Very early in my career, I had a character building event that I will not soon forget. I was a category manager at the time for a somewhat sizable retailer when our company President suggested that it may not be a bad thing if we overstated our reporting of rebates owed to us from a Fortune 500 company.  I declined based on my twenty something ideology, and perhaps ignorance with how the world really worked. Within two months I resigned and took a job with a vendor.

The last 60 days provide an interesting contrast in principle based leadership, and the affect it can have on customers, employees and branding. As Toyota’s troubles deepen, its President’s admission that the company lost sight of its values is somewhat startling.  Evidently, a zeal for cost cutting and competitive advantage may have triggered a chain of events that has significantly eroded shareholder value.

In a stunning contrast, Google announced this week that it would not comply with China’s censorship rules, and had shifted users to a Chinese version of its search engine housed on servers in Hong Kong.  Facing the real threat of losing access to the world’s largest market would seem like strategic suicide.  Yet the decision was clearly made on principle, Google’s commitment to uncensored information trumped strategy, revenue and access to hundreds of millions of users. Founder Sergey Brin, who grew up on totalitarian Russia described China’s stance as “quite troubling.” Google has drawn the line in the sand and sent a message to the world that some customers may not be worth having when your values are called into question.

Conversely, China is a nation who wants the fruit that capitalism can bear, but is not willing to align with free market values, which will only limit growth in the long term.  Many feel threatened by China, as we were by the Japanese in the 80’s. Yet as was proven in Russia and elsewhere in Europe, capitalism cannot work in its purist form without the rule of law (contracts must be enforceable and criminals prosecuted) or the preservation of intellectual capital.  While the U.S. may have suffered a setback, our economy is still based on values protected by our constitution (someone remind Congress) that have stood the test of time. 

So raise a glass to Google who reminds us that we have to make tough choices in our businesses, and they may not be the ones that are politically tenable, convenient or most profitable.  There is a reason why Google has exploded on to the scene as one of the world’s most valuable and powerful brands; people want to feel a part of something bigger than themselves. To have the vision and discipline to remain focused on your values demonstrates the best that capitalism has to offer.

If you were amused by last week’s post regarding the management acumen of Jerry Garcia (no, that is not an ice cream flavor), this week’s post will really rock your world.  It seems that Jerry was not to be outdone by David Lee Roth, the eccentric front man for Van Halen.

As Dan and Chip Heath (of Made to Stick fame) tell in last month’s Fast Company, Roth chronicles a provision in the standard Van Halen performance contract that a bowl of M&M’s would be provided back stage, with “no brown ones” included. Upon arrival at a new venue, Roth would immediately search the M&M’s to insure the brown ones had been removed (the agreement called for a cancelation of the show should they be present).

 It seems that Roth was using brown M&M’s as a predicative indicator. “Guaranteed you’re going to arrive at a technical error” quips Roth (in his new book) meaning that he used the brown M&M’s as an indicator of whether the venue’s management had read the agreement and were attentive to detail. Given the complexity of Van Halen’s massive production, he viewed brown M&M’s as a symbolism for work quality and in regard to setup of the band’s equipment, he wasn’t taking any chances.

The only way to insure service or work quality is to monitor such indicators. In my experience, world class operators are always masters at measurement. Quality programs such as TQM (total quality management), Lean Manufacturing and Six Sigma are rooted in such predictive measures of quality. Whether you are making widgets, or running a service firm, quality comes down to managing finite details.

Having strong quality standards may not be much of a differentiator any more, but it is certainly the cost of admission in most businesses. Buyers just have too many choices, and they will not accept quality that is subpar.

Businesses are well advised to have quality metrics that are measured in real time and made very public. Service errors need to be corrected almost as quickly as they are made.

What is your brown M&M?

I thought I had seen it all until a Business Week article last week entitled “What a long strange business plan it’s been”.  As it turns out, the Grateful Dead was quite a commercial enterprise. The band was highly profitable, had a Board of Directors, and a successful merchandising division whose lawyers protected its intellectual property.  Was Jerry Garcia a better businessman than the average Joe?

The real lesson here is the level of engagement that the band had with “deadheads,” the iconic fans that would travel the country to take acid and watch 5 hour concerts. “The Dead” had a phone bank announcing new shows and preferred seating for their best fans, a bizarre form of psychedelic CRM. This makes me wonder, if The Grateful Dead, who probably didn’t know what city they were in half the time could run a business with this level of sophistication, shouldn’t all businesses be capable of this level of structure?

We should at least aspire to have fans half as loyal. It appears that the deadheads would do just about anything to consume the product (I am talking about the music) time and time again. What can you do in your business to create raving fans? There are stories of how no two shows were ever the same which would suggest that the band relished the element of surprise. Fans never knew what would come next, and that was a big part of their fascination.

Business should find ways to do the unexpected for customers, like send a Thanksgiving card or an In-N-Out truck to their location. It wouldn’t surprise me if Jerry Garcia did the unexpected and showed up on stage some day.

I am often asked if organizations should include Facebook postings and other social media in their marketing plan. For those of you interested in a precise answer, here it goes: it depends.

Newspaper revenue has fallen off a cliff (down 40% by 2003) while magazines have not fared much better (down 20%). Television ad revenue is down 15%, this year alone.  Meanwhile, online media is growing at a 7% clip suggesting that as a whole, total spending on marketing is undergoing a precipitous drop.

According to Kiplinger, targeted campaigns will reap 75% of all marketing spending by 2013. Marketers, armed with the ability to regurgitate millions of data points such as age, gender, location, income and household size will find ways to market online to very specific audiences.

In these cases, social media will provide an inexpensive method for targeting specific customers.  In the interim, most of us are just spewing on social networking sites with little return. There is certainly room for consumables to be marketed through social media. A recent study published in the Harvard Business Review showed a significant lift in the popularity of certain products and services when Facebook  and Twitter are used to mold the consumers’ opinions, including the use of online coupons and the like.

Yet for now, it is hard to imagine a professional services firm (for example) using such sites for anything more than impressing their younger colleagues. LinkedIn is by far the most useful site for professional networking, yet few people take the time to mine their database beyond their existing relationships (which seems redundant and far from the point).

My conclusion is that if your primary audience is B2B, the focus of internet marketing should be search engine optimization, blogs, and LinkedIn. I have many of my B2B contacts on Facebook, but it is a slippery slope (some have even verbalized their preference not to have any business interactions on Facebook). It can be hard to mix business with pleasure, and Facebook certainly presents the opportunity for the horse to get out of the yard.

Combinations of internet marketing activities can be very powerful, such as linking Facebook, Twitter and LinkedIn posts to your blog. Some have gone as far as outsourcing to marketing professionals that do nothing more than ghost for a business on the internet.

I may be old school in this regard, but I think for most of us that money would be better spent trying to orchestrate meetings with people our own age who will be more impressed with what we have to say in person than how clever my Tweet is this week.