Marketing Consulting Blog

Since I'm preparing to head out of town shortly and haven't posted in a couple of days, I figured I'd share the interesting things I've been reading today.

Companies making the news today:
1) Wal-Mart: Would you like some glass mixed in with your trail mix? Yet another reason NOT to shop at Wal-Mart. As if the long checkout lines weren't enough?!

2) Google: Let's take China & Baidu on! Baidu has been called the "Chinese Google" for quite awhile, but it seems as though the real Google has had enough of that.

3) GM: Fighting #1 position against Toyota
I'm not anti-American by any means, but I think our car manufacturers need to pay greater attention to our foreign rivals on how to make better cars that people enjoy driving. Mass producing inexpensive junk isn't the path to success, but that's all GM & Ford have been doing for years. It's finally catching up with them, and I hope it inspires them to finally create better products for a change. It may be a little too late though. Can we please put Buick to bed? The 80+ demographic will find another car to drive, likely a Camry though, but that wouldn't be a bad thing in my opinion. Then again, they might just hold onto their 1989 Buick LaSabre for another ten years.

4) Apple: New product musings

Here are some tips to make your new year happier.

Who is Rachel Ray anyway? Interesting post on the BS Observer. I don't watch Rachel, but I'm already sick of her because she's everywhere. I'm all about promoting one's self as a brand, but there is definitely a fine line between building the brand and over-saturation. It sounds as if Rachel is going to be promoted even more across more product lines. Enough already!

The language of persuasion. Another Conversation Agent blog posting that's always thought provoking.


Have any thoughts on any of these stories? If so, please comment away!

I'm sure many of you have read or heard about the Microsoft blogger "scandal." If not, click here to read an E-Week piece on it if you wish. To summarize, Microsoft and AMD sent some prominent bloggers a honking Vista based laptops for them to test out. Initially they said the folks receiving the machines could keep them, give them away, or send them back upon completion of the "testing." The next day, after some public outcry, they requested the PCs back. Good marketing idea; bad execution. Or was it really a good marketing idea? I say it's terrible especially because of the execution--it backfired completely!

What were Microsoft and AMD really attempting? They were hoping to buy a favorable review from a few influential bloggers and gain some word of mouth marketing. This isn't uncommon, but it's a delicate tightrope to walk in order to keep things pure. The key to word of mouth marketing is honesty and the natural progression of the message. Once the public gets a sniff of anything that smells remotely of dishonesty, the word of mouth suddenly turns against the offender. Why is that? You've made the people who thought they were spreading something natural and believable look foolish. You've jeopardized their reputations. Buying word of mouth won't work--it's unnatural, and it makes people feel sleazy for engaging in such tactics.

Microsoft has been a pretty good marketer over the years, but this is a misstep for them that is disappointing to say the least. What did they really think would happen? Did they think the people getting the souped up laptops would write completely honest reviews after receiving a "free" machine? Of course not. Receiving anything of value for free is always well received, and it's a great way to initiate a word of mouth campaign. If the goal was to gain positive word of mouth, the machines should have been given to some random folks in some sort of drawing without any mention of a review or how the machine was to be used. Let people naturally decide what they wish to do with the thing and if they determine they wish to write a good or bad review, let it occur naturally without trying to influence it in any way. Imagine how much someone would talk up such a product if they "won" the thing fair and square in a drawing of some sort. By picking out people with popular review based blogs, the motivation behind such product placement is rather obvious so any reviews would likely be met with a heavy dose of skepticism unless the products were sent without any prompting whatsoever.

Imagine answering your door and seeing UPS there with a set of boxes that you had zero idea about before hand. Your first reaction would probably be "I didn't order this" then you'd probably open the boxes, look for clues as to what was in the boxes, then you'd try to convince yourself that someone made a big mistake in your favor. Eventually you'd begin to use the goods in time or try to send them back to the sender. Unless of course there was a letter outlining expectations--that's where Mr. Softy screwed up. They obviously engaged the review bloggers in some sort of sign up process prior to sending these laptops out so there were expectations implied. That ruined the whole thing.

If you're hoping to initiate a word of mouth campaign, allow it to happen organically and surprise people by doing something out of the ordinary. Then back away and let things progress on their own. That's the best bet if you want things to spread quickly and keep foul play suspicions out of the equation.

The other night my girlfriend and I went out to dinner with some friends of hers, and the topic of cooking came up and how it seemed we just didn't have the time to cook as much as we'd like. One of the men sitting at the table mentioned Little Caesar's and how he and his wife had been taking advantage of their $5 ready-to-carry-out large pepperoni pizza offer. Immediately another couple chimed in with how they've been doing the same thing because it's "so convenient," and "bad" pizza is pretty rare. In other words, most pizza is plenty good enough even if it's not great.

If you're not familiar with the Little Caesar's offer, it's more or less a fast food alternative targeting rush hour traffic with a large pepperoni pizza ready to go if you walk into the store, pay, and carry the thing out. Americans love pizza, but the pizza sector has been taking a decent hit of late with the rise of the fast food Mexican sector (Q-Doba, Moe's, Chipotle, LaBamba, etc.). While we seem to still love pizza, we're not to keen on waiting 20-30 minutes for the pizza to be delivered or having to go pick the thing up after ordering carry out. Little Caesar's has changed the rules of the game with this little twist. They obviously picked out the top selling one topping pizza and targeted their marketing & advertising to those people during a time of indecision about dinner. Their target is busy people who neither have time nor want to wait on a meal to be prepared so you have a captive audience for one. The odds that you may buy a pepperoni pizza are pretty good since that's their top seller. If you don't want pepperoni only, they'll make you one to order, but they've gotten your attention with the "remarkable" deal on the pepperoni pizza. You're already there, and that's half the battle.

I'm not predicting Little Caesar's will outshine Pizza Hut, Papa John's, or Domino's in the pizza wars, BUT they have people talking about them in a positive light which hasn't happened in quite awhile. Dare I say they've created a potential "Purple Cow?"

This is a memo leaked to the public written by Brad Garlinghouse, a higher ranking management official of the company. It's been referred to as the "Peanut Butter Manifesto." It's an interesting read that further demonstrates you can have a successful company yet still need a LOT of help strategically. Think they could use some of our services? ;)
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Three and half years ago, I enthusiastically joined Yahoo! The magnitude of the opportunity was only matched by the magnitude of the assets. And an amazing team has been responsible for rebuilding Yahoo!

It has been a profound experience. I am fortunate to have been a part of dramatic change for the Company. And our successes speak for themselves. More users than ever, more engaging than ever and more profitable than ever!

I proudly bleed purple and, yellow everyday! And like so many people here, I love this company. But all is not well. Last Thursday’s NY Times article was a blessing in the disguise of a painful public flogging. While it lacked accurate details, its conclusions rang true, and thus was a much needed wake up call. But also a call to action. A clear statement with which I, and far too many Yahoo’s, agreed. And thankfully a reminder. A reminder that the measure of any person is not in how many times he or she falls down - but rather the spirit and resolve used to get back up.

The same is now true of our Company.

It’s time for us to get back up.

I believe we must embrace our problems and challenges and that we must take decisive action. We have the opportunity - in fact the invitation - to send a strong, clear and powerful message to our shareholders and Wall Street, to our advertisers and our partners, to our employees (both current and future), and to our users. They are all begging for a signal that we recognize and understand our problems, and that we are charting a course for fundamental change, Our current course and speed simply will not get us there. Short-term band-aids will not get us there.

It’s time for us to get back up and seize this invitation.

I imagine there’s much discussion amongst the Company’s senior most leadership around the challenges we face. At the risk of being redundant, I wanted to share my take on our current situation and offer a recommended path forward, an attempt to be part of the solution rather than part of the problem.

Recognizing Our Problems
We lack a focused, cohesive vision for our company. We want to do everything and be everything - to everyone. We’ve known this for years, talk about it incessantly, but do nothing to fundamentally address it. We are scared to be left out. We are reactive instead of charting an unwavering course. We are separated into silos that far too frequently don’t talk to each other. And when we do talk, it isn’t to collaborate on a clearly focused strategy, but rather to argue and fight about ownership, strategies and tactics.

Our inclination and proclivity to repeatedly hire leaders from outside the company results in disparate visions of what winning looks like - rather than a leadership team rallying around a single cohesive strategy.

I’ve heard our strategy described as spreading peanut butter across the myriad opportunities that continue to evolve in the online world. The result: a thin layer of investment spread across everything we do and thus we focus on nothing in particular.

I hate peanut butter. We all should.

We lack clarity of ownership and accountability. The most painful manifestation of this is the massive redundancy that exists throughout the organization. We now operate in an organizational structure - admittedly created with the best of intentions - that has become overly bureaucratic. For far too many employees, there is another person with dramatically similar and overlapping responsibilities. This slows us down and burdens the company with unnecessary costs.

Equally problematic, at what point in the organization does someone really OWN the success of their product or service or feature? Product, marketing, engineering, corporate strategy, financial operations… there are so many people in charge (or believe that they are in charge) that it’s not clear if anyone is in charge. This forces decisions to be pushed up - rather than down. It forces decisions by committee or consensus and discourages the innovators from breaking the mold… thinking outside the box.

There’s a reason why a centerfielder and a left fielder have clear areas of ownership. Pursuing die same ball repeatedly results in either collisions or dropped balls. Knowing that someone else is pursuing the ball and hoping to avoid that collision - we have become timid in our pursuit. Again, the ball drops.

We lack decisiveness. Combine a lack of focus with unclear ownership, and the result is that decisions are either not made or are made when it is already too late. Without a clear and focused vision, and without complete clarity of ownership, we lack a macro perspective to guide our decisions and visibility into who should make those decisions. We are repeatedly stymied by challenging and hairy decisions. We are held hostage by our analysis paralysis.

We end up with competing (or redundant) initiatives and synergistic opportunities living in the different silos of our company.
• YME vs. Musicmatch
• Flickr vs. Photos
• YMG video vs. Search video
• Deli.cio.us vs. myweb
• Messenger and plug-ins vs. Sidebar and widgets
• Social media vs. 360 and Groups
• Front page vs. YMG
• Global strategy from BU’vs. Global strategy from Int’l

We have lost our passion to win. Far too many employees are “phoning” it in, lacking the passion and commitment to be a part of the solution. We sit idly by while - at all levels - employees are enabled to “hang around”. Where is the accountability? Moreover, our compensation systems don’t align to our overall success. Weak performers that have been around for years are rewarded. And many of our top performers aren’t adequately recognized for their efforts.

As a result, the employees that we really need to stay (leaders, risk-takers, innovators, passionate) become discouraged and leave. Unfortunately many who opt to stay are not the ones who will lead us through the dramatic change that is needed.

Solving our Problems
We have awesome assets. Nearly every media and communications company is painfully jealous of our position. We have the largest audience, they are highly engaged and our brand is synonymous with the Internet.

If we get back up, embrace dramatic change, we will win.

I don’t pretend there is only one path forward available to us. However, at a minimum, I want to be pad of the solution and thus have outlined a plan here that I believe can work. It is my strong belief that we need to act very quickly or risk going further down a slippery slope, The plan here is not perfect; it is, however, FAR better than no action at all.

There are three pillars to my plan:
1. Focus the vision.
2. Restore accountability and clarity of ownership.
3. Execute a radical reorganization.

1. Focus the vision
a) We need to boldly and definitively declare what we are and what we are not.
b) We need to exit (sell?) non core businesses and eliminate duplicative projects and businesses.
My belief is that the smoothly spread peanut butter needs to turn into a deliberately sculpted strategy - that is narrowly focused.
We can’t simply ask each BU to figure out what they should stop doing. The result will continue to be a non-cohesive strategy. The direction needs to come decisively from the top. We need to place our bets and not second guess. If we believe Media will maximize our ROI - then let’s not be bashful about reducing our investment in other areas. We need to make the tough decisions, articulate them and stick with them - acknowledging that some people (users / partners / employees) will not like it. Change is hard.

2. Restore accountability and clarity of ownership
a) Existing business owners must be held accountable for where we find ourselves today - heads must roll,
b) We must thoughtfully create senior roles that have holistic accountability for a particular line of business (a variant of a GM structure that will work with Yahoo!’s new focus)
c) We must redesign our performance and incentive systems.

I believe there are too many BU leaders who have gotten away with unacceptable results and worse - unacceptable leadership. Too often they (we!) are the worst offenders of the problems outlined here. We must signal to both the employees and to our shareholders that we will hold these leaders (ourselves) accountable and implement change.

By building around a strong and unequivocal GM structure, we will not only empower those leaders, we will eliminate significant overhead throughout our multi-headed matrix. It must be very clear to everyone in the organization who is empowered to make a decision and ownership must be transparent. With that empowerment comes increased accountability - leaders make decisions, the rest of the company supports those decisions, and the leaders ultimately live/die by the results of those decisions.

My view is that far too often our compensation and rewards are just spreading more peanut butter. We need to be much more aggressive about performance based compensation. This will only help accelerate our ability to weed out our lowest performers and better reward our hungry, motivated and productive employees.

3. Execute a radical reorganization
a) The current business unit structure must go away.
b) We must dramatically decentralize and eliminate as much of the matrix as possible.
c) We must reduce our headcount by 15-20%.
I emphatically believe we simply must eliminate the redundancies we have created and the first step in doing this is by restructuring our organization. We can be more efficient with fewer people and we can get more done, more quickly. We need to return more decision making to a new set of business units and their leadership. But we can’t achieve this with baby step changes,
We need to fundamentally rethink how we organize to win.

Independent of specific proposals of what this reorganization should look like, two key principles must be represented:

Blow up the matrix. Empower a new generation and model of General Managers to be true general managers. Product, marketing, user experience & design, engineering, business development & operations all report into a small number of focused General Managers. Leave no doubt as to where accountability lies.

Kill the redundancies. Align a set of new BU’s so that they are not competing against each other. Search focuses on search. Social media aligns with community and communications. No competing owners for Video, Photos, etc. And Front Page becomes Switzerland. This will be a delicate exercise - decentralization can create inefficiencies, but I believe we can find the right balance.

I love Yahoo! I’m proud to admit that I bleed purple and yellow. I’m proud to admit that I shaved a Y in the back of my head.

My motivation for this memo is the adamant belief that, as before, we have a tremendous opportunity ahead. I don’t pretend that I have the only available answers, but we need to get the discussion going; change is needed and it is needed soon. We can be a stronger and faster company - a company with a clearer vision and clearer ownership and clearer accountability.
We may have fallen down, but the race is a marathon and not a sprint. I don’t pretend that this will be easy. It will take courage, conviction, insight and tremendous commitment. I very much look forward to the challenge.

So let’s get back up.

Catch the balls.

And stop eating peanut butter.