Year: 2012

Pricing the ecosystem

By Mark Di Somma

Take a look at the diagram below courtesy of Ryan Jones (thanks for the point Marc Abraham). It shows how Apple spans its offerings over a surprisingly wide range of price points. By introducing new lines, retaining older lines at degraded prices and through the use of provider subsidies, Apple delivers an impressive range of ‘step-in’ opportunities for customers to join its ecosystem. I’m intrigued by this because, from a brand point of view, these arrangements provide a powerful alternative to traditional “up-sell” approaches and to the discounting that brands so often use to make high-end products more available. Apple’s approach enables the brand to retain its all-important brand equity whilst providing consumers with the means to address any price barrier in the way they feel most comfortable with. They can enter the Apple world uncommitted or very committed in terms of contracts, with a spec’d up or spec’d down product (which they will then be encouraged to upgrade/add to). Until I saw Ryan’s analysis, I hadn’t realised the sophistication and range of this strategy. …

How to make sure your company’s next strategy succeeds

By Mark Di Somma

This fabulous article by Charles Roxburgh is a must read for every decision maker responsible for deciding the fate of a proposed strategy. It explores in fascinating detail how the brain tricks leaders into making “rational” decisions that are nothing of the sort. In fact, it reveals that all of us work to a set of biases that we must consciously resist. While my recent post on Prussian cast iron medals addressed how behavioural economics can work to actively lift value and change perceptions for buyers, Roxburgh’s work is a sobering reminder that rogue decision making is alive and well. Much of what he describes in terms of European financial services is equally applicable to what happens in many other fields. In this post, I highlight Roxburgh’s key observations, his recommendations on how to address them, and the steps I look to take as a strategist to ensure that what I’m doing gets the fairest hearing it can from the decision makers I’m working with. Settle in please for a longer-than-usual riff on how decision …

Lessons from an unnoticed violinist

By Mark Di Somma

I’ve always loved the story of Joshua Bell playing the Bach pieces largely unnoticed in the Washington metro station. Please watch the video if you don’t know the story. And while the experiment does indeed confirm that we don’t take the time to appreciate as much as we should, more particularly, it’s also a poignant example of the contributions of context and information to our everyday decision making. Context provides so much of how we read situations. No-one expects to see a concert violinist playing at a station – and because no-one expects it, no-one notices what he is doing, regardless of the extraordinary quality, and even fewer reward it. In that setting, in the blink of an eye that people evaluate, he’s just another musician, just another busker. If he was that good, many people would have subconsciously thought, he wouldn’t be playing here. So if he had played in another setting, even if it wasn’t a concert hall, would that have given his performance greater credibility for those passing by? Quite possibly. There’s …

From Prussia with love

By Mark Di Somma

Jeremy referred me to this fabulous presentation by Rory Sutherland, and it’s another corker from the man from Ogilvy’s. Mr Sutherland would absolutely make my short list of people to sit next to at dinner. Not only is he an adamant supporter of one of my favourite disciplines, behavioural economics, but his talks are peppered with the most wonderful references and observations. In this speech, he gives a wonderful example of how physical value can be transformed into an intangible value that defies costs, but only if the associations are powerful and valued enough. Examples abound of this dynamic working the other way (items being sold for, or even below cost) but the Prussian medal example Sutherland gives is proof that cast iron can indeed be worth more than gold if the story that surrounds the lesser metal gives it greater value, and providing of course that those seeing the cast iron medal also understand the context of why it carries the value it does. Sutherland goes on to direct this argument at the environmental …

Sustainability: Being good, not just doing good

By Mark Di Somma

Historically, corporate social responsibility has put the emphasis on how businesses are doing good. It’s become an increasingly varied checklist of “things we’ve done right”. Today though, socially aware audiences want more. They increasingly make judgments about you based on your overall likeability. They want to do business with brands that are good. And that in turn means that, at a social level, your reputation depends less on your ability to simply highlight good works done in isolation (through community activities or sponsorships for example), and much more on your ability to show that you are inherently principled in your dealings and that you behave consistently across your organisation in ways that align with your social and commercial reputation. That shift in the significance of social actions has a downstream effect on critical social initiatives such as sustainability. In my opinion, they should no longer be seen as nice-to-haves or even as opportunities to improve efficiencies across your supply chain. Rather, the actions you take in these areas are competitive opportunities to distinguish your company …

The strategy of radical beauty

By Mark Di Somma

Should you climb a mountain because it’s there, or because you believe you have a more than reasonable chance of conquering it? In a commercial setting at least, I’ll plumb for B – because presence alone is not a rational reason to participate. I continue to be intrigued though by the human instinct to believe that the odds are there for beating. I watch brands plunge into markets where they honestly believe they can do what others have failed to do for no other reason than that they believe in themselves and/or they have little respect for the current participants. Believing in your own brilliance and/or relying on the incompetence of others however, as Michael Porter reminds us, is not a strategy. In fact, it’s nothing short of a gamble. In a wonderful article on “How strategists lead”, Professor Cynthia Montgomery of the Harvard Business School gives a telling example of how some great companies have fancied their chances in the furniture manufacturing sector, only to become a cropper. They have, she says, looked to …

15 reasons why “no-one else has complained”

By Mark Di Somma

1.     They didn’t have time 2.     They couldn’t be bothered 3.     They didn’t want to interact with you a moment longer than they had to 4.     They didn’t know how to complain (because you didn’t make it easy) 5.     They didn’t feel they could talk to you 6.     They didn’t think you could change 7.     They didn’t think you would care 8.     They didn’t think it would make any difference for anyone else 9.     They didn’t think you’d listen 10.  They thought you’d be rude and defensive 11.   They think you’re incompetent 12.   They don’t like you 13.   They never intend coming back 14.   They want you to fail 15.   They’ve already told all their friends to avoid you via social media More reading 7 Things Most Customers Won’t Tell You – Unless You Ask (thethrivingsmallbusiness.com)

Crunching on cacti

By Mark Di Somma

An airbrushed problem is not an easier problem to solve. In many ways, it’s actually much more difficult because the nature and extent of the problem itself is encoded in euphemisms, which usually means that the potential impact is also encrypted. I call these deflections and understatements “icing the cactus”. Generally, they involve playing up the momentary nature of what has happened (“unseasonal”, “untimely”), playing down the likely effects (with words like “blimp” and “unfortunate”) and playing off one action or group against another (“there’s no doubt it would have worked if …”) Personally, I’ve always held with the Stockdale paradox: that organisations need to present issues frankly and without blinking, at the same time as they must utterly believe in their ability to be resolved. You can’t fully solve what you don’t fully know, and therefore what you are prepared to fully admit to. Actually, problem solving itself is a misnomer – because the problem itself is seldom the problem. The real problems are usually the attitudes, mindsets, blindsides, denials, assumptions and stupidities that …

Story myths

By Mark Di Somma

Great brands have great stories. But a great story doesn’t automatically create a great brand. For years we’ve told ourselves a story about what story is and how it works: develop a product; build a story around that product to give it value; sell that product at a greater degree of profit. We’ve allowed ourselves to believe that stories are the lynchpin of competition and that the best storytellers will win. But that in itself is a myth. Ultimately consumers don’t buy a story. They listen to a story. They are influenced by a story. But what they buy is a truth that directs their behaviour, captured in a story. You don’t succeed just because you have a story. You succeed when you have a story that inspires people to buy your brand. The most beautiful, uplifting story in the world won’t cut it commercially if it doesn’t achieve competitive connection – if it doesn’t provide customers with reasons to connect with your brand at the expense of someone else’s. Stories may influence behaviours. But …