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How to put a price tag on strategy

value of marketing strategy

A seven-step proposal will help you highlight the value of your creative strategy.

For starters, don’t make it a discussion about your hourly rate.

In a tough economy, marketing agencies, consultants and freelancers face a daily battle against having their talent and intellectual capital commoditized. I saw this happen early in my career.

In the 1990s I worked for a B2B direct marketing agency that did very well. We had several long term accounts with Fortune 100 companies. We did many ongoing customer relationship programs for them that generated profitable sales over periods of 5-10 years.

We also had a few kinks in the business model that made me uncomfortable.

At that time it was still fairly common for an agency to land full-service business. We were fortunate enough to be one of them. Over time, we got too comfortable with the margins from printing, mailing and fulfillment services while selling creative and strategy services near cost.

Related: The triage marketing death trap

On top of that, the sales model for new business gave away strategy. We would present a complete marketing program, with all the research, analysis and creative rationale at the proposal stage. Many times I would walk away from those presentations thinking, “We’ve given them the whole strategy. They could take the plan, thank us, and then do it themselves.”

When economic hardship hit our biggest client, this came back to haunt us.

In response, they implemented a centralized procurement policy to cut costs. They unbundled all of the printing, mailing and fulfillment services from our programs, pulling them in-house. The body blows didn’t stop there.

Since we had been giving away the strategy work, it showed no value on their ledgers. Eventually we devolved from a full-service agency to a creative vendor. Party over.

I remembered that lesson years later when I became an independent consultant. I resolved to never give away the strategy or creative ideas in a marketing proposal. Instead, I use a proposal format that sells the plan and value I bring. It’s much more than a one-page cost estimate, though. Check out this slide deck to see what I mean.

7 steps to proving your value to prospective clients

Including these seven components in your marketing proposal helps to steer the discussion to how you will help solve a business problem rather than how much you cost. It follows a logical flow that more often than not gets the client to say, “Yes, let’s work together.”

Here’s how it flows:

marketing proposal flow chart

1. THE OVERVIEW

The overview is a high level summary that tells the client (I’m using the assumptive close, here) you understand their business challenges. And it states the problem you will be solving together.

2. THE OBJECTIVES

Sometimes I refer to these as “starter objectives” to get the conversation started. The goal is to get written agreement on specific outcomes and how they will be measured. For more on writing smart objectives see this post. Everything that follows is based on the objectives, so getting agreement on them is most critical.

Related: When execution beats strategy

3. SCOPE OF WORK

This part details the specific work you will be doing, and when appropriate, what is not included.

4. WORK PROCESS

Here is where you explain the steps you will take to complete the work and identify all the parties and responsibilities required to make them happen.

5. COST ESTIMATES

Now it makes sense to show the estimated costs. They are based on work process, which is based on the scope of work, which is based on the objectives. This gives a value basis and strategic rationale to the costs. Discussions about the budget can be focused on scope rather than your hourly rate.

6. WORKING AGREEMENT

The purpose of the working agreement is to establish the legal aspects of working together before they become an issue midway into the project. It covers cost estimates, ownership of work, confidentiality, payment for services and other elements of doing business together. Addressing this up front shows you are a professional.

7. BIO/ABOUT US

This is the place to end on a positive note. Don’t make it fluffy boilerplate propaganda. Direct your narrative to the skills, knowledge and experience you have specific to the industry and the assignment.

Getting to ‘YES’

The important thing to remember is the proposal is not the marketing plan. It is a discussion tool to set and manage the expectations for the project. And it is a tool to help you establish the value of the strategy and work you bring. It is your best bet for getting to ‘yes.’

Tell me what you think.

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Don’t think about innovation like a CEO

leadership & innovation

Short-term thinking by business leaders is the enemy of innovation and competitiveness.

American business leaders have a perception problem about how innovative we really are. Harsher critics might call it denial.

Recently, Forbes ran an eye-opening article on American competitiveness that is must-reading for every CEO and front line marketer in business today. It is a detailed assessment of a Harvard Business Review study that explores the causes behind lagging growth in business and job creation in the U.S. over the past decade.

Two findings from the study point to startling disconnects between business leaders’ perceptions and reality. While businesses are not competing globally:

  • Leaders rate management as both strong and improving
  • Leaders rate innovation and entrepreneurship as strong and improving

What do leaders think are the reasons we don’t compete or innovate as we should?

The most common problems business leaders cite are government regulatory policies, tax and fiscal policies and an inadequate talent pool. These are all factors, but the researchers identify a root cause leaders will not like hearing: short-term thinking by leadership.

You are what you measure

The study tracks how corporate governance began to change in the 1980s. In response to globalization, managers adopted a mindset focused on stock price and short-term growth and profitability. Over time, innovation came to be about achieving greater efficiencies and cost reductions more than creating value to customers.

At the same time, business schools reinforced this mindset. By defining profitability in terms of ratios to be measured across industries, they trained a generation of MBAs to measure short-term performance as the gauge for success.

As a result, business leaders define innovation as incremental process improvements rather than breakthrough product ideas. That is how they can determine they are strong innovators when their companies are not competitive.

Think like an innovator

To revive innovation in business, leaders have to change the way they think. Beyond resetting priorities to more long-term objectives, they need to start using the other side of their brain.

Singular focus on productivity and profitability metrics give a limited perspective of your business. Creative inspiration does not fall out of a spreadsheet or accounting ledger. 3M learned this the hard way. In the last decade, it applied Six Sigma principles for manufacturing to the innovation process, and severely stifled new product development.

Analysis has its place, but innovative ideas come from the side of the brain where you explore, experiment and imagine.

For many, this is a new approach to problem solving.

leadership & innovative thinking

Research by psychologists Joy Paul Guildford and E. Paul Torrance has identified two primary thought processes we use for solving problems: convergent and divergent thinking.

In business, we are most familiar with convergent thinking which is analytical and logical. It is characterized by arriving at the one right solution. Accountants and business analysts excel at this kind of thinking.

The other, divergent thinking is flexible, intuitive and based on associations. It is characterized by arriving at multiple, unique solutions. Artists and inventors excel at divergent thinking. This is where we get innovative ideas.

Research shows remarkably few people engage in divergent thinking. This has to change starting with the C-suite.

Leaders have to lead

This shortsighted focus is nothing short of a leadership crisis. As the proverb says, “Where there is no vision, the people perish.”

To bring about a revival of business growth and competitiveness, leaders must make a dramatic shift away from the short-term vision that has dominated the past 20 years. Awareness of the problem is the first step. But leaders must lead change.

The starting point is a renewed vision for serving customers, workers and shareholders. That means putting the wellbeing of the business ahead of their short-term rewards. Leaders must challenge the status quo of compensation that drives their behavior.

The Forbes article provides a stark account of this situation:

In his book, Fixing the Game, Roger Martin notes that between 1960 and 1980, CEO compensation per dollar of net income earned for the 365 biggest publicly traded American companies fell by 33 percent. CEOs earned more for their shareholders for steadily less compensation. By contrast, in the decade from 1980 to 1990, CEO compensation per dollar of net earnings produced doubled. From 1990 to 2000 it quadrupled.

With incentives based on short term value and stock price, executives earned more while shareholders earned less and companies innovated less. Leaders have to turn this around. They have to start thinking – and leading differently.

We need from them a new vision of success and innovation, and how to achieve it.

Without it, the people – workers, shareholders and society at large – as well as the economy will perish.

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Do you make these critical thinking mistakes in your blog writing?

August 29, 2012 5 comments
bloggers who aspire to be thought leaders need to apply critical thinking to their writing

A flawed thought process leads to faulty conclusions in your blog writing, which hurts your credibility.

It’s so easy to set up a blog today that anybody with a computer can become a publisher. A blog is an ideal platform for sharing your knowledge and establishing yourself as a thought leader.

However, there is more to blogging than jotting down your points-of-view, controversial opinions or innovative ideas and waiting for your brilliance to be acknowledged. In reality, it takes more than knowledge and intelligence to make a valid argument in writing. If your argument doesn’t stand up to scrutiny, it hurts your credibility.

How do smart people draw fuzzy or erroneous conclusions when they write, making them look less than thought leader-like? It’s usually from a lack of applied critical thinking.

What is critical thinking?

Critical thinking is not determined by intelligence or deep knowledge. Rather, it is a thought process that filters out natural emotional-psychological-sociological biases that get in the way of reaching rational conclusions.

If you’re like me, it has been a while since studying this in philosophy and logic class. But in the interest of more cogent writing and improving your stature as a thought leader, it is worth reviewing some of the key principles. You do want to be more awesome, don’t you?

There are two fundamental ways to evaluate an argument. (By argument, I mean the reasons or premises used to support your conclusion). You can look at the structure of the argument, and you can look at the content to determine its validity.

STRUCTURE

The classic structure of an argument in the critical thinking process calls for presenting two or more valid premises in support of a conclusion. The following example helps to show how faulty structure can lead to a false conclusion:

  1. All humans are mammals (true premise)
  2. All dogs are mammals (true premise)
  3. All humans are dogs (false conclusion)

CONTENT

When the content or facts of a premise are misleading or in the wrong context, an argument with valid structure can appear to reach a reasonable but faulty conclusion:

  1. Geological events produce rock (true premise)
  2. Rock is a type of music (true premise)
  3. Geological events produce music (false conclusion)

Intentional or not, using invalid arguments in the content you write can lead you to false conclusions that tarnish your thought leadership credibility.

Types of faulty content

Language or meaning is the most fundamental component of your argument. How you use factual information, direct statements, indirect metaphors or emotion-laden words will affect the validity of your argument. There are a number of ways your content can lead to weak or invalid conclusions in your writing, including:

  • Grammatical context. Wording in your argument that is grammatically close to valid premises, but distracts the reader into thinking an erroneous conclusion is valid.
  • Ambiguity. Using ambiguous language in either the premise or conclusion.
  • Relevance. Using premises that are logically irrelevant to your conclusion.
  • Presumption. Stating a premise that already assumes your conclusion to be true.
  • Weakness. The logical connection between your premise and conclusion is weak.

This infographic illustrates some of the most common types of flawed arguments found in persuasive writing.

list of invalid rhetorical arguments for blog writers

How to avoid critical thinking mistakes in your writing

Here are 12 tips for identifying weak links in your reasoning and turning them into stronger arguments:

  • Use solid premises that are true and relevant.
  • Keep your focus on using only premises that support your conclusion.
  • Learn to recognize distinctions between correlation and cause.
  • Look for faulty assumptions behind false analogies.
  • Identify fixed versus variable probabilities behind events.
  • Make sure your comparisons are apples-to-apples.
  • Evaluate the logic behind your asserted chains of events.
  • Think independently from conventional wisdom of the crowd or popular opinion.
  • Distinguish appeals to authority from logic and fact.
  • Look for potential bias from your sources.
  • Examine either/or assumptions.
  • Be aware of your own beliefs and emotional attachments to your viewpoint.

Applied critical thinking is an important process for effectively writing about your area of expertise. It will give you greater confidence in presenting your ideas with the authority and credibility of a thought leader. There is much more that can be said on this subject than I can cover in one post. I invite you to share your thoughts in the comments below.

I’d like to leave you with this funny clip from a favorite movie of mine, Office Space: the scene where Tom explains how he used his mind to come up with an idea about jumping to conclusions.

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