After spending much of our careers fighting against the proclivity of business managers to make decisions using only intuition, we were absolutely infuriated by business magazine Business 2.0’s recent cover story, “How to Think with Your Gut.” 

The article, written by Thomas Stewart, Business 2.0’s editorial director, describes a few cases where relying solely on gut instinct led to success—Federal Express, Starbucks, and The Osbournes TV show among them—and features quotes from managers from different industries touting their comfort and success using intuition to make critical decisions.  For instance, Chuck Porter, chairman of advertising agency Crispin Porter & Bogusky, brags, “when we finish an ad, the system we use is, do you feel it?  Do you feel when you look at this ad that it’s going to resonate with people?  Will it reach out and grab them?  Basically we use instinct, because we know the audience so well.”

We would beg to differ on gut instinct’s role in the success of FedEx, Starbucks, and The Osbournes. In the case of FedEx and Starbucks, what made the ideas of an overnight delivery service and made-to-order coffee successes wasn’t gut instinct, but good strategy (doing things differently than competitors) and great execution (building a unique set of activities and making trade-offs to deliver on the strategy).  Gut instinct proved right in this case ONLY because of strategy and execution.  In the case of The Osbournes, that was pure luck as far as we’re concerned—it could have just as easily flopped as have the many copycat shows that have since sprung up on other networks.

As for Chuck Porter’s comment, his agency is far from the only one using the same technique for developing a campaign and, while we can’t speak to the performance of his agency’s ad campaigns specifically, in general the ROI of campaigns today is at best 1%-4%—so much for knowing the audience so well.

We certainly wouldn’t quibble with the general finding of the experiments that Stewart cites in the piece that intuition plays a role in decision-making.  Having an instinct—or in more scientific terms, a hypothesis—about a customer target, new product or service, or what’s causing customer dissatisfaction is the important first step in the process of making a business decision. But when the first step is the only step, then business is in trouble.

Stewart writes, “firefighters don’t weigh alternatives. They simply grab the first idea that seems good enough, then the next, and the next after that.”  Ignoring the tragic fact that too many firefighters die doing their jobs, Stewart believes grabbing at ideas is a good thing for businesses to do, too. After all, he claims, “the most brilliant decisions tend to come from the gut,” and “in a fluid, competitive environment, the best decisions come from intuition.” He could just have easily written that, "the dumbest decisions tend to come from the gut," or "the worst decisions are based on intuition alone." Consider the precious resources—time and money among them—companies burn through in pursuit of each subsequent intuition.  Sure they might get lucky and find something that works on the first try.  But what’s far more likely to happen is that the first idea doesn’t work, so it’s on to the next which continues to disappoint, and so on and so on until the company drives itself into oblivion. Take any one of the now defunct dot-coms.

A much better title for this article would have been “How to Destroy Your Brand, Business, and maybe the American Economy.”  Especially these days when companies really can’t afford to make their best guess and hope it works out, this article borders on the irresponsible. Better intuition isn’t going to save American business—no matter how much managers practice listening to their guts, as Stewart suggests. Better, more profitable business decisions come from testing out an intuition with rigorous analysis of unimpeachable data. 

With the economy sputtering, corporate financial scandals in the headlines, and seemingly endless cost- and job-cuts, 2002 was far from a banner year for business.  We suspect many business managers would just assume forget the year 2002 ever happened.  However, we decided some reflection on the past year was in order because, whether we like it or not, what happened in 2002 will still influence business activity and decisions in 2003. This is particularly true for the practice of marketing.

So as we look forward to a fresh new year, here are our thoughts on the big picture marketing issues that marketers need to tackle:

Brand Confusion
For all the money spent on branding, you’d think a buyer’s ability to tell one shampoo, one PC, one department store, or one industrial supplier from another would be improving.  Instead the exact opposite is happening. As we first reported two years ago, our research indicates that buyers in categories ranging from telecommunications to credit cards, bookstores to cars, perceive the leading brands as becoming more and more similar over time, rather than different [click here for more on our research]. The problem got even worse in 2002 as companies, in a panic about the economy, cut marketing spending. The campaigns they did invest in did little to communicate anything particularly differentiating or compelling about why to buy their brands….

Discounting Obsession
….That is with the exception of, “we’ve got the lowest prices,” based on the assumption that, during a recession, buyers are only concerned about the cost of a product or service. While there’s no doubt that price may become a more important factor when money is tight, it does not generally, or even uniformly, become the most important purchase consideration. We aren’t saying that “we’ve got the lowest prices” isn’t a viable marketing strategy—it can be with the right cost controls and inventory management.  But (1) it will not work for every company and (2) it isn’t necessary to have the lowest prices to attract customers—there are other viable options to a low price strategy.

Advertising’s Declining Performance
No matter how entertaining, humorous, or artistically stunning agencies and ad critics may find current—particularly television—campaigns, unless a spot delivers a selling message that explains clearly why to buy a brand, product, or service, there is no reason to spend the money on the campaign. According to a recent study produced by the University of London’s London Business School and French advertising firm Havas SA, marketers plan a major shift away from traditional media advertising to Internet marketing and direct mail.  But whether a campaign works still depends on whether a compelling selling message is delivered, no matter what the medium.

Making Marketing More Accountable
In the wake of all the financial scandals and increasing budget cuts, there has been more and more talk among marketers about making the practice more accountable.  Marketers want to be able to evaluate marketing programs just as they would any other investment. But in spite of all the talk, there has been very little action to find metrics and measurements that not only tell a company how it’s doing, but why they are or are not doing so well and how this relates to profitability.  Many sophisticated marketers are doing the monitoring, but what the CEO of a firm is going to want to know is what we are getting for what we are spending AND how can we get an even better return.

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We talk a lot about developing brilliant marketing strategy, so we thought we’d spend some time this month focused on the other essential component of marketing success: great implementation.  Recently, we’ve encountered more and more examples of companies that had invested the time and resources to create a transformational strategy, only to have it all come undone during the implementation process. 

Our preliminary investigation—which consisted of extensive conversations with CEOs and CMOs from a variety of industries—into what’s happening with implementation revealed something we hadn’t expected.  It’s not that there are too few people on the implementation team—what most marketers feel is the problem—but that there are too few who are neurotic about executing the marketing plan as it was given to them.  In fact, Copernicus modeling work done in conjunction with Professor Paul Berger reveals that the number of people assigned to a team is indirectly proportionate to the percentage of the original marketing plan that remains after 12 months.  If there are six people on the team, for instance, we estimate about 50% of the original plan is left, with 12 people, just slightly more than 20%. 

By no means should companies limit the number of people on a team—that’s certainly not what we’re saying. But senior marketing management needs to recognize that they are fighting against human nature—compounded by the feelings of omnipotence imparted to holders of an MBA degree—to want to leave a mark. As one frustrated CMO more bluntly put it: “Everybody’s got to pee on a plan.” 

 So what’s a CMO to do? 

1) Hire obsessive compulsives to implement the plan.
The kind of personality you want working on implementation is one who will unwaveringly work to carry out the plan as it has been given to them.

2) Hire more obsessive compulsives.
We cannot emphasize enough the level of meticulousness that is required to bring a marketing strategy to life through programs and tactics. Obsessive compulsives, and we mean this figuratively not literally, understand that the success of the strategy is riding on their abilities. Perhaps they will introduce a new, more efficient way to complete a task or adapt a program given an unforeseen change in the market or budget, but they stay well within the parameters of a strategy, remaining ever faithful to it.

One CMO of a major U.S. commercial bank also suggested as a final rule for implementation:

3) Add Ritalin (the prescription drug used to treat Attention Deficit Disorder) to the water cooler.
That way the implementation team remains absolutely focused—not going off on any tangents in pursuit of another idea—on what its end goal is: to implement the marketing strategy through the execution of the marketing plan.

Obviously, we list these rules tongue-in-cheek, but we hope the point is well taken.  It’s not just the quantity of people implementing a program; it’s the qualities of the people with which companies need to be concerned.

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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We’ve often wondered about how it was that companies go about selecting chief executive officers and how—pre-scandals—names like Welch and Weill had become almost as well known as Stallone and Schwarzenegger.  Given the recent, fiery fall of the cult of the CEO, we thought now would be a particularly apropos time to read Searching for a Corporate Savior.

The book portrays the completely irrational methods companies use to select a CEO, giving clear insight into how star chief executives came to be.  Truth be told, it’s disturbing information about the personal qualities corporate boards and others felt would maintain, restore, or propel companies to greatness and how much weight was given to whether a candidate’s reputation would boost stock price or not.  But it’s well worth the read.  Of all the praise we’ve seen about the book, Robert J. Stiller, author of the book Irrational Exuberance, described Searching for a Corporate Savior best: “This book deals squarely with one of the greatest issues of our time: whether our business leadership is selected in the right way to promote long-run success.  This is a very important book for what it says about the direction of our economy.”

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The Super Bowl has become as much a contest for marketers as it has for National Football League teams.  The actual teams that will play against each other in the championship game have yet to be decided, but advertisers have already lined up for their share of airtime during Super Bowl XXXVII.  Anheuser-Busch leads the pack with ten 30-second slots, joined by Cadillac, H&R Block, Pepsi, and a host of others. 

Viewers have come to expect the funny and bizarre from advertisers, and we’re sure the spots of Super Bowl XXXVII will not disappoint—at least in terms of entertaining the audience.  Whether they’ll help boost sales or brand reputation remains to be seen.   

As is our fine Copernican tradition, we’ll have our own play-by-play account of advertising’s “night of nights” in the next edition of The Copernicus Mzine.

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