Book Review: The Logic of Life

A book written by an economist, that attempts to use economic theories to explain pretty much everything in life, probably sounds more like a cure for insomnia—perhaps even masochism—than a page-turner. But in The Logic of Life: The Rational Economics of an Irrational World, author Tim Harford, writer of the Undercover Economist column for the Financial Times, pulls off a truly amazing feat, making economics not merely interesting, but fascinating.

Just to make sure he's got your attention, Harford begins his book with discursions on the economic rationales underlying teen sex, Mexican prostitutes, and the world of professional poker. In this last topic, Harford introduces us to Chris "Jesus" Ferguson, a doctoral student at UCLA who used John von Neumann's game theory to become one of the top professional poker players in the world:

"By the late 1990s Ferguson was one of the most recognizable sights in poker, earning the nickname `Jesus' as he hid his face behind a long beard and hair that cascaded over his shoulders, buttressed by wraparound mirror shades and a big cowboy hat. He never spoke during play, trying to remove any sign of human emotion; he didn't pay much attention to other players' nervous tics either. He drew his information only from the cards, like a computer—or like von Neumann himself."

After these first few sections, Harford gets more serious, but no less engrossing. He addresses a wide range of topics, demonstrating in each case how rational economic theories explain seemingly irrational human behavior: nuclear war, cigarette smoking, our choice of snacks, speed dating, marriage, divorce, and why young women are often attracted to older men (and vice versa, though economics seems superfluous in that case).

He devotes significant space in the book to the problem of racism, particularly in relation to blacks in America, showing that while racism is reprehensible, it is also, unfortunately, rational. The contention is that blacks, as a group, have under-invested in their own education and skills development, believing that white racism prevented them from getting a fair shot at economic opportunities. In response, employers (of many colors, not only white) have preemptively denied opportunities to blacks. The result is a tragic downward spiral.

The problem is vexing. Obviously, blacks have faced significant discrimination in America, unfairly and in many cases maliciously. On the other hand, the problem can't be reduced to "white people don't like people with dark skin." Look at southeast Asians as an example of a group that has had a very different experience in America (and elsewhere), that of a virtuous upward spiral. While an employer may invite Mary in for interview before Latoya, Krishna may very well get the interview before Mary. Sterotypes can be unfairly positive as well as negative.

The solution, therefore, is going to require changes in behavior, and beliefs, on the part of both blacks and whites. Not an easy task, but possible.

Along the way, Harford explains why your office, dysfunctional though it likely seems, is perfectly rational: with a relatively small number of exceptions (sales, windshield replacement, pole vaulting), most professions are either hard to measure, or easy to measure but nevertheless difficult to compensate on that basis: "In most jobs, there are more than two variables at play and some are very hard to pin down. For those jobs, managers need a more holistic, all-encompassing measure of performance." This leads to a discussion of "tournament theory"—paying employers based on their performance relative to each other, as in a tennis tournament. The trick to applying tournament theory to employee pay, of course, is to make sure bonuses incent employees to do great work, not merely to undermine and backstab each other.

While Harford's book is very, very good, it does have three minor weaknesses. First, the author approvingly and at length quotes from Freakonomics, a book which had an unfortunate tendency to extrapolate from the specific to the general among other logical fallacies. John Lott's Freedomnomics: Why the Free Market Works and Other Half-Baked Theories Don't, though lesser known, is a far superior work.

Second, while Harford does an outstanding job of demonstrating how various economic theories can be used to explain particular decision processes or types of behavior, he ignores the possibility of other causes. In other words, while he does a fine job of showing how A causes B, he fails to even acknowledge that C, D or Z might provide a much better explanation. On various topics, religious faith, patriotism, family ties, environmental concerns or a one of a host of other factors may be more important that economics, but Harford simply ignores that possibility. A very strong case can be made, for example, that Brits would be better off economically with the Tories in charge, yet the majority don't vote that way.

Finally, Harford at times ignores his own conclusions. After demonstrating convincingly that human prosperity is directly correlated with two factors—freedom and innovation—he expresses concern over pseudo-problems like global warming. If he believes his own research, and he should, he would realize that global warming cannot be a problem. When the incentives to change behavior become significant enough, people will change them. And even if the most dire theories of global warming are accurate, and human burning of hydrocarbon fuels is a significant cause, then only the innovation of free economic actors—not the regulation preferred by those on the left—can ultimately solve the problem.

These quibbles aside, The Logic of Life is a fascinating and enlightening book that deserves a wide audience.

*****

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Contact Tom Pick: tomATwebmarketcentralDOTcom

Book Review: Marketing That Matters

In writing Marketing That Matters, authors Chip Conley and Eric Friedenwald-Fishman, not content merely to provide an above-average book on marketing strategy, instead wrote an impressive book on marketing strategy—with a point of view.

The book combines guidance on marketing strategy and tactics with a "socially responsible" orientation. The result is best described as an avocado of a book: a solid core of marketing strategy surrounded by a thick layer of politically liberal messaging. As with an avocado, some readers will find this outer layer delightfully tasty, while others will consider it disgusting green mush.

"Socially responsible" has become a charged term. It perhaps shouldn't be; first off, who would want to run a "socially irresponsible" business? (According to the authors, Wal-Mart executives, of course.) Second, many of the management practices that the authors attribute to social responsibility—minimizing energy use, creating a positive work environment for employees, purchasing from local suppliers when possible—would simply be called good business by most entrepreneurs and managers. Keeping energy costs under control and employees happy is good for the bottom line, regardless of broader societal or political ramifications.

But, social responsibility or irresponsibility aside, the authors do provide an excellent treatise on marketing strategy. Some examples:

- Getting it: "Marketing is about creating relationships...people don't want to be marketed to—they want to build a relationship with...New-school marketing is based upon satisfying needs. Pushing product doesn't work anymore, especially in the era of the Internet, when savvy customers can connect with each other and trade stories about your product—and your company—and can easily find alternative choices." This is precisely the message of The Cluetrain Manifesto, and it's always refreshing to read authors who get this.

- Strategy starts with customer understanding: "Strategic marketing is acquiring a deep understanding of the needs and desires of your existing and potential customers and designing your business (products, services, delivery mechanisms, customer experience, branding, outreach, etc.) to meet and exceed their needs and desires. When energy bar leader Clif Bar developed the Luna bar, the core idea for creating the product—active women need an energy bar and have different nutritional needs than men—was a demonstration of the pure definition of strategic marketing. The strategic marketing decision to design an energy bar specifically for active women then led to many other strategic and tactical choices, regarding product design, branding and packaging, product distribution, community partnerships, and, ultimately, promotional and sales strategies."

- Affinity matters: "Consider gathering your leadership team in a room and looking at...a particularly compelling customer experience that can be articulated to the world. Ask each person to talk to two loyal customers about how they describe the company, brand, product, or service to their friends. See what's consistent in their messaging and start to build a story that you can use in all of your communications with the world: on your Web site, in your brochures, in your press releases, in your company orientation with new employees...In Lovemarks: The Future Beyond Brands, Kevin Roberts asks a provocative question: 'How do you get intimate with customers without being invasive or insincere?' This is such a refreshing question in today's world of commoditized brands, where everything feels standardized, distant, and lacking in personal touch. Get this question right and you'll build a fiercely loyal customer base." The challenge of aligning your definition of affinity with that of your customer has been addressed here before.

- Build a community: "Building a community of believers is one of the best pieces of marketing advice we can give to any businessperson...According to consulting giant McKinsey & Company (a company which does virtually no advertising, by the way; the company has an almost 100% referral and reputation-based business), about two-thirds of all economic activity in the U.S. is influenced by people's shared opinions about a product, brand or service...What if you had to tell your story nine times before your best friend acknowledged what you were saying? For one, you'd probably pick a new best friend. But that's a good way of looking at the inherent flaws in traditional advertising. Conventional wisdom suggests that it take nine impressions for a potential customer to retain the information in an ad. One good story from a friend far outweighs the potential of nine expensive ads...The Internet is the perfect medium for furthering the conversation between companies and their most enthusiastic customers. Check out any marketing-savvy...company's eb site and we bet you'll find many ways to engage with the community that orbits around that company or brand."

There is much, much more lucid and valuable strategic advice on topics such as branding, customer-centricity, empowering employees to spread your brand message, the role of emotion in decision making, and the importance of capturing and properly utilizing marketing metrics.

Again, however, these morsels of strategic marketing wisdom are drenched here in copious amounts of social responsibility sauce which won't appeal to all tastes. For example:

- Would you really want to work with people who have no sense of humor (or worse, no sense period)? "We've seen SRBs (socially responsible businesses) with poor marketing campaigns that came about as a result of choosing process over impact. What we mean by this is that they were so tied to their do's (always include all the facts and details, spend your advertising dollars only in publications that support your politics and point of view, only market products and services that are critical to human survival, etc.) and don'ts (never print in full color, never use humor in your marketing, etc.) that they forgot to ask, 'Does this marketing approach have an impact on our customer?'"

- Strange watercoolers. "In media stories, comments on blogs, and discussions at office watercoolers, it's not uncommon to read or hear comments like 'Why wouldn't you pay twenty-five cents more per pound to know that farmers are making a living, that your food is healthy, and that yhour tomato didn't contribute to global warming by flying across the world?' All good questions." First, such conversations are far less common in most of the country that the authors may realize. And second, many readers are likely to feel that anyone who seriously believes that flying tomatoes cause global warming really needs to be reading Bjorn Lomborg, not Conley and Friedenwald-Fishman.

- Government good, markets bad. Considering that marketing is the subject of the book, the authors are at times bizarrely anti-markets. "In fact, when we think of companies taking a stand, we usually think of industry-funded campaigns or individual company-sponsored ads, in which business voice has been used to fight health-care reform, limit tougher air and water quality standards, fight living wage laws...or limit liability for products such as guns."

Again, the authors seem to ignore the likelihood that many business people (the audience for this book) legitimately believe that more competition and less regulation is a better path to reducing health care costs and improving quality than a government takeover and exclusion of the private sector would be; that environmental standards should pass reasonable cost/benefits analysis before implementation; that raising costs on small business owners and reducing employment opportunities for entry level and marginally skilled workers isn't a great idea; and that we're better off without laws designed to enrich trial lawyers while making self defense more difficult and expensive.

- Confusing community involvement with controversy. The authors advise putting "philanthropy at the center of your value/values proposition," and highlight companies that support causes such as finding a cure for breast cancer, helping women escape the international sex trade, and keeping kids safe—all worthy and non-controversial causes.

But when the authors praise the work of groups like the Sierra Club, they are going to alienate readers who place affordable food for developing nations, American jobs, and relief for families from record-high gas prices above enriching thugocratic Middle Eastern despots and avoiding any inconvenience to Alaskan caribou. Even the writers' own local newspaper has picked up on the folly of substituting biofuels for petroleum, noting that "the road to hell is paved with good intentions."

Conley and Friedenwald-Fishman are from San Francisco, and their city's offbeat, left-of-center leanings are clearly on display here. While this book is likely to sell well in a line from Los Angeles to Seattle, its prospects anywhere to the right of the left coast—geographically or politically—are less clear. Perhaps the authors don't care. But it does seem incongruous to write a book about marketing (which is the art of persuasion) while being so enamored with government regulation (pure brute force).

It's unfortunate that the authors have chosen to imply that anyone who believes strongly in supporting philanthropic causes or sensible environmental protection must also be enamored with gun control and socialized healthcare. In placing so much emphasis on controversial political positions, the book needlessly alienates (at least) half of its potential audience. If your political leanings are left of center, you'll like (most of) this book. But if not, you'll have decide if getting to the solid core of worthwhile marketing strategy here is worth the effort of mentally scraping away the thick coating of green mush.

*****

technorati tags: book review, Marketing That Matters, Chip Conley, Eric Friedenwald-Fishman, marketing strategy and tactics, socially responsible businesses, avocado, green mush, The Cluetrain Manifesto, Clif Bar, Luna bar, Lovemarks: The Future Beyond Brands, Kevin Roberts, McKinsey & Company, branding, customer-centricity, SRBs, flying tomatoes, Bjorn Lomborg

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Contact Tom Pick: tomATwebmarketcentralDOTcom

Book Review: Your Inner CEO -- Unleash the Executive Within

When I first began reading Your Inner CEO: Unleash the Executive Within, the eighth book from best-selling author and executive consultant Allan Cox, I honestly didn't think I would get much value from it. "Too squishy," I thought. "Not going to be much here I can use." The book begins with such lines as "Successful CEOs, I have discovered, share power with others...and treat all stakeholders in their enterprise with kindness, generosity and humility" and "By looking at boundaries (those ubiquitous dividers you seldom see) in a new way, you'll master the art of redefining your life on a daily basis, consistently connecting to a spiritual dimension that adds richness to all aspects of your work and life." See? Squishy.

However, as if anticipating just such an objection, Cox writes on page 34: "Does all this strike you as too touchy-feely, too abstract and philosophical, too ephemeral and ungraspable? Trust me. It's not. I'm as straightforward, level-headed, and down-to-earth as any of the CEOs I've consulted, and believe me, they and I always gain a lot by spending time reflecting on the intangibles in life." That, plus the fact that Allan's consulting clients have included organizations such as Avery Dennison, Bacardi, Cummins Engine, Kodak, Board of Owners of the Minnesota Vikings (my team!), and Travelers Insurance, convinced me to give the book a chance.

Wow, what a ride. This isn't a book about tweaking marketing tactics or even setting grand strategy—it's about changing your life in ways that make you a better leader, whether as a CEO, department manager, community leader or the head of a company of one. Best of all, unlike some other books of this type, Cox doesn't try to turn the reader into someone he or she is not, but rather guides the reader to discover and become the leader that he or she truly is by finding the authentic self.

Again, in Cox's own words, "I've found, almost without exception, that by the time executives get married, take on a mortgage, raise kids, cope with the crabgrass, climb the corporate ladder, do their best to manage career pressures, and build their net worth and get into their forties, they've lost touch with what they believe in and care about most deeply." How close to home does that hit?

Throughout the book, Cox provides exercises (yes, this is a book designed to read actively, not passively) that help the reader to define his or her style of life by completing the statements, "I am...," Life is...," and "My central goal is to...," decide whether these statements indicate a Guardian Presence or Looming Threat, and take action to recognize and navigate boundaries, ultimately becoming more grounded—a better person and a better leader. Each chapter ends with an "Inner CEO Punch List," which is a helpful device to take advantage of the chapter's advice.

Some of Cox's points border on folk wisdom, but even well-known truisms sometimes bear repeating. While everyone knows these things, we don't all internalize them. For example, "Instead of listening to your words (the least reliable indicator of what you're going to do), watch your feet!" Or as it's commonly stated: "Actions speak louder than words." Another example is that none of us are ultimately in control of the external forces that affect us, but we can control how we react and respond to such forces.

A few more of my favorite lines from the book:

• We often hear people boast proudly, "We have forged a values-based corporate culture." Duh. All corporate cultures are values-based. But are they bright ones (a guardian presence) or dark ones (a looming threat)?


• In describing art, he (symphony conductor Robert Shaw) emphasized four qualities: (1) purity of purpose, (2) historical perspective, (3) craftsmanship, and (4) revelation. As he spoke, I realized that his ideas applied not just to music or poetry, but to the art of management...More than ever, people who work yearn to bring their unique gifts to bear on their own, and their company's enterprise. Shaw called that purity of purpose. Business people call it ethics, integrity or character.


• Boundaries...define every situation, even though you often have to peer behind the facade to get to it...If you can't identify the purpose behind whatever situation you're examining, you'll never know its true nature, and...it will continue to baffle you...the purpose of even a simple, everyday object may lie far beneath your initial understanding of it. Take a humble meeting room chair, for example. You know its purpose: to provide you with a seat at the conference. But that's only its apparent purpose. Look more closely at it...That chair wasn't built for you, it was built for hotel management that needs to stack hundreds of chairs in a compact space. It's lightweight, sturdy and stackable; it can be transported easily, stored with others in a closet, and it can work as well in a dining room as in a conference room. That's reality.

Cox ties back that last point to chart of "apparent" and "real" purposes guaranteed to hit home with anyone who's spent any significant amount of time in the corporate world. Among the examples Cox cites:

A progress report. Apparent purpose: a report on how much we've accomplished. Real purpose: a tracking mechanism for our bosses to highlight what hasn't been done yet.

A management conference. Apparent purpose: it's designed to keep the team abreast of developments in the industry and add to their skills. Real purpose: corporate recreation and reward masked as eduction—attendance at trade shows builds contacts for executives who may need to change jobs in the future.

And—ouch!—consensus. Apparent purpose: "We seek consensus to create full participation by all." Real purpose: "We seek consensus to avoid conflict and straight talk." A bit later on the same topic: "The leader, eager for agreement, pushes for something on which everyone can agree, and ends up with something in which no one fully agrees. In the end, consensus makes a poor umbrella: whenever it rains, consensus dissolves into a puddle of nothing."

There is much, much more (I wore out a highlighter on this book!) but here are a few final observations and quotes:

• It costs far less to reorient a talented-but-slightly-off-track employee (at almost any level) than it does to replace that person.


• Three critical words of advice for any leader: Collaborate, don't control.


• "When thinking about the future of their businesses, CEOs and their teams often start with these three questions. (1) What drives our company? (2) Who do we want to be? (3) How do we get there? There's nothing wrong with them, but they don't strike at the heart of `the vision thing.' Real vision depends on asking two deeper questions first: `Who are we?' and `Where are we headed right now?'...Looking deep inside, not across valleys, you begin to discern an excruciating level of detail, focused on the here-and-now, the way it is, for better or worse...Our actions (not our words!), and the accurate articulation of values that we glean from those actions, tell us who we are and where we're headed."


• "I wanted them to think about the company's `keel-of-the-boat' values. `Think of a sailboat...You don't see its keel because it is underwater, but it gives the boat direction.'"

"All corporations that succeed have to be capable and resourceful in four areas..." Wait, that's enough—read the book! If you seek balance in your life and want to be a more effective leader, Your Inner CEO: Unleash the Executive Within is the guidebook for your journey.

A final note: Allan and some colleagues are also working on a wiki to accompany the book, which should go live within the next couple of weeks, providing those who benefit from the book with a place to share their experiences.


*****

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Book Review: Value Acceleration

The central contention of Value Acceleration: The Secrets to Building an Unbeatable Competitive Advantage by Mitchell Goozé and Ralph Mroz comes down to three points: 1) virtually every functional discipline in the modern organization (accounting, engineering, production etc.) is now run using established processes; 2) marketing and sales organizations are broken because they lack such processes; 3) companies can create an "unbeatable" competitive advantage by incorporating an overarching sales and marketing process, borrowing principles from the manufacturing realm.

Goozé and Mroz argue that marketing (defined as the entire process of determining customer needs, guiding product development based on customer and competitive intelligence, promotion and sales) is the central function of every company—it aligns marketplace needs with the organization's core competencies. Therefore, "An integrated-process model and objective management methods to manage that process lay the foundation for realizing the potential of marketing/sales."

The authors make a compelling case—up to a point. Particularly on the product management side of marketing, many organizations struggle to implement effective practices, or have reasonably solid product management processes but lack integration with the promotional end of marketing. In the words of the authors, "The "front-end" marketing skills—such as positioning and opportunity identification—and the "integrative" marketing skills—such as integration with product development, sales and corporate strategy—are not well understood." Getting the "front end" of marketing right us crucial because, to cite one example used in the book, "80% of HP's and Canon's revenue comes from products less than two years old."

Among the book's highlights:

- "Competitive advantage, therefore, goes only to the risk takers—to those who pioneer useful new management techniques." That may well be true, but small businesses constitute the bulk of the American economy (and many others) precisely because as companies grow, they tend to become more risk-averse.

- "Among all corporate functions, marketing alone has the distinction of not having a well-defined process by which it is practiced." The authors propose a promising answer: an overarching product-management-promotion-sales process based on a "customer manufacturing system" and borrowing principles from manufacturing, such as constraint analysis, continuous improvement and lean thinking.

- "Why is there no well-accepted marketing process today? The first and most obvious answer is that there isn't even a common answer to the question `What is marketing?' Ask 100 managers and marketing practitioners to define marketing and you'll get 150 different answers." There is no overall process because there is no common definition.

- "There is no consistency [in marketing processes] over time or across products." This shouldn't come as a surprise, given that the average tenure for a CMO is less than two years (optimistically; I've seen figures closer to 18 months). While that's enough time to install a process, it's not enough to really establish it as part of the organizational fabric. This presents a chicken-and-egg question: are CMO tenures so short because they don't implement effective, overarching marketing processes, or are such processes rare because corporations chew through CMOs too quickly?

- "[A common problem is that] too much attention is paid to gaining new customers, to the detriment of existing customers...There [is] a strong likelihood that [companies lose] existing customers to the competition while...working hard to attract replacements."

- As familiar as that last point likely sounds, this one will probably resonate even more with most marketers: "If you ask sales people where the constraint or bottleneck is in your marketing/sales process, we find the answer is invariably in only one of three areas: 1) Your prices are too high; 2) They need more leads; 3) They need more new products or services. In our experience working with companies to identify the actual constraint, this is rarely where the constraint actually lies." Ouch!

- "A set of sales activities not organized into a process is nothing more than a chaotic, random group of events. The inevitable outcome—surprise!—is a chaotic, random group of results...The only way to 'manage' or 'improve' a sales function that is not process-driven is to swap out sales people and hope for better results. Sound familiar? That's the way many sales organizations are run."

Although the central message of the book is compelling, I do have several issues both small and large with the book. Among the small issues:

- The overall tone of the writing is dryly academic, and could have benefited from a lighter treatment in places (though in fairness, the authors do quote Yoda at one point). Here's a sample: "Using a causal modeling technique known as structural equation modeling (SEM) or pathway building combined with constraint theory, it is possible to obtain correct results from this approach using a widely applied set of questions." Whew, doesn't exactly roll off the tongue.

- PR is NOT a lead generation activity; it's about awareness and credibility building.

- The proofreading is sloppy in spots. Example: "Clearly spelled out in these of processes is a detailed list marketing responsibilities at each phase from a product development perspective." Huh?

And among the large issues:

- "A useful process model...defines the information flows between the elements and sub-elements of the process; thus ensuring that marketing/sales is an integrated function, and that the information it operates on is complete and accurate." Because the authors use manufacturing practices as a model for marketing, they sometimes seem to lose sight of the fact that marketing deals with people, not parts. Yes, anyone can theoretically make the right decision given complete and accurate information, but getting such information is more challenging than the authors concede. Unlike production parts, people bring biases, assumptions, and other mental baggage to the process, so the trick is to be able to make good decisions based on information that is fundamentally BAD (my acronym from my competitive intelligence days for "best available data"), with recognition that the information at hand will always be less than "complete and accurate."

A further complication here is that human behavior is much more complex than the physics of manufactured parts. If I perform operation A on part B in the prescribed fashion, over and over, I should get pretty much the same results (within tolerances). But the same ad campaign can produce radically different results from week to week based on seasonality or just random factors.

- The authors' description of the dysfunction of most marketing departments (they devote an entire chapter to this!), while containing many valid criticisms, is a bit overdone. While their central contention—the marketing discipline in general lacks an all-encompassing process framework, and could benefit greatly from having one—is valid, few marketing departments in quite as bad shape as the authors describe. The lack of an overarching process certainly doesn't mean that there are no processes in place, or that management techniques from the manufacturing world, such as continuous process improvement, can't be or aren't already being applied (having started my career as an industrial engineer before moving over to marketing, I was applying this approach an ERP company a decade ago).

- In their discussion of misalignment between selling and buying processes, the authors write, "End-of-the-period purchase incentives are another common misalignment...you are training your customers to expect an incentive. As we write this, the U.S. automobile industry has been running "incentives" for so long, that most customers won't buy a car without one any more."

While the observation that car makers could optimize their profitability by ceasing to offer incentives may be true in theory, in practice they have created for themselves a "prisoner's dilemma"—they could all make money by dropping the incentives, but any single manufacturer that tried this would quickly lose business to those who continued the practice. The authors provide no answer to this quandary.

- The chapter on "Breakthrough Thinking in Sales" is the weakest in the book. The authors advise sales people to "Map your customer's buying process. There is no step 2. Now you can stop selling and start making customers." There are (at least) three problems with this approach:

1) Customers are most likely to have established buying processes in place for frequently purchased items, where the roll of sales is primarily to act as an order-taker, not true "hunting."

2) Different customers have different buying processes: small companies buy different than large ones, public companies may have different processes than private firms, and government agencies purchase differently from private sector organizations. Practices may also vary by industry. If there are a dozen (or more) different buying processes to model depending on any variety of factors, is there really a "process" to mirror at all?

3) For infrequently purchases products and services, or entirely new offerings, there is no established buying process in place to reflect. Sales people require the skills to guide the customer through the purchase.

- The authors emphasize continuously throughout the book the importance of solid product management in designing the right products for your market. Yet, despite the one example cited to the contrary (an odd one at that—IBM, the company that famously missed the PC revolution, which was launched by two guys in a garage), large and even midsized companies rarely introduce truly new products. They are very good at developing incremental improvements, but the aforementioned risk-aversenss of larger organizations make them ill-suited to designing entirely new products. These are most commonly created by visionary entrepreneurs in small companies willing to risk everything to bring an idea to life. As noted above, the personal computer wasn't invented in large company; neither was online music distribution (which the record companies were too short-sighted to capitalize on; that took the work of a 19-year-old), online video sharing (YouTube) or a host of other innovations.

- Finally, there is this: "This book has been about both the necessity of process management and about the need for a process model of the corporation's single most critical, non-out-sourceable function: marketing/sales." [Emphasis mine.] Whoa, while product management may be very difficult to outsource, the notion that marketing can't be outsourced would certainly be news to the 3,000+ marketing agencies in the U.S. (and many more around the world). And if sales can't be outsourced, how does one explain the existence of brick-and-mortal retailers, ecommerce companies, wholesalers, distributors, VARs and other external sales channels?

Still, despite its flaws, Value Acceleration: The Secrets to Building an Unbeatable Competitive Advantage presents a compelling case for, and a useful description of, a unified marketing/sales process model that could benefit many companies. It deserves to be read, if sometimes with a dash of skepticism, by every CMO, aspiring CMO, and marketing executive, as well as non-marketing executives who want to understand why marketing and sales sometimes seem like dysfunctional, disorganized parts of the organization—and what can be done to fix the problem.

Other blog reviews of this book:

Six Sigma Blog
Meaningful Marketing

*****

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Book Review: The New Rules of Marketing and PR

There are two kinds of readers who won't like David Meerman Scott's The New Rules of Marketing & PR; fortunately for the author, both groups are small. The first is that small group of ahead-of-the-curve web marketers and PR professionals who have already figured out how to integrate online efforts between optimized news releases, blogs, social media sites, podcasts and all of the other content distribution and promotional tools now available online (though the ranks of this group will be swelled by the readers of David's book).

The second group is the diminishing number of old-school PR and marketing practitioners, those who still believe that press releases are only for the media, that you have to interrupt people with your marketing message to get their attention, and that campaigns aren't real unless they are on TV. This book explodes their old view of the world.

Scott performs two important services with this book, one tactical and one strategic. Tactically he pulls together a disparate set of new media tools into a coherent framework, while strategically, he presents one big idea.

On the tactical side, Scott presents a coherent framework for integrating all the tools of Web 2.0 into a unified marketing and PR program: blogs, podcasting, wikis, online discussion forums, social media, video, websites and search marketing. While many B2C and B2B marketers use at least a subset of these tools regularly, thinking about them in a unified manner can be challenging. An integrated approach maximizes the impact of online marketing and PR efforts, and Scott provides a useful thought framework for creating a coherent and productive action plan.

Strategically, Scott devotes much of the book to one key new rule of PR: it’s no longer just about media relations—writing press releases for journalists and hoping they’ll write about your product, service or company, but more about what I’ll call market relations (more about this in a future post)—writing news releases and using online distribution tools to reach your potential buyers directly.

Press releases are part of the old rules (though they still have their place): write about your company or its offerings, and distribute this information directly to journalists as well as through traditional services such as Marketwire, PR Newswire and Business Wire. News releases aren’t necessarily about you—they are about topics your prospects are interested in: new ideas, perspectives on what’s happening in the industry or helpful guidance on solving problems. These are distributed through online distribution services such as PRWeb and promoted through blog posts, podcasts and Web 2.0 social media.

One measure I have of a book’s utility is how many passages I highlight; I wore out a highlighter on this book. Here are a few key illustrative points and quotes:

• PR practitioners under-utilize blog research. “How difficult can it be to read the blogs of reporters you’re trying to pitch? It teaches you precisely what interests them. And then you email them with something interesting that they are likely to write about rather than spamming them with unsolicited press releases.”


• Taking your message directly to your prospects through thought-leadership news releases is a more productive approach to the media as well. “If you do a good job telling your story directly, the media will find out. And then they will write about you!”


• A market relations strategy won’t produce results overnight, but the beneficial effect is cumulative over time as your prospects come to see your company as a source of insightful, interesting expert content and commentary.


• Under the new rules, you are what you publish. “Anybody who wants to be a leader has to have news coming out...Businesses will live or die on original content…Get down to the essence of what (problems) your product solves and write good stories about that and publish them online.”


• Marketing and PR have to be less about fluff and more about substance. “What links all of these techniques together is that organizations…behave like publishers, creating content that people are eager to consume. Organizations gain credibility and loyalty with buyers through content, and smart marketers now think and act like publishers in order to create and deliver content targeted directly at their audience.”


• Thought leadership content is the ultimate marketing message. “Content brands an organization as a thought leader...Instead of just directly selling something, a great site, blog or podcast series tells the world that you are smart, that you understand the market very well, and that you would be a person or organization that would be valuable to do business with.”

There’s much more—about the power of blogs, the value of content aggregation, the challenge of viral marketing, the importance of online brand monitoring, how to utilize social media, why the “4 P’s” of marketing are nonsense, developing buyer personas and speaking their language, common PR terms to avoid, why you shouldn’t design your website’s media room just (or even primarily) for the media, and how to “pimp out” a blog.

The section on blogging is particularly useful, even for experienced bloggers. And as Scott points out, for many clued-in marketers and CEOs today, “It used to be that the moment of truth was when somebody went to the store to find your product. Now the moment of truth is a link to your site from a blog.” A well-written business blog can serve as a “storefront, shingle, office sign, newspaper ad and yellow-pages ad” all in one.

In short, this book rocks.

*****

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icerocket tags: book review, David Meerman Scott, The New Rules of PR and Marketing, blogging, social media, podcasts, Web 2.0, wikis, B2B marketing, integrated marketing, market relations, thought leadership, buyer personas, pimp out a blog

Contact Tom Pick: tomATwebmarketcentralDOTcom

Book Review: The Black Swan

Most business and marketing books are written for the broadest possible audience, have the tone of a motivational speaker, and offer specific, concrete guidance on topics such as drawing more web traffic, better organizing your time, or closing the big sale.

The Black Swan: The Impact of the Highly Improbable, by Nassim Nicholas Taleb, is none of those things. First, it's an intellectually challenging book, so it's not for everyone (particularly economists, social scientists and government planners, who would benefit from reading it, but take quite a beating from Mr. Taleb here). Second, the tone is engaging, but certainly not cheerleading, an