Soft Leadership

Some might wonder why business is slow? Why are sales lagging? How come no one responds to the ads in the paper anymore? Marketing is a waste, right?

I remember this quote from somewhere:

"I'm absolutely sure at least half go my marketing budget is wasted...I'm just not sure which half."

This is what I understand about why marketing to the masses is a complete waste of time and money:

Over time, we as consumers have become so inundated with Choices that we don't have the Time to pay attention to everything. There is not enough time in the day to pay attention to all the mass ads vying for my attention. They are everywhere and they are generic so I tune out, everyone else does too...that is, unless they don't have enough going on in their lives.

If you want people to pay attention to what you have to offer then you need to be remarkable...OR get their permission. Instead of marketing by interrupting people, try marketing to people who are listening.

Recently, a company called Neenah Paper, a high-end paper manufacturer, discovered it was becoming increasingly difficult to attract new customers. Marketers at the company realized that conventional mediums like face-to-face meetings and phone conversations were not as prosperous as they used to be and they felt like potential customers were ignoring their efforts to attract new business. Sound familiar?

In this case, the marketing manager at Neenah decided to engage customers through social media. This was a good path to follow since it was observed that a majority of the company’s prospects were spending most of their day in front of a computer. Under his direction, the marketing department at Neenah began finding prospects by searching for keywords in Twitter and joining in on the conversations. They learned that social media is simply a more effective way of engaging with their prospects and one sales person expressed, “It’s an invitation to have a conversation. You’re getting permission to have a conversation—a conversation that used to only happen in person.”    

The landscape of business is ever changing. 2011 is halfway over and already so much has gone down. I imagine most management professionals out there would agree that the first two quarters have felt like a roller coaster. 

It's been on my mind to revaluate my company's business plan amid all the changes as of late and create a new plan, budget, goals etc. 

But then I got to thinking about the last plan I wrote...it was a great plan but in the middle of following it the economy drastically changed! Some competitors dropped off, many old customers disappeared, we gained new ones and had to learn how to serve their needs, our vendors tightened lines of credit, some of them disappeared too. It felt like we were running a totally different organization.

I've come to realize that business planning and forecasting (especially over the long-run) is really just guessing. There are way too many variables outside of what you can actually control, like: market conditions, your competition, your customers, the wonderful economy and so on. Throughout my years in business school and in almost all the classical publications I've read, managers are advised to write "business plans." 

It sounds responsible, yes. But now I ask, "What’s the point?!"

Recently I read this article by Eric Markowitz,  where he writes about Araceli Camargo's notion that planning is actually bad for business. Here's an excerpt:

Some research supports this claim. In 2007, The Wall Street Journal reported that “budding entrepreneurs can spend months, sometimes years, polishing elaborate 50- to 100-page business plans that include financial projections, market research, and intricate details on day-to-day planning and organization…But skeptics say there's little concrete evidence that extensive planning is highly correlated to success." Two years later, in 2009, The Journal clarified further, noting that "researchers found no evidence (emphasis added) that either the content or presentation of the plan influences venture capital-funding decisions."

Now I'm a HUGE planner. I'm constantly making plans in my life's personal pursuits -  planning events, projects, and things you have control over is a great way to be a productive individual. But the problem I see with planning in the business world is this:

Writing a business plan makes you feel in control of things you really can’t control.

I've come to realize that business is all about improvising. You have to be able to take on an opportunity when it presents itself. I've also learned that you have the most information about a situation when you’re right in the thick of it. Planning before you’ve actually done it doesn’t make any sense; before is the worst time to make an important decision. This is often the reason why you feel incredibly overwhelmed after a long planning meeting. 

I'm always thinking about the future and how I should solve problems that I see on the horizon. But I no longer feel like I need to write it down and obsess over it. I use to stress about keeping to business plans, financial projections, and stratagem…but it was a waste of energy because these are all just guesses! When you start to think about it like that, it's really not so serious.

I've decided I'm going to quit guessing. I'm just going to decide what I'll do this week and stop worrying about the rest of 2011. I'll start with the most important thing I can think of and move on from there. This sounds much better than following a plan blindly that has no correlation with reality.

Ever wonder how a couple hundred thousand jobs can be added in a quarter and somehow the unemployment rate still goes up? Well, the reason behind this can be found in the statistic itself. 

The national unemployment rate is based on the number of adults who want to work but can't find employment, they are therefore classified as "unemployed." The number of people who don't have jobs and are not looking for work are not counted in this figure. 

So when the economy adds jobs and unemployment rises, it is because the people who are not looking for work notice that jobs are available and begin looking for work, thus adding themselves to the number of people in search of a job.

Think about it, that really means the unemployment rate is a lot higher.

Here are three current explanations as to why the United States is not generating enough jobs:

From Salon.com: "Businesses are reluctant to spend more and create more jobs because there aren’t enough consumers out there able and willing to buy what businesses have to sell."

From The New York Times: "Workers are getting more expensive while equipment is getting cheaper, and the combination is encouraging companies to spend on machines rather than people."

From The Atlantic: "Some economists chalk up the jobless recovery to a demand shortfall and end the discussion there. But there's something else happening. It's the new, relentless pursuit of efficiency."

There you have it, machines are cheap right now and humans are an expensive liability. So if you listen to an economist, you should invest in machines because they're efficient and don't come with all the baggage stupid humans do. 

I guess I'm a people person. I'd rather surround myself with cognitive, passionate folks. I think it would do wonders for the economy...that is until machines learn how to repair themselves, then I'm selling out.

Here's a quick Seinfeld clip from an episode where Jerry is dating a Miss America contestant. Kramer appointed himself her chaperone and while at dinner, he asks the classic Miss America question: "What would you do to make the world a better place?"

She replies, that she would try to end world hunger: “If everyone ate one meal less, there would be enough food to feed the world." Hmmm....

This is an example of the misconception that for others to have more, we must take less. The problem this Miss America contestant doesn't quite get is...the functions of markets are to provide opportunities for the exchange of goods and services, as well as allocating resources to their highest-valued uses. 

So when you waste food, it really has no impact on the starving kid in Africa, he'll still be starving if you eat that last piece of chicken or not.

When I first learned about Game Theory I was rather confused, but the matrix really helped. What also helped was Seinfeld. In this clip George isn't sure if he's been offered a job or not because the guy offering him the job didn't finish extending the offer because he had to take a call, and to top it off he'll be on vacation for another week. George is very uncertain whether an offer was actually made, so he decides that the best strategy is to just "show up" for work. If he actually got the job, then he made the right move. If however, he was not offered the job, then he'll merely be embarrassed. Therefore, in George's position he believes the benefits of "showing up" outweigh the costs.