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Removal Of Innovation ultimately leads to a Return On Investment comparable to a Return On Ignorance

Try to imagine the following:

Space – the final frontier. These are the voyages of the starship Enterprise. Its five-year mission: to explore strange new worlds, to seek out new life and new civilizations, to boldly go where no man has gone before…..

but you’re not going anywhere, before you have proven the positive ROI!

In this case even Mr. Spock would have lost his cool

CEO, COO, CFO, CIO, CTO, CMO, President, Vice President, Senior Vice President, Director, Executive Director, Senior Director, Junior Director, Vice Director, Managing Director, Senior Managing Director, Manager, Executive Manager, Senior Manager, Vice Manager, General Manager, Junior Manager, Marketing Manager, Head of Marketing, Head of Advertising,…. – the list is endless.

Not all of these functions and titles will be found in one single company, but one will most probably find a clearly defined hierarchy shaped like a pyramid, in which the job title expresses the position in the pyramid. What started as an organizational principle has unfortunately turned into an operational principle and in some case even into a governing principle.

The system conditions employees and wakens their hunting instincts. Unfortunately their prey is the next ‘higher’ title and not additional market share for example. Employees start focusing on managing their careers, their immediate environment becomes the frame of reference for their decisions and they procrastinate courageous, innovative decisions, because their positive effect is not immediate. In other words, they are out of touch with the market and the consumer sooner or later and fade out the fact that in reality it is the consumer that feeds them.

Herein lies their major problem with social media. They define listening to consumers, opening up the dialogue, crowdsourcing etc. as an attempt to include consumers in the pyramid. The consumer is perceived as another hunter for the next ‘higher’ title, as a competitor rather than an ally or friend.

Lack of metrics, insufficient ROI etc. are neither here nor there, in reality it is about the preservation of the status-quo. That is however impossible. If companies don’t realize that, they will be out of business sooner or later.

Changing the structure of the organization by developing an alternative to the pyramid and getting rid of the title inflation would be a good starting point. What do you think?

The Red Flag Act was introduced in 1865 by the British parliament to control the use of ‘mechanically propelled vehicles’ on British public highways. The act required motorized vehicles to be preceded by a man with a red flag. Officially the parliament was concerned about public safety, because motorized vehicles could cause fatal accidents, scare horses, block narrow lanes, and disturb the locals by operating at night. In reality there were probably financial interests involved: Maintain the power of the railway and other industries at the expense of the emerging automobile industry. The act was, of course, unsuccessful (Source: Wikipedia).

This sounds very familiar to me when looking at the attitude towards the Social Web in quite a few companies and institutions today. Often employees are not allowed to access social networks at work, because it has negative implications for productivity and they could say something that they shouldn’t etc.

These measures are just as unsuccessful as the Red Flag Act. You can’t prevent the rise of an innovation, whose time has come, by requirements, bans and rules!

Tradition means to pass on the fire and not to conserve the ashes.

Some of these are actually very funny with impressive view numbers:

http://www.brandrepublic.com/News/929732/YouTube-hits-top-ten-home-made-videos-time/

some interesting newcomers on that list:

http://www.time.com/time/specials/packages/completelist/0,29569,1918031,00.html

More and more people don’t trust advertising. A recent GfK survey carried out in Spring 2009 in Europe and the US found that only 28% trust advertising managers, only politicians were found to be less trustworthy. As Howard Schultz aptly analyzed:In the 1960s, if you introduced a new product to America, 90% of the people who viewed it for the first time believed in the corporate promise. 40 years less than 10% of the public believed it was true.Is advertising dying, because people think it’s lying?

In the world before the Internet, one way media dominated. In this world, brands used advertising to address and influence target consumers ‘efficiently’ – ‘reach’ became the magic word and with it CPM (cost per thousand views of the ad) became the benchmark to calculate the relative cost of the campaign. A dialogue with the consumer was not on the agenda!

Since the 60ies, one way media channels exploded and they effectively developed two revenue models:They sold content to their audience and they ‘sold’ their audience to the advertising industry. Hence the amount of advertising exploded as well. The following 2 examples illustrate this point perfectly:

In 1965 it was possible to ‘reach’ 80% of the 18-49 year age group with 3 60-second Television commercials. In 2002 a brand needed 112 Television commercials to reach the same target.

In 2006 the average US consumer was exposed to approximately 5.000 advertising messages per day. Assuming a 16-hour day, that means 1 ad every 11,6 seconds

It is not surprising that consumers are increasingly annoyed with the omnipresent, impersonal brand monologue in one way media accompanied by an increasing loss of trust and a decline in quality caused by rapidly increasing demand.

Is advertising doomed to die? I personally don’t think so and will share my views in the upcoming posts.

What do you think?

Let me first explain what this post is not: It is not another comment on his incredible performances in Berlin and won’t attempt to analyze his relationship with the brand that supplies his running shoes.

Rather it is a post about decision and resulting action.

When Usain Bolt got his first running shoes – I assume he still had to buy them back then – he knew beforehand that he wanted to become a runner and to do what it takes to become a successful one. In other words, he didn’t get the running shoes to perform a task he previously performed with other shoes (like going to school or to the beach or shopping or whatever). He got them to run as quickly as possible on the track. He also realized that it requires a special, different attitude (training, nutrition etc.) to be really good at that.

Looking at many corporations and the way the treat social media, we find that they are not acting like Usain Bolt: They treat social media just like another marketing tool (i.e. just like another normal shoe) and refuse to realize that it requires a change in attitude.

If they want to be successful in social media, they have to commit to it beforehand and adhere to the rules that apply there. As long as they don’t change, they won’t be successful. Just like Usain Bolt wouldn’t have been successful wearing his running shoes to go to the beach or wearing street shoes to run on the track

Governments, economies and communities require trust to function and a society without trust ultimately dies. Even so, surveys keep on showing us that mistrust in on the rise. Besides politicians it’s usually managers, bankers and marketeers that we trust least. Why did our trust compass break?

Is it because of a general moral decline? Or because the value ‘trust’ was considered to be old-fashioned, meaning it didn’t sell well in a society shaped by an ‘anything goes’-mentality? Or because of the communication breakdown between producers and consumers in a world dominated by one way media before the Internet arrived?

The results are devastating: Companies have lost brand control, but many still refuse to realize and accept that.

Restoring trust therefore belongs on top of the agenda. That implies a change in corporate attitude: more entrepreneurship and less management. Entrepreneurship meaning discovering the chances, implementing the innovation, tapping the resources and using them and bearing the risks. Back in 1912 Joseph Schumpeter called this ‘creative destruction’.

Consumers are the most powerful ‘resources’. Including them in the corporate architecture of value creation will ultimately lead to a new, more successful business model.