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Frog Design, the Book: How Design Strategies Are Shaping the Future of Business

Frog Design founder and former CEO Hartmut Esslinger has written his first book, and it is available in stores now: A Fine Line – How Design Strategies Are Shaping the Future of Business. Part autobiography, part how-to innovation guide, part outlook to the future of design, A Fine Line is "a must-read for designers and business people alike" (Satjiv Chahil, senior vice president, Hewlett-Packard).

A Fine Line offers a step-by-step overview of the innovation process — from targeting goals to shepherding new products and services to the marketplace — in order to reveal how to arrive at an authentic human design that connects strongly with consumers. With a unique perspective, rich stories, and a global mindset, Esslinger explores business solutions that are environmentally sustainable and contribute to an enduring global economy.

Michael Moritz from Sequoia Capital, in his foreword, said it all: "Hartmut's book contains the ruminations of a man who has devoted his life to the challenge of marrying the aesthetic with the functional while standing firm against the deadening forces of mediocrity. His work shows that taste can triumph, design and production can be soul-mates, and the eye of an individual can shape a product and a company. The idea that finely designed products can change the fate of companies while also becoming our indispensable companions is a message that millions of us owe to Hartmut."

You can find the table of contents, sample chapters, testimonials, and videos on http://www.afinelinebook.com

And here are some excerpts from a video interview with Esslinger:

Get Social Now!

Several blog posts this week, combined, pinpoint what are arguably the two most influential trajectories for the impact of communication technologies on business these days: from real-time web to real-time business, and from social media to social business design.

Let’s start with the former. Referring to Salesforce.com founder and CEO Marc Benioff and his presentation at the Structure 09 conference in San Francisco last week, DigitalBeat claims that the real-time web is not only shaping the future of all computing but also that of business overall: “In business it’s real-time or it’s no time.” It goes on by quoting Benioff: “Customers (…) expect everything to happen right away— if they update their data, they expect those changes to appear immediately, not an hour or two in the future. (…) Any concept of batch or delay in development or execution, I think, will not be tolerated by customers anymore. (…) Even in development, customers are demanding now that they want to be able to build in that sandbox and deploy immediately, instantly, no delay.”

Sure, you may say, customers always want it faster and cheaper, that’s not news. But the implications Benioff talks about are more profound and affect the way organizations operate and adapt their business models to the new and ever-changing demands of immediacy. Some examples: Zara, the Spanish clothing chain, uses customer feedback to develop new clothes, in near real-time. TCHO, the San Francisco-based chocolatier, relies on continuous flavor development and customer feedback to drive constantly evolving versions of its dark chocolate, with variations emerging as often as every 36 hours. Status updates, embedded news feeds, and Twitter apps have injected some “real-time-ism” into professional online social networks such as LinkedIn and XING, converting them from address books to conversational circles, from networking forums to collaboration platforms. Zappos, the online retailer, successfully combines real-time customer service on Twitter with near-real-time delivery – having established a powerful, dynamic brand before letting its customers decide what business it was actually in. And Skittles, the candy brand, ingeniously replaced its corporate homepage with the 'Interweb,' a collage of real-time social web conversations not by but about Skittles – essentially recreating itself as the first ever real-time brand. All these models show that the news industry’s big conundrum applies to every other business, too: It used to be that there’s nothing more boring that yesterday’s newspaper. Now there’s nothing more boring than today’s. When you relaunch your business model, product, brand identity, web site – it’s already too late. Real-time beats planning to the punch.

Real-time businesses therefore must get rid of long-term strategy plans, product road maps, goals and objectives, and all the other superfluous documents that distract organizations from focusing on their true mission – the here and now. Most of these documents are inward anyway and can be easily replaced with one strong and permanent mission statement (which, if your company culture is intact, does not even need to be verbalized).

Real-time business is inherently social – there is no real-time without social. The more businesses open up their organizations and invite external voices into their inner sanctum, the more real-time they will become. Getting social will help companies gather customer intelligence in real-time and use it to move faster. In the future, real-time businesses may deliver before their customers even articulate their needs. And they will provide immediate value without immediate return, in other words they will over-deliver – free for now but with a material or immaterial return later. What is the inadvertent business model for media might be a fulcrum for companies that manage to achieve a brand premium through customer participation as a part of real-time product development: “building a plane in the air,” together with their customers.

"The process is the product,” as Trendwatching writes in its latest report, in which it also claims that the real-time the web is breeding a new quest for longevity or “Foreverism”: “the new popularity of technology that allows consumers to find, follow, interact and collaborate forever with anyone & anything.” It’s not as paradoxical as it may sound. Living real-time means living in the ongoing – forever. If everything happens in real-time, nothing is ever final and always in permanent beta. Conversely, if everything lasts forever on the Google web (your emails, networks, conversations) and your digital presence is only as good as your latest search results and Twitter updates, you better utter some digital impressions NOW.

And yet, what’s required is a shift in thinking and ultimately a new organizational model that goes beyond feeding the social media beast on the real-time web: “If the big picture is business transformation, it's going to take more than a few tweets to get there,” David Armano writes in his post on ‘social business design,’ and argues that ““Social Businesses are those which are designed from top to bottom as a reflection of the world we all live in online today. A business where everyone is connected and able to contribute but also where the right tools are available to them to do all of this with business intent from the beginning.”

For centuries, organizations have considered it their task to conquer chaos and manage people, now they have to embrace the sudden chaos instigated by unmanageable throngs of instantly and elegantly self-organized individuals. Whether that will lead to the end of organizations remains to be seen; it will definitely lead to the end of organizations as we know them.

frog design Unveils “Power” Issue of design mind Magazine

I'm very happy to announce that we just released the latest issue of our design mind print and online publication. The new issue, the third print edition and tenth overall, focuses on the theme of "Power."

As the global recession has altered the economic landscape, and digital technologies continue to challenge conventional hierarchies, design mind explores new definitions of influence and power. Who has it, where can you find it, how is it being used, and what happens if you lose it?

Highlights of the new issue include an interview with Philip Zimbardo, the Stanford psychology professor, TED speaker, and Abu Ghraib expert witness known for his infamous 1971 Prison Experiment, in which he recruited students to play prisoners and guards in a mock jail until the project took on a disturbing life of its own.

frog founder and legendary designer Hartmut Esslinger offers readers an exclusive sneak peek of his new book "A Fine Line: How Design Strategies Are Shaping the Future of Business." The book, to be published by Wiley imprint Jossey-Bass on June 29th, delves into frog's iconic work for global powerhouses including Apple, Disney, Lufthansa, SAP, and Sony.

Other features in the new issue include:
- "Wanted: Chief Meaning Officer": How the new social power of marketing can transform business.
- "Power Up": Ten innovative clean-tech and energy startups to watch.
- "In Search Of": Seven design researchers write about their unusual and wonderful discoveries on the job.
- "Design with Intent": How designers can influence behavior.
- "The Appearance of Influence": Do you have to look a certain way to be powerful?
- "The Napoleon Effect": Why small and simple ideas sometimes bring the most success.
- "The Art of the Unfriend": When social networking becomes social stress.

Written by frog designers, technologists, and strategists, design mind provides the design and innovation community with perspectives on industry trends, emerging technologies, and global consumer culture. The magazine is published three times per year and features interviews with high-profile thought leaders along with contributions from external writers, designers, and photographers. The print edition is currently available for purchase online at designmind.frogdesign.com; in San Francisco at Alexander Book Company and Farley’s; in New York at St. Mark’s Bookshop; and in Shanghai, China, at the 100percent design store. Readers can also access select content from the magazine online along with additional Web-only features including a video series, a blog network, and interactive content from frog’s exclusive speaker series events.

The premier print issue of design mind launched in July 2008 and was widely recognized by the design and business community as well as by publications such as BusinessWeek, Forbes, The San Francisco Chronicle and Core77, which called it "a tightly designed, thoughtful tool." The magazine was selected as a winner for 365: AIGA Annual Design Competitions 30, STEP magazine’s STEP Inside Design 100, and Creativity + Commerce, Print magazine’s International Business Graphics review.

This summer, frog design has been invited to produce a special design mind issue in conjunction with the upcoming TEDGlobal conference in Oxford, UK (July 21-24).

next09: From Google Economy to Twitter Economy

I'm still processing the many great insights from the next09 conference in Hamburg, one of Europe's leading digital/creative/marketing forums and one that stands out from the conference circuit because of its unique German-international focus (bilingual program, 80% international participants, many international speakers). This year's theme was "Share Economy," and the 1,300 attendees consisted of European VCs and angel investors, web 2.0 entrepreneurs, media, creative agencies, and execs from German corporations (from BMW to Deutsche Bank to Deutsche Telekom).

Jeff Jarvis: "The Great Restructuring"

The first day, the keynote day, was a little disappointing, maybe because expectations were so high. Jeff Jarvis warmed up the crowd with his trademark "What Would Google Do?" Powerpoint deck. While a terrific thinker and speaker, for some reason he and the audience did not really click although he presented a lot of thought-provoking content. The rather stiff response may be attributed to the fact that the attendees were either too familiar with what they heard or felt slightly overwhelmed. Or maybe they were indeed excited - but too German to show it…

Umair Haque, who followed Jarvis, faced an even tougher, albeit partly self-inflicted challenge: explaining the new paradigm of "Constructive Capitalism" in 45 minutes. That's like asking Marx to walk you through his Communist Manifesto in a Twitter chat. It didn't help, certainly, that Haque used the much gushed-about Prezi presentation software; all the zooming in and out was dizzying and, if anything, exposed the lack of stringency in his outline.

Fortunately, Haque had an opportunity to correct this first impression and reiterate some of his thoughts on a panel with Jarvis a day later, which turned out to be a much more suitable format for his ideas on the transformation of capitalism. He also took the occasion to rebut the attacks of Andrew Keen ("The Cult of the Amateur"), who, on the opening day, had chastised Haque (and all the other thinkers he considers to be under the dark influence of Silicon Valley) for propagating rampant free market liberalism and a dangerous new radical individualism in the guise of the social, consumer-empowered share economy that the conference was celebrating. Keen poignantly remarked that Twitter was getting us back into the 18th century: rather than liberating us from institutional hierarchies, it would reinforce an old power structure and an all too human division of roles: between those who follow and those followed.

Andrew Keen: "Digital Vertigo"

Jeff Jarvis & Umair Haque: "When Money Talks"

Keen accused Haque et al of naïveté and insisted that Google and the other web juggernauts were not "leveling the playing field" through link love (by sharing the scarcest resource on the web: attention), as Haque had claimed, but were rather using it to expand their pursuit of world dominance. In Keen's eyes, Google's openness is nothing but a suave mechanism to foment a monopoly in the attention markets. In the same vein, a party pooper in the audience asked Jarvis: "If free sharing is the future of business, why doesn't Google share its page rank algorithm?" Jarvis' response wasn't all too convincing: concerns over malicious abuse of the data. Hmm. So much for radical transparency and trust as overriding principles in the share economy.

To Google's (and Jarvis') defense, one could counter with Haque's sharp line: "When we're all hyper-connected, the cost of evil goes up." True. Moreover, Google does provide real value as it has created a win-win-win business model (advertisers, consumers, Google) that is vastly different from the toxic chunk Haque bemoaned in the non-sustainable and ultimately value-free products that toppled capitalism as we knew it: the Hummer, fast food, derivatives, etc. And yet, if advertising is the admission that you have a mediocre product, and that it is in fact an expression of "failure," as Jarvis put it, then it is hard to reconcile this view with the fact that advertising remains the main revenue stream in the very Google economy from which Jarvis wants us all to learn.

Despite the flaws in Jarvis' and Haque's thinking, however, I am eager to defend them. It's easy to deconstruct constructive visions of the future as ill-informed descriptions of present realities but it is a much bigger task to actually come up with a positive vision. Keen, the rebel with a good cause, does nothing but throwing a bomb, which he readily admits, but he falls short of offering an alternative to the frameworks Jarvis and Haque and others provide in response to the fundamental crisis of capitalism.

Google wouldn't care about any of this intellectual arm-wrestling all that much. It is fully consumed with doing what it does best: firing out beta-products and services, successfully failing by failing rapidly. One mistake that it made, however, may arguably have lasting implications. It didn't buy Twitter. And so the question, it seems, is no longer "What would Google do?" but "What will Twitter do?" Does Twitter mark the beginning of the end of the Google economy?

Jyri Engeström, who sold Twitter-competitor Jaiku to Google and is now a Google employee, might have a clue. On a panel with social media guru Chris Messina he offered some good insights on micro-blogging trends on the web and defended the new Google Profiles ("you have to opt in"). Messina seconded him and brought up another interesting point that established the context for upcoming business models in the Twitter economy: the "glocalization" of Twitter. He described how Twitter is failing to extend the real-time conversation to the whole world, simply because of time zone differences: one part of the world is always sleeping when you're tweeting. The instant social web conversation is therefore asynchronous, after all, and it is an interesting thought experiment to envision services that bridge the time zone gap and deliver tweets when the recipients can actually receive them (keeping them on the top of the feed), almost like an echo across time zones. What if the real value of real-time was the delivery of tweets when it really mattered?

The whole time dimension of Twitter is uncharted but valuable territory, and there are other add-ins, integrators, and localization services that will emerge in this vibrant new ecosystem. The conversation on the social web is as rich as the human communication (if not richer), and it is just beginning to fully emerge.

What everyone agreed on at next09 is that the next big frontier on the web (and in the Twitter economy) is how businesses talk to their customers. We are witnessing an irrevocable convergence of players. Conversational services such as Twitter and Yammer are moving into the social networking space and are acquiring the credentials of social networks and collaboration tools, while traditional social networking sites such as XING, LinkedIn or Facebook are embedding conversational features to catch up with the irresistible pull of real-time communication.

For both groups, and in fact for all other companies, Umair Haque's advice is golden: Take one of the big ideals (democracy, peace, transparency, equality, etc.) and apply it to an ailing industry that is in need of transformation or at least some serious disruption: healthcare, finance, news, energy, government – you name it. Combine that with the principles of the Twitter economy – transparency, instantification, collaboration, and free sharing – and you have a winner.

Guy Kawasaki Gets the Inside Scoop from Hartmut Esslinger: How Steve Job's Brain Works and the Top 10 Best and Worst Products of All Time

Famed Silicon Valley venture capitalist and Internet entrepreneur Guy Kawasaki offers a colorful interview with frog design founder and legendary designer Hartmut Esslinger. Hartmut discusses his philosophy on design and his new book A Fine Line: How Design Strategies Are Shaping the Future of Business, to be published in June by Jossey-Bass. Hartmut talks about how Steve Job’s brain works and why the world’s richest companies continue to put out “crappy” products. Hartmut also reveals his top 10 best and worst products of all time.

Here's the article: The Inside Scoop on Design: Ten Questions with Hartmut Esslinger. 

Gift Economy

While preparing my talk on the "Share Economy" for the NEXT09 conference in Hamburg on May 5-6, I came across this great quote from Gary Hamel ("The Future of Management"), in his article "The Facebook Generation vs. the Fortune 500":

"Power comes from sharing information, not hoarding it. The Web is also a gift economy. To gain influence and status, you have to give away your expertise and content. And you must do it quickly; if you don’t, someone else will beat you to the punch—and garner the credit that might have been yours. Online, there are a lot of incentives to share, and few incentives to hoard."

@SXSW: Branded Conversations / Some Quick Thoughts on the Past, Present, and Future of Twitter

Someone blogged that SXSW Interactive is just like the Internet itself – disjointed, decentralized, scattered, fast, aggressive, random, fragmented, and so on. In fact, the main commonality between the two may be that the number of attributes to describe them is infinite. Like the Internet, the annual tech conference in Austin is an echo chamber of an echo chamber, a place where original thought and commentary get mixed up and mashed up in a highly self-referential meta-conversation.

That was already the case before Twitter entered the scene at SXSW two years ago but the micro-blogging service has certainly amplified the effect. It was both comical and frightening to see the uber-individualistic geeksters at SXSW captivated by the invisible rules of an ostentatious behavioral uniformity: Within one mile of the convention center you could observe the strange ritual of groups of people standing or sitting together, chained to their iPhones, twittering instead of talking: “#SXSW. Twittering about SXSW.” The real conversation was often limited to a quick “What’s your name?” or “Where’s the next party?” just to have some input for the next tweet. It is indeed a Read-Write generation that is coming of age in the wake of an all-dominant present, with no particular loyalty to the past and maybe not even an interest in the future (see Peggy Orenstein’s recent piece on “Growing Up on Facebook” in the NY Times Magazine).

Yet the rise of the social digerati is unstoppable. New data by Nielsen Online shows that social networking sites (which encompass social networks and blogs by Nielsen’s definition) are experiencing growth rates of twice as much as any of the main destination sites (search, portals, PC software sites, and email). The time spent on social networks and blogging sites is growing at more than three times the rate of overall Internet growth. Furthermore, social networks are gaining traction among new audiences. On Facebook in particular, “the greatest growth... has come from people aged 35-49 years (+24.1 million). Furthermore, Facebook has added almost twice as many 50-64 year old visitors (+13.6 million) than it has added under 18 year old visitors (+7.3 million).”

Of all the social networks, Twitter may well be the most pervasive broad- and narrowcasting channel, propelled by an ever-growing base of users. Every day more sophisticated Twitter business models are popping up that move the service closer into the hands of a mainstream audience: charity campaigns such as Twestival and Tweetsgiving (Robert Fabricant pointed out that there is a natural synergy between micro-blogging and micro-donating), as well as San Francisco mayor Gavin Newsom’s efforts to use Twitter as an official channel for city-wide emergency communications are just two of them. And when even Jon Stewart features Twitter and all major publications run how-to guides, this seems to be a clear sign that Twitter is entering the mainstream.

But is it really? First of all, let’s remember that it took the service, despite all the hype, two years to reach today’s level of attention. And the adoption is primarily happening in the US. Even the Internet population of Germany (40 million), the third largest economy in the world, is still lagging: Twitter has only 27,000 registered German users at this point. Let’s also put Twitter usage in context of the overall digital footprint: Twitter has 11 million registered users and attracted seven million unique visitors in February, which represents a stunning 1,382 percent growth since last year. The total Internet user base, however, consists of 1.4 billion users. The most widely used data application on the planet is SMS text messaging: three billion people actively use it. And compared to Facebook’s 175 million users, Twitter’s numbers are miniscule. In other words: The whole world may be talking about Twitter, but the whole world is not yet talking on it. The next few months will tell us if Twitter is over-hyped or if we’re witnessing a revolution – and if so, if the revolution will eat itself.

That’s exactly the concern of Twine founder Nova Spivack who might speak for many other early Twitter adopters when he warns of the implications of Twitter’s massive growth and the increasing amount of uncontrolled abundance. Let alone potential security vulnerabilities, he flags “Mainstream Adoption” (“Tens of millions of new users are going to flood into the service. It is going to fill up with mainstream consumers. Many of them won't have a clue how to use Twitter”) and “Notifications Galore” (“Every service on the Web is going to rush to pump notifications and invites into Twitter”) as the two main threats. In his opinion, “There is soon going to be vastly more content in Twitter, and too much of it will be noise.” This raises an important question: Will Twitter remain an open-ended, self-organized conversation or will we see the emergence of more filters to make sense (and money) of all this chatter? Or, more philosophically put: Can we handle abundance (the entire Twitterverse) without any scarcity (the filter/curator)?

I’d say we need some scarcity, some reduction of choices. Spivack suggests introducing adding meta-data to save Twitter from its very eloquence, and there is definitely demand for organizing the ‘entropic chaos’ that characterizes the never-ending Twitter conversation. This could be an opportunity not only for Twitter itself but also third-party brands acting as curators. So far, almost all Twitter apps either add value on the input side (Twitterphone, Twitterific), visualize the output (see Pepsi Co.'s Zeitgeist app), or combine both (Tweetdeck). But one dimension is underexploited: accessibility.

“Brand curators” – operating along the coordinates of organization (self-organization vs. curation) and timing (real-time vs. past) of Twitter content could offer just that: making Twitter more accessible. For example, they could provide vertical search feeds (in real-time) plus some additional context. Both could be embedded in a visually rich ‘landscape’ view that features ‘favorites’ (domain experts), most popular (re-tweeted) tweets, and “breaking tweets.” In addition, Twitter curators could compile past tweets within certain categories or topic areas, as editorialized search results. Or they could create some ‘artificial scarcity’ and offer programmed Twitter slots, limited in time and audience (Liz Kelly from Brilliant Ink told me recently about a one-hour panel of journalists on Twitter as just one example). The brand would act as a ‘human’ search filter, as a trusted authority that uncovers and organizes relevant tweets. This could be interesting for media companies or brands that are transforming into media companies.

It’s worth pointing out that this scenario is not identical with just a branded linear Twitter feed. What I’m envisioning is a bias to commentary instead of immediacy. Not just a stream of tweets – a handpicked collage of various adjacent Twitter formats (replies, direct messages, re-tweets, searches). Think of it as Tweetdeck for the more passive mainstream user who wants to read tweets rather than write them. First steps into this direction are Breaking Tweets, Guy Kawasaki’s Alltop, and especially MyAlltop, the recently launched customizable version of the news rack. Offering celebrity MyAlltop lists, the service provides a blue print for brands: it creates a dashboard that offers curated content, features star Twitterers and their recommendations, and highlights tweets by categories. MyAlltop demonstrates that the verticalization of the Twitterverse is of most value if it goes along with a presentation that is horizontal.

The biggest opportunity may be something more fundamental, and it may be one for Twitter itself: a public archive of tweets. Have you ever wondered where the huge volume of Twitter-generated content goes? Who owns all your tweets? Are you giving away your data or sharing it? How can you access it (besides going back chronologically through the search function)? Sure, Twitter keeps tweets and doesn't auto-delete them. You can also set up a LoudTwitter account to generate daily blog posts that contain all your tweets from the past 24 hours. Or you can use Tweetdumpr, which creates a .csv file with your last 250 tweets (it used to be the entire record; the fact that Twitter has limited it lately shows that it may have an interest in monetizing past tweets). But all of these services work only for your own tweets and are rather cumbersome. What I’d like to see is a public Twitter archive. There is value in storing and distributing old conversations, the “now” that’s long gone. Clearly, the totality of tweets represents a massive library of human thought that we need to preserve and make accessible. In the future, wouldn’t it be interesting to go back in time to rediscover the SXSW tweets from 2009? Memory is a vital aspect of all communications, a prerequisite of accountability – yes, one could even consider it a human right. With traditional media eventually locked out of the conversation, we need to maintain the ability to revisit past events (even if they were just communicative) – if not to rectify them so at least to reflect on them.

Or is there no need to remember – and we just go with the feed? Can meaning be self-organized – without scarcity, without historians, without interpreters? And are we producing any meaning at all, or is true what the Boston Globe pointed out: Just as technology is giving us the ability to amplify every word we utter we have nothing really meaningful to say? I guess none of these questions can be answered in 140 characters. Let me know what you think – but take your time.

Top Social Brands 2008

The question which brands are the best at “socializing” with their audiences is often asked, but rarely answered. Now Vitrue, a social media advertising solutions company, has attempted to capture a snapshot by releasing a Top Social Brands of 2008 list. The ranking is based on the Social Media Index (SMI), a measurement system the company launched to help track brands' share of voice on the social web. The Top 100, which range from the iPhone, CNN, and Disney at the top of the list, to Jet Blue, Puma, and Sears at the bottom of the list, were drawn from Vitrue's daily analysis of online conversations about more than 2,000 popular brands in blogs, social networks, microblogging services, and photo and video-sharing sites.

Strikingly missing is the Obama brand, arguably the most social brand in 2008, and there are other shortcomings. Vitrue’s press release states that some powerhouse technology brands were omitted from the list “as they provide the backbone of many social networks. While Google, Facebook and others are top brands, The Vitrue 100 is measuring companies that are using social technology, not those who are the technology.” You could argue, of course, that this distinction is rather arbitrary as the lines between technology and content are somewhat blurry and will continue to dissolve. Just take the iPhone as an example – it provides social technology, per Vitrue’s definition, but also uses it to socialize its own brand. The same applies to Amazon, CNN, the New York Times, and all other brands that constitute either latent or manifest social networks online.

Another pitfall is the narrow focus on volume and the lack of analysis as to what makes brands score higher. A high score may not always be attributed to an effective social web strategy. Brands may simply top the list because their sales have been successful and they are therefore much talked about (or, conversely, everyone’s talking about them because their sales are tanking). There is no metric for measuring if the conversations were largely positive, negative, or highly contested. As one commenter on Vitrue's blog poignantly remarks: “Looking at brands as something capturing share of voice online, without understanding the drivers of said volume, is kind of like looking at shadows on the cave wall and mistaking them for the truth?”

In any case, Vitrue’s list has started an interesting conversation and helped socialize its own brand.

Press Release: Announcing The Vitrue 100

Advertising Age: The Most Social Brands of 2008

The New Permanent Crisis of Marketing

When I had dinner with my former boss and mentor in Paris a few months ago (formerly vice president of marketing at a US-based enterprise software company, now CEO of a French enterprise software company), he shared a dirty little secret with me: “Forget about marketing,” he told me, “it doesn’t really matter. I spend 80 percent of my time on HR, finance, operations, and sales. Branding, marketing communications, PR – not my priorities.” A few weeks later I came across a working paper called “Getting Marketing Back in the Boardroom,” and seeing the title gave me chills. Provided that both the practitioner’s view and the academic analysis signify a larger trend prevalent in the industry, then the days of marketing as a corporate function might indeed be numbered.

Is marketing dead or does it just smell bad? The new swan song for marketers is ironic as it comes at a point when the power of marketing seems not only so obvious but also so ubiquitous: Marketing is around us 24/7, marketing paradigms have invaded our private lives (“personal branding,” “self-branding”), the blurring boundaries between marketers and consumers have led to the rise of the notion that “everyone is a marketer,” and the Americans elected a president whose marketing prowess is widely admired (Advertising Age even voted Barack Obama “Marketer of the Year 2008”). And marketers are complaining about losing influence?

It is not the first time someone is ringing the death knell for this profession. Marketing, almost by definition, finds itself in a permanent crisis. Marketers are accustomed to constantly justifying their efforts. Marketing is an easy target because its targets are constantly moving. Audiences are fickle and their beliefs elusive, and marketers’ tools are easily outdated. As in the media business, marketers’ wins from the past are old news. What worked yesterday can be wrong tomorrow. Moreover, the lack of a formalized set of rules (as it exists for, say, accounting) makes the discipline prone to advice from all kinds of want-to-be experts from near and far. When so much of a profession is based on knowledge (episteme) and not craft (techne), there will always be those who believe they know more (or know-it-all, for that matter).

Marketing has traditionally been closely scrutinized from other corporate functions, particularly sales, not the least because of the inverse proportional ratio between the visibility of its efforts and the intricacy of quantifying their impact. Even in the heyday of marketing, when it was considered the flagship function in most companies and the fastest track for executives to be groomed to become the next CEO, chief marketing officers (CMOs) found themselves on hot seat. From the late 1990s to 2004, Starbucks appointed a new marketing head five times in seven years, and Coca-Cola changed its CMO four times in six years. This trend is mirrored globally: In a recent CMO survey by the Economist, 63 percent of survey respondents said that the global marketing head at their companies had served for less than three years. The average tenure of CMOs at US companies has shrunk to just 16 months.

But something is different this time around. While marketers have always been under scrutiny for what they do – they are now also being scrutinized for what they are.

A number of voices question the marketer's role today. McKinsey Quarterly believes that marketing executives are grappling with the new social media environment, arguing that “many chief marketers still have narrowly defined roles that emphasize advertising, brand management, and market research.” And even marketing guru Seth Godin asks whether “your marketing is out of sync.”

It looks as if marketing needs some serious marketing. Conferences that seek to redefine (and thus strengthen) marketing's role are burgeoning: The American Marketing Association offers seminars such as “Beyond Marketing 2.0: Harnessing the Power of Social Media for Marketing Campaign Results,” Forrester's Marketing Forum 2008 heralds "engagement" as the profession's "new imperative for success," and the (humbly titled) THE Conference on Marketing aspires to be the penultimate forum for marketing leaders who “seek certainty in experimental times.”

Pundits warn that this new crisis of confidence may be existential and usher in the inevitable demise of marketing as a corporate function. Today’s CEOs are more and more frequently selected from candidates who have proven their value by rising through the ranks of finance, operations, or sales. Marketing is perceived as “soft,” as the consolation prize for sales people who didn’t quite advance far enough in their own field to rise to the top.

There is growing concern among marketers about losing influence, as many strategically important aspects of marketing are increasingly distributed across other functions in organizations. A recent CMO survey co-sponsored by the American Marketing Association and the Fuqua School of Business at Duke University indicates that many tasks traditionally ascribed to marketing are no longer primary responsibilities of marketers. While marketers in the surveyed organizations oversee positioning (86%), advertising (92%), promotion (86%), marketing research (86%), competitive intelligence (71%), and market entry (67%), more strategic responsibilities such as new products (48%), market selection (48%), customer relationship management (49%), innovation (36%), pricing (22%), distribution (13%), and customer service (9.5%) have moved to other departments. Even more tellingly, only in six percent of firms marketing is considered to be responsible for stock market performance.

Diana Derval, professor of marketing at the French business school ESSEC and author of the book “Wait Marketing,” mocks marketers as a nostalgic class: “The only reason marketing still exists is because of the big lobby power of its professional organizations, especially in the advertising industry,” she told me. Derval argues that marketing is a science and not an art, and makes a passionately cold-hearted case against the “myth of marketing genius.” She contends that most marketing dollars are squandered by “experimental” marketing efforts that fail to scientifically segment and target their audiences. Her skepticism poses some rather disturbing questions for marketers: If marketing is a science, who still needs marketers? Will marketing soon be taken over by non-marketers?

Marketing is indeed in an existential crisis as it faces unprecedented challenges to its conventions. But I would argue that it is accompanied by new, unprecedented opportunities. Companies have to radically rethink how they do marketing – marketing can no longer be viewed as a collection of programs, but instead as way of behaving in a networked economy of “market communities.” The industry has reached a turning point that presents a unique launch pad for marketing to reinvent itself – or to paraphrase German filmmaker Herbert Achternbusch: “You don’t have a chance so use it!”

To be continued...

Obama Inc. – Web Activism for Profit

[Photo by David Reece]

A few months after Barack Obama’s historic election, and a couple of weeks after the release of Barry Libert’s and Rick Faulk’s book Obama Inc. (and, of course, Obama's inauguration), the first start-ups are popping up that directly apply some of the widely heralded business lessons emerging from the innovative campaign. The fact that most of these lessons lie in the marketing domain supports the view I’ve expressed earlier and on numerous occasions: 1) Marketing will (again) become the number one change agent in business, 2) when it follows the new rules of “marketing with meaning,” that is, marketing which (simply put) consistently creates added social value – not as an afterthought but a sine qua non. While marketing has always been the art of turning friends into customers and customers into friends, it is now the art of finding, befriending, and “activating” the like-minded for a common cause, for the common good, for profit. Marketing, as the “voice” of business, is THE interface in a time when interface is everything. Marketing is the software. And software drives the value of products.

A recent example of this kind of Obama Inc. start-up, San Francisco-based firm Virgance, was featured in the Economist this week, and the article indicates that social impact in an activism 2.0 world is shifting from a welcome side benefit to an integral component in the business models of Internet entrepreneurs. The new kids on the web have internalized the lessons from the Obama campaign, and now they want to make a difference, too – and money. The Economist describes Virgance’s model as “for-profit-activism.” Named after a plot device in Star Wars, the company aims to support social causes through a multi-pronged campaign platform that resembles the way Obama for America mobilized its supporters, and it typically consists of four core elements: a web-empowered volunteer network, a presence on Facebook, a team of paid bloggers to promote the campaigns, and YouTube viral videos. Among the first Virgance-supported campaigns are 1BOG (“one block off the grid” – aiming to convince homeowners to switch to solar energy), Carrotmobs (public contests that incentivize retailers to become green), and Lend Me Some Sugar (based on the Facebook application that gives users virtual sugar cubes for donations to a cause of their choice).

Virgance is not the first for-profit-do-gooder of course; there have been plenty of others whose business model combines bottom line thinking with social value: the Economist, for example, puts Virgance in a line with Project RED. But Virgance is more like Facebook Causes. It adopts the forces of “Here Comes Everybody” and builds its entire business on a social web platform, embracing the principles of open-source, mass collaboration, and transparency: “If a for-profit company did the type of work that non-profits often do, but did it more efficiently, would people trust it the same way they trust non-profits?” the Virgance web site describes the company’s ambitious mission. ”What if everything the company did was completely transparent? What if it was open source? If we can create this kind of company, and succeed, how many other companies would follow our example? Along the way, could we change the face of the business world itself?”

Does that language sound familiar? The Obamapreneurs are adept at turning their campaigns into movements. Clearly, the Obamanization of business – both in terms of substance and style – has arrived in reality, and we will see more Obama Inc.’s in 2009.

On February 27-28, IESE Business School will gather entrepreneurs, scientists, foundations, and corporations at its annual student-run Doing Good and Doing Well conference in Barcelona. It’ll be interesting to see how the Obama gem will make its way into the more old-school world of CSR (corporate social responsibility).