Listening: A Strategy and Marketing Blog | Hosfeld & Associates

By Kathleen Hosfeld

It was in the 1960s that management guru Peter Drucker first said that “Marketing is the whole company seen from the point of view of the customer.” Half a century later, we have another chance to catch on.

In a recent article released by McKinsey Quarterly, titled “We’re All Marketers Now” authors Tom French, Laura LaBerge and Paul Magill describe the growing realization that marketing is “everyone’s job.”

Drucker may have first published on the subject, but it has been reinforced recently in research on purpose-based businesses conducted by Raj Sisodia, who noticed that some companies outperformed others financially but seemed to spend less on marketing.  In an earlier article, I took issue with that statement, clarifying that they spent less money on advertising and promotion – not marketing per se. How do they outperform other companies if they don’t spend as much on push forms of marketing? Answer: Through living out a purpose that fosters good will from customers and other stakeholders. In these companies marketing didn’t go away. It became focused on relationship and the customer experience. As a result, it became everyone’s job.

Social Media is Not Driving Transformation

In a recent discussion forum, one of my contacts asserted that “social media is driving” significant changes in marketing. I disagree, social media is the enabler, not the cause.  Customers want engagement with the people and companies with which they do business. They want to trust the people with whom they work. A desire for, no, an expectation of engagement is driving the transformation of marketing.

Engagement is a word we have previously heard mainly in HR circles, centered on employees. Increasingly, however, engagement is the word used to describe successful marketing relationships that shape customer experiences. Delivering customer experiences requires the cross-functional coordination that previously was only used to service very large corporate business to business accounts.

Today, however, those who want to deliver world-class experiences are working across organizational silos to make sure customer touch-points deliver the experience and reinforce the brand.

As described in the McKinsey article, this approach requires a new level of organizational alignment and conflict resolution, including adaptive financial systems that can respond rapidly as needs arise.

The authors say that the major barrier to creating engagement is organizational rather than conceptual. Delivering superior customer experience means building processes to create internal engagement and alignment, cross-functional collaboration, and the ability to dialogue internally as well as externally with customers and other stakeholders. These capacities enable companies to design and execute superior customer experiences and, ultimately, value to all parties.

The McKinsey article: “We’re All Marketers Now”

We’re interested in your thoughts, and the customer experiences you’d like to deliver.

Executive and leaders interested in exploring the benefits of organizational purpose and purpose-informed strategy will find our workshop an inspiring introduction and orientation.

Building on the insights of such books as Firms of Endearment and It’s Not What You Sell, It’s What You Stand For, this retreat/worship explores the business case for purpose-based leadership and strategy as well as the key aspects of integrating purpose into organizational planning, operations and culture.

For additional information and details, please visit our workshop page.

Noted green business journalist Joel Makower caused quite a stir when he published this article in May: “Green Marketing Is Over. Let’s Move On.” What Makower fails to do, as comments pointed out, is define what he means by “green marketing.”  This makes the article somewhat confusing because many of the things he points to as working are also marketing issues. Turns out that he’s describing green marketing communications, not the full marketing discipline. With this clarification, this article provides substance to the position we’ve taken on green marketing for several years.

I welcome the demise of obsession with green marketing communications.   No one is ever going to scale sustainability by trying to get people to buy green for green’s sake.  As I’ve discussed in previous articles, the people who will buy green for green’s sake are the innovator’s and early adopters of the industry. Everyone else buys for other reasons, primarily the utility of the product or service.

It’s my hope that as people recognize the limitations of so-called “green marketing,” they will rediscover the other 3-4 “P”s of marketing (depending on how you count them), will discover the value of strategy as a place to embed sustainability values into the core business rather than bolting them on through features-benefits descriptions.  According to Makower’s article, this *is* what’s working.  Let’s get to it!

A decade after Margaret Wheatley’s landmark book, what have we learned from biology, chemistry and physics about purpose and strategy

By Kathleen Hosfeld
As we approached the year 2000, Margaret Wheatley published an updated and revised edition of “Leadership and the New Science,” in which she explored themes from contemporary science and their implications for organizational life.

She wrote in a time when economic volatility seemed to be accelerating, and organizational life felt more and more chaotic and uncontrollable. How can we achieve a new sense of order in organizational life, she asked, without actual control over the infinite variables that threaten to upset the status quo every day?

Wheatley’s book never strayed into advice about management practice; but she suggested two things were essential for organizations to adapt to changing conditions and to thrive over time: a “clear center” and freely flowing communication.  My interpretation of her “clear center” is a clear and compelling purpose that draws and holds the parts of the organization together.

A decade later, our experience of economic reality continues to be volatile. Yet, the dynamics of the ordered universe continue to suggest forms and patterns that help organizations hold together in times of difficulty and thrive in times of abundance.

Purpose Has Changed
The idea of the clear center – a purpose – has continued to evolve. In 1999, if you’d asked about a company’s purpose the response would have been “to make a profit.” While that’s still often the case, an increasing number of firms see their purpose as a statement of how they would like to make the world a better place. They see their purpose as something that gives meaning to their work, and can actually drive better financial performance.

Purpose is also the foundation of strategy. Purpose and strategy working together are less a static plan than a framework of identity that allows a company to renew itself over time. Strategy adapts to changing conditions; purpose is what gives a firm internal continuity over time.  This is like what biologists called autopoiesis – the ability of a system to renew or regenerate over time.

Business Relationships Have Changed
While this sounds like a lot of self-focused organizational naval gazing, Wheatley also points out that organisms (and organizations) “survive only as we learn how to participate in a web of relationships.”  This points to two other patterns in the ordered universe, that of differentiation and of interconnection, visible in flora, fauna, and star systems. We understand ourselves in comparison with others, those we serve, those with whom we partner and those with whom we compete. This too, is an area where perceptions have changed. It is much more common today to hear executives speak about stakeholders and community partners as integral to their enterprise and its success.

Communication Has Changed
One of the things that has changed significantly since 1999 is the proliferation of different tools for two-way communication that foster evolution, adaptation and renewal.  Social media, crowd-sourcing, and other collaborative innovation technology platforms all have the potential to feed adaptive change. These interactive communication tools create the potential for significantly more communication inside the organization, as well as between the organization and its external partners.

Change Has Changed
Wheatley’s new science view focuses on organizational change resulting from external stimulus. Yet, another impetus of change comes from within. It is not the sun, rain and soil that force an acorn to become a tree.  The acorn is a system whose purpose is to become a tree. It works together with the sun, rain and soil to become a tree. So, too, in organizations, purpose serves as the platform for strategy to respond to and work with external stimulus to unleash organizational potential.  Strategy design is like mapping the organizational genome, discovering what the organization is designed to become.

Strategy Has Changed
Strategy has moved from a fixed set of decisions about specific responses to the market, to a self-organizing capacity to respond relatively quickly to market opportunities in service of purpose.  One of the fallacies of early thinking about so-called “self-organizing” in organizations was that it just happened.  Like anything else in organizational life, we’ve learned that it takes intention and attention.  In the case of strategy design this can be a fairly robust exercise in both right brain contemplation and left-brain analysis. The point is it’s not all SWOT Analyses and Action Steps.

Businesses and other organizations who are embracing these great patterns and lessons from the created world, are finding that they just simply work better. Not only do they represent a more sustainable model of enterprise, they offer more meaning and a greater sense of legacy as well.

“Why does your company exist?” It’s a question every values-oriented brand or strategy consultant asks of clients when they begin work together.

If the answer comes back “to make money” we know that there’s a huge opportunity for unleashing the hidden potential of the firm. That opportunity lies in engaging the company with a purpose greater than money alone.

As I’ve said before, profit is important. It’s just generating profit is first level mastery. Once you’ve figured out that part of the game, the answer is “what’s next?” Service, gratitude and creating a better world — those present meatier and fulfilling challenges. They tap the potential producitivity of your best employees. Companies with a unique purpose out-perform
those who don’t according to Harvard Business Review blogger Bill Taylor, and the authors of “It’s not what you sell, it’s what you stand for.”

The book came out a while back, but Taylor provides a good update of what companies and organizations experience — and how they benefit — when they are “Different on purpose.” Check out the article here.

Looking for a resource to help you find that unique purpose and express it in your brand? Contact us.

By Kathleen Hosfeld

An executive I’ll call Adam (not his real name) was frustrated with the company’s inability to get traction on its strategy. A thoughtful leader who’d spent part of his career in a consulting firm, Adam didn’t understand why his direct reports weren’t making more progress.  As we interviewed him and his executives, we discovered that their archetypal understanding of the company’s strategy was completely different.  The difference had profound implications for almost every aspect of the company’s operations – from planning to marketing to organizational structure and hiring.

Thinking about strategic archetypes was developed into a useful framework by professors Jeffrey Conant, Michael Mokwa, Rajan Varadarjan and Daryl O McKee (Texas A&M, Louisiana and Arizona State Universities). Hosfeld & Associates has used their research  with permission in the development of our online strategic assessment instrument, which allows us to type companies and their executives using these four archetypes:

• Prospector – The consummate innovator, able to anticipate and capitalize on trends, design breakthrough new products and services, highly agile and market oriented. Product and service innovators.
• Analyzer – Capable of innovation, but more likely to focus on market penetration for products or services with proven potential.  Strategic market developers.
• Defender – A niche or focused company that is highly selective about the products and services it offers.  Their strategic advantage in a reputation for quality and effective cost management.
• Reactor – Responds to the competitive movements of other companies. Opportunistic rather than strategic.

Each of these archetypes has its own approach to planning, research, products and service selection or innovation, promotion, pricing and organizational structure.

Like an organizational Meyers-Briggs, an archetype assessment gives executives an accessible vocabulary to identify strategic disconnects between the C Suite and the rest of the organization, and even within the executive team. Our client Adam consistently scored as an Analyzer and all of his direct reports as either Defenders or Reactors.  This helped Adam understand why he felt misunderstood, and sometimes lonely. It also gave him a means by which to articulate the specific areas where he needed to bring the organization into alignment around his vision.

The most important learning for Adam’s organization was that the Reactor type isn’t really a strategic alternative at all. It’s the archetype of no clear strategy. When too many people score in this category, it’s a sign that either there is no clear alignment around a strategy or that no one as yet understands the strategy. It’s a wake-up call for making conscious choices about which archetype best suits the assets and resources of the organization.

For many, a strategy is a series of financial goals the company must achieve. Archetypal language gives companies a more streamlined way to talk about how to start rowing together in the same direction towards those goals.

Alignment and coherence. Two words that convey a state within organizations where the strategy is fully supported by resources, structure, beliefs and intentions. It’s implementation. It’s the details of absolute follow-through.

Is your company aligned on its strategy? Does it have strategic coherence? Possibly not. The strategy might not be clear to everyone. If it’s clear to some, it might not seem achievable to others. Even if it is achievable, it may need resource allocation that hasn’t been explored fully.

According to an upcoming book, The Essential Advantage: How to Win with a Capabilities-Driven Strategy, by Paul Leinwand and Cesare Mainardi (Harvard Business Press, 2010), alignment (coherence) is achieved by focus on three interrelated aspects of strategy: market position, core capabilities and products and services that follow from both.

Market position is identifying the place where you can offer a product or service that’s clearly differentiated from others in a way that’s meaningful to customers. Core capabilities are the “know how” that you possess that sets you apart; they are the source of your differentiation. Products and services that align with the chosen market position and differentiation will, as a result, benefit from a clear brand identity.

The consulting firm Booz Allen has created an easy  (and free) self-diagnostic that allows organizations to assess their strategic coherence or alignment. It’s called the Coherence Profiler.   It takes about 5 minutes to complete and asks important questions about how strategically aligned or coherent your company is.

You can take the test here.

We’d love to hear from you after you do; let us know your experience with this profiler and how you might like to respond to its results.

By Kathleen Hosfeld and John Forman

Trust in business is starting to make a comeback from historic lows during the Recession, according to the 2010 Edelman Trust Barometer research.  It’s a fragile trust, the report tells us. Those surveyed say that after the economic pressure is off, they expect business to go back to unbridled self-interest. In other words, they don’t really trust business – not for the long-haul. At a Young Presidents Organization event last week, members said that “trust” was their number one concern, regardless of the specific business they were in. The gap is enormous.

The Business Case

The business case for trust is well established. A lack of trust can create a number of problems for a company. It can impact reputations as conversation in the market place is fueled by assumptions of ill-will (like BP), gossip and innuendo, slower decision-making processes, as well as loss of sales. And the misbehavior of one Bernie Madoff can sour public perception for organizations that have never been connected to him.  On the other hand, a company that has the trust of its customers or other stakeholders can count on better collaboration and decision-making, resilience in the face of a crisis (like Toyota), more word of mouth advertising from advocates, and fewer legal or regulatory costs.

Trust matters to a lot more companies than a skeptical public might imagine. While there are egregiously self-interested firms that can be said to not care about trust, the larger part of the business world cares deeply. Yet, in the current  environment, positive intent may not be enough to reclaim trust.

The Trust Formula

One model of trust in relationships offers some lessons for senior executives and marketing specialists for how to reclaim trust with customers, partners and other stakeholders. The trust “formula” has four factors: Credibility, Reliability, Openness, and Self/Other Orientation. This model is adapted from David Maister’s “Trusted Advisor,” a classic in the field. All four elements in the model play an important part, but the fourth — Self/Other Orientation — can either undermine or enhance the other three factors.

Credibility – The credibility of a firm is built on the truthfulness of its communications, its reputation, its experience base and credentials. If there’s a gap between what a firm says and the customer or partner’s experience, trust can break down. If the firm’s reputation or verifiable credentials or experience don’t line up with its claims or communication, trust can be lost. Marketing initiatives to build credibility center on brand alignment, certifications, client/customer testimonials, promotion and sales processes.

Reliability – The reliability of a firm is demonstrated in its actions. Does the firm follow through and keep its commitments? Does it create predictable experiences, does it set expectations that it can keep? Uneven quality, inconsistent experiences, poor performance, lack of follow up or follow through, all contribute to a loss of trust. Marketing initiatives to build reliability include product management and sales and customer service.

Openness – In interpersonal relationships, openness is often confused with sharing intimate information. That does not foster trust. Openness that fosters trust involves the risks taken  in the relationship, and  the discretion and empathy with which one treats other people’s risks. In business life, this translates to transparency, and sharing information with stakeholders, sometimes hard-to-admit information like “we made a mistake.” Marketing initiatives that demonstrate openness include stakeholder engagement, supply chain transparency, sustainability reporting and open design standards.

Self/Other Orientation – In individual relationships, we most deeply trust those people who we feel have our best interests in mind. So too with companies. We trust companies that  care for our benefit as much they care about profit.  Marketing initiatives that foster trust also include integrating social good into all aspects of mission, marketing and communication. Demonstrating this commitment amplifies the benefit of a firm’s efforts in regards to Credibility, Reliability and Openness. Marketing initiatives that “go first” involve making a stand for social and environmental responsibility in the communities and the environment where they operate. But efforts at these forms of conscious capitalism must be genuine, and seen as genuine, efforts to make a positive difference.

How are We Doing?

Each of these qualities shows up in organizations in slightly different ways, but all lend themselves to meaningful measurements. As a result, organizations can benchmark perceptions and behaviors, and objectively assess progress towards trust goals.  Companies can be comprehensively assessed on these four qualities to determine the greatest opportunities for reclaiming or enhancing trust with customers and other stakeholders.

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Kathleen Hosfeld is the principal of Hosfeld & Associates, a strategy and marketing firm.  John Forman is the principal of Integral Development, a teaching and consulting firm focused on leadership, performance, strategy and decision-making.

By Kathleen Hosfeld

Following a recent Special Report by the Wall Street Journal, commentators had a field day with columnist Dr. Aneel Karnani’s assertion that the concept of Corporate Social Responsibility is fundamentally flawed.  Many of the comments pointed out that not only was his analysis fundamentally flawed, it was the “same ole, same ole” whateverness we’ve been hearing from free market idealogs for the last 15-20 years.

Karnani, who is Professor of Strategy at the University of Michigan’s Stephen M Ross School of Business, asserts that all CSR initiatives have to “pencil out” financially before they are embraced by CEOs. “Pleas for corporate social responsibility will be truly embraced only by those executives who are smart enough to see that doing the right thing is a byproduct of their pursuit of profit. And that renders such pleas pointless.” See the article here.

Based on the interviews that Pat Hughes and I did for her study: “The Leadership of Sustainability,” and my work with clients, my perspective is that engagement with CSR or sustainability evolves.  Some leaders we spoke with started with a “because it’s the right thing to do” mentality. They kept their experiments small to see if they would hurt or help them financially. If it didn’t hurt, they kept going. In businesses where CSR or sustainability was not baked in from the beginning, it is developmental, occurring in stages.  As a result, early experiments have to be either revenue positive or at the least revenue neutral.

However, there are many firms who find that holding objectives for financial, social and environmental benefit simultaneously creates a crucible for innovation. They have broken away from the either/or thinking represented in Karnani’s article, and are now in the territory of Third Way thinking. Third Way thinking goes beyond hierarchical rankings of choices, one being the better “good” than another. Instead, it “holds the tension” between competing “goods” until a new solution appears that honors all of them. Harvard Business Review even published an entire special edition last summer about CSR and sustainability as drivers of innovation, citing breakthroughs of over 30 companies.

So, what is the Wall Street Journal’s problem? Commentators responding to the article repeatedly questioned the lack of balanced perspective, and a pattern of editorial bias against values-based management approaches. Companies every day are proving Karnani wrong with their actions. Is the Journal simply blind to the evidence? Or are the editors ignoring the firms who are doing well by  “doing good”  because they seem to be “outliers” rather than  mainstream. If they are intentionally disregarding outliers, then they do their readers a disservice because it’s in the outliers where the seeds of breakthrough innovations are sown.

By Kathleen Hosfeld

Few companies argue that fostering trust with customers and other stakeholders is an important business task. Where there’s disagreement, however, is what specifically fosters trust, and the degree to which trust between customers and companies – particularly as it relates to green or sustainability claims – is suffering.

Our academic partner, Jenny Mish, PhD., assistant professor of marketing at Notre Dame, explored this and other questions in her doctoral research. Her study, which explored food standards and sustainability, resulted in insights about marketing behaviors that foster trust.

Mish interviewed a wide variety of individuals representing institutions engaged in developing or promoting the use of market-based product standards, such as Fair Trade or organic, that specify reductions in negative environmental or social impacts.  She spoke with people in large corporations like McDonald’s, in government such as the United States Department of Agriculture, and  smaller, grassroots organizations such as the Portland, OR-based Food Alliance.

The spectrum of types of trust she found span from the very impersonal and institutional, to the highly personal, local and dare we say “intimate.”  Large corporations tend to look primarily at repeat purchase behavior to evaluate the degree of trust they’ve engendered with customers. Some companies evaluate trust on the basis of their ability to fulfill key expectations of sustainability performance. Still others evaluate trust on the basis of direct, personal interactions with customers, and the degree to which they had actual contact with customers and other stakeholders.

Her findings suggest that marketers may be able to foster trust three different ways:

Preserving the Integrity of the Brand: The least personal form of trust is embodied in the brand attributes that create a predictable customer experience. This is true even when the context is not sustainability or green attributes.  This calls for organizational and channel alignment to fulfill brand promises consistently, which means full commitment to green or sustainability standards…not merely claims that show up in features and benefits.

Compliance with a Market-Based Standard: A company’s ability to merit certification such as the USDA’s organic standard or Fair Trade, creates a type of performance contract with customers that fosters trust. Marketers may encourage their organizations to qualify for certification, but ultimately this will require cross-functional collaboration to bring operations into compliance. Standards that inspire trust are those that are either objectively evaluated (by government or third-party) or that are developed and supported by a wide coalition of contributors/stakeholders.

Designing Highly Personal Forms of Contact with Customers: A company’s ability to deal directly and personally with its customers, such as “meet the farmer” programs, can foster the most personal type of trust.  These programs are common in “local” exchange relationships, such as those formed at farmer’s markets.

One implication of the study, as I see it, is that human interactions (personal) are where trust can be lost altogether, or maintained in either an impersonal or highly personal and reciprocal manner. Mish’s study was not designed to explore trust as engendered by the sales process, but we know from other experience that the quality of those interactions also impact on consumer perceptions. While they make good marketing sense, authentic interpersonal relationships are usually not driven by marketing goals. They usually reflect a sense of “this is the right thing to do regardless” in the company culture, as is the case with local relationships described above.  They manifest from the shared values of everyone in the company.

Ultimately fostering trust is not a matter of choosing between these forms. It’s bringing all types of trust-fostering practices to the marketing agenda. The assumption is that if the organization is large, then personal interaction is not possible.  If we believe, however, that it’s the right thing to do, then it becomes an opportunity for innovation. There’s the marketing challenge — creating trust-engendering relationships between human beings on both sides of the exchange process, regardless of company size.

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Jenny Mish’s dissertation is “Centralizing and Decentralizing Forces in the Development of Sustainable Markets: A study of Food Product Standards.” It was published in 2009, by the University of Utah.