In this episode, I talk with JP Hanson, CEO of international consultancy Rouser. JP has a deep, critical understanding of strategy. We talk about the hierarchy in strategy, the difference between positioning and distinctiveness, business strategy and much more.
JP Hanson is the chief executive for international consultancy Rouser, a globally recognized authority on business and marketing strategy, columnist for MarketingWeek and a popular headline speaker. He has delivered keynotes at events all over the world, from Reykjavik to Mumbai and London to Dubai, always with an entertainingly no-nonsense approach. Both a marketer and a lawyer, he is known for his firm belief in critical thinking, observable evidence and complete freedom from hype.
We talk about:
There is a bunch of booktips throughout the episode:
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Here, everyone, today we're talking to JP Hanson. Am I pronouncing that correctly? Jp, yes, sir. You are. And JP, what does that stand for? Or is it just JP? So my first name is your one, which is, you know, it's basically the Swedish version of john. But the problem with that is that one, it's a very common name in Sweden. So you know, I have a lot of friends with the same name. And also what I'm doing because I do a lot of international talks, people can't really pronounce it. So my middle name is Peter after my father. So JP is just, it's easy to pronounce basic. Awesome. jp, could you tell us a little bit about yourself who you are what you do? Yes, sure. So
Unknown Speaker 4:00
My name is JP hands and I am the CEO of an international strategic consultancy called browser. And I'm basically a strategy nerd on all things strategies, and not necessarily just campaign strategy, which is what people tend to focus on, at least, you know, those who who are seeing the most, but also worked a lot with business strategy and marketing strategy and brands right to say.
Unknown Speaker 4:24
And then I am a columnist for marketing week, typically on matters to have to do with marketing, management and sort of putting marketing into a business context.
Unknown Speaker 4:35
And then lastly, as I sort of alluded to earlier, I do a lot of international talk. So I'm a keynote speaker. So I traveled around the world and I basically talk about strategy and marketing and to certain degree branding as well, but everything has to have a strategic tone to it, I would say. So yeah, that's me in a nutshell. Also, yeah, I should probably mention that I'm not just just a marketer, but I'm also a lawyer, which usually puts me on par with the devil.
Unknown Speaker 5:00
Most people's eyes.
Unknown Speaker 5:02
evil person? Yes. Like I mentioned, I was talking to a friend a couple weeks ago. And he basically said that all you need is car insurance down to your CV and you're like the root of all evils. But yeah, and I'm happy doing what I do, I'm probably not going to get into car insurance bonus. But yeah. Was it was that you? Was that your background? Like, like becoming a lawyer? Was that how you actually were educated? Yes. So my background is that the first thing I studied at university was marketing and economics, basically. And then I went into law school. And I did, I worked for a law firm for a bit and I did mergers and acquisitions, typically in corporate finance. And then I eventually moved into I suppose IP law and trademark law and then eventually I went into to strategy work and marketing. And then it's been sort of the best decision of my life. I really enjoy what I do now, which is why I do a lot of things. So I bit of a nerd and I don't
Unknown Speaker 6:00
I mean, my wife complains about it sometimes but I don't really have a good work sort of work life balance. I tend to be consumed of all things marketing Betty space to 24. Seven. I read and write and talk about life. So yeah, it's a no but but again, my background is in the legal field. But I don't really do any legal work these days haven't for a long time. But there are certain benefits to it. So for example, if I'm working for with a project I'm working on right now is I'm helping a client value their marketing department and so we're looking at essentially due diligence processes. And of course, having done that as lawyer, it's quite helpful. But in the grand scheme of things, it the legal stuff is just not something that I use too much at the moment.
Unknown Speaker 6:45
Well, but it is an interesting profession to look at. I look at it sometimes from like as a strategist position and I think like a lot of things like for example, due diligence is something that we as brands strategist could really learn.
Unknown Speaker 7:00
Love from in the in the sense that you really have to do that to make sure you get the right outcomes. And I think that's often forgotten in like, a more creative space. So that's interesting to me. Yes, absolutely. And it's also one of those perpetual questions that we marketers have to face is what value do we bring to the organization. Of course, if you're looking at a due diligence process, it's not just going to be the sort of financial value that you bring, but you're also going to look at leadership and HR and those kinds of things. But it is, I mean, proving, proving your value is more it goes way beyond just ROI. So it's a very interesting conversation. And like you say, I think even within, you know, the most creative fields, we actually have to think about what kind of business problems we're solving and do we bring anything of value to the organization? Sometimes, unfortunately, the answer is no.
Unknown Speaker 7:48
And also, I think lawyers typically think they tend to think more in terms of what's the risk for the organization whilst we as I think creatives tend to think about like the operation
Unknown Speaker 8:00
Unity, but oftentimes we forget that there is a huge risk involved in doing rebrand and stuff like that. Yeah, I think that's very true. I also think that one of the benefits of being a lawyer is that strategy has a lot to do with essentially problem solving. And as a lawyer, you're trained and thinking critically, and identifying problems. So when I sit down with clients, especially if we're talking about how we define certain things, we first say, Okay, so what do we agree on all these things? Cool, then we don't need to focus on those. What is it that we don't agree on? Well, is these things okay? And how can What do we agree agree on within those things and what you don't agree on and then we can sort of start to boil down some sort of consensus and get to the core of the problem within that that is very helpful. I think the other thing, being a corporate lawyers or originally is that I have a slightly different view of not marketing, but of strategy, especially compared to those who perhaps come up via via or agency side and my view of strategy is very
Unknown Speaker 9:00
Much from the top to the bottom, where's their view on strategies tends to be quite from the bottom to the top. And if you want to put marketing within a bigger strategic context in a business context, and if you want to get it on sort of up into the boardroom, then having that perspective, the top bottom perspective really helps because basically that's how strategy works and the grand scheme of things.
Unknown Speaker 9:23
Now, I got to know you true listening to a fellow podcast named let's talk marketing. Quite a coincidence. Yeah, in it in it. You were talking about the the rouser Manifesto. Could you explain us a little bit like what it is and why you write this every year? Oh, yes, absolutely. So the Rosen manifesto is something in between a white paper and I suppose just a gathering of thoughts to a certain degree. So we do it every year, and it's to collect our thoughts and take a lot of theoretical arguments that are made and put it in
Unknown Speaker 10:00
Some sort of practical context. And so we define, for example, what a strategy is we put marketing strategy within a business strategic context or business context. And we look at the difference between strategy and tactics, communications to a certain degree and also what actually makes up a brand. And it's rate, I mean, the original idea was to essentially push ourselves a bit and just try to hone our thinking it has become a very sort of humbling fire to say, but it has become now something that I know certain agency, for example, use when they train their marketers, when they onboard new marketers, and they have to upscale they're, they're sort of currently employed marketers is that they use that as sort of a training tool, which again, is very, very flattering. But again, like the idea behind it is basically it wasn't intended to, for example, some sort of some sort of content marketing of drive business. It has more to do with ourselves than anything to be honest.
Unknown Speaker 10:59
Well, it's it's a great
Unknown Speaker 11:00
Document Everett true then. And there was a lot of things for me that I want to dive into. So let's just do it. Yeah, let's go. So maybe first, like, a lot of the manifesto talks about the differences between, for example, strategy and tactics, tactics. Could you elaborate on that? Yes, absolutely. So, the difference between strategy and tactics is basically that the strategy is the overarching plan for what you intend to do. Whereas the tactics are the tools that you use in order to achieve whatever strategic objectives that you create. And there is a confusion at the moment in the world of marketing between these two terms. And one of the problems is that if we look into marketing departments, I mean, the latest data from I think it was IP and green dress. It shows that proper marketing strategies are in place and only about 14% of all marketing departments, which is very, very low. So what happens is that let's say you
Unknown Speaker 12:00
You have a company that you need to market. So the first thing you do if you jump into tactics, tactics being essentially the four P's is, let's be honest, you're going to do communication is probably something like content marketing, right? But the fact of the matter is that you have no idea of what problem you're trying to solve what the business is trying to achieve. So you need to first the first thing you need to do it's yours drop a marketing strategy for the year, right? And, and traditionally, the first phase is going to be diagnostics. We try to understand what's happening within the marketplace, but also within our own company. That means we are unfortunate that we have to speak to you know, finance and those guys, but it we kind of have to. Once you've done that, once you've understood what's happening within the marketplace, and we've sort of effectively removed ourselves from the conversation because let's remind ourselves that we as marketers are not our customers, right? customers don't think that we the way that we do, especially not when it comes to our brands that we are so obsessed over and they just don't give a shit about
Unknown Speaker 13:00
But once we've emerged from the conversation one was once we have done the diagnostics, then we move into the strategic formulation phase. And there's traditionally where you would do your segmentation targeting positioning.
Unknown Speaker 13:11
Those it's a bit depending on whether you're more sort of Arabic bass Institute, and you're applying that line of thinking or if you're traditionally clear, you know, tend to be the former rather than the latter, but that's where you would draw them out. So you drop. Okay, so what are we trying to achieve this year? The objectives Who are we trying to reach? How much reach can we afford those things? Once we've established those things, once we've done these two thirds of the overall sort of marketing procedure, then we can go into tactics, then we can figure out okay, so how do we solve this problem? How do we achieve these goals? Do we need to work on our pricing? Do we need to open up new stores? Do we need to do communication? Okay, so what kind of comms do we need to do? Do we need to balance short versus long those kinds of things? So tactics would be the last third of that. And the problem is that again, if you haven't done the
Unknown Speaker 14:00
previous two steps, then you're basically just shooting in the dark. They just use it stabbing in the dark, have no idea if you're going in the right direction, you need to do the strategy first and then you did tactics.
Unknown Speaker 14:12
It's interesting to me how the relation between For example, I do a lot of brand strategy projects where I tried to define the brand and as you said, like sometimes it's this, this balance between what what I've learned from Aaron birdbath Institute, and then all this stuff about positioning. But really, what's interesting to me is also the more you grow into brand strategy, the more you start thinking about the business level, but still, sometimes it's really hard to find that line like where am i doing actual business strategy and where am I stay in my lane as a brand strategist? And like, yes, the relation between those? Yes, that's that's absolutely true. And it's a very common problem, especially if you happen to work as a consultant or you know, if you're working for an agency because you
Unknown Speaker 15:00
Basically being told what to do. All right, so we bring you in to do the brand strategy. Yeah. And but it might be that oh, well, actually, your problem is, yes, we'll do the brand strategy of maybe you need to define your business strategy first. And then all of a sudden, you're, you know, you're faced with some mid level manager who really doesn't want you to talk to their boss. And you know, it's a bit of an uphill struggle.
Unknown Speaker 15:21
Business Strategy and brand strategy are two completely different entities. The business strategy basically defines what we're trying to do as a business and what our overarching goals are, and then the brand it completely depends on how you define brand. And it's actually a rather interesting point. I'm going to go slightly off piece here for a second, but
Unknown Speaker 15:42
I read on Twitter earlier today, actually, that Ben Shaw, who is the head of strategy at the VH in London, he put up this really interesting tweet. He's a brilliant guy, by the way. But he saw he put up this tweet and he said what a
Unknown Speaker 16:00
The best examples of companies building brand without TV. Now that's he wasn't saying that TV couldn't wouldn't wouldn't be effective or whatever it was just okay. So what are the, the most of the best examples of companies building brand without TV? And the last time I looked at it, you'd see about 100 replies maybe
Unknown Speaker 16:19
and you know, this brand that brand the other brand, right? But out of these 100 people, not a single person thought about what a brand is.
Unknown Speaker 16:32
Right? So what is the brand? And the depending on how you answer that question, whether something can be brand building or not. It's just it varies completely. Right? So if you're brought in to define your brand, like like you have done
Unknown Speaker 16:51
the first thing you need to do is just first define, okay, what do we mean by brand because what a brand is is completely dependent on the context right?
Unknown Speaker 17:00
It can be a company a company can be considered a brand, it can be a product, it can be a set of products, if you have a brand hierarchy,
Unknown Speaker 17:08
it can be an added value to a commodity basically brand equity, it can be the sum total the interactions that customers have with a product or service.
Unknown Speaker 17:18
And you can sort of defined in particular by the residue that these experiences leave behind in our mind leave behind in our minds, it can be it can be a sort of collection of stimuli, essentially this thing to brand assets. It can be something that assists consumers and making decision on the conditions of uncertainty. The OU I saw that you tweeted the Rory quote of the fact that McDonald's is so successful just because they're very good at not being totally shit. If that's conditions on the uncertainty if you're in let's I was doing a keynote, for example, in India earlier this year, so if I'm in India, and I don't know any of the restaurants there's a lot of uncertainty if I see a McDonald's sign, I know what I'm getting.
Unknown Speaker 18:00
That's also part of a brand, right? So the answer to what builds brand, like Ben was talking about, again, it's completely dependent on how we define brand. And even then, once we've done that, you still have to ask yourself, are the sales strong? Because the brand is where is the brand strong because the sales are.
Unknown Speaker 18:20
So once again, like when I saw someone in a rather unfortunate question on some hypothetical question on Twitter, so what's the difference between brand strategy and business strategy and business strategy is quite easily defined necessarily, because opinions vary, but what it is is an entity or what the purpose of it should be, is not as contextually dependent. What a brand strategies are, especially what a brand is, is completely dependent on the context that you've defined it within. That makes sense.
Unknown Speaker 18:53
How would you like I don't know if at rouser you what kind of levels you are
Unknown Speaker 19:00
offering the services, the Strategic Services, is it money on corporate and business strategy or also on brand strategy? And if so, how do you define it for your clients? So, we tend to work with primarily business strategy. We don't do a lot of corporate strategy. We do business strategy and marketing strategy primarily. We do some brand strategy and the brand strategy. Typically, it's going to be partly based around positioning. And I'll get back to why that is slightly controversial in a bit, but it's going to be based on things like for example, your distinctive brand assets.
Unknown Speaker 19:41
And what do we think that our brand should be? And again, we first have to define what we mean by brand. Are we talking about a branded product or we're talking about the company as a whole in terms of recruiting people what what actually is the context of the brand and once we've done that, then we can find the other stuff, but my point of position
Unknown Speaker 20:00
Unknown Speaker 20:02
I suppose it goes bit back a bit to the whole debate about differentiation versus distinctiveness, which is sort of off the argued at the moment. But the fact of the matter is that consumers don't necessarily perceive any differences between brands. And the question is, if they do, what it what would it actually mean? does it drive sales or not? That's very much open for debate. Now, positioning is part of differentiation to most. So the the question then becomes like, as if people don't perceive differentiation, and we perhaps that's not that important. Why should we do position and the answer space is basically because if we define what we're supposed to do as a brand internally, it makes it a lot easier for our employees know what they're supposed to be doing.
Unknown Speaker 20:53
So if we talked about brand being essentially and lack of better terms to the company,
Unknown Speaker 21:00
persona, the brand image, you know, all encompassing as how we communicate externally, it's a lot easier for, let's say, a copywriter working for us to know how they're supposed to, or what tone of voice they should use, for example, if we have defined that the company's happy or whatever, right? It positioning can be used as a management tool. So that's where where we do we do include positioning and as well as the way I mean, it's slightly sort of controversial because you have to be very careful again with your language and what we actually mean by positioning and why and those kinds of things. But yeah, so that's we define brand contextually. And then it typically revolves around the rubric bass Institute definitions of brand that you know, you had Yanni Romania over and then we've had pattern as well. But it's it all revolves around that. And then we basically add positioning on top as a sort of a management tool. Really.
Unknown Speaker 21:58
Yeah, that's interesting to me.
Unknown Speaker 22:00
Because like, at first I was really big into like differentiation and positioning because of all the stuff. I learned about that. And then I started seeing Byron's material. And then I kind of like flip the other side. And I feel now after a while that you can start seeing, as you said, like the value of positioning as more of this internal compass and then like really thinking about it and distinctiveness. But But still, like sometimes I feel that a lot of positioning is really built around this idea of really defining an audience really narrow and like there's still some issues for me with positioning like what are the biggest issues for you when it comes to this more traditional vision on on positioning? Well, I mean, if we talk about positioning as sort of a tool with which to achieve differentiation, which is the original idea if you go back to
Unknown Speaker 22:55
position, positioning the battle for your mind by
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Unknown Speaker 23:00
Unknown Speaker 23:02
Then it's very much about that, how do we position ourselves within the mind of the consumer. And we take that and we take differentiation, which slightly comes out of Michael Porter's generic concept of generic strategies. And then of course, if you're trained as a traditional market comes, tends to come out of Clarion thinking but
Unknown Speaker 23:22
the idea the original idea of differentiation is that companies can differentiate on various dimensions. So it might be product service, HR channel, you know, image, whatever. And the problem with that is that markets don't really work like that in practice. And most companies especially large companies are broadly speaking seminar and in terms of marketing terms, they are perceived similarly. Right. So if you look at how buyers describe brands, for example, consumers, they will describe brands regardless of whether they're driving a BMW or Audi or Mercedes or whatever, they will use the same terms.
Unknown Speaker 24:00
when describing those brands, right? And so,
Unknown Speaker 24:06
if you look at for example, perception data and perception research, what you also discover is that the companies that have the highest degree of our market share the potential of the biggest companies, they will get relatively speaking, more viable, they will have more buyers and relatively speaking therefore, more people answer surveys are going to be buyers of them, right. And because attitude follows behavior, it basically means that attitudinal perceptions strongly reflect past buying more so than future buying. And double jeopardy terms means that bigger brands will have more loyal customers. The respondents are also more likely to have stronger opinions of your brand if you're a big brand.
Unknown Speaker 24:49
So, all the kind of perception research people do if you just adjust that to market share to fat loss or effect marketer, you realize that essentially all companies are the same in the mind of
Unknown Speaker 25:00
Consumer Rights, there is no real differentiation. There are exceptions. But then the next question, as I sort of alluded to earlier becomes Okay, so does that actually drive sales?
Unknown Speaker 25:10
And there's also one of the things that that are being sort of very hotly debated at the moment, but just to take a very brief example. So let's take the dove real beauty campaign. Right. It was a fair while back, but it's sort of still hailed as, you know, the the poster child for differentiation and you know, the beacon of brand purpose. It was numerous Lee awarded this that Yeah, right. So, if we presume that people bought this brand, this product, basically, because it was so differentiated, which is often the sort of argument that is being made a purpose, purpose driven product, the safe spot, right? It's sort of, you know, solves inequality and it's all good things all men, women, kittens, puppies, whatever, right? I'm sure surely those people would buy the brand more frequently, right?
Unknown Speaker 26:00
If you bought if if you if people will buy that brand because it was so differentiated, they would buy the brand again when they that's basically what it implies, right? Because I believe in that purpose thing and therefore I want to save the world through you know, deodorant, whatever, but I'm still going to do it okay? So there's this guy called Charles Graham and he actually looked into it so broke down the sales data of dove of about I think was six years worth of data. And it is, by the way, I think there's a quite an extensive bid on that and we missed it to Greene's book, which is highly recommended, but But anyway, so basically turns out that little over a third of those buyers, but once in six years, once in six years 80% of the buyers bought the brand at a rate of once a year or less for about 50% of their all girls sale. So for all the talk about
Unknown Speaker 27:00
Being so supremely differentiated, it turns out that the buying patterns of that product is exactly the same as every other product on the market. So there is no differentiation is negative banal distribution. That's it. So even the most extremely differentiated products on the planet supposedly, are not differentiated at all, when you actually break down the data.
Unknown Speaker 27:25
So positioning again, in terms of being sort of something explicit that people see and therefore buy your product is just that there is no empirical research that I found that really proves that to be true, unfortunately, but again, like you said, and I think that's the real value of positioning is that it's very good as an internal management tool. And I would actually say that that's also true for brand purpose. I'm not a huge believer in been purpose sort of infamously I've been and been interviewed all kinds of newspapers stuff about my views on brand purpose, but if you use it as a management tool to sort of help your employees
Unknown Speaker 28:00
Set goals publicly in those kinds of things. Yeah, it can work. But it's also again, it's not something that can be literally communicated to consumers, because one day don't really think about those things. And to
Unknown Speaker 28:13
what kind of goes back to I mentioned that one of the, the sort of ideas behind bad is it basically it creates mental shortcuts, right? But if we want, or if we believe that people actually think about our brands, to the extent that, for example, differentiation would require, it goes against that very point of a brand, because then all of a sudden is not a mental shortcut. There's something that you actually have to think about. And again, people don't do that, you know, in the grand scheme of things in people's lives. brands are small things, they have a lot more important things to do, like paying their bills, picking up their kids on time going to the hospital, whatever it might be.
Unknown Speaker 28:51
So yeah, so anyway, but I went on a bit of a rant there, but the point about differentiation is that again, if there's
Unknown Speaker 28:58
markets don't work like that, people
Unknown Speaker 29:00
Bye like that, on the whole anyway.
Unknown Speaker 29:03
Yeah, I really love that. What's interesting to me also is if we do think about positioning in this more management to kind of wait, like, what are some some things that we can like evaluate if it's a good position? What does it need to do? Or what what makes it a good positioning like that, that you can make sure that it does work on this level? Um, I think that that's a very good question. I think one of the problems with evaluating anything in terms of marketing is that marketing very rarely works in a vacuum. Right? So the success of your marketing is not only highly dependent on what you're doing, but it's also dependent on how your sales team are performing. Whether you get the the sort of required investments from finance, not least what your competitors are doing. Market randomness, you know, Donald Trump might go date another porn star and all of a sudden your stories just lost in the news and so on, so forth.
Unknown Speaker 30:00
I think that that what you have to do is in terms of trying to figure out whether your positioning is working or not, is basically see whether it's actually helping your employees be more effective or not. And essentially spend less times time in meetings. There's also on the benefits of strategy is that if people sort of know what they're supposed to do, and that might include not merely in terms of strategy, but in terms of your positioning,
Unknown Speaker 30:27
then they won't have to spend time in meetings trying to figure out what they're supposed to do, right. And because people don't work for free, then you can just go Okay, so on average, we're saving this much money just by essentially ensuring that people aren't in stuck in meetings, essentially listening. And that's also one of the things that you can do in terms of if you want evaluate your positioning is is is it clear and concise enough that people understand what the hell they're supposed to do? Okay, well, then we've saved some money. That's a good start. But
Unknown Speaker 31:00
You know, it's going to be one of those things what you can do brand perception, tracking and stuff like that. But again, the question is whether the some of it might be useful, but most of it sort of waste of time. And you should probably do it quite sort of similarly, but
Unknown Speaker 31:16
it can help consistency.
Unknown Speaker 31:18
It can save time, it can help make people's lives or employees lives easier. And I think that's basically how you need to evaluate on biggest. If you want to evaluate on for example, sales, then the fact of the matter is that there are so many other things that go into it that you're basically the whole correlation versus causation debate is just it's going to be impossible to solve it.
Unknown Speaker 31:43
Yeah, I love the idea of of positioning being like a time saver for the company. That's like a completely different way than then what people are talking about, like building your tribe and all that like stuff about what you said about loyalty, drinks through to me and f8
Unknown Speaker 32:00
That we over, we tend to over focus on that and have this idea that someone buys an apple because he's an apple person, but actually, the science those that it's not true. But let's talk a bit about the effectiveness because that's also I think, a big part of what is what is discussed today. Like what makes a good marketing strategy or a campaign like what is effectiveness? And like, could you explain us a bit about that? Yeah, so effectiveness is a very interesting topic. And like you said, it's a very timely topic at the moment. And
Unknown Speaker 32:37
the original idea, if you go back to effectiveness as being defined by less than pure field and long the short of it, it's basically scale of effect of whatever you're doing without it necessarily being tied to the investment made originally. When they can compare it to efficiency, which is basically you know, how much you get out of your investment. You're returning nervous.
Unknown Speaker 33:00
Basically, and so effectiveness, the idea that effectiveness is it tends to be more long term. And it has to do with negative binomial distribution and essentially increasing penetration that is getting people who aren't buying your brand at all to get it, get them to buy the brand at least once.
Unknown Speaker 33:19
The problem I have with with the effectiveness discourse at the moment is kind of the same problem that I have with Ben Shaw's tweet about brand is that
Unknown Speaker 33:31
for all the good work that's been put into it, there's not a universal definition of what we mean by effectiveness. And that means that people are talking past one another moment. If you define effectiveness in one way, and I define it in another way, and we try to compare which of our two companies or whatever it might be your campaigns is most effective. Then we're comparing apples to oranges.
Unknown Speaker 33:55
Which by the buy, oh, I would argue that you need to define effectiveness within your organization, and how
Unknown Speaker 34:00
It is a more of a long term metric, or measure. And then you can contrast that with efficiency was just going to be short term metric. Again, it kind of means you have to talk to finance, I'm afraid. But it is important to do. The problem with looking too much at the short term, which is something that a lot of companies are doing at the moment is that short term effects are essentially designed to attract heavy buyers of which there are quite a few. And also to pull up imminent purchases, issues and time. The problem is that once you've done that, for example, through an activation campaign, those people they voted major their purchase, right. So there's going to be sales tip after your campaign and then only Not only that, but because brands act within they don't act within vacuums, they act within competitive spaces. What's going to happen next is that your competitor is going to run something similar, so they're going to steal even more steal from you. And of course, those sales would
Unknown Speaker 35:00
happened at full price. That was the original idea. So there were lots of problems with working with too much with efficiency. The problem with effectiveness is that the effectiveness affects the long term effects. You can sort of tell by its name, but they take time to sort of materialize, they will increase your baseline sales that is your sales that come without any form of advertising or communications or promotions.
Unknown Speaker 35:25
Over time, but how long can you wait? So you have to balance these two things. And that's where we get into the whole 6040 rule that people I'm sure have heard of, which is that you you want to do 60% of your your investment that is to do with media, really, but 60% long term 40% short term, that's the ground rule. And then of course, it buries spin on a bunch of things. But yeah, that's, that's effectiveness versus efficiency in a nutshell, if that makes sense.
Unknown Speaker 35:54
For sure. What's also interesting to me when it comes to thinking about this, this long term
Unknown Speaker 36:00
brand building and what I think Mark Ritson repeats a lot in in like his his content about how effectiveness is a long term game is interesting to me like on the one hand in when it comes to
Unknown Speaker 36:14
creating a strategy for a company, you have to think about this long term. But on the other hand, there's this, this whole idea about, we're being in a really rapidly changing culture and things shifting really fast. Like how do you keep the balance between defining a strategy that is still open enough to evolve and like keeping it strict enough so people can essentially feel that there is some some kind of breath? Yeah, that's a very good question. So we tend to define strategies in I may have mentioned it before, but it's sort of a strategy hierarchy. So basically, the longer your timeframe in which a strategist intended to exist, the further up the up the proverbial food chain it gets so you have to put the attempt at corporate strategy at the top or business
Unknown Speaker 37:00
RG and then we boil it down all the way down to campaign strategy. And
Unknown Speaker 37:05
the problem with
Unknown Speaker 37:07
not being able to define something that is broad enough for change, if that makes sense
Unknown Speaker 37:15
is that what if you work with a typical marketing strategy is going to be 12 months. And thanks, of course, can happen within those 12 months, okay? So you need to be able to have enough space for movement within that. At the same time, what you don't want to do is you don't want one, you don't want to abandon your original strategy, because what happens in practice, and this is one of the issues with agile at the moment, which is largely used as an excuse to abandon strategy instead is to perpetual A B testing is that, again, there's a lot of market randomness. So let's say that we we do something right because of our strategy and some and the result is x. Now it might be that the result isn't what we had hoped might be a poor result, but that does
Unknown Speaker 38:00
doesn't necessarily mean that the decision was a bad one, if we abandon the strategy, because again, the result, it's dependent on market randomness, what our competitors are doing, you know, whatever's happening within the financial climate, and so on so forth. If we abandon the strategy, then we might abandon an idea or a direction that's actually very good just because of randomness. And that's one of the aspects of Angela, people don't really consider when it's just a B testing, because if you're trying something, oh, the result was bad. And we're going to try this instead. Again, the result, it might actually have nothing to do with you. So strategic direction is you have to base it on. I mean, in the grand sort of corporate strategy, business strategy scheme of things,
Unknown Speaker 38:46
a 12 month strategy is short term, really. And so when you work within that
Unknown Speaker 38:57
you're still working off of short term stuff, stuff and
Unknown Speaker 39:00
In the grand scheme of things, and you have to just you have to factor in things like Okay, so what's our cash flow looking like? What the What's the sort of what's the rack looking like?
Unknown Speaker 39:15
What What is the the the ownership strategy? Is there a certain exit strategy? What's the sort of capital horizon, stuff like that, right? So build your marketing strategy in the context of your business strategy, and then you should be fine anyway, because you're just trying to hit the stuff that the business is trying to do. That will end but while still keeping the open enough to so short, run after different things along the way. The big thing and this is a conversation I had with a client recently that has a more of an open strategy is that if you are so inclined to run after every ball that you see, right, that works if your cash flow is
Unknown Speaker 40:00
Fine and the categories is growing and a company is growing and you're doing well. The problem is that one, if we're talking about the value of marketing department that's really difficult to value externally and internally. But to when times are bad, you're basically making a lot of bets that maybe you can really afford making strategy is a good strategy, it will still allow you to run after every ball, but it will tell you to sort of prioritize, so we're going to go after these balls first, and then these and then those ones. And that's the key really, that you you basically set an overall direction that will allow you to take detours, but you You're still aware of what the goal should be. If you don't have that you might go in the opposite direction. And that's going to be a problem or you might actually just run off the cliff, which is really going to be a problem.
Unknown Speaker 40:56
How do you like assess risk when it comes to
Unknown Speaker 41:00
to defining strategy because a lot of times when when I'm working on on, like defining a brand strategy there, we do have these conversations about, well, do you think this is like the right way forward? And is there what what risk is there involved? And like, it's a really tricky thing to think about. Yeah. So if you want to really boil down risk, you really need to get a proper risk management manager risk assessor NU, what you can do is you can look at historically what you have done that sort of works and you can hedge your bets accordingly. We also know through research, what, you know, the whole differentiation versus the sanctum is, for example, like bias versus heavy bias, we know Typically, what we're going to have to do in order to grow you know, that's not really a secret by now most people have probably read how brands grow.
Unknown Speaker 41:55
But so we can sort of hedge our bets even without going into you know, the
Unknown Speaker 42:00
My new details of risk assessment along the way. But again, it you also have to factor in I it the way that I phrase it is key contextual factors. And those are things like for example, what's our cash flow looking like? Is the category growing or outgrowing the category?
Unknown Speaker 42:18
Because the fact of the matter is that if you are in financially dire time, for example, you can't afford to make certain bets. You just can't because the upside might be half decent, but the downside is basically that you go bankrupt.
Unknown Speaker 42:34
And whether that I mean, it will depend on essentially your category and life cycle stage and a bunch of things but
Unknown Speaker 42:44
if you want to assess risk, then I would serve if I tried to boil it down, it's first understand the company the key contextual factors understand the market and your competitors and then you try to think Okay, so what are we actually trying to achieve here?
Unknown Speaker 43:00
Are we trying to just increase the cash flow to survive the month? Are we trying to set us up for, you know, the future? Three years down line? What are you trying to do here? And based on that, you can basically hedge your bets if we want to, you know, essentially increase our cash flow for this month, month and survive this month. And yeah, maybe we shouldn't do the long term stuff. If you want to set up set us up for long term success. We can only do short term stuff, for example, and that's sort of very basic
Unknown Speaker 43:36
bet hedging our risk hedging out.
Unknown Speaker 43:41
How have you seen the agency world change? Because from from my standpoint, I mean, I see a lot more agencies, even small boutiques and studios, talking a lot about like strategy and brand strategy and even trying to level up on that letter, but like, do you have any idea where the
Unknown Speaker 44:00
Evolution is going or is it looking differently from your perspective?
Unknown Speaker 44:05
I think in terms of what we're seeing on the agency side, we have first have to define whether we're talking about creative agencies or media agencies, media agencies are having their own kinds of problems at the moment. But, you know, I think that that what we're seeing at the moment is that there is this question, I would say, if I'm being a bit critical of whether agencies are trying to do what's actually best for the client, or whether whether they're actually trying to do what's best for themselves. And sometimes you see agencies do things that are clearly better for themselves to just jumping on the latest side guys, and they talk about all kinds of bullshit that you know, it's there's nothing to it but sounds good in the eyes of their clients who don't know better. And that's a bit of an issue if you want to talk about
Unknown Speaker 44:53
basically what they do in terms of brand work. There are a lot of companies that
Unknown Speaker 45:00
Are agencies that do understand, you know, how brands work and how markets work and people who are absolutely brilliant at it. I mean, if we look at someone like for example, Claire Strick, it works for a need these days. I mean, she knows she works in basically when the creative strategy but she will know everything there is to know about how markets work barn sharps work, I mean, she will understand all and she will be able to take that and put it into a sort of a brand strategy or creative strategy.
Unknown Speaker 46:00
The stuff that they produce sometimes just makes you go you know who buys this crap? And unfortunately the the answers typically people don't know better, and that's going to be an issue because you're going to come back and bite them the ass eventually.
Unknown Speaker 46:14
Yeah, that's so true. And that's, I think, a big problem. And I personally I also am like a designer that learned about strategy along the way and started like moving up this ladder and started doing more strategic work. It does involve involves a lot of learning of course, but like, if I'm an identity designer, like and I want to are like a brand identity designer, and I want to learn more about strategy. It can feel like really overwhelming because like there's business there's brand strategy, there's corporate there's all this knowledge, like, how much should like a creative person working on brand know about all of this. I think that the key to strategy is that understand if
Unknown Speaker 47:00
You want to talk about again the strategy hierarchy? then understand your level of strategy first and foremost. So if you work within creative strategy brand strategy, what if you understand that bit first? Right? The next bit is to understand enough about the level above yours understand what you're supposed to do to create alignment. So, for example, if you work within marketing strategy, then the level above yours will probably be business strategy.
Unknown Speaker 47:28
Or might be brand strategy, but what
Unknown Speaker 47:32
understand understand enough about that to know Okay, so what is what is our business model? What are we trying to achieve as a business? How is the business going about trying to solve a certain problem? So, I'll I've used the example multiple times, but I'll use it anyway. Because it kind of illustrates the point. So this is a real life example there to real life companies.
Unknown Speaker 47:58
I've removed their names because they're
Unknown Speaker 48:00
American companies and they can be quite happy to sue. But let's call them company and Company B. Right? So, these two companies work within a b2b setting and they sell aluminum cans to factories right to beer cans, basically, right? They're basically the same size.
Unknown Speaker 48:19
their product is more, it's the same.
Unknown Speaker 48:23
They have basically the same kind of revenue, same kind of brand, really. So you know, from the outside looking in, they're basically the same. Okay, so the question is, how do you market these two companies? Now? If you're the kind of marketer going back to tactics versus strategy, if you're the kind of marketer doesn't know anything about strategy, you would say probably content marketing. That's, you know, everyone's favorite these days. Oh, yes. We need to put out for new to produce content. That's really, really important to go. Yeah. But anyway,
Unknown Speaker 48:54
if you're the kind of mark to her nose marketing strategy, then you're going to do you know a bit of diagnosis.
Unknown Speaker 49:00
Next, you're going to drop your objectives, who can we afford to reach? Why? Those kinds of things, okay, so what we're trying to achieve, and then you're going to go into tactics, price and distribution problem.
Unknown Speaker 49:11
But if you understand that in and of itself is like it, that's better, but it's still you're still might waste the company's time and money because if you understand the business strategy of these companies, then you realize that they're actually going about trying to solve the business problem completely differently. So the first company, it basically has large clients, so few clients, but large ones, right. So they have few shipments and they do long ones that each shipment is big. This means that they can use scale to their advantage. But on the other hand, their time to market is really, really slow. But because they can use scale to their advantage, they can maintain their margins even more sort of keeping the prices down. Now a company B is completely different setup, right hundred 80 degrees, many clients but they're small therefore they do many
Unknown Speaker 50:00
shipments, the shipment costs and associated costs are going to be quite high. So they need to keep a high price in order to maintain their margins. And one of the ways that they justified that Well, it's because they can do fast time to market. Right, they don't have any scale advantages to speak of, but their time to market really fast. Now, if you knows that, if you don't know that, you might, for example, if you're working for Company A, you go after the kind of customer that company B has, right small customers,
Unknown Speaker 50:27
it might be that the kind of the size of the order that you get in is basically too small for you to be able to use your scale advantages. That means basically that your costs are going to go up and your margin is going to go down along with your profits. If you work for Company B and you go off the kind of customer company he has, then it might be that size of the orders that you get into simply too large. So effectively, you've created a demand for which you have no supply.
Unknown Speaker 50:56
Now long term, what we want to do is we want to reach all category bikes. We know that
Unknown Speaker 51:00
From the work so for example, barn sharp.
Unknown Speaker 51:04
But that might involve, for example, buying the other company mergers and acquisitions, it might involve starting a sub brand, in my in involve fixing the supply chain first, for example, it might be a bunch of things. That's a long term perspective of how we want to grow as a company, but in the short term perspective in the grand scheme of things, business context wise here,
Unknown Speaker 51:28
then we need to work off of what we can do and what is in the best interest of the organization. If we don't understand the business strategy of our organization, that's going to be an uphill struggle.
Unknown Speaker 51:43
Where can we learn for example, business strategy, like what are some good resources or places or frameworks to go to
Unknown Speaker 51:53
the if you only need to read if you only have time rather, I should say to read one book on business strategy. I would read
Unknown Speaker 52:00
Richard rules book called good strategy, bad strategy. That's probably the best book on business strategy that I've read.
JP Hanson 52:08
If you want to get into it a bit more, I would probably read the halo effect by Phil Rosenzweig, which has more to do with analysis. But it's one of those books that will basically change your entire view of analysis as one of the most essential reads that I recommend for anything. And then, if you want to sort of if you want to really go in depth, something like strategy, census synthesis by Bob DeWitt, it's a good read. But then we are going a bit advanced. If you just want to know the basics of business strategy, good strategy, bad strategy, again by Richard Romo is definitely a good read.
Unknown Speaker 52:45
But then, I mean, it's one of those things that you can probably get an insight into the business strategy of the organization just by showing interest and being you know, available to people outside of the marketing organization on the marketing department.
Unknown Speaker 53:00
Going for lunch with people from finance or HR, whatever it might be, grab someone new each day or each week at least right? And you talk about so Okay, so what do you guys do? What problems do you face and eventually you're going to get an understanding for what the overall business strategy is. If you don't, then your your company has larger problems that your marketing probably is going to be a business problem.
Unknown Speaker 53:23
So again, start with just talking to people if you want to read good strategy, bad strategy, really good read. And then you know, if you work, if you work within your marketing department, if you're doing comms where if it might be is if you're sort of junior, timid, then it's not going to be the most important thing for you in the world. If you are a senior marketer. If you want to work with marketing management, you just you're going to have to understand business strategy eventually. You're just going to
Stef Hamerlinck 53:53
Super, I really look forward to reading I have good strategy, best strategy. I'm looking at my library and
Unknown Speaker 54:00
From the me but there's still a lot of other buttons I need to read. But there's like if you start looking at strategy, there's like a million books you can read. So it's always good to have. Yeah, that's very true. I mean, I think I because I wrote a piece on this a while back I think that the first sort of official quote unquote book on business strategy came up something in like in the 50s or something and it was something like I can't remember how many thousand books on strategy have been released since but I think I calculated 233 books a day on strategy, they're being released some like that and that includes Christmas. So there are plenty of books on Shadi tree The problem is that not a lot of them are very good. But if you start with a good strategy, bad strategy, and you can't go wrong, and Richard rumor, this is amazing.
Unknown Speaker 54:50
Michael Porter is probably good read as well though I'm slightly more skeptical of his work.
Unknown Speaker 54:57
And if you do read Michael Porter
Unknown Speaker 55:00
I would recommend reading for example, the urbik best critique of his work, just in comparison.
Unknown Speaker 55:05
But, but no anyway, yeah, there are plenty of books to read out there. And the problem is more to, you know, trying to find the right ones to read out, say, if you need reading tips, by the way, feel free to hit me up on social media, I'll gladly provide tips and they're all there. Also, speaking of the browser Manifesto, there's also
Unknown Speaker 55:26
essentially recommended readings in there. So there are 20 books that we recommend or something like that, which is also a bit of a good resource I would imagine or hope at least
Unknown Speaker 55:36
sure will link that up. You could have like a job being strategy book reader, that could be an interesting title. Yes. Yeah. Full time. They'll be more than a full time job. Yeah.
Unknown Speaker 55:47
One more question before we start wrapping up because I've took Enough of your time of course.
Unknown Speaker 55:53
What's interesting to me is like there's a big difference in in working with with smaller companies for
Unknown Speaker 56:00
These these huge companies and you also see that that in a lot of the books and research that's done, there's a lot of talk about big companies. That's that's normal because we all know them. But like, for me, it seems that the smaller the company is and maybe also it also has to do with like age, the more these levels of strategy are squashed together. And like one blurry thing, like, I don't know, if you if you have a similar experience, and like, how do you what where do you see how do you do that? Like as a strategist, like how do you work with these things? No, I think you're absolutely right. And there are a couple of reasons why. And I mentioned this in the marketing week column that I wrote this week. But it basically has to do with and it's the, I suppose to degree, the strategic case for agile, but it's when you start out as a company, a small company, right? You basically have no idea what you're doing in mind.
Unknown Speaker 57:00
Do but even if you do know what you're doing, you're not going to know you know where the demand is going to come from who your customers are going to be, you might have an idea of that. So basically, what you have to do is you have to change, you know, what you're trying to do or what you know, I suppose change your strategy could argue, but you basically have to adhere to factor in the fact that you don't know where your demand is going to come from. And that's typically why all these strategies become squashed, because it's really difficult to define an overarching strategy, when you have no idea what the market is going to be now you can of course, it and this is sometimes the case when this company is being set up and it's properly funded and the people who are setting it the company up have done it before and those kinds of things. But in the grand scheme of things there, you know, they are quite few. There are a lot more SMEs started by people who don't really know what they're doing and
Unknown Speaker 57:58
you know that they have nowhere
Unknown Speaker 58:00
Really insight into business strategy. There's no incentive to marketing strategy and then it becomes squashed. And there is a point that because it goes back into one game theoretical terms called the colonel Blotto game, and just a very brief explain what that is. It's basically that, let's imagine that that you Stephanie, we have we both have an army right? hundred people strong. Individually, these two like if you take one soldier from my army, one soldier from your army, individually, they're going to be evenly matched, matched. So if we put all our soldiers hundred each onto a battlefield, it's going to be a tie, because you have 100 500, right? Now, let's instead imagine that we have three battlefields.
Unknown Speaker 58:42
I don't know how you're going to play and you don't know how I'm going to play.
Unknown Speaker 58:47
Now, that's a more of an interesting scenario, right? And this is this is basically how the strategy works in practice, because it's competitive, right? We're all trying to distract. We're all trying to solve problems, but we're also trying to beat our competitors because they're trying to
Unknown Speaker 59:00
Same thing right? Now. That's if we both have 100 foot soldiers each, of course, in practice, especially if you're talking about new companies, we don't have the same size armies, you have 10 gazillion people. And I have three poor farmers, or whatever it might be, right. So if we have three battlefields, you're going to win every time.
Unknown Speaker 59:25
But what we see is that when we have, for example, up to 50% difference difference between in terms of resources. Yeah, the bigger brand or the bigger, stronger players going to win most of the time, but there's still randomness. And the thing is that the more battlefields we add, the more randomness there's going to be, because the relative advantage of the stronger opponent is weakened because you don't know where your opponent's going to place their soldiers. Right. And that's basically how agile works. That's basically why we see the small companies that will change stuff all the time.
Unknown Speaker 1:00:00
Time, it's because that's the only way to win over a larger competitor. Because if you play by their rules, they're just they have more resources, they're just going to spend more money into whatever field that is, and they're going to win, which is often what happens. But if David wants to be Elias, he has to change the rules of the game. So there is a strategic point of being more agile as you start out, and then once you get a feel for the game, then you become more strategic, savvy and strategic and mature and you sort of you have to go from being a, I suppose, like a child company to a teenager company to an adult company. And that's why small companies do not should not act like big companies and big companies do not act like startups, it's strategically inane to do solid stupid. So you have to factor those things. Awesome. Yeah, I love I love that visualization. I was like imagining all these like little strategic Stratego boards. Really cool. Awesome. Well, GP This was super interesting. I think listeners
Unknown Speaker 1:01:00
gonna really value this like, foot to wrap this up, like, what's the What does the future hold for you and Ross? Or like, what are some of your big plans. Uh, so we're just at the moment we're heading into a big consultancy project was going to be really good fun, we are doing more and more work into marketing department valuation, which is going to be really exciting and it's not something that a lot of people do.
Unknown Speaker 1:01:26
And then I'm going to continue doing my column and do a lot of as many talks as I can, because that's probably one of my favorite things to do. And just gone to new and better things and also, of course, to perpetually trying to learn stuff and challenge myself because one of those things that I see is that people are so afraid of being proven wrong and that you know, if you're, if you're so set in your ways, you're never going to improve. So I'm just I'm trying to read up as much as possible. I do my own research, but also read a lot of research and study.
Unknown Speaker 1:02:00
And just try to always improve as a marketer and a strategy. So that's what I'm going to do. And then hopefully get a day off for Christmas as well.
Unknown Speaker 1:02:09
No, but I feel you completely on that idea of like, what you said about not being sure and being comfortable in the fact that you don't know everything. I think that's a big trap, once you start learning a lot more about strategy is that you kind of feel like an imposter having to know everything all the time. It's just not possible. Yeah. And unfortunately, this has sort of a side effect is that people don't want to be proven wrong. And so if you're, if you're working for an agency, if you're working for a consultancy, or if you're selling, let's say something that is not digital, if I'm being but you know, I'm a bit of a geek at the moment, but the fact of the matter is that if you're trying to show someone the error of their ways, let's for example, take digital media as an example.
Unknown Speaker 1:02:55
Now, even if you have all the evidence on your side, it's
Unknown Speaker 1:03:00
going to be two things. Firstly, the whoever you're talking to, they've been wrong all the time. And not only have they been wrong, they're going to realize they've been wrong and so are all their bosses and their comics, right? That's a big problem. The second thing is that because they've been wrong, they've been wasting the company's money.
Unknown Speaker 1:03:18
And all the other people are going to know that as well. which of course means that they're, they might be slightly reluctant to take in new information. Unfortunately, that's often how people view these things, defensive decision making all those kind of things. If you want to improve as a market, if you want to improve as a brand, if you want to become really profitable, you have to be humble and open to essentially admitting that you've been wrong. Because the fact of matter is that even if you understand that you've been wrong,
Unknown Speaker 1:03:47
that's sort of the first step to becoming Right. Right. If just look at what Adidas recently did, they actually admitted which they should have credit for, even though I I called it out the decision at the time four years ago, but
Unknown Speaker 1:04:00
They deserve credit for saying that no, we over investing in digital.
Unknown Speaker 1:04:05
And it takes a lot of balls to be able to stand there and say that, but it goes into that thing that if you want to improve in anything, you have to be humble and open to new information and always think critically, you should always question everything, regardless of whether it comes from Gary Vee or Byron sharp question everything.
Unknown Speaker 1:04:24
Awesome. That's a beautiful way to wrap this up. GP Thank you so much for your time. This was super interesting. Oh, absolutely. My pleasure. It's been an absolute joy. Thank you very much for having me.