Business

I’ve been reading Dave Trott’s blog for years. He has a great turn of phrase and he makes his point very clear. He also has a habit of making the same point more than once. So while you read his blog, he’s hammering home the same point he’s made a few times before. Different stories every time, but the same point. It’s a nice way to do things. Sharing stories but repeating the point, making sure the message registers.

Dave’s current theme is about ‘simple human truths’. He’s used stories about Bernbach and John Webster to make his point. And it’s a good point. And it got me thinking about the difference between knowing and understanding, which in turn led me to recollect a story James Harding once told at an event about Ned Kennan.

Ned Kennan was a market researcher back in the 1960s. He was working for Listerine. Their market research data told them a lot about their customers: how wealthy they were; when they were most likely to use mouthwash; and so on. The data meant they knew a lot about their customers. Armed with that data, Listerine’s top management were seeking to grow sales by 2-3%.

Kennan boldly suggested that he could grow sales by 25%. He’d run some focus groups and he’d figured out that people who used Listerine followed the rules. They read instructions and they followed them. So if you were supposed to use a capful of mouthwash, they’d use a capful. If you made the cap 25% larger, then you’d sell 25% more mouthwash. Kennan understood his customers.

That’s the difference between understanding and knowing.

The latest FT-ICSA Boardroom Bellwether shows a trend toward greater interest in social media within FTSE 350 boardrooms.

The latest Bellwether report can be viewed here.

We focus too much on the value of reputation at the expense of its purpose.

Business leaders increasingly recognise the importance of reputation. But is there too great a focus on the value of a good reputation, instead of asking: a good reputation for what?

Shareholder value skew

Many of the metrics that seek to measure the monetary value of reputation base their models on market capitalisation. This is not dissimilar to the way brand equity is measured. The problem is not only that reputation equity metrics are over a decade late to the party, but a number of research papers point to the deficiencies of focusing on shareholder value for the long term performance of a business.

Shareholder value, when coupled with quarterly reporting, incentivises quick wins over long-term performance. This means firms with large reputation equity values, might be artificially overcooked and see sharp falls in the future. Shareholder value also focuses reputation studies on publicly listed companies and, particularly, US stocks because of the large data sets available about them. This skews our understanding of reputation to one type of company listed in one part of the world. We end up with a very US-centric outlook.

Value, purpose and direction

Reputation is often referred to as a strategic business asset, however, if something is truly strategic, you need to know more about it than its monetary value or whether it is ‘good’. You need to know which factors affect it, where it helps your business, where it’s a hindrance and how it can be deployed advantageously.

London’s black cab drivers have a good reputation. Their vehicles are iconic the world over and they know London intimately. Their great reputation for getting people across the city quickly hasn’t stopped them being Uber’d by a cheaper, on-demand rival whose drivers have satnavs.

Meanwhile, the dabbawalas of Mumbai, who equally have a fantastic global reputation and are also known for getting things across a city quickly, are now working in partnership with Flipkart, an Indian online retailer, to deliver online purchases across Mumbai.

In both examples, the group in question has a good reputation. However, what they have a good reputation for and the context within which they operate mean that while one group sees eroding incomes, the other is growing into new roles.

Disruption

As we see disruption across a number of business sectors, reputation has become one of the few protectable and transferable assets companies have. However, to fully capitalise on your reputation you need to understand its drivers.

Tata Group, the Indian conglomerate, has a reputation for hands off ownership, trusting management and investing in the companies it buys. Its purchase of Jaguar Land Rover saw Tata enter the luxury segment of the automotive market when its previous sector experience was largely limited to manufacturing and selling very basic trucks and buses almost solely for the Indian market.

Jaguar Land Rover has grown strongly under Tata’s ownership following years of anaemic growth under previous owners Ford; a company that on paper had the experience and scale to grow the Jaguar Land Rover brand.

Tata went through extensive discussions with suppliers, union representatives and government officials to reassure them of its plans. Its reputation helped the firm buy its way into a new sector in which it has subsequently built a strong market position.

Strategic view

Reputation can be strategically important and it’s right that chief executives are increasingly showing awareness of this. However, we should move beyond discussions of good or bad when talking about reputation and stop trying to construct value metrics derived from shareholder value.

Only by understanding what companies have a reputation for and the context within which they operate can we provide truly strategic advice on business issues.

This post was originally published here at evolvinginfluence.co.uk.

The marketing of consulting services needs to move beyond pens, pamphlets and parties.

“We need to be talking to the c-suite.”

“We should to be advising on strategy, that’s where we can add the most value.”

“Prospects should view us as providing consultancy, not just delivering services.”

Phrases like these are said in the boardrooms of almost all service businesses. But how can they be achieved?

Whether it’s accountants trying to expand from audits, or law firms pushing to move beyond drafting contracts, everyone’s got their eyes on growth and the larger fees that come from consulting.

The problem is that while audits need to be conducted and contracts need to be drafted, consulting isn’t a practical, day-to-day business need. Companies have to want it.

So how, in the eyes of your clients, do you move from the supplier of services to the provider of advice?

The answer is to learn from the business sector that is the ultimate embodiment of want over need: luxury.

Brand

Luxury marketing is all about the brand. Having defined its mission, vision and values, a company has a framework for creating a consistent experience for everyone it comes in contact with.

Everything from your marketing strategy to the way you answer the phone can be defined consistently and simply if you have a strong brand. To some, ensuring a consistent approach to details may seem excessive, but anyone in luxury will tell you it’s the details that count. If you want to deliver a truly consistent customer experience, you need a brand framework through which you choose the details.

Exclusivity

Another hallmark of luxury is that not everyone can have it. For consulting firms, this has two very specific applications.

The first is that your customers need to feel exclusive. Small gatherings, hard to access venues or tightly controlled attendance are key. Yes, it’s a little cutthroat but people like to feel special.

The second is that you cannot do everything. You can’t cover every sector and every specialism. If you do, then you’re not luxury, you’re mass market.

What don’t you do?

Indeed, being mass market really is the crux of the problem for most firms. Partners and directors want big fees but are often uncertain when deciding what their firm does and, crucially, what it doesn’t do. A well-defined brand can help work through that problem. It’s the first step in starting those c-suite conversations.

This article was originally published here at evolvinginfluence.co.uk.

The first image conjured up by Dickens in Great Expectations is of the main character, Pip, at his parents’ grave, imagining what they were like based upon the inscriptions and the shapes of the letters on their tombstone. If future Labour party campaign managers were to look solely at Ed Miliband’s pledge stone when judging their predecessors, I suspect they would not form a favourable opinion.

Metaphors

Politicians love a metaphor. Other than avoiding answering a question entirely, metaphors are their favourite rhetorical tool. They constantly talk of “paying off the credit card bill” or “fixing the roof while the sun shines”. Taking big concepts and communicating them clearly and simply is essential in getting your message across. Businesses should learn from this.

Ed’s stone, however is a cautionary tale. By having his pledges carved in stone Ed Miliband has made his metaphor too literal. Like almost all metaphors, when taken literally, they fall apart. Having pledges etched into stone is a grand gesture that screams, “trust me!” And one of the first things most copywriters learn is that when you tell people to trust you, they tend to be wary.

Messaging

The message implied by the gesture is terrible, but it’s made worse by the words used. The language is vague and the pledges are subjective. When Moses came down from Mount Sinai, he did so with Commandments that were simple, mainly objective and bold. You know exactly where you are with “Thou shalt not kill”, however, “Controls on immigration” isn’t exactly a zinger.

The use of vague language is inexcusable when we know that Labour’s campaign team can do better. In fact, they have done much better in this election. Just two weeks ago they released this poster stating that Labour would recruit 20,000 more nurses:

It’s a clear, direct and objective pledge. People understand it and it can be measured. Somehow, this boldness got watered down when it came to chiselling some words into stone. It was changed to the nice but prosaic “An NHS with the time to care”. Who cares for people in hospitals? Nurses. What do you need more of if you want people to feel they’re getting good care? Nurses. So why not go with the clear pledge? It’s on a poster and has been shared across the web. It’s already out there. Reiterate it.

Businesses can take two lessons about communicating effectively from this campaign blunder: don’t stretch metaphors too far; and be clear and direct because vague messages just blend into the ether.

This article was originally published at evolvinginfluence.co.uk.