Voices: the CMB Blog

With ever more crowded industries, and customers’ ever-growing access to information that guides decision-making, if ever there was an era where the customer came first, this is it. Landing on a strategy that will delight current and prospective customers requires getting to know them both qualitatively and quantitatively. And herein lies the challenge. This kind of insight takes time and money and often gets pushed off or short-changed.

It’s true that data should not be the only driver of your strategy. Indeed, as Steve Lohr of the New York Times recently wrote: Listening to the data is important…but so is experience and intuition. After all, what is intuition at its best but large amounts of data of all kinds filtered through a human brain rather than a math model?

Taking these words to heart, strategy is both an art and a science. At some point, asking for the umpteenth model of sensitivity analysis simply isn’t productive to decision-making. On the flip side, building a strategy based on anecdotal evidence from the sales team (for example) will usually result in more pain than gain, financially and operationally.

Data will ground your thinking in facts. Intuition and experience will guide your thinking on why the facts are what they are and how to take action.

I often find that data is at its most valuable when used to:

• Prioritize. Having data around which questions or problems are most important to address and which opportunities are most attractive is imperative to prioritizing which paths or solutions a company chooses. Even one data point can have big impact: when one of our clients learned that 50% of its online directory was inaccurate in some way, the decision around which customer-facing channel to focus on first was easy to make.

• Challenge assumptions. Without an outside-in approach, companies are making big bets on assumptions about the market and their customers. An insurance company I once worked with wanted to extend their brand into what seemed to be an adjacent product space from their point of view. However, customer research revealed that customers actually didn’t trust that company—or any insurance company—to manage this new line of business well.

• Shore up confidence. Whether launching a new product or service, redesigning a brand or moving into an adjacent market, a new strategy needs to be sold up the executive chain. Data, from the mouth of the customer, not only reduces risk in decision-making but helps sell the decision internally. Bringing the outside in changes people’s minds.

How well do you apply the science of data to the art of strategy?

Jennifer von Briesen is a Director at  South Street Strategy Group.

South Street Strategy Group, an independent sister company of Chadwick Martin Bailey, integrates the best of strategy consulting and marketing science to develop better growth and value delivery strategies.

See how CMB and the South Street Strategy Group helped SunTrust use a customer-centric approach to inform brand strategy, improve marketing tactics, and drive organizational  transformation. Read the case study.

How many times have you looked at all of the to-do’s you’ve crossed off your list during any given week and wondered, “What do I actually have to show for it?” The fact of the matter is that the work day is a constant struggle to separate out the important from the urgent and from the importantly urgent so that we maximize our time on activities that are most likely to contribute to corporate metrics. We must be strategic about how we get through the day.

This same concept applies when growing a business. When it comes to growth strategies, most firms don’t suffer from a lack of ideas and paths to choose from. Conceptually, most business leaders understand that deciding what not to invest in is just as important as deciding what business opportunities to pursue. Yet many companies still find themselves stretched in many directions, with various product lines, strategies and consumer segments. Budgets, time and employee energy are spread across too many initiatives, many of which are low ROI activities

It’s hard to say “no” when opportunity—in the form of a potential revenue stream—comes knocking. But the irony in finding growth is the ability to focus and say “no” even when it means turning down a potentially exciting or even lucrative business initiative. Without this focus, businesses can’t make sufficient investments in the most high-priority initiatives. Management struggles because they are doing everything at once. A company’s best people are spread across different projects and can’t execute efficiently. And, in some cases, even finding time to meet and move projects forward is stymied by overcommitted schedules.

A business leader must find the courage to make decisions and focus their people and their funds on the goals that are most likely to get them ahead of the competition.

How do you get to “no”? For starters:

• Focus on one or a few key customer segments where your value proposition is most differentiated. Look at customer segments where you perform better than the competition and customers feel you truly—instead of marginally—meet their needs. This typically requires a robust market segmentation to guide your focus.

• Focus on your business’ core capabilities and strengths, and commit to investing only in these capabilities. Many companies run into trouble when they move away from their core in search of more attractive opportunities. Cisco’s Flip phone was an attractive idea, but turns out the fickle world of consumer electronics was too far afield from the company’s core business.

• Focus on balancing the needs of  your customer today versus your customer of tomorrow. A tech company, for example, will want to devote more of their investments (20-30%) on future customer needs. On the other hand, more mature industries such as insurance will dedicate most of their budget to current customer profiles and any directly adjacent capabilities.

Saying yes to everything makes it harder to achieve anything. How effective is your company at getting to “no”?

Rachel Corn is a Director at  South Street Strategy Group, she specializes in finding growth opportunities in new market segments, new products and businesses and innovative business models.

South Street Strategy Group, an independent sister company of Chadwick Martin Bailey, integrates the best of strategy consulting and marketing science to develop better growth and value delivery strategies. 

Geoff Nicholson, 3M ambassador and former vice president for international technical operations, was recently quoted as saying “Six Sigma ‘killed’ innovation at 3M.” His reasoning? The Six Sigma process requires a full-blown business case and even a 5-year business plan to get a new idea off the ground and into production. The result: a company once synonymous with innovation saw its new product introductions drop and ranking as a BCG innovative company plummet from number 1 to number 7 in four years’ time.

Nicholson describes a core challenge to scaling innovation: how do you institutionalize it 

without stifling it?

Frameworks like Six Sigma and Stage Gate rely on strict “go-no-go” decisions at key junctures, based on quantified metrics such as market size, market share potential, volumes, etc. Quantifiable approaches like this work best with incremental innovations, such as line extensions or expansions into adjacent markets.

But, breakthrough innovations—the Model-T, iPod, Post-It Notes—target new-to-the-world markets and demand curves that are hard to quantify.

An alternative approach to assessing demand for a new offering is to take it through a proof-of-concept evaluation. With a small budget, a team of individuals passionate about the idea can use small-scale testing or research techniques to understand whether the idea works and if people want it. One of our clients always sets aside 15%-20% of his funds for sussing out new, big ideas in just this manner.

Without a doubt, companies seeking to innovate should try to learn rather than re-invent the wheel with each initiative. That is one reason South Street recommends clients seeking to “institutionalize” innovation do so with a playbook, rather than a process. A playbook assumes there are some generally repeatable steps at a high level, but they can be re-ordered and prioritized/de-prioritized based on management discretion and the unique nature of the opportunity or challenge addressed. This requires a deeper knowledge of different methods, deeper thought and judgment on the part of participants and more institutional agility, but it also ensures that the right tools are used at the right times. As the 3M story illustrates, instituting a one-size-fits-all process for innovation actually erodes this very capacity.

Is process killing your innovation?

Rachel Corn is a Director at  South Street Strategy Group, she specializes in finding growth opportunities in new market segments, new products and businesses and innovative business models.

South Street Strategy Group, an independent sister company of Chadwick Martin Bailey, integrates the best of strategy consulting and marketing science to develop better growth and value delivery strategies. 

In recent years, innovation has become the latest catchword in US boardrooms, and even slow moving industries not normally associated with innovation suddenly see it as a capability critical to survival. Recently, however, a quiet backlash is forming as the word conjures up images of afternoons lost to brainstorming sessions and stickie-noted walls, with little to show for it in the bottom line.

The fact is, most corporate innovation initiatives—regardless of industry—will fail. And the seeds of that failure are often contained in the lack of clarity on what innovation is and how it will help the company achieve corporate goals. For any business leader, innovation must be viewed as a means to an end. In our experience, the best innovation programs are focused growth initiatives with clear business goals or at least parameters, not a free-for-all of ideas. Thus, we define innovation as the process of finding new and better ways of helping customers achieve their goals in a way that creates value and growth for the company. It’s all about creating value for the customer, and capturing that newfound value to increase the bottom line for the company.

Using this definition, innovation need not be as far-reaching as a new branding campaign or a shake-up-the-industry product in order to be a success. In fact, for most companies innovation is less about coming up with new ideas and more about re-purposing or combining existing ideas into a better solution. Uncovering these opportunities requires a multi-method approach we call Focused Innovation, which is based on the belief that the strongest innovation strategies are built on superior market insights and a laser-like focus on customers’ goals.

How “focused” is your innovation strategy?

Posted by J. Mark Carr, Mark is co-founder and managing partner of South Street Strategy Group.

South Street Strategy Group, an independent sister company of Chadwick Martin Bailey, integrates the best of strategy consulting and marketing science to develop better growth and value delivery strategies. 

Join us, in Boston, May 6th-8th at The Front End of Innovation Conference for: Focused Innovation: Creating new value for a legacy brand

Come enjoy visions of distant lands and mouth-watering adventures as you learn how Tauck Worldwide, an 85-year old tour company, applied the principles of focused innovation to successfully reinventing its core offering for a new audience: the affluent baby boomer.

Speakers:

• Jeremy Palmer, Vice President; General Manager TWD Land, Events & New Ventures, Tauck

• Judy Melanson, VP, Travel and Hospitality Practice, Chadwick Martin Bailey

• J. Mark Carr, Managing Partner, South Street Strategy Group

As with many financial services firms, SunTrust Bank has had to re-consider its strategy over the past several years. My colleagues at Chadwick Martin Bailey (CMB is South Street’s sister company) and I had the privilege of recently working with the company as it shifted into a decidedly customer-centric approach to the way it designed its products and services.

Next Thursday, I am pleased to be co-presenting a webinar with Jeff VanDeVelde from SunTrust and Rich Schreuer from CMB. We’ll be covering SunTrust’s use of customer segmentation to drive its shift to customer centricity.

What’s a strategy consulting firm doing talking about segmentation, you might ask?

Well, strategy is as much about saying “no” as it is about saying “yes” to opportunities for growth. Being able to identify, understand, and then remain true to your target customers is at the core of any good strategy. Clarity around target market segments helps businesses crystallize and rally around the strategies that will drive the most value for their best customers, profitably.

At some point, all our projects hinge on being able to answer the question: will this product feature/marketing message/overall initiative/etc meet my most valuable customers’ needs? Because we believe customer-centric strategy and innovation leads to more profitable growth, all our work contains a strong foundational element of re-grounding the client in the market and their best target segments – for today and the future.

We hope you will join us to learn more on the 28^th, and please drop us a line to let us know what you think! Click here to register.

Posted by J. Mark Carr, Mark is co-founder and managing partner of South Street Strategy Group.

South Street Strategy Group, an independent sister company of Chadwick Martin Bailey, integrates the best of strategy consulting and marketing science to develop better growth and value delivery strategies.