“Life is like a ten speed bicycle. Most of us have gears we never use”
I remember back in my MBA days when our IE Business School professor Rafael Pampillón insisted in the enormous difference between “flow variables” and “stock variables” in Macroeconomy.
While “flow variable” is a variable whose value depends on a period of time rather than an instant (example being the gross domestic product), a “stock variable” is a variable whose value depends on an instant rather than on a period of time (example being foreign debts).
Managers and Executives frequently confuse the two different variables. A quite relevant difference is that while you can “pile” stock variables, flow variables are gone as you enter into a new accounting period of time.
In the sales world, every January you start from scratch. Well, you can argue that you have invested in creating relationships and some assets that eventually will let you grow the next year faster, but the truth is that you need to “pile” again your new sales quota in order to hit your numbers.
Old school sales managers kept some deals “disguised” in December in order to bring them up new and shiny when the new sales year started in January, which was something quite disturbing for me in my early days as a Marketing Manager at 3M, as I was used to go full speed and I couldn’t understand why they didn’t want to play big in December.
So the question is: “how can you try to avoid the artificial interruption of sales cycles and measure results not based on quota attainment during a specific period but based on the health of the opportunities pipeline?” or in other words, how can you use smart flow variables to “stock” sales capabilities?
Back in the Sales world when I was managing a B2B business at 3M, we introduced the concept “Sales Velocity” in our sales enablement tools for sales reps. It was very relevant, as it allowed sales managers to understand the speed at which they were creating new business for 3M.
Sales Velocity is defined as:
And it measures the speed at which you are creating new business and therefore the health of your pipeline. More important, it shows how to drive that pipeline by:
Increasing the number of active leads
Increasing the average deal size
Improving the conversion rate
Reducing the conversion time
Now in my current role as Incremental Innovation Lead for Iberia Airlines, I tend to see Sales and Innovation pipelines in quite a similar way. Innovation requires betting on a number of initiatives with the hope they will be successful and fundamentally change the business, which is not far from the Sales Rep. taking care and nurturing his key accounts.
So why are Innovation areas frequently not able to traction real impact initiatives?. Well, let’s go back to the “Sales Velocity” concept and let’s make an analogy with the Innovation world:
ACTIVE LEADS = INNOVATION INNITIATIVES
Are you capable of covering the number of Innovation initiatives that are needed based on your teams bandwidth? Are you able to traction Innovation initiatives across every area within the company or you just left some of them unexplored because they are just impossible to cover with the team you have?
DEAL SIZE = BUSINESS CASE
Are you betting on the right projects or are you focusing on those that you fall in love with although they can’t deliver a significant economic impact? Are you supporting those areas in the company that “shout louder” to capture your attention or do you have a strategic process to cherry pick those which make real sense for the corporation?
CONVERSION RATE = IMPLEMENTATION CAPABILITIES
Do you have the right IT capabilities to deliver on the business commitment that you make? Are the systems prepared for the integrations which are needed? Do you have the budget, the Capex, the Opex to support those implementations?
CONVERSION TIME = TIME TO MARKET
Are your internal processes fast enough to deliver according to market needs or are you always one step behind? Are you lost in bureaucracy or are your Innovation squads empowered for fast decision making?
Speed is very often confronted with Control, supported by the famous quote from Mario Andretti “if everything seems under control, you are not going fast enough”, and adopted by Silicon Valley executives for a number of years (“move fast and break things” by Zuckerberg). But that is a very limited vision of speed.
When the right processes to orchestrate Sales Funnels or Innovation Pipelines are implemented, Speed and Control can go together, and that is in my view, the only sustainable way to be in business. Be in charge of your Innovation Funnel and the rest will follow…
“Business has only two basic functions: Marketing and Innovation”
Having devoted my working life as a Strategist and Marketer to Innovation in a number of companies and sectors, I can’t be more aligned with the father of modern Management, Peter Drucker, when he said that without a customer, no business would ever exist. Therefore the fundamental presence of Marketing and Innovation in my professional career resonates so much with what I believe makes businesses possible.
A couple of weeks ago I got a phone call from one of the most relevant Spanish business schools. They wanted me to provide them with insights about the content that a new B2B Marketing executive program should include. So I started reflecting on my early years at 3M as a Marketer and later as a Strategist.
I would like to capture in this post a framework and a vision on how I would create an innovative Marketing unit from scratch if I was given that mission today, and the capabilities a modern marketer should have in my view these days.
Let’s start with the basics. I do believe there are two fundamental dimensions in Marketing:
Doing the right things – Doing things right
A Marketer has to focus on what matters first, doing the right things. But when those things are clear, he has to make sure that execution is flawless. Both capabilities are fundamental and finding someone who masters the two of them is quite unique. I have seen brilliant “thinkers” – “strategists” and outstanding “doers”, but normally they are not the same animal.
Exploitation – Exploration
A Marketer has to master short term execution (“exploitation”) while at the same time he must find bandwidth for envisioning what it is to come (“exploration”). Again, it is difficult to find individuals who can perform both roles, and from the cognitive standpoint I strongly believe the brain cannot handle playing both roles together at the same time. Allocating time and energy for each of the two disciplines is key.
If we would merge the two dimensions together, we would end up with a matrix like this one, with what I call the 4 fundamental capabilities an innovative Marketing team should have:
So now we have a framework so we can move on and dig deeper. The question then would be: what Marketing disciplines are expected under each of those 4 fundamental key capabilities of a modern and innovative marketing team? Let’s review them together:
STRATEGIC FORESIGHT (Doing the right things + Exploration)
Someone once said that “the best way to predict the future is to create it”. Understanding what the future will bring, the new market trends and how value platforms and ecosystems will be reshaping, gives an advantage to every marketer with the ability to explore the future.
Predictive Analytics will leverage the power of Data and will anticipate the probability of future competitive scenarios. Propensity models, customer retention alarms, up-selling and cross-selling opportunities discovery, content personalization,… are just a few of the possibilities Data bring to marketing organizations.
Understanding Value Ecosystems Maps (complementing Michel Porter’s Value Chains), assessing potential coopetition opportunities, exploring alliances and partnerships to deliver added value to the customer,… moves the competitive paradigm from a “zero-sum game” to an endless world of possibilities.
Futures Thinking or the systematic study of the “possible, probable and preferable”, provides marketers with a semi-structured approach to better understand what the future may bring.
BUSINESS MODELLING (Doing the right things + Exploitation)
While the term “business modelling” can also be used for exploring new disruptive business opportunities, I am referring to it in this cluster associated to everything related with the classic and fundamental marketing skills: creating and delivering value for the customer.
The Marketing 4 Ps described by Kotler are now frequently replaced for new paradigms in Marketing, but I do believe they are still 100% valid. Product is the cornerstone of the 4 Ps, as delivering a strong product and a powerful value proposition related to it (addressing customer pains and opportunities), is a foundational element of business success. Optimal Pricing plays a pivotal role in achieving profitable growth. Dynamic pricing, value pricing, price elasticity,… are just basic concepts a modern marketer must deeply understand. Promotion and brand management are necessary elements of the communication with the customer. Understanding market dynamics, channel management and Placement, very often differentiates the marketing rock starts from the others.
Portfolio management (new product introduction, product discontinuation,…) is the bread and butter of a marketing strategy. Most successful companies are very often those who shine in this discipline (e.g. Apple, Zara, 3M,…)
Strong market segmentation capabilities and Customer Lifetime Value management will tell you if everything done in Performance Marketing was worth the effort and a recurring business has been achieved, or acquisition costs have been wasted.
[ Keywords: Business Model / Product / Price / Placement / Promotion / Portfolio / Channel / Distribution / Research / Design Thinking / UX / Human Centered Design / Market Segmentation / Brand / Product Life Cycle / Customer Lifetime Value / Partners / Cost Structure / Revenue Streams / Value Proposition / ABM Account Based Marketing / Inbound Marketing / Content Marketing / Affiliate Marketing ]
OPERATIONAL EXCELENCE (Doing the things right + Exploitation)
This capability is about flawless execution at scale. Priorities have already been defined and now it is time for performing like hell. This is one of the most relevant levers in native digital businesses, while it is being widely adopted by legacy companies as well.
It is also the discipline of Marketing Automation, to ensure the right proposition arrives to the right customer at the right time, supported by strong automation platforms and solid customers and leads databases with a sharp segmentation (CRM).
Strong Loyalty schemes frequently improve customer retention and increase the yield of the existing customer base.
In companies like start-ups where there is not a solid track-record or a historical business to manage, Growth Hacking is frequently a discipline and an attitude where “growth” is the mantra and funnel conversion KPIs are like the North Star.
[Keywords: CRM / SEM / SEO / Display / CRO / Loyalty / Growth Hacking / Analytics / Marketing Automation / CPC / PPC / CPA / CPM / Trade Marketing / Inbound Marketing / Social Selling / Employee Advocacy / NPS / Customer Satisfaction / Service and Aftersales]
TECHNOLOGY ACUMEN (Doing the things right + Exploration)
Technology has always been an accelerator for change. There are two approaches to technology from a Marketing perspective: utilize it for the benefit of operational excellence (e.g.: RPA Robot Process Automation, Marketing Automation,…) or fully embracing it to incorporate it as a fundamental element of your product / service offering (e.g.: cognitive assistants, AR / VR experiences,…). I am covering here the second, when technology is not an enabler for your product offering but an element of it. In that situation, marketers need to understand and explore the possibilities of technology to incorporate it as an essential element of the value proposition.
While pure tech players will drive technology as a core competence and will develop it internally, if you are a marketer in a non tech industry chances are high that you will need to search for it outside. If that is the case, there are a number of possibilities (externalize R&D, embrace Open Innovation initiatives, acquire technology to incorporate to your product,…)
[Keywords: RPA / AR / VR / AI / Cognitive / Voice / R&D / Open Innovation / Corporate Venture Capital / Startup / Intrapreneurship]
So… are these capabilities above everything that a Marketing team should have? No, I have been just focusing on the pure marketing practice, but I would strongly recommend to complement the Marketing team with these other disciplines as well:
P&L literacy: knowing how to build and action a profit and loss statement and how different revenue streams and cost drivers affect to the overall profitability of the business.
Project Management skills: from classic project management to agile and scrum basics, in order to be effective and efficient when managing the business.
Soft skills: Negotiation expertise, team management mastery and strong empathy with customers and stakeholders.
Sensitivity towards environmental sustainability: understanding how sustainability is reshaping the whole business landscape and drives customer willingness to interact and buy from corporations.
Having reflected about all these capabilities required to run a solid Marketing team these days, I’m curious about the feedback that my colleagues and friends will provide. Are you missing something? Do you have another view on everything above?