THINKING ABOUT BIG

I’m not against big businesses.  Not at all. They are full of smart and civilised people. They are important to our economy and our social stability.

I like Google and Apple (who doesn’t?)

I used to love the spirit Nike had in the period of their pre-21st-century glory. I love the confidence with which companies such as John Lewis, Heinz (now 3G) and BMW go about what they do. I enjoy seeing challengers like Deliveroo, Uber, Airbnb and especially Aldi, disrupt their markets and behave small (even when - like Aldi - they’re the 90th biggest company in the world, a lot bigger than Tesco with twice as many stores in 18 countries.)

But there’s something about big companies that’s beginning to worry me.

Mark Ritson in Marketing Week gets it spot-on when he castigates Apple for circumventing paying their tax:
“Apple is by no means alone in its attempts to legally minimise its tax responsibilities. Despite what all the naïve morons that espouse CSR and brand purpose keep telling you, there are very few brands that don’t actively and massively avoid tax liabilities to a disgraceful degree. What makes Apple notable in this uniformly disgusting context is the manner in which Cook has continued to portray himself as a different kind of CEO, who takes his societal responsibilities very seriously.”

What worries me is being big can make you a bully and prematurely deaf. Being big makes you think ‘There’s my way and then there’s my way.’ Most of all, being big makes you an enemy of marketing. The big decisions you make will be about money, cost and margins, about downsizing, consolidating and acquisitions. They should be about people and what they want and need. They should be about marketing but they won’t be. And if you get too big to focus on marketing, well…you’re going to die.

Small businesses are about the future. They are about risk and about change. They are where innovation thrives.  They are about learning. They are about being busy doing important things. They are more in love with their top-line (their sales) than their bottom-line (profit). And they keep on trying to get better not richer.
Small businesses are lucky. They don’t usually have shareholders or if they do they don’t have analysts poring over their numbers. They don’t have a lot of out-of-date plant and investment in property they just don’t need. They don’t have a huge workforce.

But what don’t they have?

They don’t have enough money to have much wriggle room. So they need to be very smart if they’re going to survive.   Lord Rutherford the scientist said:

“We have no money so we shall have to think.” (Those who know me well will have heard that many times before.)

We’ve got to stop bending the knee to big business. The real future lies with companies creating the future and not protecting the past. And if they won’t pay their tax, however big they are, they can get lost.

THE WORLD OF THE NEW COULD BE EVEN MORE THRILLING

I’m not against big businesses. They’re full of people who are smart, civilized and charming. I like Google and Apple (who couldn’t?) I used to love the spirit Nike had in the period of their pre-21st-century glory. I love the confidence with which companies such as John Lewis, Heinz (now 3G) and BMW go about what they do.

I enjoy seeing challengers like Aldi disrupting the market and behaving small when they are actually the 90th biggest company in the world - quite a lot bigger than Tesco with twice as many stores in 18 countries. I ‘m thrilled by the narrative of British Airways and the problematic relaunch of Coca-Cola. But there’s something about big companies that’s beginning to worry me quite a lot. It’s that being big can make you a bully and turn you prematurely deaf.

Being big makes you think ‘There’s my way and then, of course, there’s my way.’ Most of all, being big makes you an enemy of marketing. The big decisions you make will be about cost and margins, about downsizing, consolidating and acquisitions. They should be about people and what they want and need. They should be about marketing but they won’t be. And when you get too big to focus on marketing, you’re going to die. Big, old companies often get trapped in their own legacy with an out-of-date business model and old fashioned products. They get uncomfortably stuck with a redundant overhead too expensive to write off yet dragging the minds of the company downwards and backwards. New businesses are about the future. They are about risk and about change. They are now and next. They are where innovation thrives. They are about learning. They are busy doing important things. Like visualising how the world might be in the future. Thinking radically and being inspired.. New businesses are lucky. They generally don’t have shareholders. They don’t have a lot of out-of-date plant and property they don’t need. They don’t have a huge workforce or a lot of bureaucracy. But what else don’t they have? They don’t have enough money to have much wriggle room. So they need to be very smart or lucky to survive. 

In a recent conversation between Professor Clay Christensen and Marc Andreessen (Silicon Valley entrepreneur) at Startup Grind Global 2016, Clay Christensen said there was capital everywhere looking for a home. Unfortunately return on investment was virtually zero overall and there was an astonishing $6 trillion in negative yielding bonds. So why isn’t more of this money being invested in start-ups? The success rate of start-ups is improving and starting from zero is recognised as a great place to set off from. The world of the new and disruptive is amazing. Consider. The biggest media company in the world is now Facebook, the biggest Hotelier is Airbnb, the biggest producers of films are India and Nigeria (Hollywood comes third.)

Excited? Well I think we should be.        

I SHOULD HATE TO UPSET ANYONE

Several years ago I ran a programme on marketing for the Brighton Chamber of Commerce. One of my definitions of marketing was:

“persuading people to do something they otherwise wouldn’t do”

I referenced the story of Heinz Baked beans. In blind test most brands of baked beams do better than the Daddy brand. Yet when people know what the brands are, Heinz is the massively preferred brand. It’s to do with the perceived brand values of Heinz or, in other words, its marketing.

In the tea break I was approached by some earnest looking people saying I’d offended them because my definition of marketing was an explicit definition of torture. I recall saying sorry if I’ve offended anyone and my apology calmed a storm but made me feel slightly sick. In fact in some sense (ironically) I felt as if I’d been tortured. To this day I regret not having exploded and had a damn good row driving these preposterous woodenheads from my sight and saying if anyone else felt the same they should leave now. What had made the incident even worse for me was they all seemed to believe that small was beautiful (yes, OK) but that big was, by definition, obscene, ghastly and diabolical. Nike, Heinz, P&G, Sony and others like them were all Nazi corporations.

So this is about freedom of speech - my freedom and your freedom.

If in doubt go the American Constitution which says “no” to things like “obscenity, slander, false claims in advertising, child pornography and so on.” All these ‘no’s are what we need to create a civilised society. But it’s pushing back the boundary of these from time to time which allows us to create an intelligent civilisation not just a safe one. In the 1960s ‘That Was the Week that Was’ shook up a stuffy and complacent establishment. Satire became the weapon of intellectual choice. And it was born and nurtured in the Universities. In my lifetime we’ve seen Christopher and Peter Hitchens, brothers with extreme polarity of opinion, knocking the stuffing out of respectively  the establishment and the liberal left and using brilliant language to do so.

But it seems that satire and debate have been exorcised from the world of learning now. At Cardiff University Germaine Greer may be banned for having “upsetting” views on the transgender community. Indeed the government has told Universities to draw up a blacklist of banned speakers. Leading pundits like Roger Scruton denounce this squeamishness:

“Free speech can make for uncomfortable listening but it needs to be defended even when it gives offence….free discussion is being everywhere shut down, so that we will never know who is right - the heretics, or those who try to silence them.”

This repression of free speech is stopping the youngest and brightest debating, learning about and supporting or opposing issues….it’s stopping them from thinking. Being offended is no reason to ban something. Banning things in general is just plain wrong.

JUST DO IT?

When I stopped laughing I realised a senior executive at the big global Corporation I was talking to this week had defined what lay at the root of the VW fiasco. We were talking about the sclerosis that was infecting his business.

“We’re great at diagnosing problems but hopeless at fixing the problems.”
“Why?” I asked                                                                                                                                           “Because we have action points like this: Action: Fix the problem.”

I was laughing so much because it simplifies our journey towards a perfect world by issuing such clear instructions.  Action: cure cancer; Action: stop wars; Action: reverse climate change; Action: be happy.
I recalled the quote from Michael Jordan.

“If you're trying to achieve, there will be roadblocks. I've had them; everybody has had them. But obstacles don't have to stop you. If you run into a wall, don't turn around and give up. Figure out how to climb it, go through it, or work around it.”

To which I always wanted to ask

“Does that include cheating as a solution?”

The command and control mentality that pervades so many companies leads to a mind set of “Don’t care how you do it just do it….action: solve the problem - don’t care how.”

Do we suppose that the guys at VW sat there and said what a very effective advertising executive, now sadly dead, once said to his assembled team:

“This is a crisis. We have only one fool-proof strategy at this point. We shall have to lie.”

I suspect a creeping sense of dismay at failing to crack the US market fast enough and realising changing minds about diesel emissions was seen as key to this led to a mission of collective mistranslation and Nike do-it behaviour plus a feeling of everyone-else-does-it/could-do-it/will-do-it so we’ll do it - schoolboy stuff. Having said this is not to excuse what happened nor to excuse what I suspect will be the consequences of what VW contrived to do in working around the problems they saw.

In a world of emotional branding where decades has been invested in clothes of “trust me with your life, your family’s life, your new born baby’s life”; where the brand VW becomes part of the family, betrayal of trust has terrible penalties. VW has been caught having an affair with the Devil - there are scorch marks on its collar.

Two VW executives said telling things:
“We’ve completely screwed up”
“We must win back trust”

No. Both statements are those that a serial adulterer might make not a repentant supplier…you earn trust not win it. This is not ultimately a game.

The lessons from VW, RBS, BP and Enron are always the same although the circumstances each faced and the wickedness is different for each.

If you are determined in a come-what-may sort of way to be the biggest you will always, in the end, cut corners, fall short of being properly diligent and revert to cheating.

Strenuous competition is OK but never forget what you really, really  stand for.

WHY BOTHER GOING THE EXTRA MILE?

In the heady world of management self-improvement books, or the sort Daniel Pink writes, the theory of trying to “achieve 110% performance, of exceeding customer expectation and not just pleasing but delighting customers” is rife.

Occasionally when you are shopping you encounter recently coached behaviour from retailers that is so exceedingly welcoming you wonder if the shop assistant may not have taken a sudden libidinous fancy to you. It can be very alarming to be the victim of “customer delight”.

The Creative Director of Noggin who coach major companies in customer service, amongst other things, recently had a strange encounter at a workshop. He was advocating the power of building customer relationships when a young man on the workshop said:

“I can’t see the point of all this.”
I imagine there was the sort of silence when someone says something like “Hitler wasn’t all bad” or “climate change is actually a myth” or “a woman’s place is in the kitchen.”
Heresy is hard to take. Had this character been feline he’d have looked like this:

Apparently he went on:
“I work for an events company and I recommend locations. If it’s one a customer wants, can afford and the availability is OK he books it and I move on…he has no interest in my personality or anything else. He’s got what he wanted: job done.”

Despite persuasive debate he was immovable. His view was that you present the deal, close it and move on. All this going that extra mile was a daft as Mo running an extra lap or driving your team hard when they are 3-0 up and the game’s almost over. He was a creature of online shopping rather than shopping at Selfridges.

I was reminded of actor Simon Callow’s story about reading a bedtime story to his God children. He described pulling out all the stops with dramatic voices. His God daughter tugged at his sleeve and whispered “do it simpler.”

Good for her. Nearly always less is more. But not when it comes to manners, human feelings and brand building. The Apple store is about much more than naked transactions as is Nike Town as is the new Lego store in Brighton.

Not everything is a click away from a sale.

I recently heard a Chairman of an advertising agency lamenting the universal use of text or e-mail to communicate with clients. When you are going to be late or more expensive than you’d thought or you’ve mucked up then a face to face meeting or a telephone conversation might do the trick. An e-mail usually does just the reverse.

The issue is not whether you are going the extra mile.
It’s whether you’ve actually completed that mile race in the first place.

THE GRASS IS GREENER

The grass may be greener but it’s likely to be a lot more dangerous.

A recent 20 year study in the USA by consultants AT Kearney and the Kelley School of business at Indiana University shows that Chief Executives promoted from within an organisation generally outperform those recruited from outside. They conclude external recruitment is “more risky, costly and disruptive.”

How much more costly? 65%.

How much more disruptive? 40% of outsiders last 2 years or less.

So it’s game, set and match for talent development and succession management.

Which is no surprise to anyone I speak to in most large or smaller corporations. Because whilst non executives and consultants are all going to be proponents for change and disciples of pundits like Lester Thurow of MIT who said:- “A competitive world offers two possibilities: you can lose or, if you want to win, you can change”, few of them are bent on annihilating the organisation they are trying to improve.

Change does not mean big, random, “asserting my will” changes an incoming CEO often from a different culture, a different country and, like as not, a different market, might want to make. Change, as in changing course, seldom means doing brutal hand-break turns or going from 30,000 feet to 10,000 feet to shake up a few people. Change can mean skilful pruning and working with the best one’s got. Usually an incumbent executive will be better at that than a stranger who’s got a huge package with vast incentives, a mandate for carnage and is unencumbered by knowledge.

UK companies who tend to promote from within include Tesco, Shell, Next, HSBC, Glaxo SmithKline and GKN. And in the USA General Electric, Intel, Nike and a host of others are succession management junkies. And when Apple went outside look what happened to them.

This puts a big premium on Talent Management and Leadership Coaches. Yet this is where the most important investment any business can make resides. Their task is not to clone conservative CEOs who don’t rock any boats but to grow and develop free thinkers who understand what RA Butler, the 1950s brilliant politician, called “the art of the possible.”

There’s a great book on golf by Robert Rotella called “Golf is not a Game of Perfect”. Neither is running a company or finding a new leader.

In fact that greener looking grass might be more toxic than it looks or it might be concealing some very venomous snakes.