Why should 50% of your marketing fail?

Using the Information Theory: the more probable the event, the less information that is needed. Why is that true? If you receive information that you expect, it contains little information. For example, if you have a targeted message to one person, that information will have a better chance to succeed. If you send the same message to 2 people, you have introduced more risk and less chance to succeed. So rather than try to drive failures out of the process or become more efficient we must introduce large amounts of information and as a result more risk. In fact, that magic number for efficiency is 50%.

To generate that 50% number lets define the 2 extremes. If we want 100%, the information theory states the lower amount of information needed. That means if we “do it right” the first time we have driven all the information out of the process except for a very select audience. If we look at 0% that means that we provide all the information to a very large audience. An analogy that I use for 0% may be a Super Bowl Ad. I am pretty sure at this point that anyone reading this is not contemplating a super bowl ad next year. My failure rate at this point may be high but it is not at either extreme. At least it is at a starting point.

How do we generate this information efficiently (50%)?

1. Distinguish between failures to generate useful information, which are new failures and those that generate information that we already have, which are the old failures.
2. Providing tracking information or checklists especially from past experiences. Good accounting of your failures is really more valuable than the description of the most successful work.
3. The early you test the better.
4. Use the smallest batch size possible.

In our discussions with small batch size strategies we can think of the process is producing potential errors at a certain rate. If we can test early, we choose to receive these errors when the costs of reacting to them are low. The striking advantages of the small batch size are that information arrived early and our total population of errors remains small because it arrives in more manageable chucks. Of course, the more batch sizes you have the more you waste design resource each iteration incurs extra costs and of course extra cost or path.

These two areas are always in direct conflict and one of the things that need to be weighed is the costs of the trials tested. When the cost of the trial is high fewer iterations will be performed and vice versa. However, frequent iterations can actually be much more valuable than people suspect.

I think this is a very interesting concept and deserves further study. I use this theory in developing Facebook and Google Ads on a regular basis. Seldom are my ads stagnant. They are constantly evolving and change as success rates change. For an example, if you have a campaign that has three or four ads in it, you can constantly evolve these ads to increase hit rates or conversions…but only try to be 50% successful!

Related Material:
Developing Products in Half the Time: New Rules, New Tools, 2nd Edition
The Principles of Product Development Flow: Second Generation Lean Product Development

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Agile, Scrum, Kanban, or is it just a Marketing Funnel?

The drawing is reflective of a Scrum sprint. Scrum is an iterative, incremental framework for project management and agile software development. The sprint is typical a two to four week process with the large loop representing the overall process and the smaller (top) loop representing a twenty-four period and the daily scrum meeting. In the Value Stream Marketing Process, I use the loops to demonstrate a higher level of intimacy with a prospect. The top loop is for existing customers to nurture an even stronger relationship.

The three separate areas of the diagram will have their own Kanban board, if there are separate teams working on them, or you could visualize each as a separate swim lane. Separating these three processes apart allow you to better identify the process steps and the tools needed to facilitate the value stream flow. And, of course, using a Kanban board for this process will help you identify where the process is not working or where the bottleneck is occurring.

The Kanban board is where the actual work gets done. We want to limit unnecessary work in process to be no higher than it needs to be to match the control point or pacemaker of the process (bottleneck). We will use these boards to limit Work in Process into each stage and as a result create a smoother work flow(Heijunka) with a goal of eliminating what Lean refer to as the 3 M’s, Muda (Waste), Mura (Unevenness or Inconsistent) and Muri (unreasonable). This way we maximize your marketing efforts to the fullest extent.

Scratching your head a bit? We will develop our Kanban Boards in later posts which will clarify things a bit. Don’t get hung up on process. All you really need to do is break down your present marketing systems onto a Kanban board and start.

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John Mariotti of Small Business Trends wrote an interesting article titled “A Hazard of Innovation: “Falling in Love With Your Own Ideas” on the American Express Open Forum. John states:

There seems to be widespread agreement that innovation is the path to profitable growth and competitive advantage.  If that is true (I think it is true), then why aren’t more people doing it?  And why do so many new products fail.  I know of no “hard statistic” other than the generalized one “that over 90% of new products fail.”  But again, I ask, why?

Here are a few proven methods to make your idea more successful and prevent its premature failure: First and Foremost – Focus Outside, Not Inside

If such common and deep-seated beliefs that lead to new product failures, (and they aren’t limited to products—it could be new processes, new acquisitions, new…whatever), what can you do to guard against this?   How about getting some independent outside opinions?. Here are a half-dozen more “safeguard tests” that can be used to enhance the likelihood of success and reduce the chance of innovation failures.

1. Market Research
2. Focus Groups
3. Surveys
4. Consumer Panels
5. Test Markets
6. Truth Tellers

Trust, but Verify is a term used in delegation and management.  When a group of New Product, Marketing or Sales people is exuberantly proclaiming the greatness of a product, investigate more deeply.  If these proclamations are coming in the face of lackluster performance in any of the above six “safeguard tests” dig deeper, and fast.  Verify that this is not a group who has “fallen in love with their own ideas.”

Don’t give up too easily or quickly—but don’t be afraid to “cut your losses” and move on.  Innovation is wonderful, powerful, intoxicating and exciting.  Failure is devastating.  Use every means you can to prevent failure and improve the chance of success.  Often, a small change, a minor difference in pricing, promotion, features, packaging, or placement is all it takes to transform a potential loser into a winner.

This is crux of the article and I encourage you to read it in its entirety. He explains each of the 6 points and the picture is worth the click. However, this article outlines many of the reasons that has driven me to start utilizing the Agile, Lean Product Development methods in marketing. Involving, Verifying, Creating and Scaling as early in the process as possible is imperative in today’s marketing. The motto: Fail often and Fail early approach is much better than hoping that you will be in that 10% of successes. I mean, really are you batting 900? If you wait for the perfect product there may be to much invested to change. The tools are there to facilitate early customer involvement but are we utilizing them? Are we even participating in our customer’s communities that will allow us to do this?

It is very difficult to get many organizations to listen for that heartbeat. They want to monitor the process but keep it inside to the last possible moment. If you think about your organization and the marketing of a new product is it your internal structure of marketing, engineering and finance that drives the process? Should innovation and development not be more centric to sales and customers? Developing better methods to hear the Voice of the Customer is essential. Is your organization still listening to your customer’s heartbeat with a stethoscope or have you moved on to an ultrasound?

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His new book, , Simplifying Innovation: Doubling speed to market and new product profits – with your existing resources, is the first to apply the Theory of Constraints for high leverage innovation improvement. You can learn how to get more impact from your innovation by visiting the Guided Innovation website or visiting Mike’s blog for a wide array of reports and other free innovation resources. There is a sample chapter download available at http://www.SimplifyingInnovation.com/chapters.

The podcast was filled with so much information that I broke into three parts. The first part included below overviews the principles of applying Theory of Constraints. Part 2 will post tomorrow afternoon and will cover the Customer Value Lens, Part 3 will cover Alliances and Tools used in innovation. As you can tell, I enjoyed the podcast, innovation, through-put does it get any better!

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Listening to your Customer’s Heartbeat with a Stethoscope?

Fail Early and Fail Often

Can you have Agile Marketing?

Dr. Robert Charente of ITABHI Corporation developed the principles of lean development (LD) in the early 1990’s as not only a strategic as well as tactical business approach for the creation of change-tolerant business software intensive systems, systems that can rapidly adapt to or help in the creation of business change. He sets these lofty targets in his developments:

• 1/3 the human effort
• 1/3 the development hours
• 1/3 the time
• 1/3 the investment in tools and methods
• 1/3 the effort to adapt to a new market environment

Why the 1/3 targets? These goals are meant to challenge status quo thinking. Without audacious goals, ones that seem impossible to reach business managers won’t bother to think about the issues of software development in entirely different ways.

Could your marketing achieve 1/3 targets? Could you achieve them while providing more value to the customer? Can you think about your marketing in a totally different way?

Bob Charente expanded the thoughts of Lean Development to these 12 principles:

1. Satisfying the customer is the highest priority.
2. Always provide the best value for the money.
3. Success depends on active customer participation.
4. Every LD project is a team effort.
5. Everything is changeable.
6. Domain, not point, solutions.
7. Complete, don’t construct.
8. An 80 percent solution today instead of 100 percent solution tomorrow.
9. Minimalism is essential.
10. Needs determine technology.
11. Product growth is feature growth, not size growth.
12. Never push LD beyond its limits.

You can read an expanded version of these 12 principles on the ITABHI Corporation website.

Lean Development focuses on the creation of change-tolerant software. Setting up this model for marketing could be quite interesting. How flexible, how change- tolerant is your marketing? Why are you marketing the way you do? Is it the way that your customer wants you too?

Photo Credit by hanneorla

You can get a feel on how it works by just evaluating your microwave. To improve heating in the microwave, halfway through the cycle you turn the package over, turbulence. If you are on a lower power level, the food takes longer to cook, time and temperature. Even a dishwasher, frying pan, washing machine, dryer or even a carpet cleaning machine follow these basic principles of Time, Temperature and Turbulence.

Can marketing make sense out of these principles? Certainly!

Time: Remember the old saying about frequency and being there day in and day out. This certainly has merit and is still a very important part of marketing today. When most people or even organizations finally get down to the decision making time, inking a contract or writing a check, the safest choice many times wins. Having a well established brand makes you the safest choice. What does it take to have a well established brand, TIME!

Temperature: I equate temperature to how well you address the need. Not only do you need to provide a service or product that addresses their need but you must clearly demonstrate that you do. Review a few jobs that you have lost in the past that you truly felt like you were the best solution. Typically, you will find that it was lost to a well established brand. They were the safe choice. Why? You did not identify clearly, without question, you were the best solution. Clarity – will make you HOT!

Turbulence: This is my favorite, causing a lot of agitation or maybe better said commotion about your product or service. Word of mouth, Gigantic Sales, Star Power and uniqueness are some of the ways to increase turbulence. You have to give people something to talk about! Create a stir!

These are very basic definitions but it is looking at all three of them at once that is the key. Examples:

1. Lack time (Time): You will have to spend a lot of time in addressing a well defined audience and making a really hot offer!
2. Lack Uniqueness (Temperature): You will need a longer time to market the product, you must be the tortoise and have some Star Power (testimonials) making you the safest choice.
3. Lack Proof, Testimonials (Turbulence): You have to take the time to develop the customer’s confidence in your product. It will need to be a much more personal sale.

Time, Temperature and Turbulence works out to be nothing more than math in the engineering world. In marketing, there are many creative ideas that can be spawned using this trio as a guideline. However, it still comes down to math.

The Marketing Equation: Time x Temperature x Turbulence = Prospects

Algebraic rules:

1. Equations are always in balance:
   1. A increase in any one will result in an increase in prospects.
   2. A decrease of any one will result in a decrease of prospects.
2. Product of the numbers is the same, no matter the order:
   1. The order should not be relevant
3. Any number multiplied by 0 is 0.
   1. If you do nothing in one area, you will get nothing.
4. One multiplied by one is one.
   1. Staying at the status quo will keep you right there.
5. Any positive number multiplied by a negative number becomes negative.
   1. Mistakes are really tough to overcome.
6. Two negatives = A positive
   1. Ok, my theory is blown!

Photo Credit: by jmv

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