The purpose of a startup..Peter Drucker

Peter Drucker famously said that the "purpose of a business is to create a customer. Often people forget. They come to believe that the purpose of their business is to build a product, grow an organization, get funded, or create an efficient supply chain. While these may be essential means to an end, the end is always to create customers. If too much effort and money is spent on the intervening steps, then too little will be spent on Sales & Marketing. This is often the case in start-up where founders can believe that the product speaks for itself, it will become successful through word of mouth or viral efforts, and will need little formal advertising or selling. Particularly today, many talk about avoiding product categories that require a lot of of Sales & Marketing. However, experience tell us that there is no such thing as a free lunch. Nothing will substitute for the tried and tested. Trade Shows and mailing lists are not glamorous compared to a Twitter account, or a partnership with a high profile company, but working the basics is essential for success. What Peter Drucker said half a century ago still holds true.

Sherlock Holmes - Big Data analyst

It has been recognized that the reason why Sherlock Holmes was so effective was that he observed and remembered everything. As such, he had access to an enormous data base. However, memory and observation alone are not enough. His strength was that he could access the data and put together apparently unconnected strands to create solutions. This was far from the concept of data mining. He had no idea of what he was looking for and no preconceptions of what he would find. He used patterns to identify those that were anomalies. This is the principle by which the future generation of Big Data analysis, such as Synerscope, will work. Pour in vast amounts of data, and simply by observing unusual or unexpected patterns, the user, not someone with an advanced degree in data analysis, can draw conclusions fast and easily.

Why do Americans Have difficulty in Europe?

One of the major barriers is regarding Europeans as a homogeneous block. In addition to language there are many cultural differences. These cover how and what people eat, how they relate socially, and how they work.  This is one of the many reasons why Greece is in trouble and Germany is prospering. Whether you are doing business there, practicing diplomacy or simply being a tourist, recognizing the differences is essential.

Why do Europeans have difficulty in the US?

The biggest cause why Europeans of all nationalities have problems is their lack of visceral understanding of scale. While European think a two hour flight is a long one, Americans will routinely take five hour flights for a meeting. However, beyond distance it also applies to money and networks. While $1 million in Europe is a lot to, say, fund a start-up, in the US it is almost insignificant. It takes Billions of $ to fund a Presidential run, and millions even for a local election. Beyond that the scale of networks and connections is also enormous. If you know 1,000 people in the Netherlands, you can reach most decision makers. Even the UK, five times larger than the Netherlands, can be covered by a relatively small number of contacts. The US, five times larger than the UK, dwarfs any difficulty in reaching decision makers there. Even, incidentally, countries with huge populations such as India and China, have a small concentration of decision makers. They went to a small number of schools and universities. In the UK, there are 114 universities, in the US over 4,000, so the "old school tie" is less of a power connection, though an Ivy League educations still helps with connections.

This handicaps Europeans when trying to do business, or deal with government in the US.

Why does TV glamorize lawyers over engineers?

The US has an oversupply of lawyers, but a shortage of engineers. Being a lawyer is one of the most boring things you can do for most, while engineering can be exciting and interesting. Yet over many years, TV has shown the lawyers life as exciting, sexy and varied. The other night on "Suits" when someone received good LSAT results, it was greeted by the enthusiasm of someone winning big on a TV game show. "You're going to be a lawyer!" Yet life for lawyers is rarely any more exciting than for accountants. Engineering has more variety and challenge than law, yet I have yet to see a single TV program about engineers. I suspect that this has much to do with the current glut of lawyers and dearth of engineers.

Marketing seems Easy, but it’s not

Most functions in business are clearly difficult. Someone in purchasing knows that Finance has an advanced and specialized skill set, so does R&D or the legal department. Most people even know that they could not be in Sales. However, most people think that Marketing is easy. Even some marketers, the weak ones, think it is easy – they are a level of, as they say, “unconscious incompetence.” I used to have a boss, a man with an operations background, who loved package design, but who was almost totally color blind, and did not understand why it would make any difference at all.  Often we are faced with a sort of mental blindness that prevents others seeing why there is any value in training or experience in marketing. The fact that much in Marketing is, or should be, data driven, is hard enough, but many concepts are even tougher to understand. For example, we glibly say, “sell the sizzle, not the steak,” or “talk benefits, not features,” yet, so many people seem to find it difficult to tell the difference, particularly those who are close to the product.

While I have written about being data driven in the past, this post is going to concentrate on the non-quantitative aspects of marketing. Four out of five advertisements, websites and social media campaigns fail to address the primary needs of the target customer in a way that is meaningful to them. They fail to be meaningful to the audience, differentiated in a way which makes sense, and relevant to the needs of the target market. In addition, they often pack in a laundry list of features, thus confusing the audience and weakening the message. “Positioning is sacrifice” – it the options you leave out that make the message so strong. These cannot be quantified, yet they are critical and very difficult to sustain. So often, the CEO or CTO pushes for something which weakens the message. In B2B it can be even more complex as there may be many target audiences depending on the buying process in a company. For enterprise software, for example, there are one million software companies, of which one hundred thousand are trying to sell to any one large corporation in a year. The large corporation may have one thousand software products in use in the organization, and anything from 5 to 50 people participate in the buying decision, most of whom can say “no,” but few can say “yes.”

Quite a few years ago, as we were getting ready to launch high speed data to consumers at US West, I had constant battles with the CTO. I kept on tying to get him to listen to the customer, and he would keep on telling me “I am the expert, not the customer, who has no knowledge of the technology.” Explaining that understanding current problems and getting some feedback to how it could be used, was of little use, until I tricked him into listening to customers by inviting hi to dinner in what was the back room of a focus group facility. He still kept on wanting to tell them how it worked though!

While marketers do themselves a disservice by failing to be sufficiently data driven, thus contributing to the short stay of CMOs in their position, we do not do a good enough job of making clear some very simple concepts, such a positioning, or added value. As a result, many non marketers expect the new CMO to come in, sprinkle marketing pixie dust over the business and make it fly! Disappointment is inevitable. Marketers have an ongoing obligation to demonstrate how it works, and what has to be done to make it effective.