If there's one thing we have all learned by this point is that accounting was not—is not—a set of black and white business practices. As evidenced by Adelphia, Enron, Global Crossing, Xerox, et al, even the most conservative senior managers were more than willing to experiment with exciting and, some might even say, innovative accounting procedures to paint the truth about the financial health of the company in various shades of gray. They came up with all sorts of newfangled recipes—many just barely inside the law—for cooking the books and preparing financial statements to win Wall Street's affections.

Unfortunately it really doesn't matter if, like us, you recognized the faux growth of creative accounting and resisted the irrational exuberance running rampant among investors; we're all experiencing its ramifications in the form of a crashing stock market, plummeting consumer confidence, stagnant capital spending, and continued recession. While it's not fair or right we should all suffer in the short-term, in the long-term we'll all be much better off as companies are forced to replace the financial smoke and mirrors with strategies for real growth which, as our readers know, comes from creative marketing.

To be clear, when we say "creative marketing," we aren't referring to marketing driven by creative-types at advertising agencies and brand consultancies. No, no. That kind of marketing, where visual identity—logos, fonts, color schemes, tag lines—is confused for branding, goofy creativity is king in advertising, and tactics like T-shirt giveaways are considered strategy, is worth about as much as WorldCom stock these days.

True creative marketing goes well beyond tactics and conventional wisdom about whom you should target and how to reach them with what message. It uses research and modeling tools, similar to those used by economists, engineers, and other scientists, to create entirely new market segments—segments your competitors do not even know exist!—select a financially-optimal target group, uncover a differentiating positioning that you can deliver on profitably, and find the advertising execution that compels action. It requires compulsively implementing the strategy, using the same scientific tools to develop a marketing plan and building the organization to support it.

It's time for business to move beyond creative accounting towards creative marketing. Creative marketing drives sales and profits and transforms companies. As President Bush said in a recent speech, "The business pages of American newspapers should not read like a scandal sheet." Indeed.

The MLB has the same basic problem as most other once dominant companies, such as McDonald's and Coke: while they are still profitable (despite what the team owners might say), it's getting harder and harder to make money. The costs of doing business are going up while current and potential customers (a.k.a. fans), with more entertainment choices and a finite number of dollars to spend, are not as interested in going to or watching a baseball game as they used to be. Just like McDonald's and Coke—and most other companies in the same predicament for that matter—MLB is letting hormone-induced intuition guide decisions, rather than research-driven strategy. Here a few examples of what we're talking about:

Example #1: Rather than ask current and potential fans why, as statistics seem to indicate, they are less interested in going to or watching a baseball game on TV, MLB guessed that it must be because the game is too long and slow-paced. Considering male teens and 18-34 year-olds, two age demographics of particular interest to MLB and advertisers, will also watch cars speed round a track during NASCAR (now the fastest growing spectator sport) events for six or seven hours and snail-paced golf tournaments over the course of several days, perhaps this isn't the real problem. Regardless, they tried to fix it. In 1998, MLB instituted new, somewhat complicated rules to try to get pitchers and hitters to work faster in the hopes of moving the game along. Yet games actually have gotten longer, attendance is stagnant, and TV viewership continues to decline.

Example #2: Instead of studying why average game attendance was stagnating or declining for many teams, the MLB began expansion efforts in 1993, adding four team franchises to the league over the course of the next five years. In a retail setting, if sales increases only come from new store openings, but sales at existing stores are flat or declining, you've still got a problem. True, expansion improved overall MLB attendance (i.e., ticket sales), but, as of the 2001 season, the average attendance at MLB games remained stuck at 30,000 per game, or approximately two-thirds of a typical stadium's capacity. In other words, expansion did not help MLB fill the seats.

Example #3: In classic over-and-over again marketing, now the MLB is reversing direction and "contracting," a.k.a., downsizing, the number of teams. Maybe MLB will save a few bucks on the cost side of the business, but decreasing the accessibility of baseball to certain markets does little to fix the league's main problem: renewing interest in the game.

Unless it wants to follow the likes of McDonald's and Coke in precipitous declines in brand equity, we can only hope managers at the MLB can mitigate their testosterone surges and actually ask fans what will bring them back to baseball. [Hint: a strike won't do it.]

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In evaluating whether to keep or divest business units, executives and management consultants around the world employ the long-revered 2 x 2 strategic quadrant approach to analysis: industry segment growth (low/high) vs. business unit performance (low/high). If a business division falls into the "dog" quadrant—stagnant or shrinking industry growth and poor business unit performance—management usually sells it off or slashes it to a bare minimum.

This is a superficial approach to business analysis. Without talking to customers and prospects in an industry, you can't fully assess the problems and the potential of that business unit.

Copernicus recently assessed a "dog" business unit of a Fortune 1000 company. What we found surprised the CEO and management consultants alike. No supplier—including the client—was providing customers with what they wanted. We found that the unit had incredible potential to increase market share and actually increase prices up to 30 percent. That's right. If they could get the product enhancements and service they needed from a supplier in the category, customers would be willing to buy more and pay for the value.

The lesson is clear: without researching customers, a company cannot make sound business decisions. Ever.

For more insightful marketing discoveries, visit http://www.copernicusmarketing.com/discover/index.htm

Have a hot discovery for our next release? Contact us at info@copernicusmarketing.com

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Peter Drucker has given us words to live by for six decades, and his new book—a collection of essays, articles, and interviews—doesn't disappoint. Managing in the Next Society offers history, analysis of trends and issues, prognostications, and, as always from Drucker, insightful advice.

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This coming October 16 and 17, at the Waldorf=Astoria in New York City, Copernicus will proudly co-sponsor The 50th Annual Marketing Conference: The New Fundamentals of Marketing. Speakers from Copernicus and companies including Chubb, The Stanley Works, and Verizon will explore the marketing approaches that work in the uncertain business environment of today. For more information about the conference and to register, visit www.conference-board.org/marketing.htm.

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