CEO’s need to apply the same approach to their business when it comes to investing in innovation. Using a ‘portfolio’ approach of new business ideas will help reduce the risk of investing too much in one idea that potentially fails.

Innovative companies invest in a portfolio of small (low risk), medium (medium risk) and large (big risk) projects that offer various degrees of opportunity or new business potential. Obviously having an innovation portfolio loaded with large, expensive ideas that drain the company of resources and management attention come with a lot of business risk. These projects need to be selective and be offset with smaller projects that offer smaller pay-offs but offer a higher degree of certainty.

Not all innovation efforts need to be industry killers or change the game type of projects. Betting too much on a small number of projects means you’re taking on too much risk and putting the business at risk.

Adopting a portfolio approach will help manage the overall risk of your innovation efforts and likely lead to greater benefits down the road.

1. Strategy

Not every innovation initiative can be a success. Not all innovation efforts have to be “game changers ” either. Using a balanced approach where investments are made in small, medium and large projects can improve the success rate of new products. Similar to an investment portfolio, you wouldn’t put all your money in one stock so why do it with your business investment.

2. Structure

Critical to developing new ideas is a robust creative element. While fostering the exploration of new ideas companies need to ensure there is a tight linkage between the innovation teams and the rest of the organization. Creating separate entities that develop and manage products & services creates divisive lines in an organization and can stifle the process.

3. Skills

Leaders and teams need to be populated with people that are good communicators and have strong inter personal skills. Successful innovation happens when people can interact with other functional areas smoothly and share ideas. The teams need people that have a broad business perspective and can facilitate external partnerships to push ideas from the drawing board to the test facility.

There is no ‘one’ solution for successful innovation. It comes with some trial and error as well as a commitment to a learning process. Putting strategy/structure and skills in place will help reduce the failure rate and stimulate more ideas.

There are three (3) basic steps to a successful innovation process for any company. Some are good at all three, like Apple and General Electric, but many companies aren’t.

Step 1 – Generating Ideas

The first step is “idea generation”. Although it may sound simple, some companies have trouble generating new ideas. Either because they don’t encourage it of the employees don’t feel compelled or valued enough to generate them. Either way, the path to innovation must  start with a steady stream of new ideas.

A simple way to address this issue if your company has trouble generating new ideas is to hold regular meetings where time is spent just brainstorming. You’d be surprised how effective a simple brainstorming session can be.

Step 2 – Evaluating & Developing New Ideas

Once you have a few ideas the next step is to evaluate, prioritize and develop a short list of the ideas for further consideration. Like a typical sales funnel, not all prospects or leads will be successful. The same holds true for new ideas. Some sound good at first but after a little extra thought turn out to be weak ideas. This should not deter you.

What’s critical at this stage is that you have a disciplined process for tracking and evaluating the ideas in order to sort the weak ones from the stronger ones. This starts with having a clear set of parameters or goals for the innovation process. Filtering the new ideas through an initial screening of business criteria will help manage the number of ideas that get considered.

From here, ideas that have market potential need to be assigned resources/people to scope them out and do some basic business evaluations. This step will further reduce the number of projects to a manageable number that can be reasonably evaluated through to a business case. Many companies struggle at this stage because the process isn’t clear or management priorities change. This is where discipline is needed to ensure that ideas don’t get lost or re-prioritized and never get developed. It can have a lasting affect on morale.

Obviously there are many more steps to developing an idea into a commercially viable product but the critical part of the process is sorting through the ideas to determine which ones should be developed further or ignored…….wrong decisions can be costly.

Step 3 – Launching a New Product/Service

Once a new idea has gone through the development process and has become a viable business opportunity the next step is to engage the organization to support it. For companies that launch very few new products, this can be a daunting task. For others, it’s a key step that will ensure success of a new product.

What companies fail to realize is that new products get ‘one kick at the can’ and that’s it. First impressions are lasting. New products must be developed that solve customer problems and deliver value. Anything less is not worth the time and perhaps valuable resources could be better spent elsewhere.

Having worked in a few LARGE companies I can understand how it happens. When companies become large and successful they tend to have leaders that start to relinquish decision making to their staff and underlings. When that happens strategic priorities start to compete for resources and priority with senior management. As a result, employees start getting mixed messages about what’s important and therefore start to let quality slide.

In some cases, as a mid level marketing manager/director, there isn’t much you can do to turn things around because you’re now starting to fight inertia. Your best bet is to make sure you do what you can to set the right example for others around you and take pride in your work. There’s no point trying to change the work environment. If people aren’t listening or decision making has turned somewhat manic, then it’s best to stay focused on the strategic priorities for your brand or business.

Here are some tips for surviving in a manic environment:

1. Focus on results. Nothing keeps managements attention better than hitting your numbers on a consistent basis. Make sure you know and understand what the key metrics are that management focus on and if you’re accountable for them, deliver them.

2. Communicate frequently with senior management. In a nervous or high stress environment, managers don’t like surprises. Keep your executive team informed about what you’re doing and how things are going. IF things start to go sideways then let people know early not after it happens.

3. Get support from other teams. Marketing can’t operate in a vacuum so build alliances across the organization. When your group comes under fire for results, as it inevitably will, you can reach out to other groups like customer care to support your efforts.

4. Seek out and pursue innovative new ideas. In a highly competitive environment businesses need fresh thinking and ideas. Don’t be afraid to offer up new ideas or try different things to drive your business. Senior managers value and recognize (at least they should) the fact that success comes from taking risks.

Set your sails and weather the storm as best you can. Better weather is around the corner.

One of the most underutilized areas of marketing is pricing. This is partly due to the fact that a lot of marketers don’t know how to manage price as part of the overall marketing mix. It many cases, rightly or wrongly, it’s assumed that pricing is a fixed element of the mix by marketing managers. Executives know the direct link between pricing and revenue and therefore are more likely to manage it with care, meaning they don’t want to touch it.

Make no mistake, pricing should be scrutinized to ensure that a company’s products or services are competitively positioned and that revenue is being maximized. The annual business plan should contain a pricing analysis and if done correctly, should identify areas where a company can take pricing action.

A few guiding principles will help identify whether your business is able to implement a price change or not. They are:

1. Time since the last price increase. If you haven’t taken any pricing action in the past two or three years then it should be a flag for the business to take action. Normal inflation is eroding your margins so a business should stay current. NOT taking pricing action also signals the market that your services have less value than the market leaders.

2. Competition. If you operate in a very competitive industry with a healthy number of competitors then it will be more challenging to increase prices. In this case price increases need to be on select products where the business has a competitive advantage or where you have few competitors. Taking pricing action on products that are basically a commodity will be met with resistance.

3. Customer base. If your customer base is very price sensitive then a price increase has to be communicated clearly and supported with clear rationale on where your costs have increased. Nothing annoys a customer more than having to absorb a price increase where they know a suppliers’ costs have not increased. Build your story and give your customers advance warning that a price increase is coming. In this way it isn’t a surprise to them and they can build it in to their plans.

4. Competitive position. Nothing limits pricing power more than having a weak value proposition. To grow your business effectively, both from a volume and pricing standpoint, a business needs a strong competitive position. Finding products or services where a business can add value for customers will add pricing power to the business.

5. Bundle products & services. This is an effective way for a business to take two or three lower value products and bundle them together for customers at a more attractive price. Bundling also helps to limit pricing transparency. Think of the McDonalds meal, it’s hard to see what product is being discounted to reach their price point so they can keep individual product prices high.

Effective pricing management takes creativity and a strategic approach but when done properly it can deliver significant dividends for a business.

Here are some classics:

1. We’re doing this for strategic reasons. This is a classic cover-up for a program that requires significant funds/resources but doesn’t have a chance of making the company a nickel anytime soon (eg. no ROI). It’s also questionable whether the program has any competitive rationale but someone has deemed this project as valuable.

2. ……because the CEO/COO/CMO said so. This is usually the answer you get when someone has no idea why the company wants the marketing department to develop a new product or launch a new program. It’s usually an indication that it’s a pet project for some senior executive to scratch his creative itch.

3. The strategy is to achieve more sales! Uh oh, we’re confused about what the difference is between a strategy and an objective. You hear this type of stuff when an engineer or sales person gets put in to a marketing role. Your first instinct is to run and hide but you can’t. All you can do is ask some penetrating questions like……how do we want to define “more sales”?

4. This program will reduce customer churn by 25% versus plan/budget. If I had a nickel for every time I heard a business pitch that would reduce churn, I’d be a millionaire! Some programs do help to reduce customer churn BUT trying to measure the impact a single program has on churn is extremely difficult at best. It’s a great way to try and slide a program through when there isn’t a strong business case for it.

5. What a brilliant idea! What the person is really thinking is….this program will NEVER work. You have to hand it to Steve Jobs, he was never afraid to tell people that ideas were bad or that some projects should be shut down right away. Saying no, is part of the strategic process, get used to saying it and you will save everyone a lot of wasted effort.

Happy marketing!!

Many people don’t realize that saying “no” to ideas is very much an integral part of the strategic process. It is much easier to say “yes” to ideas, projects and new initiatives because it avoids conflict, keeps employees engaged and generally requires less effort.

Executives that have developed a knack for saying “no” realize the importance of keeping the business focused on the key imperatives. Saying “yes” to a project can easily lead a company off track and consume valuable resources that could be used to support a project that is more important to the company.

So how do you avoid embracing a “yes” culture. Well, there are a few things you can do:

1) Communicate the strategic priorities of the company. Employees can’t stay on track if they don’t know what track they should be on. Small companies (<5 employees) rely on the CEO to keep things tight and focused but large companies (>100 employees) need to plan for strategic priorities to be communicated.

2) Train senior managers to effectively say “no”. Nothing can be more demotivating than having an idea shot down in a thoughtless and insensitive way. Many great ideas start out as half baked and all they need is a little more time in the incubator.

3) Challenge new ideas at the strategic/financial and competitive level. Any new idea or business case should have sound rationale or a bullet proof business case to support it. If it doesn’t then that is a good reason to send the idea back to the drawing board.

4) Ensure there is a disciplined process in place for managing new ideas. A disciplined process will help flush out good ideas from bad ideas before it gets to the go/no go stage. Adhoc reviews of projects and business cases may result in some good ideas being dismissed without completing a proper due diligence phase.

Don’t leave success to chance, plan and execute with discipline.

You’d think that with all the experience out there that marketers would have the process nailed down by now. Nope, people keep making the same mistakes and expect a different result….hey wait a second, isn’t that the definition of insanity?

Here is my top 10 list of marketing mistakes that I see repeated on a regular basis:

1. No clear definition of the target market. Having a vague notion of who your product or service is designed for is not a recipe for success. Great marketing strategy revolves around who you are targeting so the more clarity you have around the target market the more likely you are to achieve your objectives. A red flag goes up whenever someone says something like “we are targeting business users of technology”. That type of target market definition doesn’t tell me much.

2. Tactics versus strategy. Executing a marketing program without knowing why or how it supports the goals of the business or brand is like buying a new pair of jeans without knowing your waist size. Sure, you might guess right on the size but most likely you get a pair that make you look like hell, will be too tight or be completely out of fashion. Plan your shopping sprees and you’ll always get what you need.

3. Lose sight of the need for innovation. Great companies know that you always need to move forward and keep changing. To do that you need a constant flow of new ideas that can be developed to solve customer problems. Without innovation you fail to give customers a reason to keep thinking about why they need you. Companies like Tim Horton’s and Apple know this all to well. Learn from them and make innovation a cornerstone of your business.

4. Poor execution. The old adage is that it is better to execute a weak strategy really well than do a weak job on a great strategy. Once a direction has been set then all available resources should be allocated to the project to ensure it is executed well. If you’re going to do something then do the best damn job you can otherwise don’t do it. Often companies want projects completed but don’t assemble the right resources to do the job well.

5. No program post-mortems. Learning from mistakes is a great way to develop a better team and better results in the future. Assessing your programs for what worked and didn’t work provides a great way to zero in on where to focus your efforts. Not all programs need to have a post-mortem but certainly the large ones that consume major resources should. How else can a company get better if it doesn’t assess itself?

6. Focusing on the feature versus the benefit. Consumers and businesses buy benefits they don’t by features. Communication should be focused around the benefit a product or service delivers not the feature that it has. Consumers and businesses have a problem and they need to know how your product or service helps them solve it. Defining the product or service benefit can take some time but well worth the effort in terms of the clarity it brings to the strategy.

7. No clear point of difference or unique selling proposition (USP). If you (the marketer) can’t define how you’re better than the competition then how can you expect the customer to? A strong and compelling/relevant point of difference is the essence of business strategy and not easily developed.  Spending the time to really understand and develop a clear USP will make the difference between success & failure.

8. Product versus Brand focus. This is a common mistake for technology companies because they are typically engineering driven which means they like to invent new products and figure out who will buy them after. This usually leads to valuable resources being spent on projects that have limited market opportunity. To avoid this trap a company should focus on developing products that meet customer needs and serve the overall brand/company strategy.

9. Lack of internal alignment to the marketing plan. Marketing can’t operate in a vacuum. Marketing must be partners with the other functional groups in the organization to deliver customer value. To do that the marketing group must share its plans with the other functional groups and get support BEFORE they go to market. Nothing causes more customer confusion than a program that goes to market when only half the company knows about it.

10. Embracing Social Media Marketing before a marketing plan is in place. Social Media is a tactic not a strategy and can lead a company in to areas they aren’t prepared for. Developing a marketing plan first, with an understanding of the role social media will play in overall marketing mix, will help ensure a strategic fit and focus the overall effort.

Definition of Insanity – Doing the same thing over and over again and expecting a different result

Social Media is tool, like public relations or advertising, to communicate a message to the intended audience. As such it should be done within the context of a strategic framework in order to be effective in building a brand.

Where I think marketers get in to trouble in managing social media is they don’t see themselves as brand or customer advocates but rather program managers. This disconnect seems to be a function of a shift from “strategic” to a more “tactical” business management approach for companies. Increased competition, deteriorating economic factors and technological changes have shortened the time horizon for return on investment for companies.

Managing social media in isolation of the marketing function is a recipe for disaster. To be effective in building a brand ALL communication elements need to be tightly coordinated to ensure there is a consistent message being delivered. Allowing a group that is not tightly aligned with the marketing function to manage and control a key customer facing tool, like social media, can dilute overall brand building effectiveness.

Strong brands have a tightly aligned and consistent message across all aspects of the business. Having different functions in an organization, that aren’t aligned with the brand promise, communicating with customers can easily send conflicting messages to the market and dilute marketing effectiveness.

It takes discipline and a long term perspective to extract the maximum value from tools like social media. Build your marketing plan and simply carve out a section on Internet Marketing or SMM and outline your strategy & tactics. This way you’ll know whether it supports your brand/business strategy or not.

One way around that and to also ensure there is continuity of learning is to conduct a business review. Except for very large companies, most small and mid sized companies don’t have the resources/people to conduct a business review but they can be invaluable to the learning process.

1. Provides a rich and deep analysis of the business
2. Uncovers issues & problems that may not have been apparent before the process started
3. Serves as a mechanism to assess the state of the business
4. Is a benchmark for future performance measurement
5. Provides an opportunity to assess performance of past marketing programs…….what’s working & not working?

Business reviews are an opportunity to look at all aspects of the business to assess their relative strengths and weaknesses. This includes:

1. Financial Performance
2. Operations – service delivery, customer service, technical performance etc
3. Competitors
4. Economic/Political/Social & Technical environment
5. Brand
6. Industry trends

These areas cover the key forces that impact your business and could have major affects if left unattended to. Companies like RIM, Blockbuster and Corel could have avoided major changes to their business had they kept a firm eye on the review mirror while also looking forward.

Don’t get caught blind sided. Make Business Reviews an annual or bi-annual process for your organization.