Iconoculture recently reported on an unsettling trend in consumer travel—as airline innovation fails to keep pace with consumer demands, consumers are either rewarding smaller players like Suite Arrival (who delivers TSA-friendly personal items from popular brands directly to travelers’ hotel room) or inventing their own “DIY” approaches to make travel less frustrating.

The news isn’t all bad—Iconoculture spotted a few noteworthy exceptions as big brands made progress in the long march to improve travel.  Noteworthy innovators winning travelers’ endorsements include:

• Southwest Airlines “Bags Fly Free” Policy: takes one painful and expensive worry out of travel, and translates into clear, benefit-driven marketing messages.
• JetBlue’s Customer Bill of Rights: reimburses customers for the most aggravating travel missteps, including vouchers and refunds when flights are cancelled and delayed.
• Clear: the growing fly-through-security service enjoys over 75% favorability in online mentions.

For more winners—and a few losers—MLC members can check out Iconoculture’s full trend analysis.

Starting with polycentric innovation, in a recent special report on innovation in emerging markets, The Economist described how companies like Cisco and IBM are building innovation centers in emerging markets.  These aren’t just laboratory outposts—these are major innovation centers on par with those in developed markets. These emerging market innovation centers act as a sort of crucible—an intensely pressured, constrained environment that accelerates innovation, and potentially leads to discontinuous solutions that you simply wouldn’t get in other contexts.

This crucible effect came through loud and clear in this fascinating read on how Danone is using crucible markets like Senegal to develop radically different yogurt offerings.  In this case, the kinds of constraints forced by wafer-thin consumer budgets and a very underdeveloped distribution infrastructure forces unconventional thinking, along with fast failure and correction cycles.

A similar kind of crucible effect surfaced recently in conversations with some top CMOs in the MLC membership.  As the group discussed marketing talent development, there was this realization that some geographic markets can serve as “marketing discipline” crucibles. For example, the Chinese market is far in front in using social media to launch new products. One approach to marketing talent development we discussed was to rotate talent into these crucible marketplaces for 6-12 months to develop expertise very rapidly.  Some of these CMOs came away from the conversation with the action item of formalizing a network of global talent development crucibles.  They would prioritize markets that could act as crucibles for the key marketing disciplines that would separate winning marketers from laggards in the next 3-7 years (e.g., mobile marketing, social media).

For more discussion on crucibles in the context of innovation, join us at one of MLC’s upcoming breakfast meetings, hosted by world-class innovators of W.L. Gore (July 22), 3M (September 22) and Guardian Life (November 30).  Register here.

(photo by Flickr user John LeGear)

One of the sharpest subversive ads of the year (a humble opinion) is available at http://www.tubgin.com/, and click on “A short, short story”.

These brands offer just a few examples of a broader trend in tapping directly into the edgier, snarkier sentiments of today’s consumer (Whitney had to tell me what snarky means).

Iconoculture—MLC’s new partner for bringing real-time consumer insights to our members—has picked up on this trend in its most recent research on “Subversive Branding.”  Iconoculture’s findings point marketers in an interesting direction: while subversive branding can breathe new life into our marketing messages, it also runs the risk of alienating consumers.

Iconoculture offers a few simple factors to consider before integrating subversion into your brand strategy:

• Category Norms: Is subversion common in your category? Is it rare? If you’re the only subversive brand in the category, that may offer an incredible opportunity to reach a niche, but it also may be a warning sign—anyone raising their hand to be the first “angry” life insurance provider?
• Target Audience: Will subversive marketing be novel or familiar to your target audience?  Will it connect with their values and attitudes? Will it pull in more consumers than it turns off?
• Consumer Involvement: Are consumers already doing subversive things with your brand? Can you embrace or build on what’s happening?  If so, it may be a sign that consumers are ready to see your brand’s dark side.

For more on subversive branding strategies, and the consumer values that are opening the door for marketers to show their dark side, MLC Members can tune into our upcoming webinar on subversive branding hosted by Iconoculture’s consumer strategist team.

There’s no shortage of sensational reporting on the sponsors.  For example, there’s an interesting report here on the buzz between Nike and Adidas (the official sponsor). Observation: the PR success for Adidas from the Jabulani ball has, like the flight of the ball, been erratic and unpredictable, but probably a net positive for Adidas. 

Meanwhile, other sponsors fled like rats off a sinking ship to get away from the implosion of the French national team.  Sacre (les) Bleus!

Non-sponsor brands also saw their share of action. In a provocative tale of ambush marketing, 36 female Dutch fans were detained for wearing orange miniskirts, evidently a clear symbol of Bavaria beer (NOT an official sponsor, by the way).

But beyond all the buzz and antics, what characterizes great, enduring world cup sponsorship marketing?

It’s safe to say that strong integrated marketing is at the core.  Plus, you’d expect vivid experiential and compelling social components. Moreover, in a global event such as the world cup, you’d want to see worldwide activation of the sponsorship.  Delivering all of this is a tall order.  In most cases, sponsors will have enlisted the creative brains, arms and legs of an entire roster of agencies to pull it off.

Looking behind the curtain, most client-agency models fall short.  Aligning a multitude of agency partners to play ball and truly collaborate–acting as if part of one team–is very difficult given competing incentives, inertia and agency allegiance.

That’s why we were fascinated to understand how Coca-Cola set up what it called “Red Lounge” to carry off its sponsorship of the Beijing Olympics several years ago. Coke established this different-in-kind agency structure to go well beyond the coordination that clients usually settle for when working with multiple agency partners.  Coke was shooting for deeper collaboration, hoping that it could get it’s agency partners to build on each others’ ideas, and get to that magical 1 + 1 = 3 land.

In effect, what Red Lounge did is establish a common identity among different participating agency personnel–an identity that trumped the allegiance and incentives of  any individual on the team toward his or her home agency. Coke used a clever mix of structure, individual and joint incentives, team leadership, and psychological techniques to engender this “one team” kind of environment.  This led the agency personnel to check their competitive baggage at the door, and partner to create and activate world-class marketing.  As a result, by most accounts, the Olympic marketing effort was a huge success for Coke.

We’re eagerly watching to see how Coke performs when all is said and done at the 2010 World Cup.  Good luck to the sponsor brands in the final days of the Cup.

By the way, my pick for tournament winner?  The country where the rain stays mainly on the plain.  If I get that wrong, you can bet I’ll blame Paul, the prognosticating German octopus.  No kidding.

MLC Members, check out the Coca-Cola Red Lounge case study, which is part of a larger research study on creating high return agency partnerships (the Coke case study starts on p. 24).  The study also includes casework from companies like Clorox and Mars.

“Make a list of the cultural trends that influence your consumers’ behavior.  Take your time; all of the items on this list will not be immediately apparent.  Stay with it, and you will gradually observe more and more.  Be a good observer.  Remove yourself from your own cultural perspective.  Look for the absurdities, the incongruities, the things that don’t necessarily make sense.  You will begin to laugh as you start to see the culture from the outside.  (Laughing is a good sign).”

Bogusky’s hypothesis underpinning this advice is simple: consumers are participants in a culture first and an economy second—they’re much more likely to spend their hard-earned dollars on culturally relevant products than culturally ambivalent products.  If a brand wins the cultural relevance game, they’ll likely see the economic benefits as well.

The passage also was timely as I’d just returned from Iconosphere 2010, the signature event for Iconoculture clients.  The two-day session was essentially a lightning round of the cultural immersion and consumer behavior mapping Bogusky recommends in Baked In.  The marketers who joined us were treated to in-depth analysis of the trends and values that are shaping consumer behavior today, accompanied by a healthy dose of practical advice for brands looking to stay relevant.

While the “you had to be there” cliché rang true for the Iconosphere event, the insights and ideas we talked about were very portable.  One sample topic: a deep dive into the changing values shaping Generation X behavior as that demographic approaches midlife.  We’ve captured a summary of this session’s key takeaways along with the presentation deck and an audio file for Council members here.

Stay tuned for more on the Iconoculture methodology and more insights from their team of cultural, demographic, and category experts.

Scientia potentia est

Just as the word “knowledge” is not qualified in this famous maxim, many people assume that more of any knowledge contributes to more power.  This fails to take into account that some knowledge is far more valuable because of its uniqueness or quality.  Or, perhaps even worse, it falsely assumes that all knowledge is worth the cost of consuming or managing it.   In most organizations, this remains a highly contentious subject.  For every white paper extolling the potential of knowledge management, I read or hear a story from one of our members about the unwieldy systems that fail to deliver.

I recently read a compelling article published in the Strategic Management Journal entitled “When Using Knowledge Can Hurt Performance” (Haas and Hansen, 2004) dealing with this very issue.  The paper concluded that utilizing a firm’s knowledge resources to complete important Selling tasks can backfire and undermine competitive performance.  The study explores how engagement teams at the pseudonymed management consulting company go about building proposals for new engagements.  In particular, they focused on how the team 1) used knowledge resources and internal experts to get up to speed on the topic; 2) developed an innovative approach for addressing the client problem, and 3) structured the proposal itself.  Some of the surprising key statistics published in the study include:

• The more the teams relied on their knowledge portal in developing the proposal, the less likely they were to win.
• As the level of team experience increased, an increase in usage of the knowledge portal decreased its chance of winning.
• As the number of competitors for a bid increased, an increase in usage of the knowledge portal decreased its chance of winning.

I want to believe there is a way to make knowledge more powerful.  If you think you’ve solved this one, we’d love to hear about it.  Based on our initial exploration in this area of knowledge management in Sales and Marketing, and especially given our findings around the importance of knowledge management in supporting commercial teaching efforts, we think it’s a major component in smoothing the working dynamic between Sales and Marketing.

There’s also this large sporting event coming up (in case you haven’t heard): the 2010 FIFA World Cup. Or rather, “the-every-fourth-year-global-football-tournament-to-determine-a-single-country-champion,” as FIFA would like me to refer to it in this space.

FIFA is playing brand police here in South Africa, and a ruthless outfit at that. You can find just a taste of their efforts in this article. My personal favorite – their request of Kalula, one of South Africa’s low-cost airlines, to withdraw its slogan “Unofficial National Carrier of the You-Know-What.” While fully understanding that FIFA and its corporate partners paid truckloads of money for brand exclusivity at the tournament, the brand management tenacity at play here seems to far exceed rational boundaries.

When you’re shutting down a street vendor for selling a scarf with the words World Cup on it, it seems a bit beyond the pale – especially here in South Africa, where the World Cup may be the lifeline to a better livelihood for that precise street vendor.

FIFA is even removing any brand mark from legitimate products sold in stadiums that are not linked to its corporate sponsors. FIFA’s marketing director Thierry Weil said this: “The restriction is, it must be unbranded, but you will still make money, so this unbranded one is not harming anyone.” By his stated logic, this is facially absurd. FIFA clearly believes that brand is paramount to financial success (as do we here at MLC), hence the restrictions on those brands not associated with it. The brand removal must be at least somewhat harmful if protecting even the omnipresent name World Cup proves so important.

Perhaps I’m going overboard and am blinded by the incredible hospitality the South Africans have shown on my trip thus far. I’d love to hear what our members think on this topic. Certainly, my colleagues in our Communications Executive Council have produced much research on the importance of reputation management; I would never argue with the merits of brand standards and guidelines produced by marketing.

Yet something about this example strikes me as going one step too far, taking brand management far beyond its intended purpose. It isn’t as if the public doesn’t know the World Cup brands. Official credit card: Visa (thank you Morgan Freeman). Official soft drink: Coca Cola. Official restaurant: McDonald’s. And now we have an official brand police officer – FIFA. To invert McDonald’s line, I’m not lovin’ it. But wait, am I allowed to write that?

This observation comes from a study of key account managers in 2006 that surveyed key account managers from 53 large companies.  The study found that, while all companies tier customers, they also tend to limit the number of accounts that fit the description: “a customer relationship that is deemed significant to your company’s long-term growth because of that customer’s current and/or expected financial, learning or strategic value”.  Specifically, the number of true key accounts tends to cluster around the 15- to 20-mark, irrespective of the company’s industry segment. That was a surprise, since we expected certain firms (like the delivery industry) to engage with a much larger number of accounts given their routine interactions with 100,000s of customers.

The fact that the number was constrained suggests a managerial, rather than an operational, bottleneck.  Simply put: no company is capable of seriously engaging with more than a few handfuls of true key accounts at any one time.

This is an important constraint for marketers as they are the custodians of the firm’s value proposition and are often tasked with identifying the firm’s next growth platform.  For most firms, breakthrough growth is going to come from identifying those customers who are positioned to grow and whose growth will depend on the use of contingent capabilities.  But key accounts shouldn’t just be about stable revenue generation; they should also be about co-developing capabilities.  Privileged access to these important customers becomes a major competitive differentiator for a given company.

The catch, however, is that it’s relatively rare for key accounts to be offered a unique value proposition outlining the strategic direction for both firms to pursue. Instead, it too often comes back to ‘white glove service’ and access to fun functions. These are all wonderful things, but they don’t really talk about offering access to key managers/staff or the firm’s scarcest capabilities. They sometimes contain goals around mutual investments, but it’s rare for these investments to link to a specific strategic intent. And thus, if your firm is trying to manage more than about 20 of these top-to-top relationships at the same time, well, then maybe it has placed too many small bets and needs to double-down on a selected few for it to make a difference.

MLC members: learn more about developing a key account strategy that uses your company’s core capabilities to address the needs of target customer segments.

• 78 percent said they use two or more channels to browse, research and make purchases; 30 percent said they use three channels or more
• 43 percent said they start their research online or through a mobile device, but then need to call a customer service or call center representative to complete the transaction because the necessary product or service information cannot be found online
• 39 percent said they browse via the online or mobile channel and then make purchases in the store because they prefer to touch and feel the product; 36 percent said they do this to compare several brands of the same product

Consumers are embracing the freedom the new multi-channel environment provides them in evaluating products and services to ensure that whatever purchase they make is the right one.  Retailers are starting to follow suit, but they face some significant barriers in doing so:

• Touchpoint Coordination—Many retail organizations manage in-store experience, e-commerce, customer service, and marketing communications in separate silos, making it hard to coordinate and synchronize efforts across touchpoints and leading to inconsistency and mixed messages to customers.
• Brand Differentiation—Gone are the days where a cool website will get you noticed.   As more retailers embrace emerging touchpoints—social media, mobile, apps, etc.—it will become increasingly difficult for any one retailer to differentiate in such a high-noise environment.  Retailers need to bulletproof the value propositions that drive all go-to-market activities, reinforcing the company’s key differentiators that best meet customer needs.
• Data Collection and Capture—New channels are both a blessing and a curse: while they can provide retailers with the chance to collect previously impossible amounts of customer data, rarely do they have the systems or people in place to use this data to build a single customer view.  This problem is often exacerbated by the same org structure issues that make touchpoint coordination difficult: if the groups don’t report into a single source, their data probably doesn’t get aggregated either.

While there is no quick fix for any of these issues, there are a couple of ways retailers can begin to close the gap to ensure success in the new multi-channel environment:

• Use a jobs/outcomes framework to organize customer understanding. Retailers should use the consumer data they collect to better understand the specific tasks customers are trying to complete when they interact with the company at specific touchpoints and how customers will measure the success of those interactions.  In organizations where individual touchpoints and data sources are owned by many different groups, cross-functional coordination will be necessary to build a holistic picture.  Framing customer understanding in this way can help identify the most critical customer touchpoints that retailers need to get right. MLC members, check out this tutorial for more information on jobs and outcomes.
• Ensure that key touchpoints demonstrate the brand’s unique strengths. Rather than try to improve performance across all channels, retailers should instead focus on ensuring that the critical few key touchpoints will shape customer opinion and engagement, accurately reflect the brand’s unique differentiating strengths.   Check out Pat’s post from a few weeks back for a framework for shaping the customer experience this way.
• Identify and fix misaligned touchpoints. Once the critical touchpoints have been optimized, it’s important to make sure that the others don’t detract from the experience with off-brand service delivery or inconsistent messaging.  Retailers need to identify these “brand busters” quickly and find simple solutions for bringing them in line with other touchpoints.   MLC members, if you’re interested in seeing a framework for ensuring touchpoint alignment, click here.

Taking this approach to customer experience will help retailers move from merely interacting with customers across multiple touchpoints to creating a seamless, truly multi-channel experience.

From MLC’s point of view, the crucial implication is that such commercial innovation can be more disruptive than simple product innovation.  That’s because it can be far more difficult for large incumbents to make the same kinds of combinatorial changes in systems, distribution and product to maintain or advance established positions in the marketplace.  Moreover, if you happen to believe your products and markets are immune because your company is safely ensconced in its home market, think again.  Innovation happening in emerging markets is making its way, very disruptively, to Western shores.

If that’s not enough to get your strategic marketing wheels turning, here are 10 of the more interesting nuggets from the report.

1.  Ascendant markets are creating new products that are order of magnitude cheaper than Western equivalents: US$3,000 cars; $300 computers; mobile phones for $30, with nationwide service at 2 cents a minute

2.  The number of companies from the BRICs in the Financial Times 500 list more than quadrupled from 15 to 62 between 2006 and 2008

3.  About 70% of the worlds’ economic growth over the next few years will come from ascendant markets (40% of that will come from China and India alone)

4.  “Emerging market companies are harnessing technologies such as mobile phones and the mobile internet in much the same way as American companies harnessed the railroads and the telegraph.”

5.  GE’s portable electrocardiogram (ECG) device stands for the type of “frugal innovation” that is characteristic of ascendant markets—the device sells for $800 instead of $2,000+ for its conventional peer, reducing the cost of delivering an ECG to $1 per patient

6.  “Frugal innovation” means taking the needs of poor consumers as a starting point, rather than tinkering with features of existing products

• MLC View: frugal innovation is a fundamentally advantaged type of innovation, because it draws on what we believe to be a stronger innovation approach that drills deeper than consumer needs, all the way to jobs and outcomes.  MLC members can learn more about this methodology here.

7.  In one example of commercial innovation, Levi Strauss has introduced a “pay-as-you-wear” model for its higher-end jeans to help preserve their upmarket positioning

8.  Unilever has co-sponsored education on handwashing and hygiene that has reached 130M people in India (and helped Unilever excel commercially along the way)

• MLC View: This is one data point underpinning a larger insight.  Lack of brand loyalty in ascendant markets is pushing companies to try to connect with consumers at a deeper emotional level, beyond simply wrapping products in emotional benefits.  Helping to solve societal problems (like preventing spread of communicable disease) is one effective way to do that.

9.  Jeff Immelt of GE believes GE should disrupt itself with cheap products from India and China

10.  In 2010, 6 million Americans are expected to travel to developing countries such as India for more affordable healthcare, up from 750,000 in 2007; India too far to travel? An entrepreneurial physician, who pioneered frugal innovation in heart surgery in India, is building a new facility in the Cayman Islands, just a hop from Miami, where heart surgery will be available for half the price paid in the US

MLC Members, Be sure to attend one of the upcoming member breakfast meetings focused on innovation.  The series begins in San Francisco on May 13, and concludes in New York on November 30, with additional dates in between coming soon.