MarketingMuses

Happy Birthday Golden Gate Bridge!

Today marks the 75^th anniversary of the opening of the Golden Gate Bridge. The San Francisco Bay Area is considered a hotbed of technological innovation and development. Its origin, in this regard, is usually traced to a profusion of post-WWII achievements led by companies such as Hewlett-Packard and Fairchild Semiconductor. However, a strong case can be made that the conception and creation of the Golden Gate Bridge is the true genesis of Bay Area hegemony, for the following five reasons:

It Solved a Real Problem – Before the bridge, ferries transported automobiles between San Francisco and what is now Marin County. A one-way trip took 20 to 30 minutes (depending on departure location), cost $1.00 (twice the initial 50¢ toll for the bridge), and at peak times the wait for a ferry could be several hours.

It is an Early Example of Crowd Sourcing – James Wilkins, a former engineering student, made the bridge proposal that took hold in a 1916 article in the San Francisco Bulletin. San Francisco’s City Engineer estimated the cost at $100 million, and posed an open question to bridge engineers of whether it could be built for less. Joseph Strauss, who had designed several hundred inland drawbridges, responded with initial drawings for two massive cantilevers, one on each side of the strait, connected by a central suspension segment, which he said could be built for $17 million.

It is Innovative Engineering – Joseph Strauss became chief engineer of overall design and construction, but his initial proposal was replaced by a more graceful suspension design from New York’s Manhattan Bridge designer Leon Moisseiff. The basic structural design introduced his “deflection theory,” by which a thin, flexible roadway would flex in the wind, greatly reducing stress by transmitting forces via suspension cables to the bridge towers. When completed, the suspension bridge had the longest main span in the world, at 4,200 feet, and the tallest suspension towers, at 692 feet (above water).

It is Insanely Great Aesthetic Design – Irving Morrow designed the overall shape of the bridge towers, the lighting scheme, and elements such as the streetlights, railing, and walkways. He also decided to keep the vibrant International Orange color, originally used as a sealant for the bridge, instead of the standard silver or gray used on most bridges, because, in addition to its durability, it complements the natural surroundings and enhances the bridge's visibility in fog. In 2007, the Golden Gate Bridge was ranked number five on the American Institute of Architects (AIA) sponsored list of America’s Favorite Architecture.

It is a Symbol of American Persistence – Although the project design, construction, and financing was authorized in 1928, the 1929 crash made it impossible to raise the construction funds as planned. Instead, a $30 million bond measure was passed in 1930. However, there was no buyer for the bonds until Amadeo Giannini, the founder of San Francisco–based Bank of America, agreed on behalf of his bank to buy the entire issue in 1932. Construction began in January 1933 and was completed in April 1937, at a total cost $1.3 million under budget.

A Passion for the Arts (Part 2)

Jeff Beck is the most progressive and expressive guitar player of my generation. Seriously!

In 1962, my father won a Silvertone guitar and amplifier in a sales contest. My mother played the piano, and at her urging, I had taken lessons. But I never developed a passion for the instrument. The guitar was different. Over the next decade I taught myself basic chords, twelve-bar blues progressions, and how to play bottleneck slide in an open tuning with a glass Coricidin bottle. This was driven by my exposure to five musicians who redefined guitar playing in the 1960s by synthesizing blues and rock channeled through the new technology of an amplified solid-body electric guitar.

I watched, listened to, and played along with the revolution in popular music led by the Beatles in 1963, and I learned to play the Animals' version of "House of the Rising Son," and Van Morrison’s "G-L-O-R-I-A." But it was a succession of lead guitarists for the Yardbirds—Eric Clapton, Jeff Beck, and Jimmy Page—that initially fueled my passion for blues-based rock played on an electric guitar. In 1967, Jimi Hendrix introduced psychedelic pyrotechnics. And in 1969, I discovered the sonic resonance of a glass slide gliding over electric guitar strings in the hands of Duane Allman.

The December 2011 Special Issue of Rolling Stone lists the 100 greatest guitar players of all time. All five of the guitar players that influenced me are listed in the top 9, which are:

1. Jimi Hendrix 
2. Eric Clapton
3. Jimmy Page
4. Keith Richards
5. Jeff Beck
6. B.B. King
7. Chuck Berry
8. Eddie Van Halen
9. Duane Allman

The majority of guitar players on this list came to prominence between the mid 1950s and early 1970s (Eddie Van Halen being the exception). In my opinion, only one of the seven living guitar players has continued to progress beyond his initial brilliance. That one is Jeff Beck.

I have music on my iPod from Allman, Beck, Clapton, Hendrix, and Page (as well as Richards), which I listen to often and thoroughly enjoy. But I only have songs recorded after the mid-1970s by Jeff Beck. Obviously, Hendrix and Allman have a good excuse for no new recordings since 1970 and 1971, respectively. But while Clapton and Page are still playing very well, neither has produced new, progressive music since the 1970s. Although it pains me to say this, Clapton and Page (and Richards) are classic rock artists. When they perform in concert, they overwhelming play oldies—songs they initially recorded 30 to 40 years ago.

On the other hand, Jeff Beck has progressed from blues and rock through jazz and electronica to his present style of using the guitar as a vocal instrument. In a June 2010 NPR interview, Liane Hansen delivers the most revealing interview I’ve heard with the reclusive artist. Beck says of his present style, "I try to become a singer. The guitar has always been abused with distortion units and funny sorts of effects, but when you don't do that and just let the genuine sound come through, there's a whole magic there."

Most great artists experience a short burst of creative brilliance over a few years, but a few—Matisse and Beethoven immediately come to mind—continue to evolve and produce at a high level of creativity throughout their lives. Among the electric guitar heroes of the 1960s, Jeff Beck, who turns 68 in June, is the only one who still produces new, progressive and expressive guitar music. I rarely look for the Grammy Award to legitimize musical excellence, but it is revealing that Jeff Beck has been awarded the Grammy for Best Rock Instrumental Performance six times over four decades—1986, 1990, 2002, 2004, 2010, and 2011.

Here are three recent examples of his guitar vocals: A Day in the Life, Somewhere Over the Rainbow, and Nessun Dorma.

 

 

 

Too Big To Control

The $2- to $5-billion loss by the Chief Investment Office of J.P. Morgan Chase is making it difficult for CEO Jamie Dimon to argue that the size of the bank does not contribute to systemic risk.

 

I’ve been writing a series of posts, Risky Business, that look at the U.S. housing market and financial crisis through the lens of risk management. J.P. Morgan Chase is one of the few banks that came through the crisis relatively unscathed in terms of its financial strength and reputation. Much of the credit is given to its brilliant, bold and brazen CEO, Jamie Dimon, and his emphasis on risk management.

In the aftermath of the financial crisis, he has been an outspoken critic of government policies and regulations designed to deal with the hazards of banks deemed too big to fail. He has argued that the size of a financial institution, in and of itself, does not make it more of a systemic risk. Revelations over the last few weeks of a $2- to $5-billion trading loss by the Chief Investment Office—which, supposedly, was responsible for taking charge of the bank's overall risks, and for managing what is now $360 billion of safe, highly liquid securities—is providing ammunition to those that believe size matters, and bigger isn't better.

In today’s Wall Street Journal, Monica Langley provides a revealing look Inside J.P. Morgan’s Blunder. Ms. Langley, author of Tearing Down the Walls: How Sandy Weill Fought His Way to the Top of the Financial World…and Then Nearly Lost It All, has followed Mr. Dimon’s career since his early days as Sandy Weill’s assistant at American Express in the early 1980s. She was able to leverage her relationship and interview him for the article. It’s worth reading the article and watching the video (below) of her discussing the article with Alan Murray.

 

Does “Like It” Mean They’ll Buy It?

Social media is now an essential element of many companies' marketing programs, but how should social media marketing and advertising be planned, executed, and measured.

Yesterday, I was at the San Francisco headquarters of Racepoint Group (RPG), a public relations agency that is very effective at combining traditional PR with social media. I’ve worked with RPG at a couple of my prior companies, and I was introducing a present consulting client and RPG to each other.

We all had heard a couple of reports about Facebook on NPR that morning: GM Will No Longer Buys Ads On Facebook, and Pizza Delicious Bought An Ad On Facebook. How Did It Do?  Both reports raised questions about the value of Facebook advertising.  A quote from the GM report, attributed to the Wall Street Journal, stated:

"Asked about the move, GM marketing chief Joel Ewanick said the Detroit auto maker 'is definitely reassessing our advertising on Facebook, although the content is effective and important.' Content refers to the unpaid Facebook pages many companies use to promote their products.

"GM, started to re-evaluate its Facebook strategy earlier this year after its marketing team began to question the effectiveness of the ads. GM marketing executives, including Mr. Ewanick, met with Facebook managers to address concerns about the site's effectiveness and left unconvinced advertising on the website made sense, according to people familiar with GM's thinking."

The report on Pizza Delicious details how Facebook advertising performed for a New York-style takeout pizza vendor in New Orleans.  After targeting people who had other New York likes failed to produce results, Pizza Delicious targeted New Orleans fans of Italian food.  As the graphic shows, Pizza Delicious got close to 20 times the number of Facebook fans it usually gets in two days.

Unfortunately, the new fans didn’t turn into new customers.  According to the report, “After a long night of asking every single customer where he found out about Pizza Delicious, not one said it was through Facebook.”  The report concludes, “Maybe at some point, the new Pizza Delicious fans will show up and buy some pizza. But social advertising is so new that nobody knows for sure. It's still unproven, untested and largely unstudied.”

After this interesting diversion, we returned to the specific question of how to use social media effectively in a B2B, rather than B2C, marketing program. Social media can be very effective in the first two stages of the three-stage B2B buyer’s process. In the first stage, buyers want to understand opportunities and gain more knowledge about solutions. Videos, podcasts and white papers that describe the opportunities and solutions can be effectively distributed through social media channels. In the second stage, buyers want to define their specific problem and evaluate different solutions.  Case studies that show how companies have used your solution to solve their specific problem can be effectively presented in different media (video, audio and print) through social media channels. Social media is less effective in the final stage of the B2B buyer’s process, when the buyer is selecting the best option and negotiating terms. 

Research by SiriusDecisions shows that while B2B buyers spend 80% of their time in the first two stages of the purchase decision process, and only 20% in stage three, sellers devote 80% of their marketing resources to stage three and only 20% to the first two, most formative, stages. In my experience, social media is best used in the first two stages of the B2B buyer’s process using the following guidelines:

A Social Media Strategy – Understand how social media can best serve as part of your larger B2B marketing strategy.  I described this in a previous post Groundswell: A Guidebook for the Social Media Journey.

Understand How Your Audience Uses Social Media – When developing a B2B social media strategy in 2009, I reviewed research from Outsell that showed while 50.8% of scientists and engineers had Facebook accounts, and only 28.0% had LinkedIn accounts, the target audience firmly segregated their use of the two: Facebook was almost exclusively for personal use, while LinkedIn was used for business. Although LinkedIn had lower overall use, it was, by far, the best choice for B2B purposes.

Think Like a Publisher – In The New Rules of Marketing and PR, David Scott Meerman describes the content that is best suited for social media, “What works is a focus on your buyers and their problems. What fails is an egocentric display of your products and services.  When you understand your audience, you can construct an editorial and content strategy just for them.  In order to implement a successful strategy, think like a publisher.”

Integrate Social Media into a Unified Digital Marketing Operation – A unified digital marketing operation integrates social media along with other new and traditional marketing techniques in a manner that aligns with the B2B buyer’s three-stage decision process and allows you to measure the effectiveness of all marketing and lead generation channels.

 

How to Create a New Technology Category with Gartner (Redux)

In January, I posted How to Create a New Technology Category with Gartner. It described a three-step process used to create a new online-security category:

• Use Specialty Analyst Firms as Advisors

• Develop a Market Model and Competitive Landscape

• Land a Marquee Account

I've developed a short eDoc that can be downloaded at SlideShare.

 

Creating a New Technology Category

View more presentations from Bruce Pharr

A Passion for the Arts (Part 1)

Marketing is an ideal career for me, because, in its fullest application, it requires analysis, strategy, and creativity. Not many jobs provide you the opportunity to do all three, and I can’t think of anything that could fulfill me, intellectually, more than the type of analysis and strategic development marketing requires.

But the creativity required for marketing is design. As Kim Goodwin says in Designing for the Digital Age: How to Create Human-Centered Products and Services, “Design is the craft of visualizing concrete solutions that serve human needs and goals within certain constraints [italics added].” Throughout my career, I’ve enjoyed the roles I’ve had in the design of products and communications, but I often found the constraints rather frustrating.

I had taken a photography course in college, where my instructor demonstrated the basics of hand-coloring photographic prints. In the late 1990s, many years after the photography class, I decided to concentrate on the medium, purely for my personal enjoyment. I’ve posted a Gallery of 18 Prints, at Behance, that are representative of how the artwork evolved over three years from a traditional, realistic hand-colored style of still life, portraiture, and figure study, to a more abstract, surrealistic style of figurative images that resulted from experimentation with focus, lighting, exposure, speed, and motion.

 

 

A Unified Digital Marketing Operation

 

A unified digital marketing operation can help small and mid-size B2B companies:

Compete successfully with much larger companies

Produce a better return on investment (ROI)

Generate incremental revenue

Increase enterprise value

This short eBook describes how a unified digital marketing operation can be designed and built to fully utilize new digital marketing and communication technologies and achieve optimal demand generation performance.  

 

A Unified Digital Marketing Operation

View more presentations from Bruce Pharr

Another Crack in the Bell Curve

“For decades, teachers, managers and parents have assumed that the performance of students and employees fits what's known as the bell curve—in most activities, we expect a few people to be very good, a few people to be very bad and most people to be average. New research suggests, however, that rather than describe how humans perform, the bell curve may actually be constraining how people perform. Minus such constraints, a new paper argues, lots of people are actually outliers.” – Put Away The Bell Curve: Most Of Us Aren’t ‘Average’ by Shankar Vedantam

In a November post, Risky Business (Part 2), I described how quantitative financial analysts, so-called “quants,” had applied Browian motion from physical sciences—visually described as a bell curve—to market prices. I further described how Benoit Mandelbrot observed that the behavior of prices in financial markets frequently demonstrated huge leaps to the outer edges of the bell curve. When plotted on a chart, the curve produced bubbled out on both ends, and became known as “fat tails.” According to Mandelbrot, the standard bell curve was not applicable to model financial markets because, “Large price changes are much more frequent than predicted.”

Now comes research from Ernest O'Boyle Jr., of Longwood University's College of Business and Economics, and Herman Aguinis at Indiana University's Kelley School of Business that challenges the long-held assumption that the bell curve describes how humans perform. An abstract for the research titled, “The Best and the Rest: Revisiting the Norm of Normality of Individual Performance,” published in the Spring 2012 issue of Personnel Psychology, states, in part, that:

“We revisit a long-held assumption in human resource management, organizational behavior, and industrial and organizational psychology that individual performance follows a Gaussian (normal) distribution. We conducted 5 studies involving 198 samples including 633,263 researchers, entertainers, politicians, and amateur and professional athletes. Results are remarkably consistent across industries, types of jobs, types of performance measures, and time frames and indicate that individual performance is not normally distributed—instead, it follows a Paretian (power law) distribution. Assuming normality of individual performance can lead to misspecified theories and misleading practices. Thus, our results have implications for all theories and applications that directly or indirectly address the performance of individual workers including performance measurement and management, utility analysis in preemployment testing and training and development, personnel selection, leadership, and the prediction of performance, among others.”

An excerpt from an NPR report titled, “Put Away The Bell Curve: Most Of Us Aren’t ‘Average’,” states, "We looked at researchers, we looked at entertainers, we looked at politicians, and we looked at collegiate as well as professional athletes," Aguinis said in an interview. "In each of these kinds of industries, we found that a small minority of superstar performers contribute a disproportionate amount of the output." 

If the research is correct, it has huge implications for organizational behavior and human resource management (OBHRM), industrial and organizational (I-O) psychology, and other related fields.  Again, quoting from the research:

“Quite simply, if performance is not normally distributed, theories that directly or indirectly build upon individual job performance and its prediction may need to be revisited. In addition, popular practices (e.g., utility analysis of preemployment tests and training and development interventions), which also rely on the assumption of individual performance normality, would also need to be revisited.”

 

The above graph on the left shows a Gaussian (normal or bell curve) distribution, and the graph on the right shows a Paretian (power law) distribution. The Gaussian distribution indicates that the majority of people in a random sample will be average performers, while a relatively equal minority of people will underperform and overperform the average. The Paretian distribution indicates that a small minority of people, in the random sample, will far outperform the majority.

 

Forever Blowing Bubbles

A few days ago, I was reading an NPR story titled, “Another Tech Bubble? Maybe Not.” where I came across this bubble chart developed by Jean-Paul Rodrigue.

 

This led me to a collection of blog posts he authored between 2005 and 2009, which he describes as follows.

“This page contains a collection of my views concerning contemporary economic and geographical issues. I tend to have a rather contrarian perspective, notably for an academic. They should not be seen as investment advices but I always put my money where my mouth is. For those who strongly disagree with my views please be comforted by the fact that in give or take a few decades I will be gone.”

The posts demonstrate his contrarian perspective, along with his keen insight and wry sense of humor. Several of the posts deal with economic bubbles, and include informative charts that he developed for illustration. I strongly recommend these short, entertaining, and thought provoking essays. 

 

Praise for the Self-Aware CEO

In my experience, a self-aware CEO is very likely to increase enterprise value, while a CEO that lacks self-awareness will almost certainly decrease it.

 

Recently, I came across an interesting discussion on an executive forum. The topic was, “What is the most important quality for a CEO?” The question seemed rather vague to me, but it appeared that most people had interpreted it as, “What quality is most likely to help a CEO successfully lead a company?” And the most frequent answer, by a wide margin, was “competence.”

To me, this answer seemed about as vague as the initial question. The most prevalent definition of competence is the condition of being capable. This implied, to me, that a competent CEO is successful—and vice versa—but didn’t really explain why. So I began to consider: What makes a CEO competent and, therefore, successful?

One caveat: While I’ve worked closely with over a dozen CEOs and division GMs, in corporate and consulting roles, my perspective is limited, primarily, to companies that develop, produce, and deliver technology-based, business-to-business (B2B) products and services.

 

Measuring Business Success 

My personal experience includes 1) working with a startup on the verge of bankruptcy, where success was simply a turnaround and acquisition that recovered the VCs’ investments, 2) working with several public and private companies that achieved liquidity events (merger or acquisition) at desirable valuations (well above book value), and 3) growing revenue and profit at publicly traded companies where the market caps increased. Conversely, I’ve worked with a few small companies (public and private) where profitability was either stagnant or never achieved. This led to layoffs, restructurings, high employee turnover, and in one case an eventual sell for the value of the company’s assets.

The common metric in each situation was an increase or decrease in enterprise value, measured as a multiple of the company’s book value. In the short-term, a company’s valuation can be influenced by many factors (e.g., market, technology, regulation, irrational exuberance), but over the long-term (several years to decades), the success of a company is best measured by its increase in enterprise value.

 

Domain Expertise

I’ve read that a successful general manager must have deep domain expertise in at least one of a company’s major functions. Given my experience, the major functions are 1) research and development, 2) production operations, 3) sales and marketing, and 4) finance and administration. Using this framework, I can make two definite statements about the CEOs and GMs I’ve worked with: 1) everyone was capable in at least one of the major functions, and 2) none was highly capable in all four. Furthermore, when I force-ranked the CEOs and GMs by how well they increased enterprise value, there was no strong correlation between success and functional expertise: every domain was represented above and below the median. 

 

Self-Awareness

So, if all CEOs were capable (i.e., competent) in at least one functional area, and there was no strong correlation between any single functional area and success, what made some more successful than others? In my experience, the CEOs and GMs who honestly and accurately assessed their strengths and weaknesses, hired people with complementary strengths, decentralized decision authority, and built well-rounded executive teams achieved the greatest success. Conversely, the CEOs and GMs that lacked self-awareness were more inclined to closely control decision-making across all functions, and the companies were unsuccessful (did not increase enterprise value).

 

The Limits of Self-Awareness

Self-awareness, alone, does not ensure that a CEO will lead a company to its maximum enterprise value. For example, one CEO was self-aware, but avoided conflict. As a result, he delayed difficult personnel decisions during a period of transition. While the company was successful, it’s unclear whether it achieved a maximum valuation. Another self-aware CEO made several bad executive-hiring decisions. While he was able to increase enterprise value, the company might have achieved an even higher market cap with better hiring decisions.

 

Self-Awareness in Action

One of the most successful CEOs I’ve work with, whose domain expertise was in production operations, frequently said, “I don’t know much about selling, but I know a lot about buying.” During dozens of meetings over several years, he asked me numerous questions about various aspects of marketing plans, always from a buyer’s perspective. Many of his questions caused me to rethink and retune an initial approach, and the strategies were better and more effective as a result. But during all the meetings over all the years, he never once told me what to do or how to do it.

Another successful GM (who became a successful CEO), with domain expertise in finance, had previously led a product line to over 50% market share by emphasizing product performance. Shortly after I took leadership of the product line, the agency and I presented a new advertising campaign that was more edgy and image oriented. The GM asked several probing questions as to why we were shifting the message. We explained that we were now a dominant market leader (over twice the share of number two) with good brand awareness, and we wanted to build a strong brand image consistent with our target market: rock and country musicians, producers, and studio engineers. When I mentioned that he did not seem overly enthusiastic about the campaign, he said, “It’s not what I would have done, but you have sound logic for doing it. Just make sure you keep growing market share.” He was uncompromising about the goal, but very open has to how it was achieved.

By contrast, the least successful CEOs where more likely to describe exactly how they wanted something done, while often being rather vague as to the goals they wanted to achieve.

 

Observations and Conclusion

My experience is that:

• Every CEO and GM was capable in at least one of the company’s major functions.

• The CEO’s and GM’s functional expertise was not a factor in his success.

• No CEO or GM was highly capable in all of the company’s major functions.

• The CEOs and GMs who were able to honestly and accurately assess their own strengths and weaknesses most often hired people with complementary strengths, decentralized decision authority, and built well-rounded executive teams that increased enterprise value.

• Self-awareness, alone, may not have ensured maximum business success. CEOs and GMs who had difficulty with personnel decisions (hiring and firing) probably achieved less than they could have with better personnel decisions.

• All of the companies that did not increase enterprise value were led my CEOs that lacked self-awareness and tightly controlled decision authority.

Assuming that the CEO is competent in at least one of the company’s major functions, self-awareness is the primary characteristic that is most likely to correlate with his or her ability to increase enterprise value. A CEO’s self-awareness, alone, does not guarantee that he or she will maximize enterprise value; good personnel decisions are critical to adding people whose strengths are complementary to the CEO. However, a CEO who lacks self-awareness will not perceive his or her own weaknesses, the company’s strengths will never the greater than the CEO’s, and the company is unlikely to increase its enterprise value.