Earlier this year I had the opportunity to talk at the IT Web Digital Summit. My topic was: The importance of evolving business structures and models in the digital age.
Internal organisation structures, processes and politics is one of the main reasons why so many brands and companies in South Africa struggle to launch anything remotely innovative or disruptive. Having worked with so many large corporates over the years I have seen the exact same inefficiencies and legacy issues across all of them.
I thought I would use this opportunity at the IT Web Digital Summit to highlight some of the fundamental issues most companies are faced with when it comes to structuring their businesses and dealing with this ever evolving digital landscape.
The title for my presentation was: The Hospital Pass Model, it sounds rather irrelevant and weird for a digital conference but this is what happens in so many companies. (SlideShare link) So what is a “hospital pass”? Well, according to Wikipedia it means the following: “Hospital pass is a term used in several football codes to describe a pass that subjects the recipient to heavy contact, usually unavoidable, from an opposing player — the expression implying that the recipient of the pass could end up in hospital.” The corporate version of this might not result in someone ending up in the hospital but it will usually result in a product or campaign being launched that is irrelevant to the target audience, a waste of money and a contradiction to the original insights and strategy.
The taxi industry didn’t evolve for years, Uber came along and completely disrupted the industry. They fundamentally changed customers’ expectations when it comes to the traditional Taxi service. The reality is that this perception change also influences other industries. Customers start to ask, “why can’t my bank do that, or why can’t the post office do that”. Uber was based on a very simple fundamental human truth/inefficiency – people need an easy, safe and convenient way to get from point A to point B. We can see this trend across most innovative tech startups that are disrupting industries at a rapid rate.
It’s important to remember that it doesn’t matter how big you are, how many awards you have or how long you have been in the industry. If you can’t adapt and evolve to customers’ ever changing needs and expectations then you will run the risk of closing your doors in the near future.
A great example of how quickly the times are moving is the 3310, probably one of the “smartest” cellphone in history. You could drop it and it would break into 100 pieces, however the screen didn’t shatter and you could quickly put it back together again and it worked 100%. It had a battery life of over 5 days and of course there was snake. The scary fact is that the 3310 was launched in 2000 and before that, we lived in a world without mobile devices (I know, scary right, how did we get anything done). The core function of the mobile device at that stage was SMS, phoning, setting an alarm and playing snake, that was it. Fast forward 15 years and we have the iPhone 6, this device has disrupted many industries (camera, GPS, music etc.) and we literally run our lives on these devices now. But, we didn’t change anything from our side as consumers, we just upgraded our phones every two years and started using the new functionality and services available. That is the reality of the world we live in today, consumers’ willingness and speed of adopting new technology far surpasses the rate that brands can keep up with this ever changing landscape. We now live in a mobile first economy.
When it comes to the marketing function within a large corporate, at a high level the organisation is usually structured in the following way: Business, Marketing and then lastly Digital/IT. Then within each of these different business units this model is usually replicated (Business, Marketing & Digital Projects). The last piece to this organisation structure is usually some form of “Digital Marketing/Specialist” team that is excepted to oversee all campaigns and ensure the organisation is producing excellent and innovative digital work.
The Hospital Pass Model
So let’s unpack the “Hospital Pass Model” in more detail. If you consider the business teams within a large corporate, they are usually responsible for product development and focusing on business results and efficiencies. This usually means they have teams of business analysts crunching the numbers trying to find ways of increasing profit margins and reducing costs. The result of this work is usually a product or service that now needs to be taken to market. This is when the ball is usually “hospital passed” to the marketing teams. The marketing team is in most cases accountable for consumer insights, they are the custodians of the brand, they understand the market, however at this point they have zero input into the targets/KPIs or the product/service development. However, marketing is still expected to sell sell sell and meet the set out targets. Marketing then works very closely with the agencies, comes up with a great campaign, finalises all the media and implements the campaign. The problem arises when all their media pushes to an online platform to drive leads and conversions but they have zero control or mandate over the digital properties.
This is when the ball is “hospital passed” across to the digital/IT teams. The digital/IT teams have completely separate objectives and milestones that they need to achieve in the next 1 – 5 years. They are also often under resourced and have very limited budgets. The end result of all of this is a campaign/product that launches, it is often not based on fundamental human truths (so uptake is low because no customer wants or needs the service/product) and the digital properties are not optimised for lead generation and conversions.
The digital marketing teams are usually very small in context of the entire organisation size and they often don’t have the necessary capacity or mandate to influence decisions and campaigns. They often feel like they are on the bench watching the game and screaming from the side line but nobody can hear them or wants to listen.
In order to achieve exponential greatness, business models need to align and work towards a single set of KPIs and objectives. Teams need to focus all their efforts and energy on achieving the same vision and goals. Every business unit within a large corporate all have their own specific targets, KPIs etc. that determine their bonus allocations and increases, this results in personal agendas taking priority over the holistic company brand strategy and vision.
No Silver Bullet
Digital marketing is not your silver bullet. As soon as budgets are cut the first thing you usually hear is: “… don’t worry, we will just do digital”. The focus should be on marketing effectively in a digital world versus focusing on digital marketing. Digital is not the silver bullet. Digital Marketing should not sit as a separate entity but rather become a core competency of the different marketing teams.
Large corporates are their own worst enemy. Very often they have the best teams and agencies, the most skilled individuals and the most innovative tech and products however their internal processes and organisation structures hinder them from implementing these initiatives effectively and efficiently. What happens in most corporate situations is that you will have a marketing and business team working on a project for months with the respective agencies. They will go through multiple reverts and changes all based on insights and research to the point of getting to the final sign-off stages. These teams are then usually required to present this work to one of the main execs, they are expected to reduce a 6-12 month project into a 10 minute presentation (where the context is meant to be created in terms of how they ended up at this point). This individual or team of execs then have final sign-off and they usually have multiple changes or they pull the plug on the project completely.
The result of this process is that it takes months if not years to get anything out to market. The sign-off process is extremely complex and the individuals that approve the final campaign usually only have sight of 10% or less of the project. The work is often watered down or no longer aligned to the original insights and research. The objectives of the brief often change which should obviously impact the entire campaign.
The final output is very different to the original concept. Lastly, agencies are essentially given an ultimatum to make all the requested changes even if they believe it is wrong for the campaign and this process results in massive over-burn and budget going towards reverts versus the actual campaign.
Brands today spend a lot of time and money shouting at customers. Campaigns are often launched based on the old saying “if I don’t spend this budget I lose it” or I need to meet these KPIs to get my bonus, so we will make it work, even if customers don’t really want what we have to offer. We don’t spend enough time trying to understand what our customers are thinking and feeling. How can we become an “Uber” in their lives? What “inefficiency” can we solve?
The time of monopolies is over. Most services (banking as an example) are a commodity product. Every bank has a gold, silver and platinum card. Historically, customers had to resort to going to banks for financial services as there was no other option available. This game has however changed, innovative brands are disrupting the market and changing expectations by offering unmatched services and products.
Simplicity across all aspects of business is key. Whether it is your business structures, processes, product lines or digital properties, everyone prefers simplicity over something that is complex and confusing.
Take Wells Fargo as an example, what would it look like if we unbundled all the services that they offer and show how many disruptive players are starting to steal market share and change customer perceptions and expectations. – Click here for the original article
All of these startups have three key common traits:
1. They focus on simplicity and ease of use (they vastly improve on a banks inefficiencies)
2. Their product or service is based on a fundamental human truth
3. Their entire organisation is working towards a single vision and goal
These two quotes sum it up nicely:
“Both now and in the coming years, adaptability and agility will increasingly eclipse size and scale.” – Exponential Organisations
“Today, a trend known as Collaborative Consumption leverages the Internet and social networks to create a more efficient utilisation of physical assets.” – Exponential Organisations
We are moving from “possess” to “access“, this is the new name of the game. Speed to market is essential, all you need is a minimal viable product, from there you can start implementing validated learning methods and continually enhance and improve your offering.
Three key focus areas:
- Become agile
- Keep it simple
- Create synergy