Posted tagged ‘marketing strategy’

Disintermediation – Friend or Foe of Today’s Businesses

November 7, 2012

Disintermediation – Friend or Foe of Today’s Businesses

BY

Michael Fanghella

Managing Director

 For the past 100 of 110 years, business has been extraordinarily focused on the supply chain: building it, perfecting it, defending it. And the modern corporation depends on the supply chain to continually generate profits, because systemic growth has been so hard to bottle. The middle man is at risk in today’s environment unless they adapt.

The great companies of the past have always taken an historic innovation— Ford with autos, AT&T with the telephone ,IBM with computers—and then consolidated control of their markets by defending their distribution arm by all means. But today’s fastest growing companies, such as Apple, Amazon, Microsoft, Facebook, Twitter, and Google, don’t focus nearly as much on distribution channels. Instead, their businesses are built around consumption models, and their single minded focus is on building relationships to their family of consumers to earn their trust, to expand their role in their consumers’ lives, and to enlist them in everything from product design to service to delivery.

Today’s enterprising companies are as focused on constantly improving their levels of trust with their clients as they are on the degrees of efficiency of supply.

And that is only half of the story. Even as this cultural shift is taking place, the nature of distribution itself is undergoing a transformation. Today, most manufacturing business models are still built around the traditional notion of a physical community of towns and roads, warehouses and delivery trucks, advertising and point of sale marketing. Not surprisingly then, most supply chains are also built around local physical stores, factories and the ubiquitous dealers that serve them.

But what happens in a world where one’s neighborhood is as much virtual as physical? When your friends and other key influences are scattered around the world? What happens when a single opinion, via a blog or Web posting, can influence a millions of clients on four continents? For these questions, the traditional supply  business model has few answers that fit today’s models.

From the Industrial Revolution to the brand management system to the virtual corporation, has taken place at the system level. That is, how do you coordinate assets, information, and people? Today, the Internet is the ultimate such system, bigger than any that came before. Can we be surprised then that it reverses that most traditional of business relationships, the one between manufacturer and client? Or that the old supply model is now beginning to seek new solutions in a world in which the consumer, for the first time ever, is enthroned in the driver’s seat of the global economy? If you don’t find your path and you are not controlling the supply you better find a way to draw in the demand or be gone.

We were given an advance warning of this trend more than a decade ago, during the mortgage refinance bubble. Unfortunately, we drew all of the wrong conclusions from that period. Even today, that era, with its creation and destruction of hundreds of new companies, is typically seen as an example of wasteful runaway business growth. But to be sure its effect cut margins razor thin and the companies providing products over reacted to the demand by losing control of them and did not scale back their resources in time or manage supply cycle instead they rode the rapids like an exciting trip down the river until they met the “Falls”.

We should look back on that era as being one of extraordinary importance. The “big idea” in the air in the 1990’s was disintermediation: the notion that business systems, empowered by the new information and communications technologies, would strip out the middleman and grow more efficient in the process. That period of time was essentially this idea of disintermediation, propelled by the Internet, reaching the retail world—replacing traditional bricks and mortar businesses with e-commerce companies.

The fact is that almost all of those e-commerce companies were retail driven enterprises, often driven by old line supply companies. And if you had looked at their business plans, you would have noticed that few of them had any idea exactly who would buy these products or services. All they knew is that their clients were taking the shortest and quickest route they could find direct to the supplier.  In fact, very few had any fulfillment capability or competitive advantage to speak of.

By comparison, those companies that did survive the shakeout— Amazon, eBay, Yahoo, Zappos, Google—have proven to be some of the most important and influential companies of recent years. And they in turn set the pattern for the Web 2.0 social media firms such at Twitter, MySpace, Facebook, and YouTube that have redefined modern life. What did those survivors have in common? Their business was based on what clients wanted, rather than what the suppliers already had. They were the harbingers of the demand driven economy.

The lesson for those who act as the current authorized middle man for the manufacturer to be learned is that in this era of oversupply it is now imperative that you construct a framework in your company that encompasses and aligns everyone toward meeting not just the current but the latent and emerging demand of your highest profit clients and consumers. And before you can do that, you need to understand who those clients and consumers are, where they are, and what “need states” they exhibit as they make their purchasing decisions. The concept of need states is important for developing an in-depth understanding of demand. Need states are the circumstances or the occasions that cause someone to want something and to take action in its pursuit.

The transformation you must make in your company and the reversal you must make in your perspective will be easier than you think. This is not re-orienting  this is rethinking. This is not reorganizing, it’s reshaping dealers, manufacturers, retailers, and the media into a collaborative network that will work to the benefit of all who participate. For a long time, this new model of organizing and collaborating has been intuitively felt, and now it’s real. It’s called the feeding the flow by corralling disintermediation to win in the new demand based economy.

The problem is not that the client can and has found their way to their purchase decision vies a vie this process, it is you haven’t identified it and set a strategy to focus it for your business. Gone may be the traditional sales force and the flow personnel you have had for years as the future challenges you to embrace your client, involve them on a current basis in the decision process and let them see it all as through the project management by giving them heretofore unavailable real time access to their decision online thus cementing your relationship with them. Your marketing should parallel this concept by instead of beating the bushes in an “us” versus “them” mentality, by aliening yourself with their needs through crowd sourcing and knowledge based marketing which make your effort in concert with their needs.

For more information of the effects of disintermediation and your business call Michael Fanghella 619.758.4019 or visit us at www.santafeadvisoryservices.com

 

Procedural Guidelines in Marketing Business Strategy

April 2, 2012

By Michael Fanghella

This is a topic where we could get lost pretty quickly as the sands shift almost daily and a new idea promotes a new strategy as quickly.  But rather than go there I am going to suggest we look at just taking the issue at hand simply.

You spend lots of money to hire and train if needed sales personnel.  But have you made clear to them what you desire as a result from them and have they done the same with you?  Or has it been a sales effort by you when you were impressed with the candidate in front of you.   Often we get caught up in what we want so much we forget to review what we need.

If you can’t explain to a new hire or a veteran who is anticipating coming on board for employ what your company does in 30 seconds or less, be able in that discussion, explain what the company’s desired results are and allow the candidate to speak freely to see how they can achieve them, how can you expect them to figure it out on their own.  Truly you need to answer the following issues internally before asking your newest employee to charge out there. I find it amazing how many hiring directors hire without making sure of the prospect that everyone is on the same page.  Little things like who does he/she speak to when there are questions, where else in the organization can answers be gotten.  What procedures for pursuing and accomplishing the results so mutually set out are and what means of sitting down to review them by and between both of you to see if results aren’t forth coming have they been followed on both your accounts.  Often I will see the hiring entity explain away the question because honestly they have never thought about it.  They are too worried about “do you have industry contacts or background”.  I have seen more great sales people fail because they went to the next level with a firm that was not connected to the procedure to ensure success concept by having it mapped out.  Without a good process the sales person will in all probability fail.

This may mean that if the employee is off course a few adjustments can have a beneficial effect because when in review either they or you are off the guidelines as to what was originally discussed.  But that those procedures were set out to allow this analysis and correction on a weekly basis.   How often do we hear where a salesperson gets a 30 day probation notice after 60 days being there?  Were any procedures reviewed, did the manager sit down and review as to whether or not he and the company were fulfilling the compact by and between both parties.  You waited 60 days before noticing?  What it really means is that you don’t have a procedural guideline for this sales person to follow.

I have built multiple sales teams successfully because of this basic concept. I have multiple sales efforts fail because of its absence.  Sales people like structure, they want and need feedback, want to understand how they fit in.  Most of the time we hire them and throw them into the that red ocean of competition without a thought or plan as to  how that one person will meet both you and their results by procedure.  It is like golf, you only have to miss the ball by a degree for it to land in the rough.

You see there is this leap of faith that says as an employee, “I will work and give you my best effort on the proposition that you will pay me for that time”.  But it goes much further than that.  It really goes to whether the employer really has their act together, has a strong vision and a result in mind that calls for procedures to be in place so that when hiring someone they can start working immediately on meeting the result driven thought process versus doing what we have all seen in the past spending time building a lead generation system on his/her own, spending as much time branding the company as being able to sell the products or services available and having a mutual respect process that keeps everyone on their game.  As too often the whole result driven paradigm at the moment is on the shoulders of the salesperson to meet expectations that while they may have bought in on they had no say so in the how to get there.

One of the worse things I heard from a marketing person that worked for us was I don’t now what do to make it better, can you tell me.  Well eventually I did it is what spurred my beliefs as you see them today.  I was not going to waste our training expenses just to go out and repeat the mistake.  In doing so this person latterly was transformed over night into being the most successful marketing assistant and from where her territory sales people wanted to get rid of her she was nominated for employee of the year.  It is not rocket science, but you do have to care as much as you say you do.

This concept I speak of and the one utilized with my employee is based upon the book I believe is one of the best guides ever printed and if you get the chance read it and get the CD to listen in your car on the way to work.  Stephen Covey of Franklin Covey has been at the forefront of this thinking for years and his book Principled Centered Leadership is to me at least its bible.

It is much more complicate than just this but….If you have been following this blog you know I started out preaching the need for vision and then a mission statement then once achieved the focus starts getting narrower.

So stop today before you go on Craigslist or LinkedIn to place that ad and ask yourself, “Am I hiring a person to do what?, and am I am hiring them because I know how we want it done?, and am I providing this person with the resources when they have questions to learn? and am I committed to this being a successful hire because we will have accountability sessions where we review the whole process including my effort and what we have promised.

If you do this, your interviews will be much more focused and your hires will understand why they are there and when the process is followed goals and results will not get away from you.  If you would like more information this and other thoughts about your hiring strategy call us at 619 550 1198 or email me at Michael@santafeadvisoryservices.com