Marketing Magazine
January-February, 2004

The Only Constant Is Change

In an uncertain era, businesses must plan with strategic anticipation.

Robert Duboff

WHY IS BUSINESS SUCCESS so fleeting? Estimates are that fewer than one in 100 start-ups are still in business a decade later. And even those that grow into giants typically shrink soon thereafter. The first Fortune 500 list was compiled in 1955. Almost 50 years later, less than one-fifth of these behemoths survive in the same form, including only seven of the top 25.

A study presented at a Client Forum in the late 1990s by Mercer Management Consulting found that only 8% of the Fortune 1,000 were able to grow more than their industry’s average in two consecutive fiveyear periods during the boom years at the end of the last century.

The point is that success is hard to achieve and just as hard to maintain. Many have studied the keys to unlocking the mystery of long-term leadership. All of these books and articles on the topic are interesting, but the fact that their prescriptions vary tends to undermine reliance in the diagnoses. While we do not pretend to have the answer, we can suggest a different perspective on the issue. These authors (and most businesses looking for long-term success) concentrate on the big picture of strategy and culture, but the answer may be in a shorter-term focus. More specifically, the best approach for businesses may be to concentrate on strategic anticipation so they can actually follow the strategy when circumstances change, as they now inevitably do.

Too often, business strategy and the concomitant annual plans are set in stone. For example, an annual marketing plan stipulates spending levels for advertising, which then tend to be executed regardless of how conditions might change (or may be cut if a revenue shortfall occurs early in the year). In an era of constant turmoil, this type of execution is inherently suspect. Consider just these variables, which could dramatically affect the marketing landscape in the next 12 months: (1) war, (2) terrorism, (3) economic instability— either boom or bust, and (4) additional scandals. The remedy to this problem is contingency marketing, which we define as “the combination of scenario planning and marketing strategy at the tactical level.”

Instead of annual plans with specific numbers, we advocate alternatives tied to specific types of triggers. Companies have been too slow to react to events such as the horrors of September 11, the war in Iraq, the rapid decline of the dot-coms, and even the rise of the Internet. This short-term inertia is a major contributor to the lack of long-term success. Bill Gates has written, “Success is a lousy teacher. It seduces smart people into thinking they can’t lose, and it’s an unreliable guide to the future.” Or as Machiavelli put it, “Whosoever desires constant success must change his conduct with the times.”

What is needed is an acceptance of Herodotus’ maxim, “The only constant is change.” Expect tomorrow to be different from today. Envision what might likely happen and think through what actions that should prompt. This will enable companies to benefit from the conclusion of Darwin: “It is not the strongest species that survive, nor the most intelligent, but the one most responsive to change.”

Following the path of contingency marketing will require the development of new skills, a different, more tactical list than those of the authors who only focus on the big strategic picture. The prerequisite skills for doing this follow.

1. Strategic anticipation and effective radar. The idea is to think about what may happen and have the flexibility to adapt as the future unfolds. This requires dynamic planning and designing alternative paths rather than a single unalterable thrust. To be effective, strategic anticipation depends on the ability to see what’s happening as soon as possible. The sharpest businesses combine their radar with foresight to anticipate what’s likely to happen sooner than competitors.

There are several techniques available that bring anticipation to a more scientific level than mere guesswork. Delphi panels, for example, use a diverse group of experts or knowledgeable consumers in an iterative process to identify probable scenarios and then rate the likelihood of each over time. In addition, lead users can delineate and study those most likely to set trends or to need a new solution to a problem or unmet need.

Tracking studies are also effective. They use the old fashioned method of periodic surveys of key stakeholders and focus on what may be changing. Businesses can also employ reports from the front line by developing a process to tap key employees (or channel partners) and periodically asking what changes they are observing. Finally, carefully monitoring complaints and contacts from customers can provide important information.

The key to making strategic anticipation actually work is openness to change and the presumption that strategy will have to adapt. The legion of examples of death by inertia (e.g., Detroit ignoring a decade of Japanese success before reacting, or Sears ignoring Wal-Mart for too long) stands as testimony to the hubris of business giants. Shifting the paradigm to “only the paranoid survive” is the antidote. As Michael Hammer commented, “The most accurate measurement system in the world will fail if it is implemented in an inhospitable environment.”

2. Insight into brand and trust equity. The best defense against decline is having a strong brand or brands and a high level of trust. Aristotle noted that persuasion requires credibility. Marketers trying to influence consumers need to be credible for their messages to have impact (assuming they get through the clutter). A strong brand means a solid history but it may not have the credibility to auger a strong future. The history of powerhouses such as Nike and Perrier show how seemingly minor incidents can have a lasting impact on a heretofore powerful brand.

Each business is different, but every marketer needs to know how the brand(s) are seen and which factors are most influential to the brand’s health. And, whether the business has brand names or not, the credibility must be monitored carefully. While it is often very difficult to measure the value of a brand, it is relatively easy for market researchers to measure the level of trust a business and its spokespeople and symbols have.

3. Deep understanding of stakeholders. Marketers need to know (and to monitor) what is important to its key stakeholders. With customers and potential customers, the most vital fact is their “buyer values”—the criteria truly critical to their buying (and rebuying) decisions. At the same time, there are always other groups vital to a business’ continuing success, such as employees, owners/ shareholders, and channels.

In all these instances, it’s not necessary, nor even advisable, to conduct sweeping random samples for mass markets. The best practice always is to focus on the filet (e.g., the 20% of the customers who bring 80% of the profits, the lead users, the most knowledgeable employees, the major and most wily shareholders, and the best channel partners).

With a deep and ongoing understanding of these constituencies, the marketers can anticipate what reactions will be without the need to hesitate whenever the radar signals a change. In fact, the knowledge about brands, trust, and stakeholder values is really a prerequisite to effective strategic anticipation (and good marketing). This is the hallmark of the best leaders—whether they’re in the military, politics, or in business.

4. Effective communication in real time. This attribute is the final piece and the only one enabled recently. With the advent of voice mail and the ubiquity of the Internet, marketers can now be in continuous touch with those who want or need that communication. Contingency marketing requires pre-organized networks so stakeholders can be reached by one means or another, regardless of the circumstances.

Naturally, businesses need to have predetermined security plans so employees and customers know what to do in case of terrorism, extreme weather, or other events that unfortunately are part of modern life. Marketers need to follow this same routine. There may (and should) be a crisis communication process and plan, but this is hardly enough. There need to be marketing programs ready for all likely contingencies such as market booms and busts, extended times of gloom and despair, celebrations, and (of course) litigation claims, claims of scandal, and business accidents.

Marketing requires a future focus. Marketers rely on this when they explain that return on marketing investment is always a long-term proposition. Marketers need the same perspective when they put together their plans and prepare campaigns. Fight the optimistic view that what is planned will work because of today’s research and knowledge. Instead, assume that something, if not many things, will change over the life of the campaign or plan. Only those who recognize this reality and master the skills listed here will truly be prepared to survive, if not thrive.

This article has been reprinted with permission from Marketing Management, published by the American Marketing Association, Editor: Carolyn Pollard Neal, January/February 2004, p56.

Robert S. Duboff is CEO of HawkPartners. Contact Robert here.

 

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