Everyone who smokes, drinks too much or eats the wrong foods knows their behaviour should change. Trouble is, most people don’t do anything about it despite  the consequences. That is until the new year comes, when most delude themselves that this time they’ll tackle them (urged on by the populism of others’ new year’s resolutions) only to quickly fall back into their  old ways.

Well, according to St Bernard of Clairvaux, this is a kind of hell. For it was he who said a thousand years ago “L’enfer est plein de bonnes volontés et désirs” (hell is full of good wishes and desires). His point of course was that actions are more important than words, an idea behind  the proverb we know today“the road to hell is paved with good intentions”. 

So what are your business’s bad habits and what will you do differently this year? What actions will you take and by when?

Any time of year is a good time to reflect on such questions but new year is as good a time as any. And one practical way to go about this is to listen to what others have to say. Not only can they help improve things materially, once we understand how to improve the lives of others then there is more motivation to actually do something about it. And when we do, we get a little closer to heaven: that is, the place where our enterprise operates in a way that’s better for everyone involved.

Happy new year – may it be a prosperous one

Francis

PS: For more information about how WYS can put up a mirror and identify what your business’s bad habits are, please contact Francis on 07979 594093

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The Monty Hall problem is a brilliant way to start a fight with someone.

Now, I’m not advocating violence but when Marilyn Vos Savant published Steve Selvin’s idea in 1990, it provoked an uproar.  Thousands of Professors and Phd’s waded into a debate that raged for years. And even after a computer model demonstrated it to be true, many still refused to believe it. And as I have discovered twice in the last few weeks, this seems to really fire people up.

The scenario is simple. You are in a game-show. There are three doors behind which there are two goats and a car. You indicate one door at random that you believe has the car behind it. Without opening that door, the host opens one of the other two doors, and reveals one of the goats. You are now faced with two shut doors and he asks if you want to switch your choice or stick to your original choice. Should you switch?

When posing this question, it’s a good idea to take cover around now.  The second thing to do is to be ready with a clear explanation, stand well back and watch the fireworks begin. Because the answer, as Steve, Marilyn and many others went onto show, was, contrary to what we believe to be correct, ‘Yes’, it is better to switch.

Everything in one’s mind says there is no reason to do this. I have a 1/3 chance before he opened the door and a 1/2 chance afterwards. But there is no logical reason to switch, is there? How can there be? There are two choices and just because a door has been opened doesn’t mean I should change my mind.

The reason is breathtakingly simple to demonstrate.

There are 3 permutations of what’s behind the three doors:

1. Car Goat Goat
2. Goat Car Goat
3. Goat Goat Car

Let’s say you chose door 1 initially (so the first of each of the permutation above). Another door is opened and  now there are only two doors remaining, your one and one other hiding either  a car or a goat.

1. In permutation 1, door 1 hides the car. If you’d switched, you’d end up with a goat
2. In permutation 2, door 1 hides a goat. So if you’d switched, you’d get the car
3. In permutation 3, door 1 hides a goat. If you’d switched, you’d get the car.

So you have a 2/3 chance of winning a car if you switch and a 1/3 chance if you stick.Pretty simple huh.

What I find most interesting isn’t the problem itself but the reaction it gets from people. You can set out the problem and show the answer but every-time, people want to fight you all the way.

I suspect the reason is this: the Monty Hall problem stirs much emotion because we simply do not like being told we’re wrong. And we hate smart-arse’s leading us down a path and watch us make the choice and then tell us we’re wrong. And we hate it more after allowing them to allow us to fight them tooth and nail, even when faced with incontrovertible evidence to the contrary, we try to hold on to our original position, based on whatever flawed logic and not realising until later, sometimes years later, that we were wrong all the time.

It’s uncomfortable being faced with truths that conflict with our view of the world. Most organisations do all the time but do little about it because their world view conflicts with reality. Take RIM and Blackberry as a stunning recent example – their market research told them Apple’s i-phone was just not good enough. The mistake they made was that they started this research with a view of what their customers valued not what non-customers might value. Big mistake

The minority of organisations that do face up to reality, tend to have  reflective people,  prepared to confront the real issues and then deal with them; they’re the ones who are more likely to improve their chances of success (and get into fewer fights on the way).

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Private Eye reports this week the absurd extent to which brands will use social media. Apparently, someone at Millets, the outdoor retailer, decided to promote their instore promotion by jumping on Arsenal football club’s hashtag symbol for their new signing, Mesut Ozil. His distinct eyes  provided the tenuous link for Millet’s marketing department.

“#askozil Does our 20% off offer not just make your eye bulge with disbelief”

No doubt someone at Millets thinks all publicity is good publicity but apparently Arsenal fans were angered in such large numbers that the tweet was deleted.

I struggle with the whole concept of commercial brands trying to inveigle themselves into their consumers social space. On rare occasions this works but only when the entertainment value is such that it is worth spreading. But the vast majority of social media activity is quite simply rubbish, fatuous and naive attempts to engage consumers with a brand agenda which consumers don’t share. Why? Simple,  consumers just don’t live in the way that marketing departments imagine.

Take Camelot, also cited in the same Private Eye article. They spent £25K in agency fees and another £20K on a prize for consumers to send in a video of themselves singing a song from Camelot’s new advert. 26 entries later indicates how far away  Camelot and their agency are from their customers’ reality.

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Gordon Ramsay Hospital Road is one of only four 3* Michelin Restaurants in the UK. Its reputation is excellent, built up over 12 years of enjoying the highest culinary accolade in the world.

So it’s not surprising that the dining experience is amazing there.

Of course it’s not just the food that delivers: the service is wonderful too. From the welcome on arrival to the sommelier’s understanding of my budget and the clumsy description of what I wanted;  the discipline and military precision by which each course was served by the waiters under the authoritative, watchful command of the Maitre D; and the rich, detailed descriptions of each plate of food as it arrived.

The Maitre D  was particularly brilliant acting the host, attentive without interfering, charming without becoming too familiar. He even offered to introduce us to the brilliant head chef Clare Smyth, the only female head chef of a Michelin 3* restaurant and deservedly conferred with an MBE in the June 2013 honours list.

Great brands establish reputations on meeting expectations. A Michelin 3*star rating + Reputation + Price means you expect the best experience possible. But you also expect a certain style and panache in the way they behave, not just in the restaurant but generally, in the way they conduct themselves.

So what on earth were they thinking sending me this email a few days after my last visit?

Dear Restaurant Gordon Ramsay Guest,

Many thanks for your recent reservation at Restaurant Gordon Ramsay.  If you would kindly spare a few minutes, we would be delighted if you would click on the following link and complete a short ten question survey on your experience with us.

https://www.surveymonkey.com/s/6K3GVK5

Your time and comments would be greatly appreciated and if I can be of any assistance in the meantime, please do not hesitate to contact me.

With kind regards,

Phillip Rowlands
Guest Relations Manager

What were they thinking?

1. An impersonal greeting: I just spent a few hundred pounds there and they can’t be bothered to address me in person?
2. It uses ‘survey monkey’, a free online research tool used by small businesses. Smells cheap to me. What about a call or a letter, wouldn’t that be more in keeping?
3. Who the hell is Phillip Rowlands? We developed a brief relationship there with the Maitre D who was called Jean-Claude Breton. Why send an email from someone else?

But why did they feel the need to do this at all? The staff on the day know how well we got on and are best placed to manage customer satisfaction and best placed to sort them out.

I suspect that there is a marketing department somewhere which has been asked to run Customer Satisfaction surveys by some idiotic business manager (Phillip perhaps?). And being hard-pressed and budget restricted, they have opted for the lazy, cheapest way to execute their wishes. But in the act of so doing, they undermine their own brand – lazy and cheap are not characteristics they’d like to be associated with. But in a single thoughtless email, they undermine not just the hard work of people like Clare and Jean-Claude but 12 years of reputation building.

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Luxury menswear brand launched its new online store to my spam box today – which was nice. Followers of my previous ‘I’ve been spammed by…’ posts will know that i don’t think ‘luxury’ and spamming go well together and that anyone doing it is not actually building a brand but destroying it instead.

In this case, the email comes from marketing@bosideng.msgfocus.com. Where do I start? Firstly, even though I understand that they need to market themselves, I never actually want to  be told I am being marketed to. It rather spoils the whole ‘engage my sense and emotions with your luxury brand’ bit of marketing. As for  “msgfocus”, who are they? Is this the agency you are using to spam me? If so, why is their name appearing in the email?  Do they add to your brand proposition?

It turns out MSGFocus are nothing to do with mono sodium glutamate and are indeed an email agency called Adestra Ltd. Nothing luxury about them as far as I could see and certainly nothing luxury about the list they bought.

All of which doesn’t help Bosideng engage with me at all, p lacing them firmly in the in-authentic luxury brand category. And that’s why I’ll be clicking ‘unsubscribe’…

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Every now and again, my ignorance is poked by a sharp stick. This email from The Big Word did just that. And not just the fact that only 11.11% of today’s youth speak English as their first language; the 3000 languages expected to become extinct is a terrifying statistic.

Language diversity is incredibly important to culture and social ‘richness’. But learning languages is also a vital component of our future prosperity. In the UK, there is a natural tendency to believe English is the only language we need to get by. Whereas in reality, this is far from the case. Our growth and future prosperity relies on exports (unlike most American businesses whose domestic market is  big enough). And to compete effectively, business people must understand the cultural and linguistic context in which they operate and exchange

Unfortunately in the UK, people have lost sight of this and either don’t learn a language or demand to learn ones like Spanish at the expense of other more valuable languages like German or French. And the consequence is that those businesses for whom exports are important, have a poor supply of  employees with the right language skills. The CBI survey of employers is clear about what languages are important today.

Source: CBI Education and Skills survey 2012. 

For me the most striking exclusion is Portugese, specifically Brazilian Portugese, but what this list does give is a sense of which export markets are important to UK businesses today

So if you have children , do encourage them to learn a foreign language, preferably other than Spanish. They will be more valuable to employers, will contribute  to our future prosperity  and also enrich themselves at the same time.

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“Business model” is important in achieving sustained competitive advantage, is a hugely powerful weapon in the strategic armoury but is often greatly misunderstood.

One of the problems is that the term “Business model” (I’ll say BM from now on) gets confused with Pricing when in reality, the latter is a function of the former. So pricing is a function of BM whereby margin is captured in a certain way, for certain things and at a certain time depending on the BM you employ.

BM is part of the trio of strategic pillars on which a business sits and is therefore hard to change. Imagine trying to change the business model of an insurance company. Such organisations are built on a BM that makes money from collecting money for any given risk from the many and paying out to the few. Which is why such bodies are run by actuaries and underwriters and behave in the way they do. BM forms part of the identity of the organisation, its culture and behaviour, driving prioritisation of investment decisions, capital structures and the work that gets done inside the business.

What this all means is whilst price can be adapted to suit market conditions, business model is much harder to change. And that’s why it can be a source of competitive advantage.

The battle between Amazon and Apple is a great example of this in action.

Amazon is a retailer interested in retailing: books, films, music, now electronics and god knows what in the future. So its BM is all based on profit per product and their rate of sale. This means they prefer to sell volume items at a decent margin. So when they looked at their digital book business, they decided to make the money on the books and cover costs with the Kindle.

Apple on the other hand is an out and out technology manufacturing company. This means they make their money form selling hardware devices and everything else – software, content, apps etc – are important to the consumer but peripheral to the bottom line. So when it comes to digital book readers it has invested in software that enables the 1-pad to become a competitor to the Kindle and promote this to book readers to generate profits. However, it has ensured i-pad compatible books are available (to make  the product valuable) but chooses to only recover costs on i-tunes, mimicking its strategy for the ipod.

The fascinating battle playing out in the digital book market at the moment involves two behemoths with two completely different business models. So who’ll win in this battle? The customer essentially has a choice between a lower cost task specific device (Kindle) with higher consumption costs or a more expensive multi-application device (i-pad) with lower consumption costs. I suspect  both will carve out market positions and thrive but there’s won’t be room for many competitors. Unless someone comes up with a completely different business model. Time will tell.

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The marvellous Brand E, a media and events firm concerned with innovations in brand engagement, ran a splendid session yesterday about Crowdsourcing. We heard about wonderful ways in which organisations indulged in this activity.

The highlights were Zoopa and Sccopshot, both of whom had great tales about the ways in which organisation had used their crowd-sourcing services, the former using creatives and the latter, photographers. And alongside them were Microsoft and a digital agency telling equally wonderful stories.

Except I didn’t hear one presenter talk about the commercial value of crowd-sourcing in hard, monetary terms. No one mentioned P&G ‘s long-standing strategic aims for the way they do R&D and no-one talked about the value they accrue from this, I’m guessing because neither they nor an agency would or could profit from P&G’s strategy.

Which was shame really as there is clearly a big conceptual idea behind crowd-sourcing but perhaps it doesn’t translate into an enduring commercial business model for external companies?

Or will it?

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In my previous post about Blackberry and RIM I forgot to add the following insights:

• My Blackberry crashes regularly so I have to frequently reboot it by removing the battery, a 5 minute procedure
• The keyboard often doesn’t work so I can’t actually use it like a phone and actually answer a call
• Their batteries have got worse and worse over the years and now seem to need recharging more regularly
• I hate Facebook automatically synchronising with my work calendar so it fills up with the birthdays of people I haven’t seen since 1969 who asked to be my friend five years ago

I have also been told that I-Phone’s have always synchronised with PC’s since launch whilst Blackberry’s could only do so late in 2011, and even now, still can’t do this.

PS: My Blackberry collapsed on Sunday, weighed down as it was with the entertainment software that stops me using the device for what it used to be  truly  great at: a work device. So I called, O2 my provider, and they sent me a replacement device on Monday morning. So far so good. Except the device they sent me stopped working today because the battery doesn’t work. That’s three fatal problems with my device in six months. No wonder they’re going out of business…

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In 2008, HM Treasury commissioned some research in order to understand the growth challenges facing UK based SME’s. Interestingly, they did so by running a comparative study against equivalent US firms.

It’s a long 10o page report  but there are some fascinating insights. For instance, they found that less than 10% of SME’s are growth orientated, the vast majority happy with steady state performance especially those in retail and catering type businesses. Not surprising perhaps but it reveals how few firms there are on which the US and UK can depend on for growth. In the UK  only 5.8% of SME’s were growth orientated. Perhaps Mrs Thatcher was right, we are just a nation of shopkeepers…?

What was interesting was business owners’ experience of growth. Despite their efforts at planning, many owners were surprised by “episodic and irregular” growth spurts which didn’t meet their high growth expectations. And here’s where the US:UK comparison was interesting: 61% of US firms achieved their growth objectives whilst only 23% of UK firms did.

I haven’t heard much about what the Government are doing to stimulate this vital part of the business sector . But despite growth businesses being a small proportion of all SME’s, even 5.8% represent a large number of businesses. But what distinguishes them from their North American counterparts is strategy planning: when it comes to competitive strategy, the US firms are more likely to have a strategy and plan about customer growth than UK firms.

Is this why UK firms don’t achieve their growth plans? Is it possible what the UK economic recovery needs is businesses with better strategy?

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