Don' forget to love your own company's brands

I had a web hit from someone at Microsoft today, and what I thought was funny was that the searcher used Google.com. That reminded me of a story.

Way back I got my dream summer job, an internship at IBM, and my first day in the office my boss asked me to make a copy of a bunch of documents, so I went to one of the other people in my office and I said, "Hey, can you tell me where the Xerox machine is?" He responded, "We make copiers here."

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branding, spoken post

Clean out those old products from the cupboard

This month's PDMA Visions magazine, in an article by Leland Shaeffer, Rafael Lopes and Eric Rose, takes up a little-known part of the product manager's job: that of retiring old products.

It's a job that people avoid. As a result, the article states, many companies suffer because they don't truly understand the downside of carrying too many obsolete products.

In many cases, companies mistake revenue for profit. Products that still have a customer base are assumed to be profitable, especially since any development cost was long-ago amortized.

In fact, write the authors, because they've lost scale and scope, old products can easily lose money on a direct-cost basis. Add to this the opportunity cost due to the time and energy these products take up throughout the organization, and hanging onto too many old dogs can significantly affect company profitability.

Getting rid of obsolete products is difficult. There are customers to migrate or fire, distributors to negotiate with, and generally a lack of standards around product retirement.

One interesting suggestion from the authors: plan for product obsolescence in the initial product plan (akin to including terms for ending a partnership in the initial partnership agreement).

Another: set aside "retirement funds" to allow product managers to cover shutdown costs for obsolete products--and thereby remove another reason for old products to persist: plain old inertia.

(Photo from zdeso via stock.xchng)

product management, portfolio management, life cycle, PDMA Visions

Don't kick the bucket: it's got your unused cellphone minutes in it

Finishing today's roundup with breaking news from the Wall Street Journal (link): the word bucket has become the business world's favorite metaphor. A delightful front-page article describes how bucket has supplanted other terms like silo (missile connotation = bad) and basket (too feminine) as a way to express organization or sorting of people, financial figures or other miscellany.

(The Journal seemed to run more of this type of story in the past. Am I the only one who thinks its recent makeover reduced its sense of humor as well as the size of the paper?)

One consultant is asked whether European cellphone companies will adopt the term to describe allotments of minutes included in a monthly plan, as American companies already do. “'They will adopt bucket,' he says. 'That is my strong feeling.'”

metaphor, idiom, wireless, finance, Wall Street Journal

Think business as usual doesn't cost you money? Check out Parker Hannifin

If you thought cost-plus pricing went out with the Reagan administration, read today's front page Wall Street Journal article on Parker Hannifin Corporation and the efforts by its CEO to overhaul its decades-old pricing approach.

Parker's managers priced their 800,000 products using roughly the same formula: cost plus 35%, whether the product was a commodity or a one-of-a-kind.

According to consultant Tom Nagle (disclosure: my old pricing professor), 60% of industrial companies still price in this manner. Yikes!

With the help of outside consultants (and an iron-willed CEO moving aside internal objections), Parker sorted its products into five buckets from commodity through most differentiated, and raised prices on most. Some commodity products saw their prices lowered.

Possibly the most difficult task was to push the price increases though their distributors and customers objections. But the result was a $200 million increase in operating income and a return on invested capital rising from 7% to 21%.

The lesson for businesses is to look at pricing regularly. Don't let your pricing or your pricing model get stale. And don't be afraid of raising prices when you find a product priced too low. (Perhaps try some deliberate mistakes by raising prices on a small subset of products and see what happens.) The results can be astounding.

marketing, pricing, strategy, Wall Street Journal

Take a vacation, why don't you?

Regular readers of this blog may already realize that I'm hung up on sleep, or lack thereof (see here). Perhaps it's because, with children just having emerged from the wake-several-times-a-night phase, I'm on a first-name basis with sleep deprivation. It also may be evidence of a career-long struggle to find balance in a culture that celebrates and honors workaholism and sleep avoidance.

At any rate, more good news for people who just want a rest arrived today. The New York Times's Frequent Flier column profiled consultant Mark Rosekind of Alertness Solutions , a former director of NASA's fatigue countermeasures program (now that's a job title). His assertion? In addition to getting more sleep, you also need a vacation. Says Rosekind:

I just completed a study for Air New Zealand that suggests that if people actually took their allotted vacation time, they could improve their performance by more than 80 percent.

If you still don't get the message, Rosekind includes a truly frightening anecdote about a TV reporter who, apparently out of story ideas, went without sleep for three days. What she experienced the last day will make you want to take a nap straightaway.

sleep, productivity, balance, New York Times

The man who harnessed the power of dialogue

Dr. Milton Wexler died earlier this month at age 98. Dr. Wexler was a sucessful Hollywood psychotherapist who co-wrote the screenplays for the films "The Man Who Loved Women" and "That's Life!" with the director Blake Edwards. But those factoids were not what interested me when I read his obituary in last Saturday's New York Times.

Dr. Wexler devised a new technique to spur progress on the research of Huntington's Disease, a terrifying genetic disorder that claimed the life of his first wife. (Here's a recent story about Huntington's.) The Times obit stated:

He formed the Hereditary Disease Foundation to gather young scientists from different disciplines and institutions for freewheeling talks about Huntington’s as well as to sponsor research....

His strategy was one he developed for group therapy among creative people: no-holds-barred discussion toward a common purpose in a nonthreatening climate.

The research that emerged “changed everything in the world of genetic disease,” Dr. Housman said, adding that many influential scientists had not expected so much progress for 100 years.

What can a psychotherapist--not a medical researcher--do to attack the disease that took his wife and threatened his children? One would imagine that Dr. Wexler would feel powerless. Instead, he harnessed the power of dialogue and spearheaded significant advances against the disease.

It might not be a stretch to call the Hereditary Disease Foundation the world's first open source project. In that, Dr. Wexler was twenty years ahead of his time.

innovation, medicine, genetics, obituaries, New York Times

Ask more of, and raise rewards for, employee idea-generators

Innovation via employee-generated ideas fails at most companies. Employees generate a number of ill-thought-through concepts that management, to its embarrassment, must quickly discard. "Winners" get a handshake, a plaque, perhaps a $100 check. Eventually comes a suspension, termination or petering out of the idea-generation initiative, which then finds its way into the lore of company failures, never to be repeated.

I've seen that happen at more than one company. Gary Carini and Bill Townsend, writing in the April Harvard Business Review (free link through April 2007), suggest two fundamental changes in these programs: (1) require employees to flesh out their ideas and develop realistic business cases for them and (2) increase the rewards for those ideas that work to more than symbolic levels.

The authors write:

Companies that required employees to present business cases for their ideas and offered substantial rewards saw the number of workable ideas rise significantly...[increasing] in the 20% to 40% range.

They suggested rewards such as half the first year's savings for a cost-reduction idea. For one administrative assistant, that was worth $152,000. For that kind of potential reward, I'd put my thinking cap on, no matter what my job.

innovation, creativity, rewards, Harvard Business Review

Daimler pitches continued alliance after Chrysler sold

As discussed a few weeks ago when DaimlerChrysler first revealed the option to sell Chrysler to another investor, untangling the connections between the Mercedes and Chrysler operating units poses a challenge for buyer and seller. Perhaps to reassure investors, and get a better price for their asset, Daimler yesterday announced (as reported in the Wall Street Journal) that it would be willing to continue many aspects of the cooperation between Mercedes and Chrysler.

Daimler's offer of joint purchasing, component sharing, etc., after a divestment is more appealing to a private-equity buyer than another car company, which might have strategic and competitive reasons for limiting such sharing (as might Daimler).

Splitting operating siblings who are in the same business is the corporate equivalent of separating conjoined twins. After years of union, each has grown to rely on systems and processes provided by the other twin. When the units are separated, those systems must be recreated. Daimler's offer to continue important partnerships allows the weaker twin (i.e., Chrysler) to continue to benefit from the stronger twin's systems, as well as save expenses, even if they aren't formally connected anymore.

(Photo still from the movie "Stuck On You")

strategy, alliances, automobiles, Wall Street Journal

On designing

Lots of talk this week about design, including Business Week writer Bruce Nussbaum's broadside on arrogant designers, and reaction here, here and here.

I am a rank amateur when it comes to the aesthetics of design. For example, my wife created the vision and look for our house's new addition, specifying materials, sizes, configurations; my biggest contribution was to appreciate the result.

With regards to technology products, I perhaps have more to offer. Aesthetics are a small (though significant) part of what constitutes design for tech products. A much larger component is answering this question:

What will the product do, and what will it not do?

The functions of traditional products (buildings, furniture, housewares) are typically constrained by tradition, physics and the properties of the materials used. Designers of high-tech products, especially those that are software-driven, face innumerable choices about what to include (a term has emerged describing a typical result: "software bloat"). The first personal computers sidestepped these decisions by providing platforms with little built into them (except a compiler--the message to users was, "use it for whatever you can build!"). Word processing programs, spreadsheets, Powerpoint, games, web browsers, anti-virus programs, e-mail programs, etc., followed.

Formerly lower-tech products like automobiles and airplanes now confront this scoping problem. BMW replaced radio knobs with iDrive, a function-stuffed, nearly unusable system. Delays in Airbus's A380 project stemmed not from issues with airworthiness, but from problems with the 300+ miles of electrical wiring.

iDrive and PCs demonstrate the biggest negative side effect of the urge to function-stuff. The more things a product can do, the harder it is for mere mortals to use. Consider the following question: if you have one PC in the house, in which room do you place it?

Apple's genius with the iPod, iMovie and other products was to design them to do less, to make them supremely usable (and good-looking) and of limited functionality. For them, the iPhone will pose a challenge: how to create something with as many uses as a Swiss Army knife but which doesn't baffle its buyers.

(Picture by Annette via stock.xchng)

design, innovation, software, technology

Computing pioneer dies at age 82

The man who led the creation of Fortran, the first successful high-level computing language, John W. Backus, died Saturday at age 82. According to this obituary in the New York Times, Mr. Backus grew tired of "hand-to-hand combat with the machine" via assembly language, and convinced his superiors at IBM to let his team create a new language that communicated with the computer at a higher level of abstraction; i.e. closer to the process of human thinking. The first Fortran compiler was completed in 1957, a year before the word "software" had even been coined.

The Times added:

Fortran was also extremely efficient, running as fast as programs painstakingly hand-coded by the programming elite, who worked in arcane machine languages. This was a feat considered impossible before Fortran. It was achieved by the masterful design of the Fortran compiler, a program that captures the human intent of a program and recasts it in a way that a computer can process.

People who once programmed in Fortran are getting older, and many have moved onto other professions, like marketing.

Rest in peace, Mr. Backus.

innovation, software, programming languages, obituaries, New York Times

The value of B2B brands

Jon Miller of the Marketo blog has a very powerful post refuting some people's belief that B2B brands don't matter, and that investing in brand-building is a waste of money for B2B companies.

I'd go as far as to say that anyone who thinks that brands don't matter in business-to-business sales hasn't sold to many businesses. And certainly hasn't been involved in buying much for their companies.

In my experience, selling with a well-established brand behind me is much easier than selling an unknown brand. And buying a well-established brand conveys stability, longevity, predictability and a measure of security.

By way of the evidence of B2B brands' value, I'd point readers to the March Harvard Business Review, in which James Gregory of CoreBrand and Donald Sexton of Columbia University describe their method for calculating the brand equity of business-to-business companies. (A free copy is available by following this link.) Sexton and Gregory concluded there were significant deltas in brand equity between leading companies and lagging companies across many B2B industry groups. For instance, in the Office Equipment category, brand equity ranged from 18.37% of market cap (highest) to 4.26% of market cap (lowest).

If B2B brands are meaningless, how then to explain the differences in brand equity these statistics illustrate?

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branding, B2B, brand equity, Harvard Business Review

Candor in business storytelling

It's called a "confidence" game, right? Why? Because you give me your confidence? No, because I give you mine. So what we have here, in addition to "Adventures in Human Misery," is a short course in psychology. - David Mamet, House of Games screenplay, p. 34

"House of Games" is one of my favorite movies, and these lines in particular, spoken by the con man Mike to the psychologist Dr. Margaret Ford, have stuck in my mind for years. I think they say something important about connecting with people.

Connecting with people is critical for selling. And one of the ways we connect with people is to tell them stories about ourselves. [And, no, I'm not trying to compare selling with a con game. Was it necessary to point that out?]

The theme here is candor and openness. I was at a business storytelling workshop recently, and the stories that were most effective (by acclamation of the attendees) were ones where the teller let down his/her guard, and revealed something personal. This is one of the reasons storytelling is more effective than reciting a list of benefits to a prospect. In addition to being interesting and easy to understand, it also helps create a personal bond with the prospect. It means that you may want, in your business storytelling, to reveal anxieties, fears and feelings.

In other words, to give the prospect your confidence.

(Photo still from the MGM DVD.)

movies, sales, storytelling, narrative

Good service--a product's most lucrative feature?

Customer service is so often seen as a necessary evil, or, worse, the first place to cut costs, that it's easy for product managers to focus on other areas. But an article in the March Harvard Business Review makes it clear that good service creates shareholder value, and poor service destroys it.

The article (link - $$), by Christopher Hart of the Spire Group, points to a study from the University of Michigan, which created a hedge portfolio based on buying companies rated highly on the American Customer Satisfaction Index (ACSI) and selling short those rated poorly on the ACSI, which tracks customers' perceptions of more than 200 companies.

Over a five-year period, the ACSI hedge portfolio grew 144.5%, while the S&P 500 grew 38.7%. (Here are some other comparisons of high ACSI and low ACSI companies.)

The article also shows evidence that service problems have a greater effect on customer's likelihood to recommend than the product problems that create the service calls in the first place.

So, think twice before you disable the "0" key on your IVR or send your contact center to Asia. If it doesn't make your customer service better, it's better not done at all.

product management, customer service, shareholder value, Harvard Business Review

Here's how I'm using Spin-my-Blog

For the last couple of weeks, I've been doing occasional posts using the Spin-my-Blog voice blogging service. What I've found to be the best approach is to use it as a place to post ideas. Things that I would otherwise write on a sticky note, instead, I speak into the phone. The system translates them to text and sends them directly to my blog listing as draft posts, where I can then edit them, expand them, add photos and tags and prepare them for publication.

It's highly convenient, saves typing time, and I don't lose any ideas (which, I suppose, is not always a good thing).

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mobile, blogging, technology, blogs, spoken post, spoken blogging

Favorite non-business business blogs

Can blogs that aren't about business shed light on problems we businesspeople face every day? James March, the professor who taught us about foolishness, might say yes. Here are my favorites:

1. Hobby Princess - all about handicrafts, yet sprinkling in lessons for those of us in business. Check out this post about how small can be better than big. Or this one about the conflicts between copyrights and open source.
   
   
2. Greg Mankiw's Blog - economics brought to ground level by a Harvard professor. Ostensibly a tool for his introductory econ students, the blog takes on questions of government policies and looks at them with an economist's eye. Want to learn what Pigovian taxes are? Check here.
   
   
3. David Report blog - on design of architecture, furniture, clothing. Beautiful pictures and some thought-provoking commentary about how design can improve or degrade our lives.
   
   
4. Bill Walsh's Blogslot - the author, a copy editor for the Washington Post, regularly points out poor grammar and word choice in the nation's newspapers. The lessons for anyone who writes (i.e., all of us) are invaluable. Here's a simple take on an emerging problem in blog grammar.
   

design, crafts, economics, writing, blogs

Hershey: the end of an era approaches

There was a small item in the Wall Street Journal today mentioning that the Hershey Company, among others, might be interested in purchasing the confectionary business of Cadbury Schweppes. Perhaps you didn't notice that. But you don't live where I do.

Our house is a few miles from the self-proclaimed "sweetest place on Earth"--Hershey, Pennsylvania. Here, Hershey is more than a company, more even than a large local employer. It is the pre-eminent industrial symbol of the area. The Hershey name graces the town (the company came first), a gigantic amusement park close enough to the factory for guests to smell the cocoa, two hotels, a minor-league hockey team, several schools, and the largest teaching hospital within 100 miles. Main Street is called Chocolate Avenue.

It's quaint, really, and, like most things quaint, its days are numbered. The early warning sign occurred in 2002, when the company put itself up for sale. A huge local backlash rose up and quashed that idea. But the changes in the offing for Hershey were just beginning.

Last month, Hershey announced that it would reduce employment by 1500 people and open a large plant in Mexico. The Harrisburg Patriot-News reported that staff members had been told the toll could be 3000 workers. The catalog-fulfillment side of the business is being outsourced to Philadephia and Illinois.

And the purchase of a company like Cadbury wouldn't be just a purchase. Cadbury is larger than Hershey, and more global. Any such combination would mean more production shifting, right-sizing, and the like. There's no way Hershey would still be Hershey the way we know it here, today.

Someday, I'll tell my grandkids about the time we lived near a company town, and they will say to me in response, "What's that?"

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(Photo from the Hershey web site)

strategy, acquisitions, Patriot News, Wall Street Journal

Web 2.0 - coming soon to your office desktop, or not?

A great post by corporate IT guru Andrew McAfee last week chastised FastForward conference attendees for their blind faith that Web 2.0 tools will gain widespread adoption in business. And it got me thinking about how companies and individuals use Web 2.0 tools differently. Here is one conclusion:

The great convenience and usefulness of Web 2.0 tools has spurred their rapid adoption by consumers (e.g., 50 million+ blogs, according to Technorati), while concerns over security and control of information have inhibited their adoption by corporations.

And that's much to the detriment of business. Collaboration is essential to any business. And with large businesses in particular, collaboration across distances and other boundaries (organizational, time, national, etc.) is mandatory. Yet IT departments don't know how to deal with some of the best tools--wikis, blogs, content tagging, social networks, etc.--that can benefit that collaboration.

Like individuals, businesses will have to give up some of their obsession with confidentiality and privacy in order to make use of these tools. The companies who figure out how to solve that equation first will have a great advantage. The rest will be wondering, five years from now, what happened.

knowledge management, information technology, web2.0

PGA Tour has lost its sense...of branding

Sports marketing has been careening toward the cliff of excess for some time now (the wall-to-wall corporate sponsorship depicted in "Talladega Nights" was more verisimilitude than parody). But the recent revolving door of sponsor-named events in the US PGA golf tour is seriously damaging the history and heritage of US professional golf.

The latest example is something called the PODS Championship, held this past weekend in Florida. (PODS stands for Portable On-Demand Storage, in the form of a shipping container that this company drops in your front yard for you to fill with stuff, where it sits till your house project is done, much to the delight of your neighbors.)

The PODS Championship used to be the Chrysler Championship, and was held in the fall, not in early March. It's always been in the Tampa area, but you wouldn't know that from any of the communication surrounding the event. In fact, for all I knew (and I'm a golf fan!), this was a brand-spanking new event.

I could have said the same thing about the Wachovia Championship, the Fry's Electronics Open, the Buick Classic, the Buick Open or the Buick Invitational, not to mention the late, great 84 Lumber Classic. (Some of these were events with history, and some were new. See if you can guess which!)

What ever happened to the Westchester Classic, the Western Open, or the Firestone Tournament of Champions? At least AT&T was smart enough to retain part of the historical name of its tournament (the AT&T Pebble Beach Pro-Am).

Exclusive naming rights bring tens of millions of dollars yearly to the PGA Tour, helping purses to grow tenfold between 1986 and 2006, according to GolfWorld. But at some point they'll be ruing the day the good old Greater Hartford Open became the Travelers.

branding, marketing, sponsorship, sports

Yahoo-AT&T: an alliance under pressure

Nothing cures end of the week writer's block better than a front page Wall Street Journal article on one of my favorite subjects: alliances. Today's article about the shifts underway in the Yahoo-AT&T partnership contains lessons for any company in an alliance or contemplating one.

AT&T is seeking to renegotiate the terms of the alliance, under which it pays Yahoo a revenue share for each DSL customer it signs up via Yahoo, and funnels traffic to Yahoo services through its home page. Simply put, the world has changed since the original deal was signed in 2001, and so has the power dynamic in the alliance.

AT&T has made two gigantic acquisitions and now is a behemoth with 12 million broadband customers and a strong nationwide brand. Yahoo has fallen to number two in internet search and advertising to Google. Add the fact that Google is paying people for placement on computer screens and home pages, and Yahoo will have to take a serious haircut as the alliance is recast.

The lesson for those striking alliances--monitor changes in the landscape and be prepared to make adjustments (or have them thrust upon you) as your business and your partner's change. No good thing lasts forever.

(Update: in a tantalizing blog post, the Journal speculates that the endgame of this alliance could result in AT&T acquiring Yahoo.)

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strategy, alliances, negotiation, Wall Street Journal

Cold calling with dignity (yours and the prospect's)

I had to do some cold calling today, so naturally I worked from Jeff Thull's script. It's simply the best approach I know to keep the dignity of the customer intact while you're interrupting them with an unsolicited pitch. And since I hate getting cold calls, when I do my own cold calling I try to keep that in mind. Here's Jeff's 20-second pitch, outlined nicely in his new book Exceptional Selling.

Convey professionalism by identifying yourself and your company straightaway. "I'm John Caddell with Caddell Insight Group." (Don't ask how they are doing today.)

Give the prospect an easy way out, and show respect for his/her intelligence by admitting that you don't know if they need or want what you're pitching (note: you should have done sufficient preparation and qualification to believe they very well might need your solution). "I'm not sure if it's appropriate we should be talking."

Show relevancy by connecting what you do to companies like the prospect's. "We work with companies like yours who are developing breakthrough technology products..."

Connect more deeply by referencing a generic problem they might be facing. "...and occasionally have difficulty getting their sales forces to embrace the new product."

Ask for permission to continue. "Do you have a moment to talk?"

There's lots more to the method, especially if they say, "Yes, I'd like to talk more." But you'll have to read the book for the rest.

Voice-to-Screen messaging - powered by SpinVox

psychology, sales, spoken post, reading list

Public radio's Ira Glass on storytelling

Two of my favorite bloggers have posted on Ira Glass' (This American Life) videos on storytelling.

Shawn Callahan of Anecdote discusses the video here and connects it to the work his team does with businesses. (There are still a few days left to register for Shawn's narrative in business workshop in Boston on March 29.)

And Garr Reynolds of the great Presentation Zen blog breaks down the video and summarizes each section.

Storytelling is everywhere.

storytelling, narrative, presentation

Are CEO's powerless to lead?

That might be the conclusion you draw from an article from last week's Wall Street Journal Business Insight section entitled "Leading from Below" (free link). The authors, James Kelly and Scott Nadler of consultancy ERM, write:

...The truth is that at most companies, senior managers are increasingly hamstrung by the demand from investors and analysts for immediate results. If change is going to come about at these companies, it will be because the managers below the CEO (and below the whole "C suite"...) take the initiative and risks to drive the company in a different direction. Change will have to come from those leading from below, rather than relying on leadership from the top.

Excuse me, but in this scenario, what are the "C levels" doing every day? Going to Davos or TED, I guess.

It sounds as if the authors have seized on a point discussed by Bower and Gilbert in their recent HBR article (link) "How Managers' Everyday Decisions Create - or Destroy - Your Company's Strategy," but, in the case of "Leading from Below," middle managers crafting and executing their own strategy in large companies is a feature, not a bug.

The point of the article may be that senior leaders should foster leadership throughout the ranks, and not micromanage. All well and good if that's the case. But if that's what they meant, I wish they had written it.

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(Picture by lckidwell via stock.xchng)

leadership, strategy, Harvard Business Review, Wall Street Journal, spoken post

Dispositional innovators -- however you say it, they're not afraid to try something new

This thought didn't fit in yesterday's post on Private Label Strategy, but authors Nirmalya Kumar and Jan-Benedict Steenkamp brought up a fascinating and new (to me) concept with the unwieldy name listed in the title. As defined in the book:

"Dispositional innovativeness is the predisposition to buy new products and brands at an early stage, rather than to remain with previous choices and consumption patterns...." (p. 171)

Yeah, so what? So what is that these types of people (we'll call them DIs) are very important in the success of radically new products and services. Find and reach the DIs, say the authors, and your new product has a chance. Waste your marketing on the rest of us, and you might as well pull the product off the shelves now.

And even more interesting was Kumar and Steenkamp's assertion that different countries have very different levels of DIs. In Europe, the UK is 24 percent DIs, where Spain is only nine percent.

So, if you're trialing a new product, pick the UK over Spain every time. And the best test market of all, at least at the moment? The US of A. We'll try anything once.

(Picture by digital_a via stock.xchng)

innovation, adoption, marketing, product development

Know a great innovator?

Well, don't just sit there reading blog posts! Nominate them for the Product Development and Management Association's (PDMA's) Outstanding Corporate Innovator award.

innovation, awards, PDMA, product development

Everything you ever wanted to know about private labels: What I'm reading now #3

Unless you're a consumer-packaged-goods marketer or retailer, you probably have no idea how pervasive private labels have become in the stores you frequent. But the next time you go to the drugstore, see if you pick up a bottle of Aleve or the CVS naproxen sodium placed right next to it.

Professors Nirmalya Kumar of London Business School and Jan-Benedict Steenkamp of Duke University have satisfied the curiosity of everyone who ever wanted to know about private-label goods by writing Private Label Strategy: How to Meet the Store Brand Challenge.

According to the authors, the opportunities for private labels are vast, and the challenges to branded goods are daunting. Private label goods provide a point of differentiation for the retailer (such as Target or Tesco), and they create powerful leverage when negotiating terms with brand manufacturers.

Leading packaged-goods companies, like Procter and Gamble, Unilever and Nestle, are responding to the challenge. How? Four main ways:

1. partnering with retailers to produce exclusive specialty offerings
2. innovating like crazy to stay ahead of copycat private-label offerings
   
3. divesting laggard brands
   
4. increasing investment in advertising and marketing for the brands they retain
   

To point (4), the authors point out a most interesting development: as a result of the increasing size and scale of retailers, brand manufacturers' marketing dollars have been drawn away from advertising and other brand-building activities toward point-of-purchase and promotion investments. The latter help the retailer and sales (in the short term), but at the cost of the long-term value of the product--and as a side effect improving the prospects for private-label copycats.

The book is essential reading for any consumer-packaged goods companies or retailers, and for anyone else who wants to study up on a dimly-lit corner of the marketing world.

innovation, branding, marketing, retail, private label, reading list

Alliances: the importance of seeing the end before beginning

When negotiating a strategic alliance, few companies take the time to think about and discuss with their partners a plan for what happens when the alliance comes to an end. And they all end, sooner or later.

In an article in today's Wall Street Journal Business Insight Section, authors Ranjay Gulati, Maxim Sytch and Parth Mehrotra (link - $$) urge companies to set out the rules for disengagement with enough detail that when time comes to dissolve the alliance, most of the important questions--who retains the intellectual property, how will customers be supported, who takes ownership of tangible assets--have ready answers. Leaving these items undone, the authors argue, adds significant conflict and risk to an alliance.

From my experience, the contemplation and discussion of breakup items are the last large issues on the table before closing. The psychology of negotiations has a lot to do with it. It's hard to talk about endings when you're just getting to know each other.

But deferring the discussion till after the agreement is signed doesn't work. Then, everyone who isn't overcome by deal euphoria is working on closing business. And the shifting power dynamics of alliances make pinning down criteria post-signing a very difficult task.

So, as unpleasant as it may seem, negotiate that prenup before getting married to another company.

(Picture by rovaro via stock.xchng)

strategy, alliances, negotiation, Wall Street Journal

Spoken blogging in action

Last month, I wrote about a new speech-to-text service that allows you to speak your blog posts into an ordinary telephone. Now I've got the service, SpinVox Speak-a-Blog, set up with my own blog, and I used it to create today's earlier post.

Some results:

The translation service worked very well. I had to make a handful of very minor corrections--the spelling of a name, a couple of capitalizations, one verb tense problem. But these took all of a minute to do.

I retitled the post, did some slight line editing, and added Blogger labels and Technorati tags. (Note to product management: it would really be something to speak your tags and have the code appear magically in the post.)

I'm going to try to do one spoken post a week to see how they evolve and compare to the written posts. There's enough time to speak about 75 words. Most readers would say that's plenty!

mobile, blogging, technology, blogs, spoken blogging

Salespeople as Parents - prescription for failed sales

Have you ever spoken to a sales person & felt they were treating you like an idiot? We, as sales people, tend to have these types of conversations when we're trying to close a sale, even if we don't realize it.

Jeff Thull, in his book Exceptional Selling, calls these Parent/Child interactions. We as parents treat prospects like children, persuading, lecturing, pleading. The prospects, sooner or later, shut down. (Like me talking to my six-year-old.)

An adult conversation, where we and the prospects could talk like businesspeople, would be more effective, wouldn't it? (Sorry--didn't mean to lecture. Strike that last sentence.)

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