Monthly Archives: February 2014

Strategy

Why Jack Welch is right

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Jack Welch is no dummy.    He evokes the 1990’s as powerfully as Friends or Smells Like Teen Spirit, but he has understood what social media is about for a long time.  (How many 79-year-olds have 1.4 million Twitter followers?)  From a tactical perspective, he’s good at Twitter and LinkedIn, but his real contribution comes from his #1 or #2 rule.  

Back when he took over GE in 1981’s, GE was a conglomerate with over 350 business units.  The majority were in manufacturing in the USA.  At that time, Asia was about to take over the manufacturing industry with cheaper products made by cheaper labor.  Welch could see what was coming, and it was going to be ugly for a complacent company who felt it was entitled to its position.  He had three fundamental components to his philosophy, all of which reinforced each other:

  1. Performance:  Every GE business had to be either #1 or #2 in its industry, or it needed to be fixed or sold.    The market was not kind to also-rans.
  2. Efficiency:  GE needed to eliminate waste from its processes.  Asian competitors would have much lower costs, so GE had to eliminate any excess costs to have a chance of keeping up.
  3. Talent:  GE needed to have the best talent and talent systems.  He made this real via the the 20/70/10 rule, where the top 20% of managers are stars and compensated as such, the 70% in the middle are well-treated but given instructions on how to get to be in the top 20%, and the bottom 10% are “counseled out.”  Ruthless, but effective.

He did this because he saw the competition that was coming.  Companies that felt they deserved to be on top would be stepped on, and only the truly hungry would survive.  He changed the culture of GE, getting rid of hundreds of business units and adding dozens of new, more efficient ones, all in keeping with his philosophy.  He was not interested in being the biggest, but in being the best.  (And by being the best, they of course became the biggest.)

The competitive situation in manufacturing in the early 1980’s looks a lot like the competitive situation in digital media today.  With no barriers to entry and very little cost of production, nobody is entitled to anything.  Look at the remarkable lubricating power of Google.  When it comes to organic links, if you’re not #1 or #2, your odds of success go way down.

The chart below shows click-thru rate by position in Google SERPs (Search Engine Results Pages).

 

CTR by SERP position

It’s a very simple story.  The top organic search result gets clicked on over 50% of the time.  The third-ranked gets clicked on less than 30% of the time, and anything after eighth-ranked gets clicked less than 10% of the time.  The page at moz.com has lots more charts that show how the curve changes for different queries, but its basic shape remains the same.  If you are not at the top of the Google results pages for your preferred search, it is unlikely that anyone will click on your link.

This is why new people aren’t reading your blog—even if you get Google or Bing’s attention, it’s hard to get to the top of the food chain.

How do you fix this?  Tactically, do all the things you know you need to do.  Run down your social media checklist of all the blocking and tackling that needs to be done.

Strategically, refocus.  Instead of being about stationery, be about stationery for adoptive parents.  Be relentless about being #1 or #2 in your competitive set.  Sometimes that means redefining your competitive set.  Once you are the #1 or #2 player for stationery for adoptive parents, expand your competitive set—stationery for parents.   Only by being relentlessly focused can you earn the right to grow.

Welch’s other two rules fit well also—be ruthlessly efficient about your social media.  Don’t waste time on things that aren’t working.  Test and measure.  And be humorless about talent.  Don’t give your social media to the youngest and cheapest person you find.  Owning social media means owning the brand.  It’s a sobering responsibility, and not everyone can handle it.

Too many times we assume that the lessons from the past don’t apply in this era.  Social Media has upended a lot of received wisdom about Marketing tactics, but it hasn’t invalidated much strategic thinking.  Welch’s rigor and focus are a perfect fit with the social media era.  Almost perfect competition means that the lazy will be eaten, and people will barely notice.

He may be a 79-year-old man and a bit of a loudmouth, (think Gary Vaynerchuk’s even more outspoken uncle from Boston) but ignore him at your peril.  He knows what it takes to win in viciously competitive markets.  This stuff works.

Photo Credit:  Flickr

Adrian Blake has worked with Saturday Night Live, McKinsey & Co., and The Progressive Farmer and is a founder of a Social Media agency.

Adrian Blake.  Strategy.  Social Media.

 

Strategy

Why Good Social Media is Harder Than You Think

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All art is about the tension between order and chaos.  If something is too orderly, it’s boring.  If something is too chaotic, it’s irritating.  But when the two sides are in balance, you have something transcendent.  Like Carousel.  Or London Calling.  Or Lawrence of Arabia.  Or Starry Night.  Art History majors refer to the Apollonian and the Dionysian, but it’s the same idea—too much of one side is not good.  Art that connects with us is balanced.  (And yes, I am calling social media art—if you want someone to spend their precious time looking at something you did, then you had better think of it as your art.)

In the old media era of oligopoly, structural advantages were huge—you watched mediocre television because it was the only thing on.  You read the local newspaper no matter how bad it was.  Take a look at local TV news sometime—obviously they think we’re living in the age of reduced choices.  I think it says a lot that the new Golden Age of television, ushered in by The Sopranos, The Wire, Mad Men et al., arrived just at the time that people stopped watching so much broadcast TV.  When real competition exists, you have to raise your game.  The crap we accepted in the 1990’s was no longer economically viable, so people raised their game and started creating better work.  But not everyone did—even in the age of Orange is the New Black and Louie and Breaking Bad there is still plenty of studio-made crap on broadcast television.  In fact there’s a big enough supply of crap out there that two big ideas are immediately apparent:

  • The crap makes the good stuff look even better in contrast.
  • The people making the crap don’t really realize anything’s wrong.  Or even if they do, they can’t be bothered to improve.

If you’re willing to do the work and make something really good, it will be easy to notice, even in this very noisy world.  Very few people will raise their game.

Unfortunately, making something perfectly crafted isn’t enough.  If your idea is beautiful, it has the right to spread and the potential to spread, but it’s not going to spread unless you do the other hard work.

SEO.

Blogging every day.

Hitting Google+ every day.

Following the right people every day.

Thanking your retweeters every day.

Someday the world may beat a path to your door.  But until that day, you have to make yourself easy to find.  And that means following a checklist.  Even when you don’t feel like it.

Old media had years to build up their distribution network—the green newspaper trucks of The Boston Globe, the tv stations coast-to-coast that make up NBC’s distribution, the individual relationships Columbia records had with music stores.  But for your brand, not only do you have to be the Creative Director, you’re also Head of Distribution.  And you have to build up that distribution from scratch.

In our perfectly competitive world, you need to be more creative AND have better distribution.  Slip on either one and you don’t get seen.

And if you’re doing this halfway—stop. I mean it.  Social media probably isn’t for you.  If you are asking someone to spend their time (the only asset most of us have) focusing on your content instead of their family and friends, or more important work, then you are cheating them.

You owe them your best work.

A sobering thought, I’m sure, but if you’re not willing to meet that bar, you’re wasting money, you’re wasting time and you might as well buy PPC ads or a coupon in the Sunday newspaper.  Those are irritating and interruption marketing, but at least those might work.  Cynical social media does not work.

To succeed at social media for your brand, you need to work harder than you’re working now.  You need genuine creativity and empathy and soft skills to get people interested. You need mirthless discipline to make sure that every channel is updated in the best way.

It’s very hard to do either well.  And it’s vanishingly rare to do both well.  But if you can do both well, you can change the world.

Photo Credit: Scripting News  

 Adrian Blake has worked with Saturday Night Live, McKinsey & Co., and Progressive Farmer and is a founder of a Social Media agency.

Adrian Blake.  Strategy.  Social Media.

 

Strategy

Why Jerry Garcia was right

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In a way, social media is to our era like rock’n’roll was to the 1960’s.  Not because we’re necessarily changing the world or dressing like idiots, but because there are no barriers to entry– anybody can do it.  Back then it took three chords and a dream. Elvis and the Beatles changed the culture and showed kids that they could make a mark with music.  And everybody wants to make a dent in the universe.  So thousands of kids started bands in their garage.  Most of them were awful.  (This is a great compilation of what the good ones sounded like.)  And most relevantly, they all sounded about the same.  As the English say, “Much of a muchness.”  Everyone was ripping off the same blues riffs that the Rolling Stones had already ripped off, and most bands were born, lived, and died without a trace.  In this explosion of supply, tons started, fewer kept it up, and only a few survived and thrived.  Those that did succeed did so because they offered something unique—not just another cover of Hey Joe or Wild Thing.  Detractors said it was all trivial (and in most cases they were right), but those thousands of bands changed the culture anyway.  Even if most of them were crap.

It’s much the same today with social media.  Everyone else is doing it so why not?  (In fact it’s easier because to howl at the moon today, all you need is a smartphone.  You don’t even need guitar lessons.)  The supply is even greater—a billion people on Facebook, 240 million on Twitter.  And almost everyone is mediocre.  We’re seeing the same sort of cultural evolution now.  Millions try, most are mediocre, a few stars emerge, and the culture permanently changes, even if lots of people are tweeting about celebrities.

But in a world of infinite supply, how do you ensure that your brand is one that does survive?  Whatever you’re selling, there are other sources for it.  The only option is to be distinctive.  Jerry Garcia captured this when he said: “You don’t want to be merely the best. You want to be the only ones who do what you do.”  Tom Peters has used this quote for years because it neatly captures what it takes to be competitive on a global scale.  He calls it excellence, I call it distinctiveness.  Being the only one who does what you do.

Who’s distinctive?  Seth Godin.  Glenn Reynolds.  Kathy Sierra.  Maersk’s Instagram Feed.  GE’s Pinterest Board “Badass Machines.” Lowes’ Fix in Six Vines.  There’s distinctive work all over the place.  What do they have in common?

  • They know their audience.  They are not trying to please everyone.  (Lowe’s Fix in Six is not for their Contractor segment.  So what?)
  • They have a voice.  They are not afraid of sounding like themselves.  Being generic is not a long-term strategy for a media company.  And we’re all media companies now.
  • They consistently publish.  With the exception of Kathy Sierra (who has a good excuse), all these examples are constantly producing new things.  They don’t have to be perfect.  Plenty of their stuff is just OK.  (The Beatles, The Clash, and Radiohead made mediocre songs as well as the good ones.) But they don’t let one weak data point stop them.  They keep creating.

Whether you liked the Grateful Dead or not, they knew their audience, they didn’t sound like anybody else, and they kept creating.  That’s how they gained an audience that was insanely devoted.  (In a way that Foreigner’s or Nickelback’s audience never could be.)  They were distinctive.

So now that every organization is expected to be creating content, how do you make yours stand out?  In a world of perfect competition, what hope do you have of capturing your targets’ attention?  The only guarantee you have is that mailing it in doesn’t work.  So get to work.

P.S.  The counterexample is Lee Mavers from The La’s, who recorded the sublime There She Goes in 1990 and then was paralyzed by writers’ block.  He hasn’t released anything since.  Creating a great single is a beautiful thing.  But after a while, the market forgets about you.  The objective is not to make zero mistakes.  The objective is to connect with your audience.  That’s how you make a dent in the universe.

Photo Credit:  http://flic.kr/p/8oCHKy

Adrian Blake has worked with Saturday Night Live, McKinsey & Co., and Progressive Farmer and is a founder of a Social Media agency.

Adrian Blake.  Strategy.  Social Media.

 

Strategy

Why the Content Market is becoming Perfectly Competitive

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Social media draws upon many disciplines—marketing, design, communications—but to me the most interesting part is where it overlaps with economics.  The last five years have seen a spike in available content that is clearly unparalleled in human history.  And this has changed the economics of content.

I spent a long time in the Media & Entertainment business, and one thing that was clear was that while there were hundreds of entrants, it was an Oligopoly.  A few players—the movie studios, the major record labels, the cable operators, the major television channels in each territory—had the power to shape the market.  Star Wars was worth more than Weekend at Bernie’s.  Cheers was worth more than My Two Dads.  Paramount had more power than a small producer.  Market inefficiencies were exploited, barriers to entry were high, collusion was a fact of life, and the biggest players in general made most of the profits.  That’s what Oligopoly looks like.

But unlimited content production tools (Blogger, iPhones, WordPress) and practically free global distribution (Twitter, Facebook, Youtube, et al.) have caused not only the supply of content to go up, but the supply of suppliers to go up.  Everyone is their own content brand.  There is considerable overlap—when I see a New York Times article by Sam Sifton shared by a friend on Facebook, there are at least four content brands involved. (Sifton the author, nytimes.com the aggregator, Facebook another aggregator, and my friend the curator). And if the story refers to another source, or the story was shared in a Facebook group, the chain continues.  Every one of these content brands can have a relationship with the reader.  And if one of them goes away, they can be quickly replaced.  That looks like something very different, something which until now has been a theoretical concept—perfect competition.

We’re not there yet, but it is where we’re going.  In Economic Terms, Perfect Competition has the following characteristics:

  • Infinite buyers and sellers – An infinite number of consumers with the willingness and ability to buy the product at a certain price, and infinite producers with the willingness and ability to supply the product at a certain price.
  • No barriers of entry and exit – No entry and exit barriers makes it extremely easy to enter or exit a perfectly competitive market.
  • Perfect factor mobility – In the long run factors of production are perfectly mobile, allowing free long-term adjustments to changing market conditions.
  • Perfect information – All consumers and producers are assumed to have perfect knowledge of price, utility, quality and production methods of products.
  • Zero transaction costs – Buyers and sellers do not incur costs in making an exchange of goods in a perfectly competitive market.
  • Profit maximization – Firms are assumed to sell where marginal costs meet marginal revenue, where the most profit is generated.
  • Homogenous products – The qualities and characteristics of a market good or service do not vary between different suppliers.
  • Non-increasing returns to scale – The lack of increasing returns to scale (or economies of scale) ensures that there will always be a sufficient number of firms in the industry.
  • Property rights – Well-defined property rights determine what may be sold, as well as what rights are conferred on the buyer.
  • Rational buyers – buyers capable of making rational purchases based on information given
  • No externalities – costs or benefits of an activity do not affect third parties

Not all of these conditions are strictly met, but it’s close enough that we need to adjust our content strategies.  We certainly have de facto unlimited buyers and sellers, no barriers to entry or exit, perfect factor mobility (bloggers can freely move from brand to brand or set up their own), and perfect information (Google).

So what?  Hasn’t it always been this way?  Yes and no.  There have always been many places to get your news, but your local paper or the New York Times or the AP always had huge advantages from scale.  Those advantages are melting. Scale still matters a little, but not enough to ensure success (ask CNN).

So what can brands do to win in this perfectly competitive world?  One level, a perfectly competitive market should behave like a commodity market (e.g., Corn & Soybeans), where everything is perfectly substitutable for each other.  Or maybe the airline market (with no barriers to exit).  We’re not there yet—ESPN, Perez Hilton, and The Motley Fool are not perfectly substitutable goods.  But readers do have a fixed time budget.  Even if the time allocation for digital media continues to increase, at some point people will have maxed out on consuming content.  And if ESPN is good enough, and soaks up a lot of time, maybe the Motley Fool doesn’t get looked at.  Even though they are not in the same niche, they both are fighting for the same fixed supply of attention.  But within each market niche (news, sports, entertainment news), we are in many cases at de facto perfect competition.

This has big implications for all of us.  We’re already there in many categories, and yours is probably next.  No matter how obscure your niche, there’s someone who can enter at any time and take away your audience.  It’s going to be a bumpy ride.

Photo Credit: x-ray delta one via Flickr

Adrian Blake has worked with Saturday Night Live, McKinsey & Co., and Progressive Farmer and is a founder of a Social Media agency.

Adrian Blake.  Strategy.  Social Media.