Archives for posts with tag: efficiency


Average companies are organized for efficiency. Effectiveness. Shareholder value. Never for delight.

McDonalds, Citi, Delta Airlines and other push stuff. They reduce costs. Use time measurements to become more efficient.

They are like factories, always the stopwatch in hand, trying to maximize efficiency. The problem with this strategy is that you can only go so far squeezing efficiency out of your people and assets.

When you sell millions of burgers, reducing the cost of one unit by 0.00001 makes a difference but not a game-changing difference. Even worse, the real problem with focusing on maximizing efficiency is that you don’t do things that people will talk about. For that, you need to pay premium to disrupt people’s attention. Unfortunately, once you got their attention, your staff is not ready to deal with special requests, personal quirks and deliver service that delights.

Factory organizations fear special requests, put everything in a manual and make it almost impossible to delight people because everybody is powerless. These organizations are perfectly designed to patch problems over after the fact, instead of employing passionate people that delight customers.

Why not organize for delight?

Be a company that gives employees and stakeholders the freedom and make it part of their job description to create, connect and deliver joy. These are organizations that let people be different to make a difference. Opposed to organizations that look for violations in the employee handbook.

On that note, in case you haven’t seen that Valve employee handbook yet, better download it.

It starts with this quote: “We are all stewards of our long-term relationship with our customers. They watch us, sometimes very publicly, make mistakes. Sometimes they get angry with us. But because we always have their best interests at heart, there’s faith that we’re going to make things better, and that if we’ve screwed up today, it wasn’t because we were trying to take advantage of anyone.”



I had coffee with the Creative Director of a prestigious agency. He just switched from digital to traditional, shooting TV commercials. He shared his newest commercial, a very creative work of art, destined to win awards. I asked him about his experience in the traditional advertising world: “I love it. Nobody nickels and dimes you to death. I used to have to fight for every penny in the digital agency, nobody questions budgets in the traditional world.”

While the digital media world is busy to get more efficient and cheaper, TV is celebrating a double digit increase in spending. TV commercial crews are busy re-shooting small parts of a commercial for $100k or so while digital folks spend sleepless sites for $20k with a profit margin of $0.02. And when you watch TV in the evening, you look longingly at the amazing production value of commercials while some crappy display ads hurt your eyes.

Don’t blame TV. Blame yourself.

Our approach to marketing and communicating the digital web was wrong right from the start: Cheaper. More efficient. Measurable.

We appealed to the left brain, to the penny pincher mindset. We’re not as sexy as TV but we are so much more cheaper. Our banner ad pales compared to a commercial but it’s so much more efficient. Nobody really sees banner ads but we can target your second cousin in Des Moines. Remember when people said “Social Media is for free?” Free never communicates value. (And it was never free, was it?)

Isn’t it fascinating?

The digital revolution has started to transform whole industries (ask music labels) and it’s already transforming how we connect with the world, changed our daily habits, the way we think. And, we’re just at the beginning of this revolution. Whole industries will disappear, replaced by innovative services and products. At the same time, the digital marketing world feels like a torn Valpak with discolored flyers full of misspellings.

We need to bring digital sexy back.

As infographics have shown us, data can be sexy. We need to communicate the sexiness of our insights better to our clients and internally. We have to focus more on value of digital communication and less on the cost-cutting promise. We need to give Creative Directors the freedom to produce more than just 300×250 ads and landing pages with a budget less than the catering for a one-day TV shoot. We have to focus on the long-term future of digital marketing and not the incremental changes of a DSP or Behavioral Targeting. We have to get excited again about the revolutionary changes we’re experiencing, the transformative nature of the digital lifestyle.

We need more passion in this space. Or we’ll never feel the love.


This column appeared first at Jack Myers’ MediaBizBlogger site.

Many people in the Social Marketing world say that anything social should be measured with soft metrics (fans, followers, number of conversations) and brands should focus on enhancing the brand by adding a social layer.

Sounds good to me.

Others in the Social Marketing world say that ultimately in marketing it’s always about money: Sales, increase in customer service efficiency (decrease in costs) and more effective ways to communicate with people compared to the guessing game we call advertising.

Sounds good to me.

How can we align both paradigms?

We’re living in tough times. Clients need good returns on their investment. Any discussion about Social Media will touch the money issue: Resources, re-allocation of funds, organizational commitment. Sure, there are organizations where the ROI is fabulous and immediate: Just ask Burger King, Starbucks or Dell.

What about the majority of brands?

Let’s be honest with them: Most likely, Social Marketing won’t deliver immediate sales increases or anything that can be quantified monetary. Social Marketing (well done) will add another layer to the overall brand experience that will help your sales number incrementally.

Will people read your tweets and immediately purchase your product? Hell no.

Will they join your community and share with the world that your brand is just the best and everybody in their social graph should join as well? Doubtful.

Will participation in Social platforms enhance the overall brand experience by providing a positive impression? Absolutely.

So many Social Marketing initiatives have been abandoned because they didn’t deliver immediate results. Don’t blame Social Media or the client for that result. Blame yourself for not setting the right expectations. There’s a lot of value in Social Media. It’s your job to unearth it and keeping it real.

Actually, just speak.

Wednesday, June 23, 8 am PT, 11 am ET

A conversation with Gail Collins, Internet analyst at BGC, a firm with $1.2 billion in revenue and offices in 19 cities. His coverage includes GOOG, YHOO, AMZN, EBAY and others. Every Wednesday at 11 am ET, Gail hosts an investor conference call.

In this week’s installment, we will talk about Facebook as the next chapter in targeting failure, lessons for business leaders that can be learned from World Cup, the difference between efficiency and effectiveness and the problems with digital marketing. Should be an interesting hour and I hope you can join us.

Please register here to the dial-in number. Hope you can join us.

dsc_0299__1Image: Courtesy of Emil Kozak

Organizational design produces the vision of an organization and a desired behavior. The gaps between what the organization is and now is doing, and where it wants to be and to be doing, expresses the challenge to be tackled by gap analysis and gap planning.

Gap Planning determines how the gaps are to be closed or reduced. It is the preparation of the design’s “initial  drawings” which provide the instructions required to close or reduce the gaps. Gaps can be filled by adding things, eliminating unnecessary things or by changing things.


Before any assessment can take place, each stakeholder needs to understand and agree on the new direction of the organization:

  • Communicate widely the vision, mission and pie in sky design
  • Design the data-gathering process and explain to all stakeholders that an enterprise-wide gap analysis will take place
  • Discuss with each stakeholder the benefits and difficulties involved in the transformation process
  • Establish the initial design and data-gathering lead teams
  • Determine the stakeholder task force
  • Establish expectations for ongoing communication, and communicate the philosophy for staffing the organization

Using a combination of survey and group interview techniques, gather information on the effectiveness of the current organization. Data gathered should include: core processes and their effectiveness, additional customer data, critical tasks or key activities, work load, roles and responsibilities, decision-making authority, qualitative data on management practices, and internal issues and suggestions for improvement. Enterprises need to consider the current culture, how change has been implemented in the past, and how is has been received by employees at all levels.

Gap Analysis

In planning the analysis, it is essential to clarify what information is most relevant. This involves specifying intended outcomes and possible unintended outcomes. It also involves plans for assessing how well processes have been implemented and where improvements are needed.

We use the example of a luxury car dealership to illustrate the gaps. In this example, there are several gaps that are important to measure. From a service quality, these include (1) service quality gap; (2) management understanding gap; (3) service design gap; (4) service delivery gap; and (5) communication gap.

Service Quality Gap

Indicates the difference between the service expected by customers and the service they actually receive. For example, customers may expect to wait less than 10 minutes for their loaner car but reality is an average waiting time of 20 minutes. Most cars are being dropped off early am and 10 minutes before work are more valuable to people than after 5pm.

Management Understanding Gap

Represents the difference between the quality level expected by customers and the perception of those expectations by management. For example, in a car dealership customers might expect expediency on their repair but management focuses more on excellence than expediency (for many legal reasons).

Service Design Gap

This is the gap between management’s perception of customer expectations and the development of this perception into delivery standards. For example, management might perceive that customers expect someone to answer their telephone calls timely. Customers might think “timely” is less than twenty seconds and management defines “timely” as less than 40 seconds, thereby creating a service design gap.

Service Delivery Gap

Represents the gap between the established delivery standards and actual service delivered. Now, management might establish a new standard of answering each call in less than 20 seconds but average time of answering is 27 seconds, creating a service delivery gap.

Communication Gap

This is the gap between what is communicated to consumers and what is actually delivered. This happens frequently when dealerships offer low-price oil changes and then charge customer for questionable labor.

Gap Fillers

The most important criteria used in evaluating the gap plan is whether it will the enterprise to push in the right direction, avoiding a chaotic transition and helping the organization to utilize opportunities. It’s extremely important to refer back to the mission statement, and understand if the gap plan will help to fulfill promises made in the statement.

When an individual or a group is confronted with a gap between where they are and where they most want to be, they can respond in four different ways: absolution, resolution, solution, and dissolution. Learning and creativity are enhanced more by design (dissolution) than by research (solution), more by research than trial and error (resolution), and more by trial and error than by doing nothing (absolution). The goal is to design an organization that considers dissolution as their main goal. Dissolution of boxes,  paradigm, linear thinking. Through organizational design, all stakeholders will contribute to the creation of a world they are envisioning to live in.

The efficiency and effectiveness of the gap fillers selected in gap planning are not only matters of selection one of a set of available gap fillers, but are also a matter of creating gap fillers not previously available. Organizational business design unleashes creativity in developing a vision to be pursued by an enterprise. But creativity also has an important role in selecting the gap fillers by which to pursue it. Therefore, the selection of gap fillers can also be more a matter of design than research or common sense.

Last but not least, the gaps treated as challenges in gap planning are almost never independent of each other.  Therefore, their solutions interact systematically. The selection of solutions to close the gaps should take into account these interactions, especially their joint efforts on the enterprises’s overall performance.

Tomorrow we will discuss asset planning.

For your reference, you can find the previous chapters here: Part 1, Part 2, Part 3, Part 4, Part 5


Image: Courtesy of donttouchmymoleskin

We’re going to change programming for the next  2 weeks and publish a guide how to navigate business challenges and transform your business in today’s market reality. This is a 10-part series that will help you create a more effective internal system and employ a flexible structure that will minimize the need for future restructuring. Ultimately, our goal is to help executives find and implement the system best suited to meet their organizational goals.

Let’s get started.

Systems Thinking

We all feel it. We all discuss it. We all experience it: Something is rotten in the state of Denmark. BP, Fannie Mae, Great Recession – you name it. We continue to apply our old way of thinking to new problems that were created by our old way of thinking. While resistance is strong to adopt a new way of thinking, new ideas are emerging that will help us guide through the dramatic changes that are about to take place.

Before we further discuss systems thinking, we need to understand the nature of systems. A very simple definition of system:

A system is an ecosystem that can’t be separated into independent parts without loss of its essential properties or functions.

This doesn’t seem that complex but its implications are fairly revolutionary. During my tenure at business school, I learned everything I need to learn about marketing. We received cursory insights into finances, personnel, production, sales, etc. but we almost never discussed the interdependencies between each division. It’s fairly obvious that a failure in one division will dramatically impact the performance of all other divisions. Management was seen as handling specific levers to improve performance of your division. That’s an Industrial Age thought pattern that should have been discarded a long time ago.

As mentioned above, it’s hard to change thought patterns but the failures of old thinking leads us to this new perspective:

No part of any system should be adjusted without a deep understanding how this change will impact the whole ecosystem and clearly analyze if this change is beneficial to the whole system. That expands the role of management to

a) Manage all interactions of their employees

b) Manage interactions between all internal divisions

c) Manage interactions between all stakeholders

Efficiency vs. Effectiveness

Think about Search Engine Marketing: Google is very efficient in delivering good search results. But they have to calibrate their results to be as effective as possible to help their bottom line. Imagine Google would deliver the perfect search results each time you’re using the service. They would be very efficient as a tool but not very effective as a money-making machine since nobody would click on paid results anymore. On the other hand, Google would go out of business within a short period of time if their organic results would deliver a sub-par experience while the only value is through paid ads.

Businesses always need to calibrate the two dimensions of efficiency and effectiveness. The advertising industry is a good example where everything has become much more efficient but not very effective. We’re doing things right in advertising but we’re doing the wrong thing. Meaning: we’re getting better at doing the wrong thing. Most industries would benefit from focusing on effectiveness first before they deploy efficiency strategies. No matter how efficient you become doing the wrong thing, you just become better at being wrong.

Analysis vs. Synthesis

Many companies employ business analysts, rely heavily on thinking that takes systems apart and looks at each part separately. Synthesis, on the other hand, looks at systems as part of bigger systems: industry, society, the whole planet.

This analytical thinking and constant disassembling of parts has crept into each part of our private life: Businesses are designed for work, not play or learning. (Let’s not even talk about inspiration). Schools are for learning but not for play or work. Yet, we know that certain school models (Waldorf comes to mind.) integrate each important aspect of our lives into one package. People don’t just want to work when they head out to their jobs. They want to learn, be inspired and play. We are beginning to understand that we can’t be effective carrying out any important functions if not all aspects of our lives are integrated.

Problem Resolution vs Paradigm Change

A few years back, I had to deal with severe back pain. I’m in pretty good shape, run quite a lot and my back has always been problematic. The first physician I saw just gave me Vicodine. He ignored the real problem, just hoped the pills would make my pain go away. The second doctor wanted to fuse my spine. He wanted to resolve the situation by bringing out the big guns. The third physician prescribed physical therapy. His idea was to optimize my back, make it more capable of adjusting and less prone to pain.

I decided to follow the fourth doctor: myself. I started to observe when I tend to have back pain, look at the triggers. In addition, I experimented with different forms of exercises: Yoga, abdominal exercises, swimming. I lost weight, I changed my diet. I changed routines. Basically, I looked at myself as a system, not a myriad of symptoms. And my goal was to optimize the system; to find out the right things to do to improve my health and then optimizing my system over time.

Let’s just have a quick look at the advertising industry: It was never cheaper to deliver impressions to people. I can buy 1,000 impressions for under $1. And the whole industry is busy delivering even more efficient impressions: Brands are cutting commissions of their agencies, holding companies are building huge data centers to deliver cheaper impressions, sites carry up to 20 impressions on one page. More. Faster. Cheaper. Unfortunately, the whole industry is answering the wrong question right. More efficiency is not at the core of the problem. Declining effectiveness is the real problem.

Because the advertising business has problems connecting with people and delivering valuable results to companies, this problem is categorized as an “advertising” problem and thereby retained and not solved in the advertising department. I would argue, the best place to treat a problem is not necessarily where it appears. Advertising is just one part of the system and its challenges shouldn’t be discussed by that discipline alone. Advertising is a cultural pillar and its decline needs to be discussed with sociologists, technologists, futurists, psychologists, anthropologists – you name it.

There are many ways of looking at a problem, the most productive way of dealing with a problem is seldom obvious. For that reason, problems should be viewed from as many different perspectives as possible through collaboration of multiple points of view.

In Part 2, we will discuss different types of systems, their effects on organizations and the way they are managed.