PayPal Wars book cover

The PayPal Wars - Battles with eBay, the Media, the Mafia, and the Rest of Planet Earth is the exciting true tale of a startup that went from a blue-sky idea to a public valuation of over $1 billion in under three years. Written by the marketing manager for PayPal during its startup days, Eric Jackson, it is a consuming, fast read.

Jackson was a disillusioned staff consultant at Arthur Andersen who jumped ship to gain nonexistent stock options. He met PayPal’s CEO Peter Thiel at Stanford while earning an economics degree. Thiel had transformed a student newspaper, the “Stanford Review,” into a campus institution. He and a “Review” cohort wrote The Diversity Myth, a book that criticizes changes in Stanford’s curriculum. Eric had helped with some research for the book.

Thiel, an attorney who is today a venture capitalist, worked for a Wall St. law firm and Credit Suisse in Boston before returning to the San Francisco area in 1998 to set up his own hedge fund. After delivering a guest lecture at Stanford on the link between market globalization and political freedom, he was approached by Max Levchin, a young man whose prospects for opportunity and education had suffered until his family emigrated from the USSR to the US in 1991. During his brief time in the USA he had already developed automated marketing tools and sold them to Microsoft.

Peter, 32 years old, and Max, in his 20s, were idealists who wanted PayPal to become a way for ordinary people in the developing economies of the world to control their own money, depriving corrupt governments from stealing wealth from their people through currency devaluations and inflation. PayPal users could switch to dollars or Yen, dumping their local currency before it became worthless.

There would be a long yet brief journey to ramp up the offering.

A “digital wallet”

PayPal was the creature of Confinity, a startup that merged “confidence” and “infinity” to describe a company that would change the way all global citizens paid for– everything– and got paid. “In the 21st century, people need a form of money that’s more convenient and secure, something that can be accessed from anywhere with a PDA or an Internet connection,” stated Peter.

He also maintained that creating a successful payments service could only happen if something called a “network effect” was achieved. “An interactive, inter-connected system… could only exist if it conferred value on the people who voluntarily chose to join it. The more people participating in it, the more beneficial the network would become since all members could interact together. Hence a large, established network is very valuable to enter and very costly to leave… it locks in its members and prevents would-be competitors from getting off the ground.” Jackson notes on page 30. “A good example of a network is telephones. The benefits of having one increased exponentially as the number of people and companies that could be reached using it also grew. Similarly, the advantage of participating in a payments service increases as the number of other users goes up. Robert Metcalf, the inventor of Ethernet claimed that the value of a network equals the square of its users, or a network with twice as many users as a competitor is four times as valuable.”

Scaling up quickly was key. Jackson was given the task of spending $1M in short order to get more customers! Based on a hunch, he targeted eBay’s auction users. Referral bonuses were part of the plan as well. Soon, eBay auctioneers began to put PayPal logos on their sites to advertise this easy way to pay. They were advertising PayPal! A symbiotic relationship had been accomplished, but eBay’s owners were not in tow.

The network effect was at work, venture capital was flowing, and competitors were massing. Standing up to the assaults was accomplished in various ways. The new economy emphasis on shared goals, clear priorities and encouragement from management for the staff to suggest new ideas was a way of life. As well, new products and the immense talent of the software writers outpaced the competitors.

From mid-1999, PayPal went from several talented employees, a few board members, and $3M in venture funding to:

  • Loads of employees, including 500+ at a call center in Omaha
  • MANY, many millions in financing; the burn rate was $10M a month in mid 2000
  • A focus on payments between friends to targeting online auction transactions by latching onto eBay’s online community.

Trench warfare

Combatting competitors from all quarters including an eBay acquisition, “Billpoint,” threw PayPal into trench warfare. Dealing with fraud was a major problem with one mafia costing the company $5.7M over a four month period in mid-2000. However, buying and selling patterns were noted and the Feds busted organized crime rings in Chicago, Houston and Nigeria, thanks to PayPal’s help.

PayPal decreased its dependency on eBay by linking with the gaming industry, merged with its major competitor, x.com, closed a finance round of $100M, and developed a working business model in short order.

THEN, regulators and other attackers such as attorneys for class action suits and even the American Banking Association nearly derailed the IPO, but fate smiled on the backers and PayPal became the first public offering after “9/11,” opening at $13 a share on February 15, 2002, and closing at $20.09, a 55% one-day increase.

The entire story is an unbelievable series of leaps from one stepping stone to the next as each morphed into an alligator until PayPal succeeded, only to be bought by eBay.

Jackson feels that PayPal could have developed further and perhaps realized its ultimate dream had there not been so many challengers––not the expected competitors, but the unexpected hits from so many major players. He is now CEO of World Ahead Media– the stock options paid off!

Visit paypal.com for a free guide on how to grow your e-business.

light bulb

No, this is not a political blog.

I'm referring to the power spikes and surges that can ruin equipment that uses microprocessors. Even electrical "noise" will take a toll on sensitive equipment and on software programs and data files.

Whence comes this dirt? Lightning, yes, but also unnatural causes such as utility switching, high-powered electrical motors, radio transmitters, industrial equipment and more can dish up dirty power.

I would not mind having Ceramatec's wonder battery to power my office/home because the last spike that shot through my lines nearly killed one of my PCs that was protected by a dying surge protector. The spike finally killed that protector, so I got a new one.

Do you know how to figure out if a surge protector is adequate for your computer protection?

First, what are the devices that must be protected? Any peripheral that plugs into the computer will need protection, including the cable modem, because lightning can enter a computer network by cable as well as by phone line.

Next, how many watts will the protector need to handle? I did an online search for my computer's wattage.

You also need a surge protector with battery backup that remains on long enough for you or a computer program to safely shut down the pc or network in the event of a power failure. Typically you would want your monitor and computer to be on battery backup.

Many years ago a bright computer repair man who restored a hard disc for me explained that most of the computers he fixed had been damaged by electrical noise over months or years from dirty power supply.

At the time I used surge protectors but not line conditioners. After the repair I got a UPS (uninterruptible power supply) with an AVR (automatic voltage regulator) which ensures consistent power for computer systems.

And speaking of power solutions, don't forget to vote next election!

Future Shock. The Third Wave. Power Shift. And now, Revolutionary Wealth. Having read the first three of Alvin Toffler's bestsellers on how life is changing and why, I searched for his fourth major work in 2000. His series clarified for laypeople the evolution from a "first wave" agrarian-based economy to a "second-wave" industrial to the knowledge-based "third-wave" economy, and his prognostications were very useful. I needed the one I was sure would be out in 2000, but it wasn't there.

Future Shock, published in 1970, prepared us for the information age; The Third Wave, published in 1980, further interpreted the movement toward electronic empowerment; Power Shift, published 1990, prophesied a change in the very nature of power. Then, the Tofflers, as Alvin included his wife Heidi, stated they would not publish a book in 2000. The turn of the millennium was not a good time --too many uncertainties. Finally, in 2006, Revolutionary Wealth joined the line up of hallmark achievements for these very special authors.

What's in their book for you? A mind-blowing discourse on what goes on in the first decade of the 21st Century and what to look for; an expansive digest of world trends and events that are churning up the "third wave." A reader might be lucky enough to amass revolutionary wealth by keying into one of the featured trends of the knowledge economy. For example: "The new wealth system demands a complete shake-up in the way increasingly temporary skill sets are organized for increasingly temporary purposes throughout the economy." This prediction may lead you to challenge your staff to find ways of meeting American customer desires by supporting their new and changing family configurations.

Or, you may be the powerful player who pushes legislative change to keep pace with societal need. The Tofflers note that while business and nongovernmental organizations (NGOs) are moving at speeds of 100 or 90 mph, labor unions, education and legal institutions are lagging at speeds of 30 to only 1 mph. This is an amazing dilemma if your law suit is never settled until your actual business need ceases to exist.

Knowledge Described
Taking a bird's eye-- or more like a satellite-view of production and human labor over history, one sees a bright future despite the glaring hardships besetting nations, economies and workers at the present. A glance at the facts of knowledge reveals why the knowledge-based economy holds immense potential for people relative to the agrarian and industrial epochs… Knowledge...

  • is inherently non-rival - the greater the number of people who use it, the more likely it is that someone will generate more knowledge from the same bit of it.
  • is intangible
  • is non-linear - tiny insights can yield huge outputs
  • is relational - a unique piece attains meaning only in context with other bits
  • mates with other knowledge - the more there is, the more possible combinations there are
  • is more portable than any other product - can be distributed instantaneously to the next cubicle or to ten million in Hong Kong at the same near-zero price
  • can be compressed into symbols or abstractions - unlike tangibles
  • can be stored in smaller and smaller spaces - coming soon is storage nano scale
  • can be explicit or implicit - shared or not
  • is hard to bottle up - it spreads.

(The above list is an edited version of the ten features on pp. 100-101 of RW.)

Can you now understand why more job creation is simply a matter of exercising our collective imaginations? Factories exported to Mexico? So what. China manufacturing more and more: Big deal. America, you are the giant of the knowledge economy! Realize your prowess!

Other messages are not so fun: Desynchronization between the deep fundamentals like time and space and our major institutions is a serious dilemma. MUCH more troubling: Our educational system is not preparing students to work in the new economy that is striving to get in sync with the deep fundamentals.

The Tofflers put stock in science. If the trends and realities of this accelerated day and time are shocking and unwieldy, apply scientific method and planning. This, in their view, is an effective salve for the human condition.

Prediction: In an age of NGOs becoming past-masters at negotiations and missions accomplished, we can expect human cloning and such other possibilities to occur. One NGO will fight against particular agendas; another will successfully advocate. The clout of NGOs will eclipse that of nations.

Insights for the US
RW is not blithely proglobal. It does not turn a blind eye to China's military budget "estimated to have shot up at least sixfold between 1991 and 2004" (p. 322) and its theft of intellectual property (p. 377).

RW sees that the great powers including America are less and less great. And in the current climate of anti-American sentiment worldwide, where is the appreciation for her contributions? Winston Churchill's statement about the U.S. Marshall Plan under which the WWII-torn nations were rebuilt as "the most unsordid act in history" is quoted.

As you can see, the book runs the gamut from reasons to regard your prospects with amazement to woeful potential turns of fate for the red-white-and-blue.

From the "24 hour street" in Curitiba, Brazil, to "obsoledge" in the internet, to the unpaid work of prosumers, to the rise of para-money, to sensor technology that is emerging as one of the most important industries of the future, you will like Revolutionary Wealth, if you enjoy roller coaster rides.

Revolutionary Wealth, by Alvin and Heidi Toffler. Published by Alfred A. Knopf, New York, 2006.

doing a cartwheel

The publicity stunt is a way of gaining attention for your company that can offer a gigantic payoff--BUT it is always a gamble since there is no guarantee the media will cover it. If you have been trying to come up with a way to make the news, there is a book that can help you increase your chances for a win.

Publicity Stunt! was written by Candice Fuhrman who headed her own PR agency in the San Francisco area for 10 years. Her clients often asked for news-making ideas, so she began to explore what makes an idea so irresistible that it becomes page-one news.

She acknowledges that today, most PR agents disavow any connection with stunts, pointing to their role in creating a client's total image. However, her research led her to an appreciation for the special genius behind the publicity stunt.

Following are examples of stunts that were successful.

Story creation... In the 19th century, fledgling newspapers would create stories to build circulation. The New York Herald sent journalist Henry Morton Stanley to Africa in 1871 to search for the missionary-explorer Dr. David Livingston. He sent back stories all along the way.

Outrageous acts... The publicist for The Return of Tarzan caught the public attention by checking into the Hotel Belleclair in NY City with a large box said to contain a piano. The next day he asked room service to send up 15 lbs. of raw red meat, prompting the management to inspect the room and discover a full grown lion in residence. This brought the police and reporters, and rescued the Tarzan sequel from oblivion by linking the stunt with the movie.

Attracting a crowd... may be as easy as putting a sandwich board on a man and as expensive as dropping $10,000 in small bills from the top of a skyscraper to celebrate a particular accomplishment.

Photo opportunity... Alerting the media to a situation to be created for an interesting photo can lure reporters. The famous photo of Marilyn Monroe on a street grate with her skirt blowing straight up did not just happen --It was a staged event to publicize The Seven Year Itch, accomplished with the help of special wind blowers installed in the grate.

Daring acts, contests, fake letters to the editor, and other staged events are explored in Publicity Stunt!, and Ms. Fuhrman invites readers to share their own stunts which she promises to publish in a sequel.

Publicity Stunt! by Candice Jacobson Fuhrman. Candice Fuhrman Publisher, 1989.

pretty woman

The late Andy Warhol predicted that in the future, everyone would be famous for 15 minutes. With the proliferation of media and the desirability of having your product or service televised, you could find your place in the sun as a company spokesperson. Are you ready for that?

YOUR PUBLIC BEST by Lillian Brown is "The complete guide to making successful public appearances in the meeting room, on the platform and on TV" (its subtitle). Ms. Brown knows her subject well; her list of credits includes being a radio producer, voice coach, chief TV makeup artist for CBS News Washington Bureau, and personal makeup artist for five presidents, among many other distinctions.

Her advice covers personal appearance, voice improvement, public speaking, handling the media, and TV appearances.

If getting your point across convincingly is important to you, Ms. Brown's tips will be, too. Her list of most frequently asked questions includes: "What colors are best to wear in public?" "At my age, can I change my voice?" "What can I do to avoid stagefright?" Following are some of her insights on these matters, to help you on your way to becoming your public best...

Don't trust your color analysis.
What colors are best to wear in public? Never wear black, red or white, advises the maven. The two extremes of the color spectrum are black and white, and both the eye and the camera have difficulty bridging the distance between the two. White faces in black suits, for example, are not photogenic. Red is domineering and harsh. Wear blues, grays and jewel tones on the platform or on TV. No matter what colors are flattering to you according to your color analysis, they could be publicly insulting. Ladies, keep jewelry to a minimum; men, avoid the red "power" tie- it will reflect red on the white of your eyes. Look on your tie selection as an enhancement of your eye color.

The public will also judge you by your voice. You know you have a problem when you pop the "p" on a microphone, or when your listeners eyes wander or glaze over after you've been speaking for a while, or when you look mature, but your voice sounds too young! Fortunately, none of these symptoms is irremediable.

Exercise to shape up
Ms. Brown gives lots of exercises for voice improvement such as how to breathe so radio or TV listeners won't hear the audible gasp for air through the sensitive mike you must address. Also, imitating your favorite singer can teach you to pronounce your final consonants which is essential to clear diction.

Perhaps you'll never be faced with a media stakeout or press conference, but you may be called upon to accept an award, or to participate in a panel discussion. Stage fright may urge you to run, but hold on. Through preparation, logic and on-the-spot reasoning with your fear, you can conquer this instinct. Rehearsing your talk and visualizing the setting beforehand can prepare you for a great performance.

Here's_a tip for a dry mouth: "Drop your jaw and rub the underside of the tongue against the inside of the lower and upper front teeth. This activates the lubricating saliva glands, relaxing the back of the throat and giving you the moisture you need in your mouth." (p. 122)

We recommend YOUR PUBLIC BEST as an excellent consultation on this subject. Ms. Brown's 30 years of experience will help you be your public best.

YOUR PUBLIC BEST, by Lillian Brown. Copyright 1989. Newmarket Press, New York, NY.

computer security

There is a growing focus in business on:

  • healthcare
  • security
  • efficiency and
  • internet.


Which of these represents the area of greatest potential financial trouble for your business? For your customers?

What should your company do to avoid the dip in profits that will result if it does not change the way it is addressing this area of challenge?

What specific advice can you offer customers to help them continue to grow in the face of these challenges?

handshake

"I'll grow you if you'll grow me" - Strategic Marketing Ideas for Mature Businesses

by Anne Yeiser

Stop being driven by the competition and start teaming up with customers you can grow! That is the message mature businesses need to hear according to Recompetitive Strategies by Mack Hanan. Stop trying to plan FOR customers- they can only be planned WITH. Find ways of integrating your growth objectives and strategies with theirs!

These methods have worked for many Fortune 500 companies whose profits were declining, according to Hanan who is an internationally recognized consultant, author and lecturer on marketing, sales and business growth.

Growth followed by maturity followed by decline is not inevitable in the life cycle of a product, says Hanan. In the recompetitive model, maturity is followed by rebirth of growth, and the good news is: "The profits from recompetitive growth can, and most of the time do, exceed the profits from new growth, in their rate of return and very often in volume as well."

Hanan's insights are based on his consultation and research for large manufacturers and retailers, but they will be appreciated by any size firm seeking a new burst of growth, whether selling services or products. The only mature businesses which he has found not eligible to recompete are those with obsolete technology or "old school" managers.

Recompetitive Strategies states that efforts to restore competitiveness to old products usually focus on:

  • enhancing the product (usually unnecessary),
  • selling harder to current customers,
  • expanding sales to new customers, and
  • entering allied markets.

Hanan calls this "rouging the cheeks of the corpse."

The mature business should instead undertake:

  • market concentration
  • asset base shrinkage, and
  • product redefinition.

Market concentration means focusing on the customers who contribute the most profits. The ones willing to pay a premium price are those whose profits are being increased by their relationship with the mature business. It is crucial to understand their business and why yours is prospering theirs. They and new customers whose businesses can be grown are the mature business's "growth niche," according to Hanan. "Competitive maturity begins with one market-narrowing question: Whom can we grow?" The number of customers forming the growth niche may be only 20% of the total customer base. The remaining 80%, not to be ignored, are not a primary focus.

Asset base shrinkage, the second rule for becoming recompetitive, refers to the downsizing of product lines to those which best contribute to improved customer profits and those which still can be profitably mass marketed.

Product redefinition means replacing the tangible product or actual service with a financial product-- the profits it offers the customer's business. "[Profits] are the only true tangibles in any business transaction," says Hanan. "When profits instead of products are offered, price can be detached from product benefits and attached to their dollar benefits." This is how prices may be justifiably raised.

Hanan also outlines how to internalize customer data in order to merge into problem-solving partnerships with customers, how to re-train and reorganize for "consultative selling," how to price profits (not products), and how to identify customers who will be growth partners.

By permission of publisher from RECOMPETITIVE STRATEGIES, by Mack Hanan ©1986 AMACOM. a division of American Management Association, New York. All rights reserved.

researching

An acrostic from RESEARCH to encourage studying a new concept before leaping to launching

Research is an active verb. Remember that. You may jump to wrong conclusions if you rush into a new venture before carefully researching it. Think of what each letter in R-E-S-E-A-R-C-H stands for before you start up...

R is for research. Don't leap-- instead, do research. Think: what is intuition? It's a sense of the marketplace. How is it developed? By keeping ones ear to the ground. You must inform your intuition--Develop your sense of the marketplace by studying it. Chance favors the prepared mind. Even highly intelligent people do fail in their ventures when they don't do basic research.

E is for Examine the trends. What are the political, legal, environmental and societal factors that could affect your offering? And if you have an idea based on a particular trend, is that trend complemented by other trends? For example, the nonsmoking trend is complemented by the fitness trend. This means that it is more likely to continue rather than fizzling out as fads do.

S Seek out opinions. This is termed collecting primary data. Using methods such as focus groups, questionnaires and interviews, find out what people think about your idea. In the case of market creation, you may not spend much effort on surveying your prospective customer, but you can still ask the experts. Other people who have been in business longer than you, have valuable insights to offer. For consumers, statistical laws indicate that to assure nearly 100% accuracy, roughly 300 responses for each demographic characteristic should be solicited. A demographic is a feature of the consumer such as his/her age, sex, family status, education, occupation, or income. Sometimes geographic info or job title can be pertinent. To gain an accurate concept you must sample 300 people ages 25-30, 300 people 30-35, and so on. Also, survey 300 males, 300 females; 300 high school graduates, 300 college; 300 from the east, 300 from the west, etc. The idea is to survey a large enough number from an adequate sample in each group since groups are not homogeneous. If you are seeking validation of secondary data, that is, of written information, how much is enough to verify your primary research? For consumer markets, 25-50 personal interviews, 50-75 telephone interviews, and 100-150 mail surveys.

For industrial or commercial products, do secondary research first because users, specifiers and buyers in commercial markets are far less demographically diverse. Their preferences or subjective interests are very narrow. They only need products and services to do their job, and their attitudes have a single focus: performance. Thus it takes fewer interviews to validate assumptions and costs less. Here, you are looking for repetition of attitudes, opinions or facts. This can be derived from 5-10 personal interviews, 10-15 telephone interviews and 25-50 mail surveys. A low sample rate works because questions are narrowly focused on performance, competitors trends, price, delivery etc. There is less invasion of the respondent's ego, biases or privacy.

E Evaluate the competition. At a minimum you need to know the names, logos, colors of your competitors to avoid duplicating their image. Do you have a significant differential? Is the niche you seek to fill of negligible interest to major competitors? Would you be able to defend this offering against an attack by a major competitor?

A Analyze the marketplace. Is the segment you want to serve of sufficient size and purchasing power to be profitable? Does it have growth potential? Here is where you figure out your pricing which is a key to your success. Be sure to charge enough to cover advertising and promotional expenses.

R Review your resources. Do breakeven analyses and payback period analysis. Do you have the financial and material resources and the skills to effectively serve your target? Also, know your products and services, their attributes and benefits. All this brainstorming leads to message development and a better grasp of your marketing challenge.

C Check out your target. Understand your customer. What makes him or her tick? Maybe you have a good idea but you need to refine it. Look at the lifestyle, values and personality characteristics of your target.

H Hypothesize. After you have done your research, then hypothesize. A hypothesis is an unproved theory. It's a proposition tentatively accepted to provide a basis for further investigation. Either your hypothesis will be, "I don't think this idea will work—" or "I think it will be a good idea."

After you've written your hypothesis, be honest. If you suspect you've got an unworkable idea, go back to the drawing board, refine your idea or start with a new one, and then do your research again.

©2014. DAY Communications. All rights reserved.

many microphones

What would you do if the local news team or ombudsman phoned or appeared in your office? It could happen to you. Unexpected calls and visits from reporters and watchdogs are made to even the best companies, for unforeseen reasons.

Here is advice from Herb Schmertz on handling the media under adverse circumstances, from his book, Good-bye to the Low Profile. For 20 years Mr. Schmertz was a member of the board of directors and vice president of public affairs for Mobil Oil.

»» Don't let a reporter intimidate you into talking by telling you it's in your best interest to cooperate. He could be right, but the decision should be yours, not his or hers.
»» Feel free to ask the reporter whom else he will interview and what his sources are.
»» Don't allow a reporter to seduce you through flattery or by coming across as a trustworthy friend. In many cases, by engendering a warm, friendly feeling, his aim is to encourage you to say things you shouldn't.
»» Some reporters may use techniques or intimidation such as trying to convince you they are morally superior or represent the public more than you. Your objective is to put yourself on equal footing with the journalist. Remember, you are the expert.
»» Try to avoid saying "no comment."

Don't wait for an emergency to initiate contact with the media. Start now--when there's no story to report.

Treat reporters as you would want to be treated. Don't try to make friends with them, but do try to establish a real relationship so that they can respond to you as an individual instead of as the representative of a firm.

GOOD-BYE TO THE LOW PROFILE. 1986. Little, Brown & Company. Boston.

man listening

"Mashup" connotes varying products to different industries. For musicians it may denote Mashup MixedInKey. The Digital DJ offers a good review on YouTube. See it below.

Keeping abreast of music and sound creation technologies is important to any advertiser or agency because music makes ads memorable.

Here are five recent studies that confirm the link between music and memory.

Sound, too, has immense power to boost a brand. Find out what the 10 Most Addictive Sounds in the World are here.

man thinking

What industries are hot?

Of these, which ones are most likely to use our services? Why?

Which of our services are the hot industries most likely to use?

How are we pursuing these specific businesses?

Which of our people can best provide these services?

Specifically, how many of our people does it take to provide ______ to ______?

What will their time be billed?

Is this fee in line with other competitors, including those firms that are not on a par with our length of service (depth of experience)?
••••••••
Is the Internet doing my job?

If so, how can I counter its intrusion?
••••••••
How can we improve our website?
••••••••
What is the probable effect of the top five franchise successes on my business?

Have these franchises entered my local market yet?

If so, how will their presence affect my clients who are their competitors? List 10 ways you can help your client to outperform this newcomer/up and coming threat.
••••••••
What is the current status of artificial intelligence relative to my field, and what will its effect be on my industry this year? In two years? In five years?

How can we use AI to help our clients?
••••••••
What is the state of manufacturing in our area?

How many jobs have been lost? Were they lost to foreign competition or to robotics and smart software, etc?

How will these losses affect our bottom line? Our clients' revenues?

employee group

"You can eat your cake and have it too when you're counting on your chickens to hatch."

There are great rewards for the company that encourages its employees to be innovative. In this fractured analogy, your cake is your profits, the chickens are your employees, and their eggs are the new ideas you need to have profits.

In the past a company could count its chickens but not make them hatch, and most companies didn't even care if their chickens hatched any new ideas as long as they were in the coop scratching away at their jobs. Today, companies must have the ideas and insights of their employees. And when you have involved everyone in the quest for new ideas, then go ahead and eat your cake, that is, use some of your profits on their ideas, because only in that way will you have more cake, more profits.

Here are some ways to involve your staff in the quest to be innovative. First, explain why it is so important. In a highly competitive marketplace, innovation is crucial to survival. Next, set a goal such as, "We will come up with three new services this year," or "We will improve our products in a certain measurable way by year end." Encourage employees to get close to customers or in some cases, to meet with other employees for cross-functional idea sharing. Ask for their ideas on what might improve their jobs or what projects they would like to work on to facilitate innovation. Invite an expert on creativity training to your firm. Many large corporations have realized significant benefits from such seminars. Plan with employees how to carry out their vision. Have contests and give rewards for great ideas.

In Peter Drucker's book, Managing for the Future, he discusses how the Japanese organize to innovate. Every major industrial group in Japan now has its own research institute whose main function is not technical research but research into knowledge, that is, to bring to the group awareness of any important new knowledge in technology, management and organization, marketing, finance, training, developed anyplace in the world. These think tank groups have emerged from the Japanese belief that leadership throughout the developed world no longer rests on financial control but on who knows the most.

Why couldn't your organization have a research institute? Why not stage a monthly meeting where people come together to share their discoveries, with each one responsible for an area such as technology, marketing and so on. Just by compiling the reports and taking minutes on the discussion that would ensue, new ideas would be generated from which innovations would emerge.

Another way to organize to innovate is through the Inquiry Center. This is an idea introduced by Gerald Zaltman and Vincent Barabba in their book, Hearing the Voice of the Market. The concept is to have a group of people within your firm whose job is to listen to or do research to discover what customers want and what they are willing to pay for. This group then makes known their findings to the various departments, and is also responsible to understand the voice of the company and to reconcile these two voices.

How would you implement an Inquiry Center? Very loosely, say Zaltman and Barabba. 1. Find the right people who are good inquirers and change agents. 2. Give them broad goals. 3. Let them go. 4. Figure out what they did. 5. Institutionalize it.

Make your chickens hatch so you can eat your cake and still have it!

©2001. DAY Communications. All rights reserved.

man researching

Why and how to do simple research to improve your market odds

You don't need a Ph.D. in marketing research to practice it. Using simple methods you can discover most of what you need to know in order to successfully market your product or service.

For knowledge about the marketplace and your industry, simply read and listen. Read one national newspaper at least once a week, a news magazine or two of opposing editorial viewpoints, the most important trade journals of your industry; attend business meetings, and watch TV news and analysis programs. Search online for pertinent keywords and concepts, and join newsgroups and read their articles. Do all of this with an eye toward how the trends will affect your firm. Open your eyes and ears to what is going on. What could be a more simple method of doing research than that?

For knowledge about your offering, try a simple technique called Attributes Listing. Research means to travel through, to survey; it is careful, systematic, patient study and investigation in some field of knowledge, undertaken to discover or establish facts or principles. Attributes Listing is a way of creative problem solving. It's an idea finding method--a simple research technique. You want to discover everything pertaining to what you offer. Next make a list of benefits. Sometimes these overlap with attributes, but they are the aspects of your product that benefit the customer, not simply its descriptive features.

A research technique that can help in listing benefits is Brainstorming. First, state the problem, such as, "What features of  this product will most benefit my customer?" Then, going around the table each person makes a statement and no one is allowed to criticize or even  analyze the statements made. All ideas, no matter how crazy, are important contributions. Someone keeps a list of the ideas which can be later evaluated and studied in depth.

Next, try a Competitor Analysis Matrix, another simple research technique. Make a grid by putting the names of two to five of your competitors across the top, and down the side you will have your list of attributes which has both your strengths and your weaknesses clearly delineated. Now fill in the blanks under your competition's headings and see how your offerings stack up. Be sure to compare your pricing with theirs and your advertising with theirs as well as all aspects of your marketing program.

Another simple technique is the direct-response split run or more simply, split testing. If you are sending out a direct mail letter to try to get people to call you, send two letters to a random sampling, each with a different lead paragraph or headline. This can be easily done, especially with your own computer. You will see whether one approach has a greater appeal than the other. Then do the larger mailing using the most successful lead in.

Finally, do research on your prospect. One expert says you should know 25 needs of your prospect before ever approaching them--even to set up a meeting. Although you would focus only on three or four of those needs, knowing 25 gives you the edge you need. Discover their needs by investigating their firm and products. Visit their website. Also, much can be discovered at the public library or by asking associates for insights.

computer board

by Anne Yeiser

What can you learn from the Silicon Valley marketing experience? Can the hard-won insights of a high-tech marketing consultant benefit you?

The Regis Touch by Regis McKenna is subtitled "Million Dollar Advice from America's Top Marketing Consultant." The author has worked with more than 150 companies in Silicon Valley and helped bring success to upstarts such as Apple and its Macintosh.

He learned by experience that fast-changing industries must play by a new set of marketing rules since the old rules assumed that technologies and markets change slowly.

McKenna reveals these major points...

The new marketing, like the old is a battle for positioning, but the new requires dynamic positioning which is achieved through positioning the company, not just the product.

In a culture where constant flux and radical change are the norm, one must focus on intangibles such as quality and leadership in carving an image, rather than on price or product specifications. That is the only way to combat the fear, uncertainty and doubt (FUD) that trail rapid change, and to survive when the unexpected occurs-- and it will.

Recognizing that complexity is a growing cultural phenomenon, a company must target a specific niche rather than trying to be all things to all people. Products must be viewed in terms of unique benefits to capture prospects who are diverse and demanding.

Product positioning must be shored up through word-of-mouth campaigns in the marketplace because buying decisions hindered by FUD are based on personal recommendations more than on advertising. McKenna outlines how to launch a word-of-mouth campaign.

Strategic press relations and a good reputation in the financial community are also indispensable. All these elements and processes result in dynamic positioning.

Market creation, not market sharing, is essential in fast-changing industries. The traditional market-share strategies focus on advertising, promotion, pricing and distribution and on winning market share from others. Market-creating strategies instead emphasize 1. applying technology, 2. educating the market, 3. cultivating the good will and recognition of retailers, analysts and anyone between the customer and manufacturer who has an influence on the buying process, and 4. creating new standards. Marketing managers must think like entrepreneurs and be willing (allowed) to experiment and take risks.

Companies in the fast lane must be market-driven, not marketing-driven. Marketing-driven businesses stake their livelihood on advertising and promotion, while a market-driven approach 1. develops strong products, 2. requires the manager to understand the structure of the market, and 3. focuses on building relationships and strategic alliances with other people and companies in the marketplace. It uses advertising and promotion to reinforce positions, not to create them.

The new marketing is qualitative, not quantitative. Marketeers who rely on numbers can miss the action since extrapolating the trends of the past or the present "almost never works," says McKenna. Example: In the 1940s, computer companies estimated the total world market for computers to be several dozen. They obviously failed to envision the rapid spread of new applications, or the sharp decline in prices.

Qualitative marketing is based on intuition-- that sense of what is going on in the marketplace based on a broad-based, first-hand study of it. It takes into account the strengths and weaknesses of competitors, the perceptions and attitudes of customers and prospects, and the social and political trends of the nation. These factors are continually, creatively monitored, and marketing strategy is adjusted accordingly.

McKenna recommends:
»» a clear but flexible company mission,
»» internal and external audits to define company goals and market trends before strategies are laid,
»» roundtable discussions rather than lengthy marketing reports,
»» a company culture that encourages innovation,
»» an organization that enables fast decision making, and
»» selling to the right customers - those that make quick buying decisions, which often are not the [bureaucratic] Fortune 500.

He discusses 10 intangible competitors which marketing managers in fast-changing industries must confront. The first one mentioned is change. The U.S. auto industry is cited for ignoring the growing demand for small cars, which is how it lost market snare to the Japanese.

To discover McKenna's other nine intangible competitors, read The Regis Touch. To evaluate whether they might threaten your company, consult with us!

THE REGIS TOUCH, by Regis McKenna. Copyright 1985. Addison-Wesley Publishing Company, Inc.

Caesar

Nearly 2100 years ago on March 15, only a year after he had been appointed a perpetual dictator, Caesar was murdered by assassins whom he knew very well. He had been warned many times of their intent, which is why the saying, Beware the Ides of March, went down in history. The ides fell on either the 13th or 15th of the month in the ancient Roman calendar.

Why did the master of the Roman world--having been clearly warned about impending danger--elect not to worry? He was a military genius, an incomparable strategist! But the very man who proclaimed, "I came, I saw, I conquered"--got conquered.

Must the mighty always fall? Are there any warnings you have received about the health of your business-- and ignored? Beware the IDE's of marketing!

I is for Ignoring Information

Didn't Caesar believe there was a conspiracy against him? Did his emotional ties to those such as Brutus prevent him from mistrust? Whatever the case, if he had listened to those who warned him, he might have died of old age. Likewise, to avoid being murdered by the competition, an executive needs to carefully consider all information pertinent to the well being of the firm. Here, we can learn from the Japanese. Every major industrial group in Japan now has its own research institute whose main function is not technical research but research into knowledge, that is, to bring to the firm awareness of any important new knowledge, not just in marketing, but in technology, management--whatever--developed anywhere in the world. These think tanks have emerged from the Japanese insight that leadership throughout the developed world no longer rests on financial control but on who knows the most.

Could your organization have a think tank? Why not? People who are responsible for specific information gathering could come together once a month to share their discoveries. In the information age, what you don't know CAN hurt you.

D is for Deathwish Marketing

Deathwish Marketing is a term coined by agency professionals Kevin Clancy and Robert Shulman in their book, The Marketing Revolution. They define the malady as marketing efforts which emerge from errors such as
    • Basing key marketing decisions on judgment alone... "This is the way we made the decision last year."
    • Watching the competition for guidance. (They could be wrong.)
    • Demanding short-term results... Fast reactions are sometimes necessary, but following a process is what increases the odds of success.
    • Creating marketing programs that build consensus within the firm... but don't address real customer needs with real solutions.
    • Seriously considering far too few viable target markets, positionings, creative options, pricing levels, etc.... Tunnel vision based on untested or limited assumptions.
Consider your options! You could get your wish.

E is for Egocentric Efforts

Caesar enjoyed wearing a laurel wreath. Whether he was resting on his laurels we cannot say, because he wore the woven leaves not just to show he was a hero but to conceal his baldness. In either case, it made him a sitting duck. The moral? Be conspicuous for customer service. Stand out for helping your clients win laurels, not for your own feats.

Now you know the IDE's of marketing. Avoid them-- You have been warned!

meeting

A lot is written today on team building, shared vision and other such warm, fuzzy management goals. Yet the executive who excels at encouraging disagreement will make better decisions than the one who focuses on building consensus. Management expert Peter Drucker gives three main reasons for "organizing" disagreement among staff members.

First, it safeguards the executive from becoming a prisoner of the organization. "The only way to break out of the prison of special pleading and preconceived notions," says Drucker, "is to make sure of argued, documented, thought-through disagreements."

It provides alternatives to a decision. "If one has thought through alternatives during the decision-making process, one has something to fall back on."

It stimulates the imagination. Imagination must be challenged or it remains latent and unused. Disagreement is the most effective stimulus we know. "Unless we turn the tap, imagination will not flow. The tap is argued, disciplined disagreement." (Note- disciplined, not rude.)

These ideas are especially pertinent to marketing management. Be sure to organize disagreement among your staff at your next marketing meeting. Considering all the options is the safest way to arrive at a course of action that will succeed.

Quotes are from The Effective Executive by Peter F. Drucker. Harper & Row, Publishers, Inc. 1967.