Year End Performance Reviews

Assuming your company has a calendar fiscal year, right about now you will either be giving or receiving a performance review, or both. Some advice on the year-end appraisals would therefore seem to be timely. The first point to make is that the performance aspect should come as no surprise to the recipient. The results should be transparent throughout the year and the feedback on them continuous. The year-end performance review is not about performance, it is about 2 things, the future and the bonus.

The bonus should not come as too much of a surprise either. In the best bonus systems the majority of the payout is based on a combination of the individual’s and the business’ performance  – see point above. Only a small part should be discretionary based on an objective, but more likely subjective, view of the person being reviewed. This is normally determined by assessing how well they have done versus their peer group and to what extent they have delivered above and beyond the call of duty. Systems that allow someone to get paid more than 100% of their bonus for exceptional service throughout the year are to be recommended.

The most interesting part is the bit where both boss and employee kick back and talk about the future. What has been learnt this year, where have the improvements come? What are the person’s aspirations for the future, are they realistic, what needs to be developed to achieve this? Everyone has their own style but I believe you should always encourage people to dream big and then be supportive but realistic about what stands in the way of those dreams.

People normally get the bonus bit out of the way first and, of course, if this has not gone well this can get in the way of a constructive discussion about the future. What do you do if you have not been given the bonus you think you deserve and you know the business is capable of paying you (no point arguing the toss about your bonus in a business that is going broke, ask the bankers this year)? My advice is to throw it back at the boss (not literally). Imagine you thought you deserved to get 100% bonus or more and you only get 75%. Try this script:-

“Thank you for the information about my bonus. Before I respond can I ask you a question? Presumably when deciding to give me this number you had a point of view on how I was going to react. Do you mind if I ask you what that was?”

Boss will now look very edgy and will mumble a lot of stuff and say as little as possible. Press home the point but in a calm matter of fact way.

“ I am not trying to be difficult, I am just curious. Did you think I would be pleased and feel very motivated about the future, did you think I would be satisfied and want to know about how I could do better next year, did you expect me to be disappointed and just take it on the chin, or did you think something else? You obviously could have given me more and of course you might have given me less, I was just interested to know what effect you thought this bonus would have on me?”

Boss will now either admit they did not give it that much thought or will foolishly choose one of the options you gave them. If it is the latter, you’ve got them whichever option they choose. If they say they thought you’d be pleased you can ask why and put them even more on the defensive. If they say they thought you’d be OK with it, you can say you don’t do ‘OK’ and are surprised they do. If they say they knew you’d be upset you can ask if they were concerned that you might look to leave. At 75% bonus they obviously do not want that (if they did it would have been even lower) and will now really be on the defensive.

At a certain point suggest – again very calmly and in a very matter of fact way, this really unnerves people – that perhaps it would be a good idea to take some time on both sides before discussing further.

This approach stands some chance of getting the bonus changed but a bigger chance that they will be more generous in the future. At the very least it is very satisfying to see your boss squirm. One member of our team has used this – in a previous life I hasten to add – and it worked like a charm. Times were better then, however, so use with caution.

So You Wanna Know About eMarketing?

I have just finished writing my latest eBook, “So You Wanna Know About eMarketing?”. Having a little experience now with writing books, conventional or eBooks, I know this means that I’m about two thirds of the way through the process: one third = research, one third = writing, one third = corrections and rewrites. So I’m not sure I’ll get it posted this side of Christmas. I’ve also committed to writing an article based on the book for Market Leader and that has to be ready for January. This may all get in the way of my planned, long vacation.

Blog posts are much easier so I thought I’d give you a précis of the new eBook just to keep you going. It covers 3 topics:-

What is eMarketing and why is it different?
How to develop an eMarketing strategy
How do eMarketing Agencies work – who (if anybody) should be your lead agency?

In order to get to a definition of eMarketing I marry a definition of marketing (the process of adding value to get people to pay more for your stuff) and a perspective on digital.

In defining digital I stress that it is much more than a ‘New Media’. This is typical old school thinking of the sort that treated the challenge of creating ads for the new media of television in the 1960’s as ‘radio ads with pictures’.

Digital (effectively the internet) is not one thing, it is several – a distribution channel, a communication tool, a medium, a forum, an aggregation mechanism. It is effectively a highly social exchange where everyone transacts with everyone (not just business with customers) and the currency can be shared ideas, attention, information not just money.

So, if marketing is about adding value by business for people, and digital is an exchange where value is created and shared by everyone with everyone then eMarketing is:-

The process of optimizing value for all parties in the digital world.

eMarketers are different because digital is very different in many ways. I go into quite a bit of detail on this but the summary is:-

Users are more impatient and promiscuous, and much more functionally oriented. Technology is central. Creativity, strategy and tactics are merged in a more complex world of options. Everything behavioural can be, and is, measured. This creates a very different mindset especially because it is so quick and easy to experiment. It is a fundamentally social world where it pays, literally, to treat people with respect, the way you’d like to be treated. You do indeed require permission to market.

When it comes to developing an eMarketing strategy I pose 6 questions (because I have always seen strategy as the search for answers to questions e.g. what is my market, who are my competitors and customers, what are my core competencies?). Not sure how much sense this will make without the full explanation but here they are:-

1. What are you trying to achieve in terms of value exchange and with whom? (If an ecommerce business – what is your business model?)
2. What is this worth to you and how will you measure it?
3. What is your programme to experiment, optimize and learn – how much budget do you need to keep back for this?
4. Have you included technical in the team?
5. Have you considered all the options (tools, tactics, channels) to give the best chance of ‘creative strategy’
6. How will you manage the learning loop and deliver innovation?

I also highlight 4 key reflexes you need when developing an eMarketing strategy:-

Functionality – slippery, impatient customers demands things that deliver and digital competitive advantage is much more weighted to this.
Content – most of the time, what people want delivered is great content e.g. information, advice, tools and entertainment. No-one is going to go on to the internet just to see your great brand web site unless it delivers functionality and content.
Search – eMarketers spend a lot of time on this because if you can’t be found you’re wasting your money.
Buzz – momentum, the sense that a brand is the coming thing, has always been vital to successful brands. Apple have it, Microsoft don’t. Toyota has it, Ford don’t. You’re either hot or you’re not. In digital this kind of buzz is vital and consequently innovation (based on experimentation and increasingly collaboration) is the sine qua non of digital.

Finally I argue that there should be no such thing as a ‘lead agency’, only a lead client. So unless one’s need is purely digital – and it rarely is – I do not try to argue that an eMarketing agency should be your lead agency.  What I do argue strongly is that:-

eMarketing should always be at the top table.
eMarketing should be separate from, not subsumed by, your Ad Agency (even if they are owned by the same group).

My defense of these statements is based on two things.

1. The nature of digital requires it to be addressed right upfront and to be part of developing the marketing strategy rather than an after thought.
2. The way digital agencies work mean that they have a unique perspective to offer and they cannot be ‘mixed in’ with, or report to, other types of agencies.

So there you have it in less than 900 words (the full version is 15,000 – bet you can’t wait).

Any comments gratefully received but not too many otherwise I’ll never get it finished!

A Repositioning of Green Cars

Following Stame’s rather pathetic post on hydrogen powered cars and his claim that he is about to buy a Porsche (rubbish – he can’t afford a Skoda) I share a recent article from Mckinsey. In it they suggest that a bit of market segmentation could give a boost to sales of electric cars. A typical piece of McKinsey analysis reveals that different types of driving needs gives the opportunity to develop and position different kinds of electric cars. I fully approve of the use of market segmentation to reveal innovation opportunities. I am a real fan of segmentation and have always argued that it is a key reflex of a good marketer. Only by slicing and dicing the market in a different way according to different circumstances (who, what, why, when, where) can brands spot new ways to add value. But sadly this McKinsey work misses the point.

Firstly, most people are not in a position to operate a portfolio of cars. One car needs to be able to perform several functions and to be able to do so cost effectively. It must be an economical and practical car about town, a decent long distance ride, and a fair sized people carrier for when you need to cart of few mates or kids around. As the second highest capital investment that most people make, it must also hold its value well – something of a concern I suspect for the new alternative fuel or hybrid cars.

Secondly, cars are a big badge. Your choice of wheels makes a significant statement about you. Even people (and it is a small minority if you discount the liars) who say they really don’t care about cars still want a car that says they don’t care but they’re not stupid or poor either, so they buy an Audi. The Toyota Prius, which is frankly a bit of a con as a save the planet- mobile, has achieved its success because, thanks to the likes of Leonardo de Caprio, it gives you a great big Green Badge, a statement of moral superiority, albeit a misguided one. Whether you like it or not, and most do, the choice of car says a lot about a person.

I do think that the hydrogen fuelled car is probably the future, and I suspect other radical breakthroughs are around the corner. 95% of the energy a car produces is used to transport the car, not the passengers. The single biggest difference we can make to fuel economy is to light-weight cars which modern materials now allow us to do. But rather than a lightweight, hydrogen-powered Honda, I’ll wait for the Mercedes, the Porsche, the Audi or even the Renault – because they are brands that make the right statement (for me).

As a footnote, check out Rory Sutherland on TED.com. A really funny, clever talk where he makes the point that if the ‘greens’ want everyone to stop driving SUV’s they must ensure that every convicted paedophile is required to drive a Porsche Cayenne!

Green is the Colour of Money $$$$$$$$

There is definite mood shift about the Green Revolution advocated by Friedman in Hot, Flat and Crowded (see my review). Just a year or so ago the predominant attitude in mainstream business to the whole ‘sustainable, green, environment, manage your waste’ thing was a begrudging acceptance and fear that it would inevitably spoil the party. We now detect the green shoots (pun intended) of investor excitement. Revolutions are an opportunity to make money, that is how we now see the agrarian revolution, the industrial revolution, the information revolution, and it is how more and more people are seeing the Green Revolution. “Hang on a moment, if we get first mover advantage on renewable energies, efficient waste disposal technology, new recyclable materials we can make a killing”. The smart money (which in these equity markets has nowhere else to go) is shifting towards anything green. Suddenly people with crazy little green ideas don’t seem so crazy and private investors are stepping forward to back them (I know of at least two such private investment groups, serious players, who are chasing such opportunities the way they would have chased internet start-ups).

Friedman’s argument is that the USA is uniquely placed and particularly motivated to lead the Green Revolution and thereby retain its place as world economic leaders. Perhaps, but the evidence of past revolutions is that they result in new world orders and new players. It was, after all, the industrial revolution that propelled the USA to where it is now and built the fortunes of new upstarts like J.D. Rockefeller (oil) and Andrew Carnegie (steel).

Who will be the new winners in the Green Revolution – answers on a postcard (or better still a comment to me which I will post).

How to progress from CMO to CEO – advice from Spencer Stuart

Here is something for all you ambitious marketers out there. How do you make the leap from being head of marketing to CEO? The general view is that this is very rare, more often CEO’s come through the route of general management, finance or operations. Frank Birkel and Jonathan Harper from Spencer Stuart, one the world’s leading executive search firms, have done some research and published their findings. We have it on good authority that one of the people they interviewed, a CMO who has become a highly successful CEO, is my old mate, Martin Glenn. The full article is available from the Spencer Stuart web site. Marketers can read it for advice on how best to position themselves to be considered for the top job – in most companies the board overlook their own CMO when discussing candidates for CEO – people in other functions can use it to make the argument against appointing someone with a specialist marketing background. There should be strong competition to be the boss.

Here are some of the highlights:-

1.    CMO’s (or marketing directors) often have to make a double transition. They have to move company and move function to get considered. Hardly anyone promotes their own incumbent CMO to CEO.
2.    The main reason is that CMO’s are seen as too specialist and too ignorant of other functions and finance in particular.
3.    It is marginally easier in marketing –led businesses like consumer goods but nowhere is it easy or common.
4.    There are ways around this – volunteering to get on cross functional project teams builds your experience. CMO’s also need to demonstrate their willingness to learn, hands on, about other functions and to present more data driven evidence of marketing success to build credibility.
5.    More often than not they will first need to take a sideways move into a general management role e.g. running a division.
6.    Not all marketing directors sit at the very top table, the senior leadership team. If they can break through to the board this obviously gives them the chance to see how the whole business works together.
7.    CMO’s need to appreciate that the kind of leadership skills a CEO has are different to leading a marketing team. It is not just that they have to be broader in their scope; they have to be prepared to penetrate the bullshit CEO’s get given (everyone tells them what they want them to hear) and often make decisions on less than perfect data.
8.    CMO’s may have the advantage of being naturally good communicators and may think they have great people skills but again the CEO has to have a different kind of communication and people skills. They talk to vastly different audiences and they have to persuade other people to get along with each other, not just get along with other people.
9.    Finally, the CEO’s in the research who had come through the marketing route seriously questioned whether most CMO’s really wanted their job. It can be lonely at the top; you need to get a buzz from financial data and investor meetings; you need the wisdom of Solomon and the patience of job.

It is comforting to hear from the CEO’s that the worst mistake a CMO can make, if they do make it to the top job, is to forget about marketing. They need to stop playing at being brand managers but they need to retain their obsession with the customer and top line growth.

You have been warned.