Finding hidden treasure in plain sight.


Prospecting, mining both are familiars metaphors describing the activities associated with finding and developing  resource rich opportunities.  Rarely  in plain sight for any passerby  to scoop up and gain advantage, prospecting for Gold, other metals or precious gems like diamonds require active and often deep digging capabilities.

Like precious metals or gems, the secret to good business is creating precious assets of intrinsic value. The attributes to value when known for durability and uniqueness, such as a brand, retain  value over time,  predictably generate  cash flow and  become  difficult for competitors to acquire. But the uncertainty of today’s markets and the disruptive threat of new technologies can quickly erode the value of any asset and so growth is essential.  Whether your strategy calls for acquisition or organic growth, either way, the underlying development and prospecting costs need to be contained.

In stories and legends, merely having a treasure map and knowing where to dig doesn’t always lead to happy endings. Technology has certainly helped to mitigate the risks or advance probabilities of success.  Ground and water penetrating radar and detectors   discriminate ferrous and non-ferrous metals pinpoint the site to begin mining and improves the probabilities of a fruitful yield.  The challenges in any mining activity depend not on the power of the technology or in making the dig profitable. Today’s WSJ headline reads Gold hits $1,700.  Absent reliable, hidden treasure maps knowing where to look is an advantage. Returns depend on offsetting the difficulty and risks associated with its extraction and the quality or grade found. Forbes recently summed this up  USAGX’s Denbow: Gold-Mining Companies Face Challenges Finding New Supply.

Prospecting is a perennial challenge for any and every business, and managing the costs is the key to delivering returns.  The current market turmoil has done more than merely  increase investors uncertainty.  for the Risk averse, who have shied away from innovation  or the adventurous  business who has wisely taken pause, I suggest this is a great time to revisit your strategies.  Standing still can prove surprisingly  advantageous if in the process of cleaning house you discover  undervalued or even overlooked assets.  What value does an earlier project, research or failed product launch buried for any number of reasons offer? Lance and Scott Bettencourt of Strategyn write in Harvard Business Review in June 2011 Innovating on the cheap  a series of suggestions on how you can  leverage your existing assets, or rediscover value in surprising places.

Mining existing assets

I suggest a process that may take you a little further.  Consider Google’s Search business and the  underlying value of its algorithms and index.  Maintaining these assets is of critical importance but so too is the value of constant improvement.  Daily, new content and pages added to the internet require Google’s index continuous update.  Including  rich and diverse content such as images, video and sound  files on the internet challenges Google’s index  and algorithm update to accurately rank and deliver the results.  Realized innovations  continuously contribute  to Google’s financial performance and persistent high  market valuation. Even Google however has failures. Research,  experiences of both internal and external users generate additional  assets hidden in plain sight. Actively sharing and reflecting on the meaning of both successes and failures  allow new project teams ready access to key insights that otherwise would be left to lie fallow collecting dust.  If Google continues to draw value  or benefit from their latent assets, can you?

Identifying data or purpose

Frequently, environmental conditions change a variable’s significance.  Strategyn authors talk about unrealized value in products that may have been premature for the market,  experienced formidable technical difficulties or their launch prevented  by high manufacturing costs . Nothing stays constant anymore.  Consumers are always adapting  their preferences to changing circumstances and environmental conditions, and  business are equally forced to adapt.  A variable’s significance in your business model  in one moment may prove insignificant later. Persistently changing conditions is  why its’ important to frequently revisit your tactical plan and forecast models; and occasionally revisit your business model/strategy.

In 1984, Jesse Jackson was the first Black American to run for President.  I was an assistant statistician working for CBS News assigned  to use the exit poll and early returns to create prediction models to track trends in voters behavior. Race became a significant variable , where as before it had not been much of a determinant factor.  To increase accuracy, the forecast model needed to adjust to accommodate and recognize this historic precedent.  Likewise, when I joined Citibank in 1985, the business needed a P &L model for an innovative new offering in four test markets that linked savings and credit products in a relationship.  No one had looked at  interactive product performance before and the experience was a revelation.  The adaptation to existing analysis and risk management tools were instrumental contributors to the explosive growth of Citibank’s  credit card business. The original business proposition  failed to consider that the risk in a bundled loan or relationship,  product was not merely additive but interactive.  Early, controlled testing allowed them to go back to the drawing board armed with new insights and better understanding of the boundaries.

New data is rarely the culprit in a failure; but as things change,  more data enhances interpretation and  provides insights to re-imagine your business.  When you are the largest issuer of credit cards in the world,  accurate risk models  can be built using available billing histories.  In the 1990’s  mountains of itemized purchase or transaction level was left untouched, though its potential value was clear,  there were no clear benefits to justify the monumental costs of analysis. This was a treasure waiting to be mined.  Lacking urgency or absent a competitive threat also minimized the value of uncovering additional insights into consumer’s behavior.

Fast forward just under 25 years and the costs of time and computing resources to sort high volumes of transaction data is trivial and the returns from real-time processing lucrative. Mined transaction data triggers fraud alerts and delivers additional purchase suggestions based on comparison to  individual consumer history and that associated with cohorts, peers or “friends.”  Amazon  demonstrates   mastery in mining  typical  point of sale enhancements and redeems enormous  value from its dual function processing.

Opportunities and technology capable of mining even richer, more complex data eclipses  the significant value accrued from mining transactions.  The potential  value is driving the collection and complex tagging and sorting  of recorded customer service conversations, video capture of consumers shopping or following their daily routine at work or at home or all the places they go  online, key strokes, eye tracking, written comments.  It appears that there are very few domains of human experience and activity that remain a hold out from data capture.  The number of matching and sorting tools, the algorithms and systems also are getting simpler and more widely accessible.  Today, the speed and volume of results Google returns in a general search is far more advanced than credit card billing records I analyzed.  When was the last time you checked out Google’s  specialized search tools or the technology  coming out of their labs?

Returning Power to the People

The  insurmountable challenges are no longer in finding available data, or even privacy. Its ubiquity and increasing open source availability creates an even bigger challenge,  turning the vast amount of real-time data into a durable advantage.  Sunday’s New York Times (August 7, 2011) reported the unusual establishment in Chicago of a team of specialists tasked to help Chicago harness the technology and gamut of rich data the city collects.  Not alone in its efforts, Chicago is  farther ahead of other governments in creating easy interfaces that contribute to the public’s use of  its treasures of recorded and collected data.  Transparency adds more value by increasing the number of analyst reviewing the information, spotting trends or creating applications that simplify the lives of residents.  For example, the free Bus tracker application to let riders and plan their trip better.  It also holds his office more accountable  and increases the opportunity for activism by city residents.

There’s no doubt that power accrues to those who can imaginatively convert  data into both meaningful and doable innovation.

Finding treasures by leveraging connections

Today’s data mining technologies facilitates more than  accountability and activism.  Beyond knowledge of the type and place of available data,  a dedicated commitment to sift and mine the growing mountains of data requires critical analysis and matching skills.  Google does not stand alone in its specialized capabilities, numerous competitors offer diverse and specialized alternative search tools.  Numerous open source tools  make it easy to sort and manipulate any of the open data made available online.  As in prospecting, the tools and ability may narrow the competition and may advance the process. But those systems capable of exploiting and  enhancing anomalies  with supplementary information increase their chances  to uncover intrinsic value and thus create durable advantage .

Innovation results from capabilities to invent but can equally result from abstraction and adaptation.  Most of us at one time or another have come across a person who managed to re-purpose or refashion an object for an alternative use.   For example, the flower bed below.

Between Naps on the Porch eclectic landscape

Don’t merely consider looking at your existing data in its current form, but revisit it with newer analytic capabilities made possible from the numerous open source and proprietary data mining tools rich in functionality.  Consider supplementing your understanding of your assets from the perspective of your final judge, the consumer.  Also consider these sources:

  1. If images are worth a thousand words, spying consumers who refashion or use products for purposes beyond the manufacturer’s original conception can prove inspiring.
  2. Conversations and story are at the core of social media’s power.  The words of mouth, or stories  associated with transmitting and  promoting your business also motivate, inspire and compel employees to higher performance and deliver insights into how your product can be improved.  How often are you  using these to find products  in your inventory or services, that you may over overlooked or underestimated, but  are important to a group of consumers?
  3. Sales Data–Data mining tools can be used to find surprising blips, if you look beyond the blip.  Focus your analysis on the less understood context such as coincident placements or other variables that may not have made it into your database but none the less explain the anomaly.  They may very well be the source of an unrealized opportunity to refashion and reposition products that have trailed in sales.
  4. Last, perhaps you need to apply data mining tools  on your own data collections. The files of failures, tucked into drawers or file cabinets, the product research and or launches that never saw the light of day may call for another look.  After all, consumer preferences are always evolving, but so are your competitors, as well technology that may allow you to overcome previous cost barriers.  For example, oil and gold extraction from very difficult places is now proving economically viable as both these commodities benefit from high market prices.

More reason to harness data mining technologies to jump-start innovation in product marketing, reuse or refashion your assets to generate additional cash flow.

I’d love to hear of your experiences recapturing value in your business by any other routes as well as  suggestions for good tools or tips to improve your data mining or prospecting success.

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Is it Too Late for a Web Strategy?


Old spice man

If you don't know this man, then you're missing out on one of the more popular twists in popular culture and marketing of 2010. 

This is the Old Spice campaign's man of mystery.  Intentionally I did not insert the web video, nor am I interested in chasing down the viewer stats, though sales report isn't great.  It's here because the ad reference exemplifes multi-channel linked marketing strategy and came up  in last Friday's monthly Chicago Booth Alumni Club's Discussion around  Strategic Management Practices.

Wearing my research hat, and doubling as a typical consumer, the first place I turned to find the reference was to type the key word phrase "old spice man" into my google search bar located at the top of my web browser. My search was not to purchase, engage in conversation or to gain proximity to someone with product experience –that would need  some different key words.  The campaign as well as my search process shows the evolution of the internet and the effect of its influence in our lives.  The shifting trends exhibited below in this wonderful chart  was the focus by Chris Anderson and Michael Wolff in the provocatively titled September 2010 article in Wired The Web is Dead, long live the Internet

Internet traffic trends 2010

CISCO compiled data using the Cooperative Association for Internet Data Analysis (CAIDA). The chart suggests that Video and Peer to Peer traffic is increasing while the use of the world wide web is declining.  This data is somewhat misleading and the chart's suggestions that mobile apps, and other specialized channel options, will displace the web browser  is not so clear-cut.

Is this graph a credible and reliable translation of the geek speak from  CAIDA?  A more recent  analysis than what appeared in Wired, expresses the following:

" Continuing its growth in traffic, connectivity, and complexity, the current Internet is full of applications with rapidly changing characteristics."

Overall, CAIDA has found that traffic on the internet continues to grow,  which is not adequately represented by the two- dimensional graph CISCO and WIRED depicted. Growth does accurately reflect the transition and growing emergence of traffic off the world wide web and into  alternative internet based transmission paths (e.g. mobile based and other applications that allow real time streaming).  

This same transition mimics strategies used by effective  marketers who link the brand messages and campaigns across  multiple media platforms.  Key words provide the bridge. The more consistent their use across the growing number of media platforms,  the more certain an organization's promotion efforts will  intersect key consumer touch points on or offline.   Ideally, consumers pick up these same key words  and carry them across other natural communication channels, further enhancing the brand's reputation and in theory  increasing sales.

If your business is selling Search Engine Optimization (SEO) this emphasis on key words appears  great for business. It's not however where a capable marketing strategy should invest the majority of its budget.  Not merely because there is some danger to pursuing this strategy (see the The dirty little secrets of search in last week's New York Times); but the greater, more complex objective is reputation management and not key word optimization.  

 Historically, brand owners/creators controlled media messaging and placement.  To successfully sell, you "paid" for the privilege of being placed in front of consumers walking through the yellow pages or by a billboard, listening over radio/TV  or their eyeballs scanning newspaper or specialty publications. Product packaging, placement and promotion  are often  budgeted separately and only occasionally linked for a "special" promotion (e.g. cause marketing or a contest).  The rise of the world wide web, added the category of "owned" media to the marketing mix and budgets had to cover the cost of website development, content writers and traffic analysis, including SEO.  With Social Media, a third area– "earned" warrants increasing budget and management attention to monitor the customer-created channels and chatter of your brand enthusiasts  as well as brand detractors. (see complete description in Branding in the Digital Age by David Edelman). 

 The Edelman article's case study of a TV manufacturer across one touch point within the wider consumer decision journey proves far more  instructive than my earlier reference to the Old Spice ad and its multi-channel focus. 

"A costly disruption of the journey across the category made clear that the company’s new marketing strategy had to deliver an integrated experience from consider to buy and beyond . In fact, because the problem was common to the entire category, addressing it might create competitive advantage."    

Unlike Old Spice, the manufacturer opted to shift the marketing emphasis away from paid media.  Focusing on owned and earned media seems to enhance the effectiveness of their key words and multi-channel linkages, and engage traffic where it mattered most at the buy, and enjoy, advocacy, bond  touch points. This is not a prescription for all brands, but the case is instructive in identifying the disconnects and deficiencies in common web based strategies, or even of marketing extravaganzas disconnected from the ongoing conversations that are circling your business, product and/or brand.

Whether or not you belief in Chris Anderson's prognosis about the death  of the Web or buy into David Edelman's Consumer Decision Journey research, few organizations appear to have fully leveraged these changes.  Increasingly, an ability to execute and efficiently allocate resources to address the demands presented by the growing number of communication channels  will  distinguish successful companies from their competitors.  The changes create more opportunities for strategy to take a more commanding role in managing and driving the combined efforts, either internally or with the help of outside specialty firms.

Additonal Discussion Take Aways

  • Social networks are informative, free sources of intelligence that naturally build out and generate mutual trust and benefits to buyers and sellers. 
  • The role of the marketer is merely to influence and no longer the producer/director of the brand experience.
  • The responsibility for marketing  is changing and increasingly is upending internal role limitations  and requiring participation from unlikely sources e.g. corporate governance, communication standards and guidelines.  Employees share roles with customers and the more acquainted with internal policies, strategies and planning the more they can aide and assist in  wider message consistency. 
  • Authenticity has become ever more important.
  • Fluidity and increasing knowledge of terminology around the digital communications space is a valuable skills set…not just for marketers and IT folks. 
  • As reputation management rises and people do business more and more with the people that they know,  is there anything really being created of value, and are other marketing and sales efforts as necessary?
  • How do these lessons translate or enhance B2B sales? 
  • It's not the web vs. the internet differentiation that matters, as much as recognizing how one innovation(social media)  has brought into focus an array of  deficiencies and gaps within an organization (marketing departments) as well as an industry (e.g. advertising) The challenge is how to best integrate the old with the new. 
  • In the end, the prescription to know your customer before creating your strategy remains the first and foremost lesson. Knowing what your customer wants will always be helpful but successful business requires more.
  • True differentiation in products being marketed remain beneficial but the emphasis should be toward innovation in developing products. 
  • Important to remember the shape of the adoption curves with new technology and Chris Anderson's point that new doesn't replace old. New merely creates more table space to accommodate more preferences.  The challenge is the frequency we change, resort and revisit our marketing activities and resource priorities. 
  • Both  articles confirm the importance of social media and keeping up with changing technologies.  They also call attention to the  the challenges organizations  face in trying to bring them together  to create successful communities around their products and/or brands.

 

Any added thoughts, perspectives or cases are welcome.

Added citations

Edelman makes some of the same points in this article:

Four ways to get more value from digital marketing

By David C. Edelman, McKinsey Quarterly, March 2010

https://www.mckinseyquarterly.com/Four_ways_to_get_more_value_from_digital_marketing_2556

 

Trust Agents, Using the web to build Influence    by Chris Brogan and Julien Smith

NOW Revolution, 7 shifts to make your business faster   by Jay Baer and Amber Naslund