Case Study

NickB

Drink like a girl? 1.25 billion bottles later…

Thanks to a post on LinkedIn by Tom Goodwin I got a real taste of how innovation happens. In this case the taste is cream, chocolate and more than a hint of Irish whiskey – in other words that favourite tipple of your grandmother/auntie/father-in-law (in my case): Baileys Irish Cream.

In an excerpt from his book, the wonderfully-titled “That Sh*t Will Never Sell!” published in the Irish Times last year, product development expert David Gluckman describes the birth of Baileys, that “girly” drink we all pretend we’re far too sophisticated to like. (Actually, I love it, but I grew up drinking Babycham, so maybe my palate is ruined forever.)

It’s a long-ish read but worth spending some time on, since it illustrates the key truths of innovation:

  • The idea for a new product can happen in an instant
  • Getting the product to market requires persistence, particularly when it doesn’t fit into any previous categories
  • The idea may be a winner, but it may sleep for a while first.

According to Gluckman, the initial though behind Baileys “took about 30 seconds. In another 45 minutes the idea was formed.” Gluckman wasn’t a novice who got lucky with his first go: he’d got 10 years’ experience of product development to draw on to know it had potential when his partner suggested mixing Irish whiskey and cream in response to a brief from International Distillers and Vintners (IDV) to develop a new alcoholic drinks brand. A quick trip to a nearby supermarket provided a rough-and-ready prototype with cream, whiskey and – the magic touch – drinking chocolate. The “mucky brown” result was taken to an initial group of IDV executives and product developers and met with some enthusiasm: enough to recognise that it had the potential to create a new and different brand.

Gluckman describes a nervous moment when the product was tested with a men’s focus group in Ireland when one of the men described it as “a girl’s drink” (this was 1973, remember) – although every one of them drained their glasses. And the women’s focus group compared it to anti-diarrhoea treatment kaolin and morphine (they had a point – they look and taste quite similar). So, the results of that and a test behind a local bar were not that encouraging and in fact this “market research” never saw the light of day.

The product was launched to IDV without the backing of extensive market research, just the belief of David Gluckman and his business partner Hugh Reade Seymour-Davies that the unusual liqueur could find a market. After the product reached the shelves in 1974 it took three years before it really took off, helped by a US advertising campaign with the slogan “The Impossible Cream”.

Decades later, over 1.25 billion bottles of Baileys have been sold and, presumably, drunk so Gluckman and Seymour-Davies’ hunch and belief paid off – although it didn’t make them rich: they were just paid for the initial product development.

As you pour yourself a glass from that bottle that Grandma didn’t quite finish off over Christmas, take a while to reflect on how creative ideas get treated in your own organisation: do you allow people to run with an idea if they just believe it’s unusual enough to create a market or do you require “proof” in the form of exhaustive market research? Far too often it’s the latter approach that holds sway – and we’re all the poorer for it.

Cheers!

NickB

When customers ‘gang up’ – how to handle it

The role of social media as a machine for allowing groups of people to be in a state of perpetual outrage is a trend which shows no signs of abating. Love it or loathe it, what should you do about it? Is responding to organised online campaigning a reasonable reaction to the Voice of the Customer or are you just caving into cyber-bullying?

The recent withdrawal by stationery and greetings card chain Paperchase from a Christmas wrapping paper promotion with the Daily Mail raises just these questions.

Paperchase said it was responding to feedback from hundreds of its customers who complained about their promotion or endorsement of the newspaper, owing to its coverage of the LGBT community and other minority groups. This was orchestrated by the Stop Funding Hate campaign which aims to persuade advertisers to shun papers that carry articles ‘demonising foreigners and minorities’.

There’s a debate to be had about the legitimacy of this approach. On the one hand it could be argued that much of the material produced by the Mail and other publications of a similar persuasion does help to foster a climate of ignorance and prejudice. On the other, there’s an argument about freedom of speech and where lines need to be drawn between different viewpoints and those that are classified as ‘hate speech’ – a meaningless and pejorative term that, in my opinion, muddies the waters even further.

However, if you’re in the business of getting customers to buy your products, organised online campaigning is something you should be concerned about, irrespective of whether it’s wrong or right. And getting it right means a customer-centric approach that requires two simultaneous balancing acts.

Voice of the Customer vs Voice of Reason

First up, you need to determine whether the campaign is significant or not. According to an article in Drum, 14% of the company’s customers are likely to read the Daily Mail they are more likely to read broadsheet newspapers than the public average (27% against 15%, source YouGov). According to Amelia Brophy, head of data products at YouGov, “it’s unlikely that Paperchase’s customers would have left the brand in any case as our brand tracking data indicates that it is a company with solid consumer perception.”

If that’s the case, you could accuse Paperchase of over-reacting to the Voice of the Customer rather than taking a cool look at the data.

But that neglects a more amorphous but equally important consideration…

What we believe vs what we do

Irrespective of the rights and wrongs of this particular issue, it’s given Paperchase an opportunity to state something about its principles. I’d like to have been a fly on the wall when the company took the decision to cancel its promotion: debates on what a company stands for are not that frequent, usually because those values and beliefs are woven into the fabric of everything it does, so they have a depth that discussions on, say, sales figures don’t.

In this case, Paperchase concluded that, effectively, they didn’t want to be associated with the values promulgated by the Daily Mail and I applaud them for taking a stand on this and making their views clear – even though commercially it could be wrong-headed.

There isn’t an absolute right or wrong in these situations, although the opinionated keyboard warriors at all points on the political spectrum would have you believe otherwise. Ultimately it’s a test of what you as a business stand for, and if enough of your customers salute you for it and continue to do business with you, it’s the ‘right’ one.

NickB

Priti Patel and the mine field of being a maverick

Priti Patel’s much-publicised forced resignation as International Development Secretary the other week, for not disclosing the extent of her holiday meetings with senior contacts in the Israeli government, illustrates the perils of going outside accepted policy and organisational norms.

In other words, she was sacked for being a maverick. 

The positive side of being a maverick is they “break down doors” and get things to happen more quickly. The problem is they also make decisions and don’t bother to tell people – in some circles that is deemed not acceptable. Goodbye Priti Patel.

We seem to have a political elite who talks about the importance of very high standards on one hand and sets very low standards on the other. Assuming there is not something else going on which we have not been told about, shouldn’t we be encouraging maverick behaviour that challenges the accepted way of doing things?

Interest declared: I was a fan of the TV series Maverick when I was a (toy) pistol-packing, poker-playing young cowpoke (my childhood had its colourful moments). Much later, I was inspired by reading Ricardo Semler’s seminal book ‘Maverick’ about his experiences creating Semco as a radically different kind of organisation. This informed a lot of the start-ups I created inside large organisations.

And some of the people I’ve most enjoyed working with have been leaders that kicked against or challenged the conventional ways of working.

So, I’m naturally drawn to mavericks of all kinds, although I accept there are limits!

To remain healthy and competitive, businesses should encourage their independent thinkers and doers to pursue their own projects – Semler’s Semco did just that, with improved performance as the outcome – but, sadly, Corporatism will kill Entrepreneurialism every time, as Clare Boyles points out elsewhere on this site.

In the case of Priti Patel, Is this another example of Corporatism clamping down on a creative individual who was doing the right thing, but cutting a few corners along the way?

How you answer that question depends on whether you think Patel’s actions were in themselves correct. Without going into the mire of Middle East politics it was clear that her unauthorised meetings didn’t fit at all with the UK Government Policy or support its aims regarding Israel-Palestine conflict.

As a result, she had to go.

The same fate awaits business mavericks working inside corporates. Step too far away from the age and you’ll find your career stalling for lack of resource or senior support. At which point you may decide to take your brilliant wealth-creating idea somewhere else. However, to prevent that happening you should – unlike Priti Patel – make a habit of telling people in the organisation what you’re up to, and how it serves the common good.

In my experience that’s where a lot of organisational mavericks come unstuck, since sharing their independent vision might mean having to compromise or change it.

Nurturing the independents within an overall vision is the hallmark of a truly entrepreneurial corporate.

And judging how much to compromise or adapt your vision to get a bigger result is the hallmark of a genuine entrepreneur.

NickB

The good, the bad and the ugly: Thames Water

If there’s one thing that makes my blood boil – It’s seeing a company get away with providing repeatedly poor service and get away with it. No apparent sanction. No sense of guilt.

Yes, Thames Water – I am talking about you. What makes my anger even worse is an ownership structure which appears to point that the only people are suffering here are the customers. An absence of clarity is rarely an accident. I suspect it’s a lack of genuine care about those who pay them yet have to bear the brunt of their sheer incompetence!

What you might find strange is my anger is not because I am one of the Thames Water victims. I am actually an untroubled customer of Thames Water, without any major interruptions to my water supply in the four decades I have lived in South London. I have been a long-time advocate for great customer experience and when I see companies that so flagrantly disregard it – I speak up. The experiences written in this article should not be happening in 2017.

Let me tell you about the experience of David Wertheim as reported recently in the FT. David is the owner of an impressive Islington antiques shop and possesses a large and expensive collection of Japanese art built up over almost 40 years. Early one morning last December a cast-iron pipe burst and David arrived to find cabinets holding hundreds of thousands of pounds of unique and precious paintings and prints submerged in flood water. Completely ruined.

The shop is now back open, but water ingress is still very evident and he is very worried it will happen again. You could class this as simply bad luck – except in David Wertheim’s case it was not the first or indeed the second or the third. It’s the seventh – yes, the seven in seven years.

Not an isolated incident

Thames Water’s maintenance record suggests bad luck could happen to any of their London customers, since there were 31 serious bursts including eight high-profile floods in just two months at the end of 2016 according to an internal report that has now been made public. Thames Water’s record is simply the worst out of all of UK’s water companies.

Steve Robertson, the new Chief Executive Officer claimed that customer experience is a critical element of the company’s strategy and he has spent a significant amount of time meeting both customers and employees. Interestingly, given the turn of events you would expect David Wertheim would have been one of them. He was not.

I state again – Thames Water’s record is simply the worst out of all of UK’s water companies!

Do they have enough money?

Valid question. They made just over 2 billion GBP in revenue and an operating profit running at almost 30%. So, the answer is clearly yes.

Thames Water also proudly announced they spent 1 billion GBP on maintaining their pipes but that has worked out exactly the same amount as the average per year for the previous 12 years.

So, let’s get it straight: we have a water company posting healthy profit returns yet it is investing less in real terms per year than ever and posting the worst track record.

In for the long haul

Arguably, Thames Water has the most challenging area to look after given London’s extensive and ageing water and sewerage system. That doesn’t excuse a maintenance and replacement schedule that is running behind schedule – so far behind, in fact, that some estimates suggest it will take 357 years to renew the network if continued at the current rate.

What makes this frustrating is that the ownership of Thames Water seems about as murky as some of the water it processes, which makes accountability hard to pinpoint. Sure, we have a regulator but following criticism by the FT – again, are they the only people bothered by this? – OFWAT’s response reads as too little, too late and less than equal to the challenge.

Hopefully the residents of Islington won’t be troubled by repeated floods any longer as there are diversions around extensive repair works in Upper Street, although when I spoke to David Wertheim – still in discussion with Thames Water about compensation – he didn’t think it would fix his recurring problem.

I drove past the works the other day: a sign on the hoardings said, ‘come and chat to us about what we’re doing’. I guess if you’ve got 357 years to replace the pipes, a few minutes out to chat to the customers isn’t going to make much difference, but frankly I’d be happier if Thames Water’s long-term commitment to its customers went considerably beyond a bit of customer handling on the front line.

 

NickB

Did Dove behave like bad boys? Don’t forget: customers drive your reputation!

Do you remember how Dove not only shot themselves in the foot but then carried on and removed a couple of toes for good measure?

To many it was always going to be a controversial Facebook ad. A soap brand showing a black woman ‘changing’ to a white, then Asian one as she removes her t-shirt appears to be the result of a thoroughly misinformed piece of decision-making.

Dove’s subsequent ‘apology’, claiming that they had ‘missed the mark’ struck many as less then wholehearted. This apparently compounded the initial error, created more column inches and debate across social media than any non-controversial advertisement could ever hope to achieve.

Misinformed mistake or deliberate strategy?

However, as commentator Richard J Hillgrove suggests in Drum, this could just be part of a cynical strategy by Unilever to propel their brand to the forefront of people’s attention.

If you go back to a comment made by Jennifer Bremner, director of marketing for Dove back in March 2016 who said at the time “We want to rally one of the most digitally savvy and socially conscious audiences to join the conversation.” She went on: “Body shaming has sadly become a normal part of today’s online interactions, but sometimes we do not realize the role we are playing in that conversation.”

Perhaps there is a bit more to this than first appears.

Unilever who owns the Dove brand does not seem to have suffered either with their share price rising 5% over the time the furore was going on. The market does not seem to be judging this too harshly when you compare to other viral interventions such as the ill-fated “United breaks Guitars” which wiped 185 million USD off the company’s value in a matter of days. Other airlines such as Delta have stumbled similarly when “doing wrong” for the customer has got into the public eye.

Back to Dove: think about it. How often do you discuss skincare brands in the course of a normal week? Exactly, so all publicity is good publicity, yes?

There are two ways to look at this

One perspective suggests that ‘bad boys’ are running the show and, whilst we might not like what they do, we go back and buy their products because, at the end of the day, they’re cheaper and/or better than other products. (And we’ve forgotten those products anyway because they weren’t in the news).

There’s definitely mileage in an edgy brand that has an element of ‘rebel’ about it – in the brewing industry, Brewdog has been successfully occupying this territory for a number of years (having some reasonable beers in their portfolio helps). Whether Dove thought a touch of rebel was worth pissing off thousands of women and men of colour for is a question worth asking though.

It’s not just Dove that falls into this category, Ryanair has been occupying the territory with a ‘man-you-love-to-hate’ (Michael O’Leary) in the driving seat. Like Dove, Ryanair can shoot itself in the foot – in this case by screwing up pilot rosters – but still stands a chance of posting great results because, if sufficient customers want to endure the many indignities and inconveniences of low-cost flying, then they will continue to do so.

The difference between Dove and Ryanair though is that it’s unlikely that Ryanair made some cynical calculation about the amount of publicity that would ensue from a mistake on pilot rostering.

The second, more constructive, approach to reputation is to place the customer at the centre of all decision-making. It’s hard to imagine that the customer was front of mind in whatever process led to the Facebook ad at Dove. In a genuinely customer-driven company, all relevant customer segments should be ‘present’ when key decisions are made, either by including actual customers or a sufficiently diverse panel of staff who can act as the voice.

In this environment, cynical decisions don’t get made, since the anticipated feelings of customers drive the process. And with social media acting as instant judge, jury and executioner of reputation, it’s worth paying a bit more attention to how any decision will play out in the court of public opinion.

image of an airliner landing
NickB

Ryanair has a customer-centric approach, but it’s not what you think

I recently co-wrote a report on customer-centric strategy for NextTen that included Ryanair as a (positive) case study. The recent problems with pilot scheduling might cause me to make a hasty edit – but I think not: Ryanair is thoroughly customer-focused, but their low-cost approach illustrates the challenges of maintaining such a strategy when things go wrong. In fact, pursuing this strategy appears to be more likely to cause these problems.

Boo-boo

Ryanair reported record earnings earlier this year, attributing this uptick to a  increased focus on customer experience. However, what was described by CEO Michael O’Leary as a ‘boo-boo’ (may not have been his exact words) on pilot schedules caused the cancellation of 2,000 flights and has unleashed a storm of criticism from customers, staff and commentators.

So, what’s gone wrong? Leaving aside the technicalities of pilot rostering, the issue that’s surfaced shows that, when your customer proposition is low-cost, you walk a tightrope between delivering against that proposition and driving the model too hard with no slack for when cock-ups happen. Ryanair’s been an acknowledged leader in driving down costs in an industry where being perceived by your customers as lowest cost represents an enviable position to occupy. O’Leary’s acknowledged that their crew costs are about €5 per passenger (versus an alleged €9 by Easyjet) and this gives little room for manoeuvre when you ask your pilots to go the extra mile and forgo some leave, even when there is a financial reward. Ryanair is raising pilot pay in some centres, but whether this is enough to stop the defection to other airlines remains to be seen.

Hello schadenfreude

For those who like to indulge in schadenfreude, the travails of Ryanair are a boon, and rivals such as Lufthansa have lost no time in capitalising on their misfortune. Meanwhile it’s provided the humorous end of the commentariat with another opportunity to sneer and roll out the old jokes about Ryanair’s destination airports’ distance from the actual destination, surly staff and so on. But none of this is likely to matter in the long term: Ryanair will continue to have a reputation for low-cost travel and customers will continue to put up with some inconvenience in their search for a bargain.

That said, some of the customer experiences when their flights were cancelled were not a shining example of customer care. I heard many accounts in the media of long-planned special trips that were not happening and, whilst Ryanair are offering standard compensation, this will probably not be sufficient for those whose desired outcome was more than ‘get me from A to B for least cost’.

Maintaining a laser-like focus on its core, low-cost customer proposition is what Ryanair does very well and if that focus has blurred a little in recent weeks with a consequent impact on share price, it’s unlikely to dent their performance in the long term. I see no need to change my view that Ryanair remains thoroughly customer-centric.