Marina Gorbis's Blog, page 1595

Ten Charts That Show We've All Got a Case of the Mondays

If you're in a workplace in America right now, chances are most of the people around you are pretty checked out. You might even be plodding through the day yourself, counting down the hours until you can fly out the door. Or you're doing your very best to make your unhappiness known to anyone within earshot.

This type of disengagement is outlined by Gallup's latest "State of the American Workplace" report, which has implications for you, your financial bottom line, and the well-being of your company, so I pulled out some charts from the report that I found striking.

First, though, a couple of things to know about the poll: Over the past few decades, Gallup has interviewed over 25 million people across a wide variety of industries and organizations. As for the terms used:

"Engaged employees work with passion and feel a profound connection to their company. They drive innovation and move the organization forward."



"Not engaged employees are essentially checked out. They're sleepwalking through their workday putting time — but not energy or passion — into their work."



"Actively disengaged employees aren't just unhappy at work; they're busy acting out their unhappiness. Every day, these workers undermine what their engaged coworkers accomplish."

Let's begin with the most constant and depressing graphic from the Gallup report: two-thirds of working Americans have been disengaged in some form or fashion for the past 12 years.

Not exactly a promising trend. Worse, people who aren't engaged spend much more time experiencing emotions like worry, stress, and pain. According to Gallup, when workers spend more time using their strengths to do work they enjoy or find valuable, the less likely they are to find time to be unhappy. In general, better engagement also leads to less absenteeism and more productivity and profitability.

Pay attention to the turnover numbers, too: the actively disengaged say they're more likely to jump ship if the economy improves.

So aside from making people angry and wanting to flee if not for the recession, Gallup slices engagement by industry, gender, location, and generation, among other segments. The gender breakdown is pretty even, with women being slightly more engaged than men (33% to 28%, respectively). As for how states shake out, Louisiana has the most engaged employees while Idaho has the least.

More startling, however, is what's happening across industries. While managers and executives are the most engaged, they're apparently not doing a great job engaging others. Particularly troubling are the bottom three sectors — service, transportation, and manufacturing or production. Although those workers are the most actively disengaged, it's those very sectors that are either experiencing strong growth in a weak economy (like the service industry) or being hawked as the future of U.S. growth (like manufacturing). And even though managers are doing the best in terms of their own engagement, more than half still aren't especially engaged.

When you look at how the generational numbers break down, the differences appear negligible: millennials and traditionalists are slightly more engaged, while the group in the middle (boomers and Gen X) are the least.

To top that off, American workforce is largely made up of the two least-engaged groups.

And while Gallup reports that 52% of Americans work for companies with 500 or more employees, these aren't the places where engagement is rife.

One other interesting tidbit: it seems that the sweet spot of being engaged involves employees working remotely part of the time.

This brings us to the report's most important point (and biggest "duh" moment): supervisors who focus on an employee's strengths have more engaged employees than those who focus on weaknesses or neglect to focus on much of anything at all.

"Gallup research... shows that these managers from hell are creating active disengagement costing the U.S. an estimated $450 billion to $550 billion annually," writes Gallup chairman and CEO Jim Clifton in the report's introduction. "If your company reflects the average in the U.S., just imagine what poor management and disengagement are costing your bottom line."

Imagine, indeed. Maybe it's time, one more time, for this old chestnut.

How Long Would You Wait to Be in Charge of Goldman Sachs?

Patience Is a Virtue


Oh, to be that close. Succession planning, we know, is often a fraught and/or ignored task. But the case of Goldman Sachs is rare: It's pretty clear that the bank's president, Gary D. Cohn, is ready in the wings. Except, of course, for a tiny problem: Lloyd Blankfein, the current CEO, ain't going anywhere (except for global speaking engagements and parties), joking that he's going to die at his desk. So what are Cohen — who reporter Susanne Craig calls the "Prince Charles of Wall Street" — and Goldman to do? Craig paints a picture of the men as friends whose ambitions might become increasingly conflicted as time rolls on. We know, for instance, that coups have happened before (Paulson versus Corzine), and that the longer Blankfein is in charge, the messier succession planning is likely to become as more candidates enter the fray. So can the company keep everyone happy and keep a solid succession plan in place? Time will tell, but a successful outcome is pretty important: “You can’t understate the importance of the person who runs Goldman,” says Michael J. Driscoll, a former senior trader at Bear Stearns who now teaches at Adelphi University. “The head of Goldman is the de facto head of Wall Street.”

Ruby on Rails, For Now

Are Coders Worth It? Aeon

To write or code? That is the $120,000 question (quite literally, along with cushy perks and a signing bonus) that James Somers, a writer and programmer, ponders in this essay on the state of creative work. Tracing his path from freelance journalist to in-demand developer, he investigates why he and others like him have such ease in finding jobs in such a terrible economy. The short answer is that creating a successful start-up (versus just having an idea) means pushing a few hundred thousand dollars in the direction of coders, who "are the limiting reagent of every start-up experiment, we’re the sine qua non, because we’re the only ones who know how to reify app ideas as actual working software." The value of a start-up, Somers writes, is based on how many developers a company has on its payroll. This is all well and good (maybe), but why does this value exist in the first place? Somers points to this growing entrepreneurial mind-set: "If you’re not technical, you’re not valuable." America demands: “Be a specialised something — fill your head with the zeitgeist, with the technical — and we’ll write your ticket." It's hard to say no to that.

Unless You're Unemployed

Retirement Will Kill You Bloomberg

Like Lloyd Blankfein, I've often joked that I'm probably going to work forever (though perhaps unlike Lloyd Blankfein, I’m thinking as much as about economic necessity as the satisfaction of working). Peter Orszag thinks keeping at it might not be a bad thing. According to a whole bunch of recent research he's collected, there are health benefits to being employed for long periods of time. In one that focused on white American women between the ages of 45 to 84, a key factor in life expectancy was working (in addition to being educated and not smoking). And a British study found that depression rises the longer someone has been retired. While neither of these studies proves Orszag's thesis conclusively, he still puzzles over the fact that life expectancy goes up during recessions. Could it be, he writes, that while some people still work, many don't, thus reducing traffic fatalities and pollution and improving nursing home staffing? This, of course, allows people who are working to reap the benefits of better health, thanks to those who aren't. Disturbing and problematic, yes. Orszag stresses: "Yet the next time you think your job is killing you, just remember that the evidence, if anything, suggests the opposite. Your job may be saving your life."

Dancing to Death for Free

Unpaid Interns Win Major Ruling in ‘Black Swan’ Case — Now What? ProPublica

You've probably got at least a few interns roaming around your office this summer. Now's probably a good time to make sure you understand exactly what they're doing – and whether their work is actually legal. A U.S. court ruled this week in favor of two unpaid interns who worked on the film Black Swan. Essentially, the interns did the same type of work an employee would have done, deriving little to no educational benefit from it (other than, you know, learning what it's like to have an actual job), thus violating U.S. and New York minimum-wage laws. In this piece, Blair Hickman and Jeremy B. Merrill dig into one of the key phrases bandied about by those arguing over the value of internships: the "perceived beneficiary" test. This basically means that an unpaid intern should gain more from the experience than the employer. But the judge in the case called this test "subjective and unpredictable" and questioned whether receiving college credit as replacement for a wage is fair.

3-D Printing Is No Joke

Who Says Jay Leno Isn't Cutting Edge? Wall Street Journal

If you're not convinced about the disruptive power of 3-D printing, consider Jay Leno, who no longer has to prowl junkyards looking for parts for his 1906 Stanley Steamer or the 200 other cars and motorcycles in his collection of vintage vehicles. When he needs a part, he makes it. He uses an industrial-grade 3-D printer and other equipment to make exact copies of worn-out components. He scans an old part, creates a digital image of it, modifies the image if there are defects in the existing part, and creates a mold that lets him cast a new one. He can even cast his own engine blocks. Leno's shop tells you a lot about where manufacturing is heading, says the Wall Street Journal. — Andy O'Connell

BONUS BITS:

PRISM, With Pictures and Things

How Much Is Your Personal Data Worth? (Financial Times)
A Designer Overhauls the NSA’s Atrocious Powerpoint Presentation (Fast Company)
Using Metadata to Find Paul Revere (Kieran Healy)

The Most Overlooked Part of Your Data Security

Organizations constantly replace outdated computers, servers, laptops, copiers, and countless other types of electronic devices to keep up with technology and enhance worker productivity. This rush to upgrade, however, creates a challenge: large numbers of excess electronics must be managed and disposed of properly.

During a recent IT asset disposal project for a large New York bank, a chain-of-custody audit revealed three computers were untracked. An IT director was suspected of taking them.

When first questioned about the missing systems the IT director — let's call her "Robin Hood" — denied any knowledge. Next she blamed the disposal vendor for taking an inaccurate inventory. Then she accused a truck driver of stealing the systems en route to the recycling facility.

Finally, when confronted with evidence, Robin admitted that her daughter's elementary school was in desperate need of computers — but insisted that, as a 12-year veteran of the firm, she would never intentionally harm her employer. She said she had ensured the hard drives were erased, and pointed out that the bank had historically donated used computers to nonprofit organizations. But what she viewed as a trivial act was in fact a serious data security threat that created massive liability for her company.

A Rising Threat

Securing sensitive data is a daunting task for any business. Today more than 550 US laws now affect IT asset disposition. Data security laws mandate that organizations implement "adequate safeguards" to ensure privacy protection of individuals. And the penalties for data breaches are tough. Under a proposed data protection law, European firms could face fines of up to 2% of their annual turnover for a breach. The HITECH Act enacted in 2009 extended provisions surrounding information handling and increased penalties for HIPAA violations. Today, American companies are subject to unprecedented sanctions following HIPAA security violations.

Governments are not the only ones eager to punish violators. The effect of a punitive privacy class action lawsuit can be far worse than a government fine. Following the loss of a backup data tape in 2011, US healthcare benefits provider TRICARE was hit with eight separate privacy lawsuits, including one seeking an astounding $4.9 billion in damages. The company was accused of "intentional, willful, and reckless disregard of plaintiffs' privacy," and for failing to respond to "recurring, systemic, and fundamental deficiencies in its information security." Similarly, Sutter Health was hit with a billion dollar suit, and Emory Healthcare faced a $200 million suit.

Historically, privacy class actions have faltered due to the plaintiffs' inability to prove recoverable damages; however, this provides little consolation for a company being sued. The cost of defending privacy suits can cost millions. The average litigation defense now exceeds $500,000 and the average settlement is over $2 million. Moreover, corporate risk managers should take note of recent decisions in the US Eleventh Circuit Court of Appeals that bring punitive class actions closer to becoming big payoffs for plaintiffs (and, of course, their attorneys).

Savvy plaintiff attorneys are also shifting legal tactics. In addition to defending themselves against claims for damages, violators must now defend against claims that they unjustly profited by skimping on security safeguards that could have prevented a breach in the first place.

Soft Underbelly of Data Security

Without question, most large organizations take data security seriously. Corporations will spend an estimated $68 billion worldwide this year on IT security measures including firewalls, network monitoring, encryption, and end-point protection. When an organization spends millions guarding against hackers, it is tempting to feel confident.

But the most overlooked aspect of corporate data security may be simple IT asset disposition — in part, ironically, because so many businesses now rely on expert assistance. The fact that certified electronics recyclers are transporting retired IT assets to vendor facilities to be processed and sanitized can create a false sense of security that blinds executives to the biggest threats. First, there is still the possibility that assets can be lost or stolen in-transit. (Increasingly, companies are learning to destroy data in-house, prior to disposal; that way, any loss or theft, while unfortunate, won't result in the financial disaster that would come from an actual data breach.) Second, there is the threat we saw with our Robin Hood IT director: Trusted insiders can take retired assets any time before the handoff to the outsourcer, and before data is destroyed.

For the past eight years, Retire-IT has been tracking how effective security-conscious organizations are when it comes to accounting for retired assets.

At a high-level, organizations might seem to do an adequate job with chain-of-custody. On average 97.2% assets were tracked.

Detailed tracking data, however, reveals a troubling fact: four out of five corporate IT asset disposal projects had at least one missing asset. More disturbing is the fact that 15% of these "untracked" assets are devices potentially bearing data such as laptops, computers, and servers.

Chain-of-custody is not a catchphrase: It is the foundation for indemnification and transfer of liability. It only takes a single missing item to cause a breach. Only a careful, objective examination of tracking data can confirm chain-of-custody — or reveal potential liability.

How can a business keep a Robin Hood from taking retired computers, and potentially making a plaintiff attorney's dream come true? Acknowledging the risks and inherent conflicts-of-interest surrounding retired assets will result in more effective ITAD policies and adequate safeguards. Applying established incident-response procedures to the process of ITAD can help raise awareness of unappreciated vulnerabilities. Educating senior management about the risks will hopefully secure IT asset managers the resources needed to prevent an ITAD-related breach.

A critical aspect of every major data security law is that organizations must minimize segregation-of-duties conflicts that create opportunities for theft and fraud. Treating IT asset disposal as a "reverse procurement" process will deter insider theft.

There will always be people and places, like Ms. Hood's local elementary school, that could use free computers. Make sure the way they obtain them doesn't cost your company billions.

Data Under Siege
An HBR Insight Center





Why Businesses Should Share Intelligence About Cyber Attacks
Why Your CEO Is a Security Risk
Beware Trading Privacy for Convenience
Four Things the Private Sector Must Demand on Cyber Security

Make Your Brand Story Meaningful

It's not easy for brands to get their message across in a world of highly fragmented media and dangerously short attention spans. The brands that are able to forge connections with their customers are the ones who are the most gifted storytellers. What makes a story good enough to captivate and motivate your audience?

The best stories are designed to get the audience to care.

Stories that start with "why" — that articulate the organization's purpose and passion — are able to get more consumers tuning in to the brand and what it stands for. For instance, Intel's "Sponsors of Tomorrow", Apple's "Think Different", and Google's "Don't Be Evil" taglines helped to articulate their corporate strategy, consequently getting people to care about and subscribe to their brand promise. Nescafe Philippines decided to tap into the strong community spirit of the Filipinos, and articulate that "why" around the passion point of music. This evolved into Nescafe Philippines' "Red Mug Sessions," which served up warm stories and inspiring music over great coffee.

Heartwarming videos from Red Mug Sessions chronicled the meaningful stories, experiences and live performances of Filipino musicians, which were shared on Nescafe Philippines' social media platforms. These sessions emphasized Nescafe's engagement with promising local talent, and gave the musicians an outlet to showcase their music. Commendably, the focus of Red Mug Sessions was never on the attributes of Nescafe's coffee — it simply functioned as the beverage in the background that was facilitating meaningful experiences. The "Red Mug Sessions" generated over 74 million online impressions, chalked up 500,000 views on YouTube, and engaged a Facebook community of over 1.8 million fans. Now that's a powerful story.

The best stories empower and motivate audiences.

But it's not enough just to tell a good story. Today's connected consumer embraces a two-way dialogue. Brands that actively listen to social networks and respond with real-time content have exploded in popularity recently. Oreo's now-famous "You Can Still Dunk in the Dark" Super Bowl tweet has received over 16,000 retweets and 6,000 favorites on Twitter so far. Calvin Klein, not to be outdone, produced a Vine to maximize the 30-second TV spot. These are two examples where real-time marketing empowered audiences to co-write a brand story in collaboration with the brand. In this social era, the best stories are a reflection of the brand's willingness to give their audience a say in the brand story — to capture hearts and minds, and to meaningfully engage in a social ecosystem.

The best stories embody purpose and relevance.

But what is a good story without purpose? The best stories have a key message — a driving force that underpins the "why" and builds the connection of why the audience should care. Purpose is about relevance. Relevance is about creating meaning out of the influx of experiences with the audience by listening to them. Zappos is a brand that epitomizes that. The "heartware" of Zappos was their customer service, thanks to stories shared by loyal Zappos customers. As CEO Tony Hsieh once said, "We're a service company that just happens to sell shoes." The astute brand will co-create this brand purpose with the consumer, and know how it connects to a more relevant brand promise.

SingTel, Singapore's oldest telecommunications company, decided to take this idea one step further. In their first real-time marketing experiment, SingTel took to Twitter and asked its followers to describe situations in which a high-speed 4G mobile connection would be useful, employing the hashtag #Need4GSpeed. Over the course of nine hours, the best suggestions were turned into improvised comedy skits, published on YouTube, and tweeted as a reply to the respective Twitter follower. To further humanize the story, SingTel partnered with a Singaporean icon, Hossan Leong — a well-loved, multi-talented comedian — to tweet as @SingTel, hence allowing the audience to (very importantly) put a face to the brand.

Here's one of the videos created as a response to the similarity of the real-time marketing campaign with the Old Spice man:

Responding with real-time, dynamic content within a specific timeframe certainly took considerable courage and required making instant calls of judgment when executing the creative production. SingTel took a big risk, and their brave step is commendable. They wanted to listen, co-create, and deliver on a more relevant brand promise — that a high-speed 4G mobile connection will facilitate better consumer experiences. Their experiment with co-creating a brand story of purpose exceeded expectations, and as a result, the significance of the brand experience for many of @SingTel's followers increased, driving massive audience engagement. The hashtag #Need4GSpeed trended for more than 24 hours, captured more than 64% share of voice on Twitter in Singapore that day, and increased traffic to SingTel's dedicated 4G website by 39%. This spike in traffic was not just a one-day blip — overall volume was sustained at an increase of 30% for the month of March.



Case Study Video for #Need4GSpeed

Miguel Bernas, Director of Digital Marketing at SingTel, shared his take on the company's efforts to engage using #Need4GSpeed. "Given the short response window of only nine hours, we wanted to show a lighter side of SingTel, spark people's imaginations, and prompt swift action. We also made sure that Hossan brought to the table the perfect balance of Singaporean-ness, wit and irreverence that would make the movement spread like wildfire."

From Story Tellers to Meaning Makers

The most successful brand storyteller is a meaning maker who tells the story with the savvy of Don Draper, the cheeky cleverness of Dr. Seuss, and the data fluency of Barack Obama's re-election campaign team. After all, consumers are inspired by having 1,000 songs in their pockets; not by having a gigabyte of memory in their iPods. People will congregate around ideas and stories, not data points and spreadsheets. Even as our modes of storytelling evolve and adapt across time (from our ancestors painting on cave walls to our teenagers writing on Facebook walls), stories will never stop being the emotional glue of society. So make your own brand story one that will inspire and motivate your audience.

Give Your Performance Management System a Review

Nearly every mid to large size company in the world now has some kind of performance management system, a process that in theory should help people set to achieve goals and ultimately drive performance. Yet only 14% of organizations are actually happy with their performance management system as it stands, according to industry research firm CEB. Despite that, so far only 3% of companies are doing anything radical around how they manage performance. The rest are tinkering on the surface, altering the number of goals being set, shifting from a 3 to a 5-point rating scale, or changing the rating criteria.

While I respect that significant change in a large organization is tough, tinkering isn't doing much. Research shows that there is no measurable impact on performance linked to the number of ratings people have, or from altering the wording for these ratings. It seems that we need a significant rethink of the whole concept of how we manage performance.

Driving this need are seismic changes in demographics as well as how work is structured today. Annual goals might have worked 20 years ago, but between new technologies and a rapidly changing economy it is hard for goals to be relevant for more than a quarter. Even quarterly feedback does little for younger generations craving to learn something useful every week from their boss. And consider the fact that most of the time performance is only discussed with one manager - even when that employee is involved in a half dozen emergent teams unrelated to his manager's work. The nature of work has become more relational and creative than ever, with a greater need for collaboration — which some performance systems accidentally inhibit.

The first step in any difficult change program is to acknowledge that your company has a problem. To help recognize that problem, maybe it's time you gave your performance management its own performance review. There are many ways to do this, including identifying the real business goals of having a performance system, and seeing if these goals are being achieved through employee surveys. You could also collect data about the actual behavioral impact that annual employee conversations have on teams.

I will share more on these kinds of approaches in future posts, for now I wanted to share an even simpler idea: A 5-point rating scale for performance management itself. Here's how I would craft the ratings — read through and think about where your company's system falls:

Tier one: "Needs to go"

While your performance management system showed promise during recruitment, it's turned out to be a dud. It hasn't achieved any of company goals. Heck, it probably never knew it had goals. Worse still, no one wants to work with it anymore. It's time to move this system on to new pastures and let it find a place more suited to its talents.

Tier two: "Needs improvement"

Your system has personality issues. Despite achieving a few goals and having good technical skills, it often rubs people up the wrong way. People complain about its lack of authenticity, inflexibility, and glaring blind spots. In short, the system is underperforming and needs to have a breakthrough soon if it is going to stick around.

Tier three: "Good but inconsistent"

Your performance management system is like the wind in summer. Things fly along, then there are long stretches of nothingness, people becalmed in a sea of unmotivated action, waiting for something better — feedback of any sort, a career discussion, any puff of positive wind in their sails. You wish your system raised performance more consistently throughout the year, yet you can't quite bring yourself to let it go, because, sometimes, it works.

Tier four: "Strong performer"

Your performance management system does a solid job most of the time. It gives employees the feedback they need to feel appreciated once in a while and helps them generally understand how they can develop. While not a stellar system, you're happy with what you have and can't see yourself firing this system any time soon. You'd love it to be a top performer, but hey, at least it's consistent.

Tier five: "Top performer"

Your performance management system consistently motivates top talent, stretches mid-level performers, and helps your low performers self-select out. When times are tough and bonuses are tight, your performance management system helps folks stay engaged for better times. Everyone who works with your performance management system loves it, and wishes they could be it when they grow up.

So, how does your performance management system rank? If it is low, how long has it been at that level, with no consequences? Should you let your system languish another few years on a low tier, hoping it will improve? Oh, and if you decide to rank your own firm, be sure to keep things confidential. No one likes feedback going public. Even performance management systems have feelings.

Beware the Cannibal In Your Product Line

Kantar Worldpanel predicts that 75% of growth for consumer products companies in the next decade will come through new product development. And yet, more than half of senior executives declare themselves unsatisfied with the financial returns of product innovation. Why? Because their innovation models don't determine where the growth is actually coming from. So, companies end up developing a product that tested well in market research only to find out later that they've got a cannibal on their hands, chipping away at their existing market share.

The value-destroying menace of cannibalisation is the dirty little secret of the innovation industry. Launching a new product that steals a large proportion of market share from a company's existing portfolio is a bad idea. The problem is that traditional approaches to identifying winning innovation don't screen out cannibal products until very late in the process, after significant sums have been spent — and when there is great temptation to ignore the findings of research and push on anyway.

What's worse, the traditional innovation process doesn't just ignore cannibalisation — it can actively favor cannibal products over ideas that would grow a market or a company's share of it. Concept screening, the process of assessing which ideas have the greatest potential, tends to focus on the total trial they would achieve. Judged by these rules, concepts that involve launching a variation of an existing brand tend to do very well, since shoppers respond to a brand they already know. This is why supermarket shelves are often filled with variants of established products. Unfortunately, these types of product launches are most inclined to cannibalism, draining sales from the very brands they had hoped to leverage. For example, the new quadruple-blade razor that's launched under a well-known shaving brand will probably gobble up most of its share from the triple-blade razor that brand was already selling quite successfully. Similarly, the introduction of laundry pods have caused the entire category to shrink, as people now use the correct volume of detergent, whereas overuse was previously the norm.

The seductive power of cannibal concepts becomes even more of an issue when times are tight and the pressure is on for new products that can deliver a return on investment. If that return is initially measured only in terms of total sales, then cannibals start to look like safe bets — rather than the threat to profitability that they so often are. In most cases, sales of new products command far lower margins than those of established brands — which means that the time and effort expended to launch a cannibal can actively erode value across the portfolio as a whole.

It's easy to find examples of cannibal products failing to deliver the benefits that their total sales volume might suggest: our research shows that the launch of Dove deodorant for men has undermined sales of its sister Axe/Lynx deodorant; a great deal of Coke Zero's growth has come at the expense of the existing Diet Coke.



But to understand the full damage cannibals can do, let's look at a slightly older example. Back in 1994, Kodak launched the low-cost Funtime film; only to take it off the market when it stole share from Kodak's existing products. Now, this was bad in and of itself — but imagine if instead of ploughing R&D dollars into Funtime, Kodak had focused on ways to make money from the emerging worldwide web and digital cameras. The big problem with cannibals is that they tend to drown out truly innovative ideas that can have a far more positive effect on a company's fortunes.

So, how do you recognize a cannibal in the concept stages? It starts with focusing on incremental growth, rather than on total sales. My company, TNS, has shown that judging concepts based on incremental growth rather than the traditional "biggest is best" approach results in a different decision on which ideas to proceed with 40% of the time. To weed cannibals out of the innovation process, you need a model that focuses on incrementality from the start; one that has the right techniques and strategies for measuring it — and the right idea development process to deliver it. Here's a quick three-step guide to finding ideas that can deliver genuine growth, rather than growth at your own company's expense:

1. Demand to know incremental volume

Your company doesn't need a new product to deliver a lot of sales — what you need is for that new product to deliver profitable growth. Incremental volume is the only true measure of growth potential. Yet traditional approaches to innovation only address this towards the end of the process, through "share of requirements" analysis that gives an average view of how the new product will affect consumers' existing spend in the category. The problem is that this general overview lacks the precision and credibility to sway investment decisions at such a late point in proceedings, when significant resources have already been invested in a product's development.

2. Analyze individuals, not averages

If you want to measure incremental volume with any accuracy, you need individual-based modelling techniques that take into account the individual spending patterns of each person who will buy the new product, rather than drawing general assumptions from average numbers. As a simple example, the impact of somebody who buys an existing product on a weekly basis and switches about half of their purchases to a new product is far greater than a shopper who buys an existing product only monthly, but ditches it entirely in favor of the new product. Effective individual-based modelling doubles the accuracy of incremental sales predictions when compared to aggregate calculations (see chart).

3. Invest in finding the right ideas, not just developing the ideas you have

Businesses invest considerable sums in developing winning ideas; they pay far less attention to finding the right incremental ideas to develop. Innovation needs to be guided by an integrated understanding of customer needs, the competitive landscape, and a tried-and-tested approach, identifying the area where a winning concept is likely to be found and exploring that area with creativity and imagination.

With all of that said, cannibals can have their uses. Where an existing product is under threat, a carefully-designed cannibal can help to protect the bottom line. The iPad mini is a great recent example: in the context of the Kindle Fire and other smaller, cheaper tablets, it's an understandable attempt to protect Apple's overall market share.

Cannibals, therefore, aren't always bad news. But the situations in which they can be valuable are very specific — and demand a precise understanding of how the new product will affect consumers' spending. If you are intentionally planning to launch a cannibal, you need an even deeper understanding of incrementality.

Don't risk letting cannibal concepts hijack your innovation process. In complex markets and with intensifying pressure on innovation to deliver results, you simply can't afford to turn a blind eye.

In Praise of the Generalist (CEO)

Yes, you can become a CEO if you come out of a specialized field such as marketing or finance, but you probably won't earn as much money as a generalist CEO whose specialty is being a manager. The annual pay premium for generalist CEOs (those who have held a number of positions in a range of companies in varied industries) is 19% relative to chief executives who have had relatively few jobs in a limited range of companies and sectors, according to a team led by Cláudia Custódio of Arizona State University. That amounts to nearly $1 million in extra compensation per year, the researchers say.

If Your Mobile Strategy Can Win Here, It Can Win Anywhere

As a marketer, I work to engage women online with brands and causes. Ultimately, however, we hope for more than merely sales or action: we want to build a relationship with our audience. Ideally, a brand and a woman of influence interact directly, one to one. But there's something that's increasingly coloring our relationship. It's her phone. The phone is more than our hardware. It's our lifeline.

A stunning 64.7% of emails to my all-female marketing database are opened on iPhones, likely because many on my mailing list are busy moms who often aren't in front of a computer. Whitney Broadwell of Women for Women International notices the same trend: "This time last year, 12% of our email opens were through mobile, now it's 33% and climbing every month."

If you're marketing to women through social media, imagine your conversations mediated by a smartphone screen. According to a 2013 survey by Nielsen, "Nearly 60% of women use Facebook/access Facebook multiple times a day on their device/computer compared to approximately 45% of men." Women, already social media power users, are increasingly exercising that influence via their phones.

In some countries, women's access to mobile media is quite literally a lifeline, because mobile health services fill a revolutionary gap by providing crucial medical and financial information.



But, possibly because it has such great potential for improving welfare, the developing world far outpaces the US in creating a system where mobile phones — marketed specifically to women — are truly essential tools. So I asked several leaders in the mobile health space what they've learned from developing world direct-to-consumer mobile programs that could inform American mobile marketing programs.

Utility, customization, and segmentation are key to the success of mobile marketing to women in the developing world. Choice, too, is crucial: all mobile programs are opt-in and easy to opt out of.

Kirsten Gagnaire is the Global Director of the Mobile Alliance for Maternal Action (MAMA), launched in May 2011 by former Secretary of State Hillary Clinton. A mom of a 10- and a 14-year-old, she contrasts American moms' access to online health information, to the services provided, often by single feature phones, in the developing world.



The information we take for granted — think of a quick search on Babycenter.com or watching a video on a hospital website — is not accessible to women in poverty in the developing world. There, women may rely on others in the community to provide information that may turn out to be inaccurate or even harmful. Mobile phones can help fill that information vacuum.

Gagnaire notes, "The way they get vital health information is through their mobile phones. Our program addresses local myths, stresses the foods they should eat, and helps provide vital health information. For example, in Ghana one of the major causes of infant death was the infection of the umbilical cord. There is a myth you shouldn't take the baby outside for six weeks after birth because of evil eye. Now we can send moms a message on the signs of infections and when to take the baby to the clinic."

She continues, "mobiles are prolific...even if she doesn't have a phone, someone does. She'd be able to access a handset capable of making calls and basic SMS. So we've developed a suite of messages based on the BabyCenter model that are sent two or three times a week, covering pregnancy and up to baby's first year of life."

MAMA's text messages, which meet WHO and UNICEF standards, are timed to a woman's stage of pregnancy and her baby's age. And these messages use strong market segmentation. For example, Gagnaire notes, "How are we going to deliver the messages? How do women in that market get information? In Bangladesh it's SMS and voice, but most of the mothers using our messages are illiterate: so we use voice messages. In South Africa, women are more literate but SMS is expensive, so we use the mobile web. Our messages are accessible though askmama.mobi."

More curious to me, however, was this question: A big part of successful marketing to women is relationship-building. A big part of relationship-building, in established markets, relies on visual cues. So how do we build a relationship when all you have is a non-visual basic phone?

mHealth (mobile health) providers have learned that it's all in the messenger. Some programs use simple game characters to put a face to the advice provided via phone — after all, pregnancy through the first year of a baby's life is a long time for mothers to text or call a stranger. Gagnaire notes, "How do we build a relationship? In Bangladesh, we've created Dr. Apa, a character who delivers jingles, vignettes, and skits. Women begin to recognize Dr. Apa, and recognize her voice and trust what she says."

"We take user testing and rapid iteration very seriously. We went where women are under a tree, in their homes, and at clinics and listen to what they want. We play messages and ask what voices they like, what they don't. We find the accents that work, the music they like and the terms they understand. Putting our work into their context is so important to building relations and trust."

Cathryn Stickel, Operations Manager of Frontline SMS, notes that while in the United States, 97% of mobile subscribers will read an SMS within 15 minutes of receiving it, in the developing world text messages have become like email: a deluge to be managed when you have time. It's a cautionary tale as marketers in the West rush to cash in on the mobile gold rush.



"I was just in Mumbai, where internet penetration is low, mobile penetration is high. Spam SMS is a fact of life there. In the rest of the world people are more dubious of mobile marketing. But in the US we think our SMS is so important we have it sent to the front of our phone and user experience! 97% of mobile subscribers will read an SMS within 15 minutes of getting it."

"I wouldn't want to see us go to where I have seen the situation in India go where people don't trust their SMS. It's a delicate push."

This impacts FrontlineSMS' work. In India, organizations have to communicate with the government and get an exception before working with local groups to create programs that use their open source technology to solve problems ranging from providing services to pregnant women, rape or sexual violence survivors. In Haiti, FrontlineSMS powers KOFAVIV, which connects women who've been raped to medical and legal services via SMS.



I asked Cathryn how she builds depth without a relationship or visuals. She answers, "SMS is not step one. You're going to have a hard time engaging with someone with SMS alone. The relationship needs to be personally established and then reinforced using SMS."



Still, while emerging markets are the frontier of mobile marketing, there are some barriers that marketers in established economies don't have to worry about. As Stickel points out, in many emerging market countries, female phone ownership is an emotionally charged issue. Due to cultural barriers, women are less likely to have a mobile at all. In some villages, FrontlineSMS learned, a woman with a phone may even be perceived as promiscuous.



"A lot of big organizations will say we need to get every woman a phone. But it's not that simple. It gets under my skin a bit to say 'we need to get all women a phone' and women need to use that phone to cast off their oppression. Women can get in trouble for having a phone — what we're trying to do at FrontlineSMS is to make phones such useful tools that it becomes a financial liability for the family to not let the woman have a phone." Options go beyond maternal and child health and allow the phone software system to help in paying for school costs, to analyzing the right fees to charge for agriculture at market.

Despite challenges like this, mobile marketing in the developing world empowers those with extremely limited resources and offers powerful lessons for US marketers learning to build customer relationships through a phone. Let's learn from this and make sure the next "killer app" in the US mobile market helps us lead better lives, not just pass the time while waiting for the bus.

Innovations in Digital and Mobile Marketing
An HBR Insight Center





How Advertisers Can Maximize Mobile Conversions
The Mobile Shopping Life Cycle
Quality vs. Frequency: What's Your Mobile Strategy?
When Digital Marketing Gets Too Creepy

When Personalized Ads Really Work

Imagine that you've just looked at a really nice hotel on your favorite online travel site, but you haven't yet booked your trip. Next, you're off browsing other websites, and an ad for your favorite travel site pops up. Would you be more likely to go back to them and book your vacation if the travel ad had a picture of the specific hotel that you just browsed? Or will you be more likely to go back if the travel ad is a general ad for their brand? This is the kind of question online retailers are asking themselves every day, and, in fact, many choose to show the ad with the picture of the hotel. After all, Marketing 101 teaches us to get personal and specific with our marketing communications. That's called "dynamic retargeting," where the seller dynamically adjusts the content of the ad to the product(s) the consumer viewed earlier on their website. But is dynamic retargeting really more effective than showing the generic ad?

We decided to look empirically at this question using data from an online travel site. However, understanding the effectiveness of marketing interventions is notoriously difficult. For this research, the site ran a randomized controlled trial, also called a "field experiment" or "A/B test", where they randomly showed consumers either a generic retargeted ad or a dynamic retargeted ad. This approach allowed us to compare which of the two types of ads was more effective.

Surprisingly, we found that on average, dynamic retargeting (ads showing the specific hotel people looked at) is less effective than showing a generic ad for the company (in this case, the travel site). This means that when firms aim to sell to customers who have been on their site before, they are, on average, better off advertising just their brand, rather than a specific product or service.

Given industry excitement about dynamic retargeting, this was a surprising result, so we then asked ourselves why this was the case and whether there were instances when a specific ad might be just as effective, or even more effective.

We started off with the insight that data on users' browsing habits can reveal a lot of information about consumers. In this instance, the travel site recorded all advertising exposures across the web, whether consumers were retargeted or not. Since the site was a heavy advertiser across the web, they had a fairly good idea which sites their potential customers visited and when. Importantly, we were able to identify when customers visited a travel review site, like Tripadvisor or HotelMe. So we checked the effectiveness of different types of retargeting before and after consumers visited a travel review site. This analysis revealed important insights: Before customers visited a travel review site, generic ads were much more effective than advertising the specific product in a dynamic ad. However, after having visited a review site, customers responded positively to both ads.

We think this happens because the way people approach their purchase evolves over time. When they have only a broad idea of what they want — for example a relaxing vacation — advertising the brand to them is a better strategy than showing them specific hotels. The rationale is that if a consumer has not yet decided whether to make a trip to Greece or to Florida, there is no point showing them a specific hotel in Greece. But once they start thinking about the specific product details and the trade-offs between attributes, then they are more open to ads that communicate such products. We then go one step further by showing that product-specific retargeting can beat generic brand advertising if it is shown not only after potential customers visited a review site, but also on days on which they are actually browsing travel-related sites. Basically, the further and more active someone gets in their purchase cycle, the more effective dynamically retargeted ads get.

This research has three main takeaways for marketers:

Marketers should be cautious in their approach to very personalized advertising. It may appear to be effective only because firms tend to show personalized ads only to their very best customers, possibly because of a lack of data on other potential customers.
Optimal advertising content varies over time and should be honed to reflect the stage the customer has reached in the purchasing process.
Our findings illustrate the importance of implementing randomized controlled trials, also called A/B tests or field experiments. Specifically, in online advertising, many moving parts determine a consumer's decision. Only an experiment that randomly gives a marketing intervention (e.g., shows an ad) to a subset of consumers, but not to a control group, allows researchers — or managers — to accurately isolate and measure the effect of such marketing activities.

So, the next time you think about running an online ad, be sure to do your homework first and select the right ad for the right moment to maximize your ad's effectiveness.

Innovations in Digital and Mobile Marketing
An HBR Insight Center





How Advertisers Can Maximize Mobile Conversions
Quality vs. Frequency: What's Your Mobile Strategy?
Being Digital Demands You Be More Human
CMO's: Build Digital Relationships or Die

Why We Need to Redefine Intelligence

An interview with Scott Barry Kaufman adjunct assistant professor of psychology at New York University and author of Ungifted: Intelligence Redefined.

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A written transcript will be available by June 21.