Tactics to Make Your Business a Networked Organization, Part 1
By Hunter Hastings and Jeff SapersteinThis is part 1 of a multipart series on the steps businesses must take to become networked organizations, while also examining how organizational structures and processes can make managing the demand of a product or service a process-based, predictable and repeatable science.
Like many business tools, organizational design has come to the end of its useful life.
Organizational design emphasizes structure. But today’s organizational analysts believe relationships between people inside and outside an enterprise create economic value by sharing knowledge and generating new knowledge. Value networks are a new form of organizational thinking based on human interdependence.
Companies have both external and internal value networks. External networks include customers, intermediaries, stakeholders, open innovation networks and suppliers. Internal value networks focus on key activities, processes and relationships that cut across functional departments, such as order fulfillment, innovation, lead processing or customer support. Value is created through exchanges and the relationships between roles that advance innovation and wealth; they're the source of company growth and success.
Sometimes value networks can be groups of companies working together to produce and transport products to customers — e.g., the partnership between Procter & Gamble and Wal-Mart. Customers also can create value networks, such as mothers who form a community on a baby care product site, like the Huggies Baby Network. Companies can create value through linking their customers by direct methods (phone and web) or indirect methods (combining customers’ resources for production or delivery).
A value network analysis helps communities of practice negotiate for resources and demonstrate their value to different groups within the organization. It's possible to develop scorecards, conduct return on investment and cost/benefit analyses, and drive decision making.
Because the value network approach addresses both financial and nonfinancial assets and exchanges, it expands metrics and indexes beyond the lagging indicators of financial return and operational performance to also include leading indicators for strategic capability and system optimization.
Here are four tips to consider when tackling the optimization of your value networks.
- Visualize and organize the enterprise as a network, not an organization chart.
- Make roles the building blocks of the network, replacing the concept of jobs.
- Reward roles for creating value instead of compensating jobs for completing tasks.
- Replace process thinking with relationship thinking.
Check back in two weeks for part 2 of this series, where we'll provide in-depth analysis of these four steps, as well as how best to implement them within your organization.
Hunter Hastings is chairman of EMM Group, a global growth consultancy, and chief marketing officer at JBS USA, the North American arm of JBS, a multiprotein producer and brand owner of processed beef. Hunter can be reached at hunterhastings@emmgroup.net. Jeff Saperstein is an author, teacher and consultant on marketing to increase growth. Jeff can be reached at sapermktg@earthlink.net. Hastings and Saperstein are co-authors of “Bust the Silos: Opening Your Organization for Growth.”
5 Creative Catalog Techniques That Save Paper Costs
By Melissa CampanelliAll catalogers want to capitalize on the recovering economy, but they're most likely still constrained by pretty tight budgets. To help catalogers learn how to prioritize their needs and tailor their printed catalogs to maximize revenue, All About ROI presented a Feb. 16 webinar called "Ways to Get More Bang for Your Paper Buck: How Combining Your Priorities and Paper Innovations Can Save You Money in 2010."
(To register for the on-demand version of the webinar, click here.)
The presentation featured Carol Worthington-Levy, creative director and partner at LENSER, a multichannel direct marketing firm, and Brian Cummins, marketing strategy manager at paper firm NewPage Corp.
During the presentation, Worthington-Levy offered the following five creative catalog techniques designed to help you save on paper costs:
1. Design your catalog to fit press and paper sizes. "Look at sizes that don't waste paper but that can also run on a lot of different presses so you have some options when bidding," she said. "Look at sizes like 8-1/4 by 10-1/2 or thereabouts, and talk to your printers to see what fits on their presses."
2. Paginate your catalog in true signatures. "When developing your catalogs, choose the proper number of pages to fit together in the signatures on a press," Worthington-Levy said. On a half web press, for example, you'll probably have eight pages printing at one time, and on a full web press, you'll have 16 pages. But, "as soon as you start attaching a separate cover to your catalog, between the labor and the extra paper, it's going to start costing you more," she added. "So try to keep it in full signatures, and you'll find both printing and paper costs will go down."
3. If you're changing your catalog size, quantity or format, rebid work with three printers. "Even if you have a printer that you absolutely love, definitely rebid this work with other printers," Worthington-Levy said. "Your current printer may not be set up to run this new size efficiently or cost effectively."
4. Always review paper samples in a range; then narrow your choices down. When thinking of paper samples, Worthington-Levy suggested keeping the following in mind:
∗ Paper weight: If you're printing a catalog with only a few pages, "use something heavy, like 60-pound paper. If you use 40- or 50-pound paper, your catalog will be too floppy and look cheesy in the mail."
∗ Paper grade: While people in the agency world love to run on brighter No. 1 or No. 2 grade paper, "check out No. 3 or No. 4 freesheets," Worthington-Levy said. "Oftentimes they're just as nice, bright, white and opaque as a No. 1. You'd be surprised."
Also, look at paper samples very carefully, showing them to your art or creative directors to ask for their opinions. "Lay the paper on top of black-and-white type so you can judge how opaque it is," she added.
∗ Paper color: "I prefer paper that's a blue-white color to a yellow-white color because I like how colors look on it," Worthington-Levy said.
∗ Gloss? Matte? Dull? "I prefer a matte or dull finish because people who receive catalogs often like to write on them, and a dull or matte finish won't smear as much," Worthington-Levy said.
5. Format change. Try a few different format versions, Worthington-Levy said. Even though you may spend more, you'll get better response. Try a slim jim [or a letter-size catalog] for a special sale, she suggested. Or, try a tabloid-size for catalogs or annual newsletter-style catalogs.
"Switching out formats may cost more, but it keeps customers on their toes," Worthington-Levy said. "They'll be getting different formats from you, but as long as your brand, look and feel are consistent and your logo is clear, you won't lose customers." Before changing formats, however, "ask your printers what they've run for other people that's different; then ask for samples and pricing," Worthington-Levy recommended.
The Changing Face of Direct Marketing
By Jim CooganEconomic crisis accelerates changes in the basic underlying business models of multichannel marketers, who have had to adapt in order to survive as consumers shut their wallets. Here are some of the ways business models have been radically and permanently altered.
- Consumers learned to wait for promotional offers in emails, on websites and in catalogs. Consumers simply refused to buy without a promotion. It used to be that marketers could discipline their own customers, teaching them that promotions would appear occasionally rather than constantly. Today's consumers have been trained to expect a constant stream of promotions from their favorite merchants, simply waiting for the next promotion before placing their orders. The rules of the game have changed from “if” merchants should offer promotions to “how much” and “how often” they need to be putting promotions in front of their customers.
- Email emerged as a primary method for communicating with customers. Some marketers are finding that email is the channel of communication when it comes to making sales. The amount of time, effort and thought that goes into planning and budgeting email campaigns is increasing exponentially. Marketers have learned to coordinate email campaigns with their catalog mailings, segment their email databases and impose discipline on their email campaigns.
- Catalogers’ matchback results have become increasingly complicated as order flows have shifted away from catalog circulation to a wide variety of online sources, ranging from email campaigns, website promotions, behavioral targeted ads, etc. Smart marketers are spending time finding the most profitable mix of catalog circulation and web marketing as they try to make sense of their matchback results.
- Catalogers cut back circulation to survive. Catalogers found ways to squeeze wasted circulation as they were struggling to react to shrinking response rates. The need to cut circulation made many businesses healthier, as they found ways to cut circulation without cutting into top-line sales and bottom-line profits.
- Manufacturing costs (printing costs as opposed to paper costs) have fallen 10 percent to 15 percent as printers have struggled to fill press time resulting from downsized catalog circulations and the evaporation of magazine ad pages. Catalogers are capturing these savings by bidding out their printing jobs and making sure their existing printers' costs are in line with the new reality of printing costs.
- Catalogers have learned to optimize their housefiles and prospect circulations at the co-op databases, cutting out the bottom 10 percent to 15 percent that just won’t respond. Co-op databases are powerful tools to identify households that just aren’t buying. Identifying those households that have stopped buying is an efficient way to cut printing, paper and postage costs for wasted circulation.
- Online behavioral targeted ads have exploded onto the scene with Dotomi, acerno and Affinity leading the way in serving up online ads that are proving to be incremental, measurable and cost effective.
- Virtual catalogs have become an affordable and effective technology for catalogers to broaden the reach of their print circulations. Printers are leading the push for virtual catalogs, led by Worldcolor, Quad/Graphics and Brown Printing, as well as stand-alone virtual catalog vendors. Virtual catalogs included as links within emails are proving effective at driving quality web traffic.
The economic crisis has meant that every business has suffered. In a time when “20 percent down is the new flat,” marketers have had to find new ways to reach their customers cost effectively. Catalogers have morphed into savvy multichannel marketers. Both Catalog Success and the ACCM show changed names within the past year to reflect the new reality that direct marketers must evolve into true multichannel marketers. Expect the hard lessons of the past year to translate into stronger companies and healthier bottom lines.
Jim Coogan is president of Catalog Marketing Economics, a Santa Fe, N.M.-based consulting firm focused on catalog circulation planning. Reach Jim at (505) 986-9902 or jcoogan@earthlink.net.
February's Record-Setting Weather Takes its Toll on Retailers
March couldn't come quick enough for retailers, especially those in the Mid-Atlantic and Northeast regions of the country, who watched record-setting snowfalls in February do a number on their bottom lines. According to a recent report from Planalytics, a provider of business weather intelligence, February snowstorms resulted in a $36 billion loss for the U.S. economy. Here are some more findings from Planalytics’ report:
- The "Super Saturday" snowstorm in December 2009 had a bigger impact on the retail economic sector (estimated $2 billion for lost retail sales) as it fell on one of the top five biggest shopping days of the year, but February's storms had a bigger total economic impact as they've been disruptive to a larger amount of the U.S. population for a longer period of time.
- Retail traffic for the country during the week of Feb. 5 was down 9 percent vs. the same time last year, while the week of Feb. 13 was down 1 percent.
- Several big cities saw their retail traffic decline over the two-week period, including Dallas (26 percent), New York and Atlanta (both 18 percent), and Chicago (16 percent).
- Winter apparel proved to be the leading product category over the two-week period, up 109 percent nationally vs. 2009. Other product categories that saw gains included electric blankets (93 percent), boots (69 percent) and hot cereal (18 percent).
- On the flip side, sales of shorts were down 36 percent nationally for the two-week period.
For more information, go to www.planalytics.com.
Jim Gilbert's Return on Intelligence: Undercover Boss - 6 Things I Learned Watching This TV Show That Can Help Your Business Thrive
By Jim GilbertI had a boss in the early stages of my career, one of the last great bosses I’ve ever had, who was a huge fan of Tom Peters and his “excellence” training.
Tom Peters’ notion of “management by wandering around” (MBWA) is one of the concepts that really hit home and became a career-defining principle for me.
MBWA is defined by BusinessDictionary.com as “Unstructured approach to hands-on, direct participation by the managers in the work-related affairs of their subordinates, in contrast to rigid and distant management. In MBWA practice, managers spend a significant amount of their time making informal visits to work area and listening to the employees. The purpose of this exercise is to collect qualitative information, listen to suggestions and complaints, and keep a finger on the pulse of the organization.”
Recently, a version of MBWA has shown up on network TV in the form of CBS’ show “Undercover Boss.”
If you're not watching, you should be! While it’s not a perfect show by any means — it’s sappy, formulaic, sometimes manipulative, and as reality TV goes, a lot of it feels staged — it does convey the right message.
Each week a different CEO goes undercover in his or her own company, taking entry-level positions. These CEOs learn about their companies, processes and employees (lots of sappiness here) as individuals, in an attempt to better manage their businesses. The bosses in the first four weeks of the show have been from Waste Management, Hooters, 7-Eleven and White Castle.
Somehow — and I find this to be highly disingenuous — all these CEOs managed to have game-changing “aha” moments. The game changers usually centered around actually learning who their normally nameless/faceless employees were on a human level: their medical problems; their multitasking in order to keep roofs over their heads; their stupidity (especially the Hooters manager and his humiliation of his female workers). Somehow these bosses were reminded that they were in business to employ people, and that people matter. Reality show emotional manipulation at its finest. Oh the humanity!
And two of the CEOs managed to cry on camera. Frankly, I just don’t get it.
How could these CEOs be so completely out of touch with their line employees? And how can these bosses, all family men, as seen in the show's opening sequences stating the exact same thing, word for word, “that their families are their rocks,” seemingly with hearts of gold, not have a clue?
But that’s not why I'm writing about the show. Here’s why: While I highly doubt it'll happen, every CEO and C-level executive in America should watch “Undercover Boss.” But since they won’t, here are six takeaways for any businessperson from CEO on down:
1. If you listen and get past the syrup, there are deep messages in the show about the disconnect between corporate and line workers. But that’s just a metaphor; the disconnect is from all workers and customers alike. While sanitized for the typical reality show audience, for the savvy boss, the message is there for the taking.
2. Direct marketers should run, not walk to their nearest call centers. Listen to your customer service reps. Listen to your customers and prospects. I guarantee it'll be an eye-opening experience for you.
3. Send emails to past customers, asking why they've left you. This will give you firsthand knowledge of why your customer churn is so high. And along the way, you may find some customers you can reactivate as well.
4. Do the same with present customers. Ask them what you can do better; watch what happens.
5. Ask your employees to write a one-page essay on what your company's doing right and wrong. Have them anonymously put their essays into a “suggestion” box (remember them?).
6. Don’t assume that since you're the boss, you actually know what’s going on in your company. Chances are you know the least. Remember the maxim: “Power corrupts. Absolute power corrupts absolutely!” What do I mean? Your employees fear you — much like in the story of "The Emperor’s New Clothes."
So check out “Undercover Boss” on CBS. Then go on a walkabout in your own company. Post a comment below or email me your experiences at jimdirect@aol.com. I’ll post them (anonymously) in a follow-up to this article.
Kevin Hillstrom's Dear Dr. pROfIt: 3 Ways to Improve Offline Targeting
By Kevin HillstromIn the online world, you can target ads to specific individuals. It’s quick, easy and reasonably inexpensive.
Offline, targeting is more difficult. We’ve been hearing about how we can unlock the magic of customer targeting for more than two decades. And yet, at least in direct mail, there's surprisingly little sophistication.
The need to target in the offline world is becoming greater by the moment. I'm increasingly being asked to identify pockets of customers who have a certain set of characteristics that make them desirable for targeted catalog mailings, for instance.
When considering offline targeting strategies, please keep the following three points in mind.
1. Prior buyers tend to be future buyers. In other words, customers who purchased toner cartridges in the past are often most likely to buy toner cartridges in the future. This is kind of a no-brainer, but it does make a significant difference when evaluating the profit and loss of targeting strategies.
2. Identify customers who are likely to “crossover” and buy from other merchandise divisions. If a men’s shoe customer is willing to buy men’s outerwear, then you have a customer that could receive a men’s outerwear targeted offer. Conversely, it's wise to identify customers who are unlikely to crossover and buy from another merchandise division. It's this audience where you save a ton of advertising expenses and, as a result, become more profitable.
3. Recency matters. Customers who did something in the past few months are more likely to repeat their behaviors than customers who did something 39 months ago. With every month that passes, customers become less and less likely to exhibit repeatable behavior. And with most targeting activities, repeatable behavior is essential. Repeatable behavior is how marketers generate profit.
The future of offline direct marketing is all about targeting — making sure that the right audience receives merchandise that's tailored to current and future customer needs. By following the three simple ideas mentioned here, you're much closer to a profitable customer targeting future.