Archives for posts with tag: McKinsey Quarterly

In “The perils of best practice: Should you emulate Apple?” the McKinsey Quarterly examines the practice of copying successful companies, and uses Apple as a case in point. The theme is, can you identify best practices, and is it a good idea to copy them?

If only it were that easy.

You should also ask the “can” question: Can you emulate Apple and its best practices? More abstractly, can you copy the best practices of your more successful competitors and steal some of their market share, or begin to outperform the market yourself?

I don’t have the answers, but here are some considerations.

The VRIO framework talks about:

  • Value
  • Rarity
  • Imitability
  • Organization

(1) Does your product/service/solution provide value to the customer; (2) are you the sole or one of very few providers with that capability; and (3) are there notable barriers to copying your offering? In comparison to yours, how do competitive offerings stack up?

Most importantly, is your company organized in such a way that you can (could) consistently exploit your market differentiation? Being the best isn’t good enough, it’s being able to defend being the best that matters, and that’s what “organization” in VRIO speaks to.

O” is about all the things that are hugely difficult to emulate:

  • Operational effectiveness and excellence
  • Corporate culture that learns from success and failure
  • Ability to innovate — interpret signals from slow and fast culture
  • Comp plans that foster innovation
  • Customer-centric service design

Only when what you deliver is valuable, rare, and difficult to imitate, and you are fantastically well organized will you be able to emulate a company like Apple, or your very best competitors.

And then it’s not about emulation, but about domination. Taking a cue from the Five Forces: for example, what inputs could you dominate to keep competitors at bay? Apple has signed huge contracts for glass for its portable devices, purchasing as much as 70% (if I recall correctly) of the available supply. That (a) creates shortages for competitors, and (b) drives up the price for the remaining manufacturing capacity. In your business, do you have enough cash to manhandle your competitors’ supply chains?

Back to the larger questions of should and can you emulate Apple, which has a Superstack—a nearly wholly owned and fully integrated value chain (infographic PDF).

Accenture Superstack

Accenture Superstack (appropriated w/o permission from Superstack PDF. Sorry.)

[FWIW, as much as people say that Google purchased Motorola Mobility for its patents, I can just smell the Superstack synergies, which likely weren’t lost on Google. Watch for a similar Microsoft move. . .]

In an era of outsourcing and specialization, how vertically integrated are you? Should you engage in M&A or, against the recommendation of the Five Forces model for many alternate suppliers, should you have just a few highly symbiotic, tightly coupled single-vendor relationships. How would those be affected during economically tough times?

What does your more successful competitor really deliver? Is it a product or an experience? Apple delivers a fully integrated and portable experience. You can watch the photos you took on your iPhone either on your iPad or even on your TV via Apple TV. You can listen to the music you purchased on your iMac via your iPhone or iPod. Apple makes available what matters to you in your personal life anywhere you want to experience that. They’ve made a conscious choice to leave the office behind. Microsoft, Google, and Oracle will fight that battle (not just with data availability, but secure portable application availability).

The “should you” question really is about strategy. What do you want to be when you grow up? And will emulating someone else actually get you there?

The “can you” question really is about capabilities. Can you successfully implement similar strategic and tactical choices that will ostensibly result in the same outcomes for you as they do for your competitors?

Which question you ask first is of academic importance—they’re two sides of the same coin, and in both cases the answer needs to be “yes.”

Ask yourself these questions:

  • What is our company good at?
  • What is our company bad at?
  • What is our competition good at?
  • What is our competition bad at?
  • Is our product valuable, rare, and inimitable?
  • Are we organized in a way that provides value (triple bottom line?), and is that organization difficult to copy (causal ambiguity).
  • Who are our direct competitors; who is entering our space with a similar solution; what dissimilar (substitute) solutions exist that accomplish the same outcome?
  • How are our competitors organized?
  • Do we have a clearly defined strategy, and is everyone in the company aware of this strategy and working toward its success?
  • Is sameness a viable differentiation strategy? Yes? No? For what reasons? What gaps need to be plugged?
  • Do we have a brand in good standing?

Then you can ask yourself: Should I copy my competitors’ best practices? By now you ought to know if they would add value to your organization, and if you could implement them successfully.

McKinsey Quarterly just published “Measuring marketing’s worth” (free subscription necessary). All of us marketers struggle with answering this—not because we cannot measure outcomes, but because we don’t have good traceability: inputs are difficult to connect to outcomes (often because of cross-channel marketing activities). Or as the saying goes: 50% of marketing dollars are wasted; we just don’t know which 50%.

In short, the article posits the following “five basic questions”:

1. What exactly influences our consumers today?
Marketers must be ready to use the findings to debunk accepted wisdom and legacy rules of thumb. In today’s fragmented media world, only by knowing how the way consumers interact with your company has evolved can you begin to make more cost-effective marketing investments that truly influence purchase decisions.

2. How well informed (really) is our marketing judgment?
Data remain only as useful as the expertise you bring to bear, and good judgment will remain a hallmark of the best marketers.

3. How are we managing financial risk in our marketing plans?
Managing risk is critical, and marketers shouldn’t be shy about putting this issue squarely on the table. With thoughtful scenario planning and cross-functional participation, such discussions can be extremely rich and rewarding.

4. How are we coping with added complexity in the marketing organization?
First, you’ll require a number of specialists. Second, you’ll need somebody who both integrates marketing efforts across channels and communications vehicles and focuses on the bottom line. Finally, you’ll need absolute clarity in processes, roles, and responsibilities not only within the marketing organization but also throughout your company (across functions and business units) and externally (with agencies and external vendors).

5. What metrics should we track given our (imperfect) options?
The volume of data available today should make it possible to find metrics and analytic opportunities that take advantage of your unique insights, are understood and trusted by your top team, provide proof of progress, and lay a foundation for more sophisticated approaches to tracking marketing ROI in the future.

Again, you really should read the whole article, rather than just the truncated excerpts above.

After that you have to read John Stauffer‘s “Social Brand Planning” article (Journal of Brand Strategy, April-June 2012, Volume 1, Number 1). John wrote the must-read (!) marketing article of the year so far: very strategic with excellent tactical guidance.

Specifically, John Stauffer explains in detail what and how brand planners need to execute:

  • Actively listen to slow and fast culture.
  • Identify their biases early on in order to break down some of their barriers to empathy that exist within brands and agencies.
  • Apply insights from social media upstream into the major arteries of brand planning.
  • Build consensus on a cross-practice measurement model designed to yield a realistic and timely assessment of marketing and communication efforts.
  • Lead an enterprise-wide planning model that acknowledges consumers do not think of a brand in discrete categories of marketing, communications, public relations, or advertising.

Run, do not walk, to your nearest library, and demand a copy of the journal. Or just buy it. Then you can answer the five questions McKinsey has thrown at you.

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