The Physics of Marketing - Bernoulli Equation

Daniel Bernoulli observed that in flowing fluids there is a relationship between speed and pressure.  This relationship, known as the Bernoulli Equation went on to inspire the creation of blood pressure monitors, airplanes, and even fuel injectors.

What Bernoulli observed was that moving water created lower pressure.  The faster the water moved, the lower the pressure dropped.   Airplanes can fly, due in part to the fact that the curved shape of the wings allows for the air to travel more quickly over the top than the bottom - thus creating lift by lowering the pressure on the top side of the wing.  A simple explanation is the idea that speed can reduce pressure.

How does this equate to marketing?

My mind gravitates to sales with this one.  Particularly the notion that the speed at which sales are generated reduces the pressure on the rest of the organization.  Thus a good sales strategy seeks to find ways to speed up sales cycles.  This could be accomplished by removing unnecessary steps in the sales process.  Taking time to educate sales personnel properly.  Focus on quality leads over quantity of leads - thus reducing time pressure.  Eliminating unnecessary meetings and paperwork - all of which require time and attention and increase pressure.

Yes pressure is necessary.  There are things that just must get done, and often organizations can only handle so much speed before the system breaks down.  Still, removing unnecessary pressure from sales is a great strategy for increasing the speed at which revenue flows.  Marketing plays a huge role in examining the sales processes and activities and seeking ways to make things more effective.

Often when sales begin to slow, the natural reaction is to “put more pressure on the sales force.”  While this seems like a good idea if they are truly lazy, most often the opposite happens.  Under the increased pressure to do more with less speed diminishes and the numbers fall.  The better approach is to examine how to reduce pressure in the system - better products, more training, better leads, better marketing materials, less paperwork, better service, shorter lead times, etc…

By actively working to support the sales team, Marketing can reduce unnecessary pressure and increase the speed at which a business operates.

What do you think?  How would you apply Bernoulli to Marketing?

Daniel Bernoulli - Wikipedia, the free encyclopedia

Guiding Growth

For my money, the best regularly scheduled networking event in Dayton is the Dayton Chamber Breakfast Briefing.  Month after month, the series delivers top notch speakers, attracts a great cross section of community leaders, and offers a chance to break bread and sip coffee while enjoying the picturesque view from the top of the Kettering Tower.  Admittedly I am biased, as I am on the committee for this event.  Still, the reason I wanted to be on the committee was precisely because the event is so great. This past Friday, my feelings about the event were confirmed yet again, as Joni Fedders, President of Aileron, spoke to the crowd about the Fundamentals of Business.

For those who are not familiar with Aileron, it is the brain child of Clay Mathile - the entrepreneur who built the Iams Brand and later sold it to P&G.  He formed Aileron as a way to “help fuel private business and free enterprise, providing business owners with the tools and support they need to mature and succeed.” The company works with business owners to help them “lead and manage their companies, driving growth, innovation and jobs.” The company recently opened a new campus north of Dayton, where they conduct seminars and offer business leaders a quiet place to think, plan, and create.

So, getting back to the Breakfast Briefing, Fedders speech was very concise, yet was full of valuable information.  She walked through the elements of the basic model that Aileron uses to assess the health of a business.  I did my best to feverishly scratch out notes to capture her thoughts.   Here are some key take-aways from her presentation:

Professional Management - Aileron uses a term called “poof management” to describe the natural progression that often takes place as extremely talented technical performers suddenly find themselves in managerial roles.  Often that shift from doing to managing can be difficult, and it is important to realize that great performers on one level are not always natural managers.

Business Life Cycle - According to Fedders, most businesses fail because of poor management.  She stressed the importance of properly aligning the business with where it is in its life cycle.  Early on, businesses tend to be more entrepreneurial - bouncing from opportunity to opportunity to pay the bills.  As time passes, management should begin to focus on areas of expertise.  She emphasized the importance of establishing a board of advisers from outside of the firm to assist in this planning on a quarterly basis.  She suggested that these meetings should be at least 75% forward focused - with discussion around working on the business and not in the business.

Leadership - Joni discussed the idea that a key function of leadership should be to set the vision and then create an environment to move the business in that direction.  She also stressed the importance of leading by example.  “If the leaders are late and sloppy, how do you think the employees will behave?”  She went on to discuss the idea that leaders should engage in continuous learning, should be pivotal in determining strategy, and should ultimately serve as “Keeper of the Culture.”

Strategy - Fedders spoke about the importance of utilizing a decision making process that looked at the following: 1.) Reality - what are they paying us for today  / tomorrow,  2.) Focus - Where is the market headed,  3.) Competency - can we do it?     These elements come together to build a framework for producing a successful strategy.

Mission - She moved quickly through this point, but basically it revolves around “what are you trying to accomplish.”  It is important to create and internalize a formal mission so that everyone is clear as to what the ultimate goal should be.

People Development - This goes much deeper than training.  Fedders stated that this is really about engaging people, and empowering them to become better.  She asserted that this is key in creating long term growth.

Culture - “The way we do things around here.”  The idea of culture is so important.  Joni spoke about both the stated culture of policies and procedures as well as the actual culture of norms and customs.  Culture should be a visible trait, and can be a powerful way to differentiate a company from its competition.

Structure - When speaking about this, Fedders suggested that structure should very closely follow strategy.  It is the idea of creating an org chart to match where the company is planning to go.  Then finding the right people to fill the boxes on the chart.

Control - Lastly, Joni addressed the importance of control or measurement.  She stressed the need to examine the concepts of “are we doing waht we planned” and “is the market doing what we expected.”  Finally are the results in line with what we anticipated.

Joni then spent 20 minutes answering questions from the crowd.  Her responses were both candid and insightful.  This was one of the best Breakfast Briefings that I have been to, and I think that they are all excellent.  Joni Fedders did a great job of sharing information about her business and providing information to help those who came improve their own businesses.

The next Breakfast Briefing is on September 12th at the Kettering Tower in Downtown Dayton.  I hope to see you there.

Were you at the breakfast briefing?  What did you think?

Aileron – Meeting the life-long educational and developmental needs of entrepreneurs, business owners, and executives.

The Physics of Marketing - Chaos Theory

Chaos Theory states that little things can mean a lot.  For example, the wind created from a butterfly flapping its wings in the jungle could result in a tornado forming in Southwestern Ohio.

Chaos Theory is why the weather can only be predicted for a few days out.  There are so many variables that come into play, that long term predictions become virtually impossible.  Over time variance in inputs result in patterns which can change in unexpected and unpredictable ways.

Chaos Theory was developed by Edward Lorenz, who was an American mathematician and meteorologist.  He devised the theory as a result of rounding errors as he was trying to compute weather patterns.  He found that these small changes in rounding of numbers could result in dramatically different outcomes.    Thus he concluded that minuscule changes in inputs can have enormous consequences on the ultimate outcome.

So how does this pertain to marketing?

I think that the analogy to marketing is rooted in my belief that everything a firm does is in fact marketing.  If this is true, than seemingly little things like how clean you keep your lobby, how you show appreciation to your customers, or how you handle complaints can have a huge impact on your success.  While it is not possible to predict exactly how each interaction will play itself out, it is certain that in this age of interconnection and transparency patterns will emerge.

Thus, just as Chaos Theory states that little changes can have a big impact, the same holds true in marketing.  Thinking of outsourcing your customer complaint line?  Yes it might be cheaper, but it will make a difference in the ultimate outcome.  That minor change could have a major impact.  Ask Dell about that.

We live in a time where consumers have unlimited choices.  Thus as marketing professionals, we must take great pain to make sure the the inputs that can be controlled are controlled.  We must proactively seek to improve the customer experience.  We must seek to add value relative to the price that is being paid.  We must make sure to notice the little things that most would not notice.

Some might argue that Starbucks was a victim of Chaos Theory.  Is their recent trouble due to the fact that they opened too many stores too quickly?  Was the brand just a fad?  Do $4.00 gas prices and rising unemployment come into play?  Are they hurting because they focused on things like music and credit cards instead of coffee and customers?  Did the change from the manual to automated espresso machines dilute the brand?  I have no idea which of these things actually caused their current problems.  It might be all of them, it might be a butterfly in the jungles of South America.  I would argue however that these things led to a pattern with a predictable outcome.   Taken on their own they are small, but combined they create a difficult situation that would have been difficult to envision just a short time ago.

So for marketers, control that which you can control.  Focus on delivering quality to the consumer.  Pay attention to changes in outcome.  And, pray that butterflies help you more than they harm you.

How would you apply Chaos Theory to Marketing?  The world is waiting to find out.  Share your thougths, and change the world with your comments.  You never know what outcome they might produce…

If I Was In Charge of… NBC

Next February, good old fashioned broadcast television - the kind delivered by the combination of aluminum foil and rabbit ears that sits atop of my old school analog set - will cease to exist.  The Federal government is mandating that television networks broadcast solely in digital signals. Thus, if you are like me, you will need to get yourself a digital converter soon.  Still, I think this turn of events in conjunction with the tough economic times we face might just open up a new opportunity for Network television.  Follow along while I briefly explain my reasoning.

Recently I used the $40.00 voucher from the government to purchase a second digital converter for my home.  I bought it at Target, and it ended up costing me $10.00 after the voucher.  As I was buying it, a guy in line who identified himself only as a Television Executive, asked me if I really viewed television strictly over the air.  I proudly replied yes.  He was dumbfounded.  He could not believe that I was able to manage with only network television to guide me.

This got me thinking, why would I need cable at all?  With my digital receiver I now have over 30 stations, all for free.  I have more than 10 versions of PBS - covering kids programming, cooking and arts, travel, state government, and traditional programming.  Not only that, but local stations also offer multiple channels for me to enjoy.

Now that got me thinking even further…  With the expanded bandwidth afforded by digital broadcast television, why would the networks need cable or satellite for distribution?  The answer is they don’t.

So, if I was in charge of NBC, I would create 100 niche channels and make them available for broadcast through the local stations.  Music, sports, finance, politics, gardening, gossip, talk and more - all for free.  Why would I do this?

Well the whole point of commercial television is to sell ads.  If I can attract people to my content, I can sell more ads.  If people can give choices without having to make them pay, they should be interested - especially now as family budgets are stretched to the limit.  By being the first network to embrace this move, NBC could take a dominant role in the new niches that will emerge in the digital broadcast space. (note that you can substitute CBS, ABC, or FOX and it still works).

Look at your most recent cable or satellite bill and then tell me you would not be interested in having all the networks embrace this potential opportunity.  Imagine having 100, 200, 400 digital channels all for free.  Imagine having over $1000.00 back in your pocket at the end of the year - how is that for a stimulus package?

No, cable and satellite are not goint away.  No, I would not pull programming from them… yet.  What I would do is take advantage of tough times, federal mandates, vouchers, digital technology, analog televisions that still work, and mounting consumer frustration to take advantage of what might well be the biggest opportunity to come to television in years.

What would you do if you were in charge of NBC or another television network?

The Physics of Marketing - Brownian Motion

In 1827 Robert Brown was trying to observe the fertilization process of flowers under a microscope when he noticed slight movements in the grains of pollen, which were suspended in water.  “Were the particles alive?”  “No, so how did they move?”  The answer is Brownian Motion.  The pollen on the microscope’s slide was suspended in water.  Thus the movement of the pollen was not due to the pollen being alive, but was actually caused by the constant and random movement of the water molecules which were bumping into the pollen.  These collisions created the illusion of the pollen being alive.  In actuality the movement was a by-product of the movement of the water.

This phenomenon can be observed in the way that air pollution spreads, or how dust particles seem to dance about in a sunbeam gleaming through a window.  Brownian motion can be influenced by things like the type and temperature of the particular gas or liquid in which something is suspended.  For example molecules in warm water are more active than in cold water, and thus would result in more movement.

How does the concept of Brownian Motion pertain to marketing?

For me this is very similar to the concept of signal versus noise, discussed by Don Wheeler in his book Understanding Variation.  The central premise is that a data without context is basically meaningless, and that changes in numerical values are not necessarily representative of real change.  Wheeler asserts that “the first mistake in interpreting data is to interpret noise as if it were a signal.”  The second is to “fail to detect a signal when it is present.”

Much like Brown’s initial reaction to the moving pollen, business leaders can mistakenly attach value to motion.  So the 5% increase in sales that made everyone feel so great, could actually be the act of random motion.  The increase in the response rate on that piece of direct mail - might just be noise.  Conversely, the decrease in hits to your web site might just be the result of random movement.  There is a certain amount of variation inherent to everything.  Thus, making the numbers or beating the numbers can be misleading.

Just as happens in suspensions, every environment is different.  And just as temperature and chemical composition influence the amount of variation, so do things like competition, market saturation, market awareness, and other factors.  Some industries may have little fluction, some may have substantial changes.  As Wheeler states, The Voice of the Customer decides what you want from the system, the Voice of the Process decides what you will get.  “It’s Management’s job to bring the voice of the process into alignment with the voice of the customer.”  That is how real motion, not random motion, takes place.

As a marketer it is important not to attach too much importance to individual data points, (the numbers are up today, the numbers are down today) but rather to view the data as a whole.   Variation, or random movement, is inherent to nature.  One must take the time to separate the signals from the noise, and then to act accordingly.

How would you apply Brownian Motion to Marketing or Business?  Share your thoughts by leaving a comment.

Sam’s 10 Charts You Can’t Live Without

Sam Lawrence is the CMO for Portland based company Jive Software.  He is a fascinating guy and a thought leader in enterprise social software.  His web site, GoBigAlways is full of great content, including his latest post 10 ROI Charts You Can’t Live Without.  The post concisely articulates several ideas that I believe to be prevalent in modern business, and thus I thought I would pass it along.  Nice work Sam.  My favorite happens to be #3 pictured here.  Check out Sam’s post, and let me know your favorite of his 10 charts.

Go Big Always - 10 ROI charts you can’t live without

If I Was In Charge of Verizon…

If I was in charge of Verizon, the first thing I would do would be to take the large group of people, known collectively on TV as “the network,” - seen following around the “can you hear me now?” guy in the commercials - and reassign them to work in Customer Service.  In fact I would make the core focus of the company customer service. I would make going to the Verizon Store something you love to do - not loathe to do.

Note to Verizon.  I can hear you.  Great job on the network thing.  Now that we have established that fact, let me hear you be nice, thoughtful, and helpful.  Make me feel like bypassing the iPhone and AT&T (who could also benefit from this) or Sprint, or whomever, was the right choice because you actually care about your customers.

From the billing process, to telephone help desk, to the in store service and sales experience, there is huge opportunity for you to improve what you do, while setting a new industry standard for excellence.  Be the first to own this space and make service the cornerstone for your future growth.  Can you hear me now?

What would you do first if you were in charge of Verizon?

The Physics of Marketing - Absloute Zero

At just about -273 degrees Celsius, you reach the point at which all molecular motion ceases.  There is no heat.  None.  This is known as Absolute Zero, and it was developed in large part by Lord Kelvin.  In his honor, the Kelvin Scale, in which 0 degrees equals -273 C,  was named.  While scientists have some close to reaching absolute zero in laboratories, it may be impossible to accomplish because the act of measuring would require some level of heat be introduced.  Still, scientists have gotten really, really close to this temperature that is really, really, really cold.

There are some really “cool” things that happen to certain elements when you approach absolute zero, such as condensates - super cold liquids that can overcome adhesion and gravity to spontaneously flow out of their containers.  Needless to say, funny things happen near absolute zero.

So, from a Marketing Perspective, what is analogous to absolute zero?

I am inclined to say that the concept of the Long Tail, introduced by Chris Anderson, is analogous to this concept in some way.  The Long Tail states that, among other things, the internet empowers infinite consumer niches, and thus in a digital world where inventory is not much of an issue, there is a demand for just about everything.  So, that record you and your buddies made in the garage in 1976 might have one person out there somewhere, besides you, who is interested in it.  That record - once thought to be completely void of heat - now possesses a minuscule amount of movement.

Marketing professionals are paid to move products and services away from absolute zero - as far away as possible.  Marketing is some sense is about using resources for generating heat around a product or service, capitalizing on the Second Law of Thermodynamics (Thanks Geoff) to maximize the return on investment.   As the product life cycle would dictate, nothing lasts forever and today’s hot product becomes yesterday’s news pretty quickly.  Marketing moves on, and the product or service often loses heat until it finally dies - theoretical absolute marketing zero.

Still, the long tail being what it is, absolute zero for a product may never actually be reached.  As products or services approach this temperature, weird things happen.  Small groups of people may decide that they don’t want to let go of a product or service, and demand comes from seemingly out of nowhere to defy conventional wisdom.  That is why someone will pay $27.00 for the Shirt Tales lunch box on ebay.  Sometimes this remains isolated and sometimes the product begins to generate heat again and moves away from Absolute Zero.  Pabst Blue Ribbon comes to mind as a brand that was once near death, and then, somehow got to be trendy.  Now, bars in Columbus, Ohio can’t keep enough of it in stock to meet demand.  While this definitely differs from the absolute laws of physics, the ideas seem to be similar.

I am curious to hear from you on Absolute Zero.  How can you apply this to Marketing?  Please share your thoughts and join the discussion with your comments.

If I Was In Charge of… City Life Sculptures in Dayton

For the second year in a row the City of Dayton, along with the Downtown Dayton Partnership, has brought in 20 of the magnificent bronze sculptures sculptures of J. Seward Johnson.  The sculptures are extremely lifelike.  They depict people, sometimes accompanied by animals and props, going about daily life in the city.  The detail is amazing - causing people to double take as they pass just to make sure that it really is a statue.  They have been widely successful in attracting attention and drawing people to visit downtown Dayton to check them out.  The city started a photo contest around the sculptures, which I think is brilliant.

Still, if I was in charge of the City Life Sculptures the first thing I would do would be to create a blog for each of them.  On each blog, the story of the person depicted in the statue would be told day by day.  This could be done as a creative writing project, where students from Dayton Public Schools could compete to earn the right to tell the fictional story of one statue.   The writings could focus on a different area of life each week, creating a framework for the project.  This could start with biographical information about where they grew up, where they live and work, what they see everyday, how they interpret it based on who they are, and what they hope to see in the future.  This would be a wonderful exercise in characterization and imagination.  By placing it in the context of a blog, readers could engage with the statues in conversation - truly bringing them to life.   This would be sort of a Canterbury Tales meets the Internet.  Each statue has a story, and each winner gets to tell it.   I think this would be an amazing opportunity to showcase young, creative talent, while simultaneously attracting additional attention to this amazing exhibit.

What would you do first if you were in charge of the City Life Sculptures in Dayton?

Downtown Dayton Partnership

Dropping Some Knowledge - Money Quotes from John Moore

Looking for some advice on how to build a successful brand?  Want to learn more about the importance of the customer experience?   Check out this post from my friend John Moore.  He lists “Money Quotes” from his book Tribal Knowledge - where he chronicles some of the wisdom he gleaned during his time at Starbucks.

John was kind enough to come to Dayton last year to speak at a PRSA meeting and then an AMA meeting.  Both presentations were incredible.  He shared so many fascinating stories about his life, and the lessons he has learned.  Both audiences were completely captivated by John’s creative presentation and compelling message.

I got to share the stage with him later in the day, when we addressed an auditorium full of students at the University of Dayton.  The experience was thrilling, and I hold him in the highest regard.  I also owe him a beer.

Get to know John Moore.  Check out Brand Autopsy and then pick up a copy of Tribal Knowledge.

Brand Autopsy: Tribal Knowledge Money Quotes
http://www.typepad.com/t/trackback/11572/30352818

Next Page »