Buggy Whips or Branches?

This is the seventh in a series of articles for the CMO on planning for 2011.

Talking heads and prognosticators will soon fill the air waves with summaries of 2010 and forecasts for 2011.  That we start a new decade and are still in the midst of a recession will add to the babble.

One area of focus will be social media/social networking/Web 2.0/digital marketing, etc.  Some will declare that “tipping points” have occurred and that significant changes will take place.  Others will decry the hype and say that much of what is going on is a fad.

What is true is that no-one can predict the future.  We can, however, learn from the past.  It is true that the automobile basically wiped out the buggy whip business.  It is also true that neither Television nor Radio replaced Movies as a form of entertainment.  What happened is that each form of media grew in its own way and to serve its own segment.

The unknown about social media is that we don’t know how it will evolve. Will the Internet/Google TV/You Tube take the place of older media?  Will tablet devices take the place of newspapers?  Will newspapers follow buggy whips? Probably not.  What is more likely to happen is that a junction will be reached and new branches will appear.  Learning from history:

  • Thomas Edison based one of his early companies and efforts on providing DC power to densely populated areas.  He didn’t see the need to electrify rural areas because of the cost to reach only a few people.  The introduction of AC power created the greatest growth in electrification, pushed DC power in a different direction, and created numerous branches for electrical transmission and related electrical products.
  • Henry Ford said that the buyer can have “any color as long as it is black,” and almost went bankrupt.  GM/Chevrolet provided color and gained significant market share.  Ford fought back, recovered and prospered. And as an interesting turn, Ford is the only domestic car company that did not have to be recently bailed out by the Government.
  • In 1977, Ken Olsen the head of Digital Equipment Corp. said, “There is no reason for any individual to have a computer in his home.”  While that strategic direction didn’t help save Digital Equipment, the PC business today is alive and well…and moving toward hand-held devices instead of in the home.

The bottom line is that people forecasting the future, or making declarative statements are usually wrong.  It takes a significant change and usually a long time before a product or concept is rendered obsolete, regardless of how hard VCs look for “disruptive technology.”  More frequently, new branches appear, grow and multiply.

How should the CMO react in the face of the 2011 forecasts?  Our advice has been fairly blunt:

  • Recognize that you will probably have to reorganize/restructure for the “new” marketing.
  • Continue doing what works.  (If you don’t know what works, set up a measuring process.)
  • Join the digital age. Set aside a good portion of your resources to experiment.  Generally you will need more time (people) than money.
  • Cultivate your installed base of customers in two ways:
    • Listen to what they say about your product and services, and make appropriate changes
    • Provide them with new products and services…it is the most inexpensive sale you can make
  • To grow, seek adjacent markets with current products and services but move carefully.
  • Recognize that there are increasing demographic divisions occurring, both in your staff and in your buyers:
    • The Millennials  act differently than the Baby Boomers.  Embrace the differences and use it to your advantage.
    • The rich (both people and companies) are getting richer and the poor are getting poorer.  Unless you can sell a lot to the poor people/companies, concentrate on selling to the rich.

As the CMO have you prepared your Management for 2011?  How will you react when  the best known talking heads suggests that all the world is going Web 2.0, and your management wants to know why you aren’t following lock-step?

RHM 12/2/2010

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