Comments on: Perishing for Lack of Vision

By: Dusan Vrban

Dusan Vrban — Sat, 06 Jun 2009 17:27:29 +0000

Paul, thxs for reading my comments so seriously. And vice-versa of course, I always enjoy your posts at max and consider you the most forward-looking marketeer in the industry. Just wish I will be able to know so much as you once.
And yes, forward to basics might be the right way. Where basics are values that are important on long-term.
Just being at this point, it is very interesting that from all of my web-posts wherever for now, the one about ethics was most commented?

By: Paul Barsch

Paul Barsch — Sat, 06 Jun 2009 16:57:20 +0000

Dusan, one of my favorite European marketers – thank you for commenting! I always enjoy your perspectives. NewYorker author Nick Paumgarten relays about thirty culprits for the financial crisis in his aforementioned article, but he sums it up this way, “debt, greed, and hubris” are mainly responsible for the mess we’re in.
Your comments bring up a few good points worth repeating. Yes, they are common knowledge, however how often is common knowledge chucked for the “next big thing”?
First, if it’s too good to be true, it probably is. Example, 10-12% year over year return from Madoff. Seriously?
Second, values are critically important. That’s why many B-schools are focusing on a back to basics course on business ethics. However, ethics will go only so far if incentives are aligned differently…

By: Dusan Vrban

Dusan Vrban — Sat, 06 Jun 2009 09:06:34 +0000

Why Titanic shrinked in the Atlantic? A lot of people trusted few, that they’re taking the right course. But those few did not listen to some that said it is dangerous.
Yet, a lot of people survived.
* Does “marketing” have a role and responsibility in helping our companies develop sound, strong and robust business strategies?
Resposibility yes, role not. At least in last few years, the role had those that promised the biggest profit in the shortest time. And that’s never linked to long-term success.
* Marketers, what tipping points–or warning signs about the economy did you notice and at what stage (if at all) did you alter your strategies?
I was amazed by the promissed profits from investment companies always. 20 – 50% per year? Wow! Well, there must be something very wrong if all of them are making so much profit.
Didn’t alter any strategies beacues all ours strategies and those that we advice, are based on flexibility and natural way of development.
* Culturally, is it American “optimism” that’s responsible for many ignoring intimations of a brewing financial crisis? That we inherently believe the good times should–and will–roll on forever? European and Pacific Rim countries, please also weigh in
American optimism isn’t responsible. That optimism is good and everyone needs it! Don’t loose it please.
“American” profit hunting is responsible. All the investments are heavily followed on financial criteria, mostly on ROI (or whatever amazing business model someone will come up with).
Many things don’t matter to investors as long as the profits are high. Values are THE problem.
What is a value to media and business? Who is a good manager? Which books were popular for the last few years? Those that showed big success. Big profits, potentials, money. Reaching 1 mio followers of Twitter?
Where are the values when we all follow a person that is texting 140 characters about jumping into water? And we have so 1 mio computers polluting the environment for reading those 140 characters that are quite irrelevant?
OK, perhaps another case I was listening to in the beginning of the week – from Vijay Mahajan. He was noticing nicely – how many experts and scientists were developing a robot that gives you a hug when you come home? A robot that hugs you? Spending millions on a robot that hugs me? Well…

By: Paul Barsch

Paul Barsch — Fri, 05 Jun 2009 21:58:46 +0000

Thank you Neil for the comments and link. Schiff of course was not the only voice mocked for openly stating the obvious. Marketers, take a look at one contrarian voice yelling at the top of his lungs. Decide for yourself, and then steer your marketing strategy and investments accordingly... http://ftalphaville.ft.com/blog/2009/06/01/56441/taleb-goes-long-inflation/

By: Neil Anuskiewicz

Neil Anuskiewicz — Fri, 05 Jun 2009 19:04:17 +0000

I have to say that while I do not agree with nearly everything Schiff believes or says on politics or economics, I do not think he should have been dismissed out of hand.
Paul, I did not find the snickering video but this one covers things pretty well.

By: Neil Anuskiewicz

Neil Anuskiewicz — Fri, 05 Jun 2009 17:40:57 +0000

Here are some clips of Peter Schiff predicting what happened and various people reacting to him: http://www.youtube.com/watch?v=Z0YTY5TWtmU

By: Paul Barsch

Paul Barsch — Thu, 04 Jun 2009 20:51:40 +0000

Neil, at least for me, one of the lessons learned is to pay attention to dissent, especially when common knowledge or popular opinion says otherwise. More than a few CEOs and economists predicted the bubble bursting in a big way and were mocked. When you see opposing positions openly ridiculed, it’s time to consider the possibilities of those positions.
If we believe that marketing has a role and responsibility in helping our companies develop sound, strong and robust business strategies, then we owe it to ourselves and our companies to pay attention to outliers.

By: Neil Anuskiewicz

Neil Anuskiewicz — Thu, 04 Jun 2009 14:48:57 +0000

Wow, Paul, powerful post. I remember seeing an economist interviewed on one of those finance shows a few years ago predicting all this well ahead of time. I am not kidding when I say that the other guests on the show were actually laughing at him derisively.
I have watched the sequence on youtube a few times and, yes, it was derisive laughter but I also detected the quality of nervous laughter.
They was no doubt they were killing the messenger but I got the feeling that at some level they knew he was right. Was it denial? Optimism? Not sure.
Some economists publicly and loudly predicted this collapse but almost nobody listened. It may be human nature to not want to rock the boat too much when things seem to be going so well, even when something seems wrong and sustainability is lacking.
Optimism does seem to be a North American cultural trait. I am an optimist to the core.
That said, other countries have had their financial crises and bubbles, too. Sweden’s banking crisis comes to mind immediately but there are lots of examples.
We Americans have to go big, though, don’t we?
We will come through this stronger ultimately. The data shows signs of a recovery on its way fairly soon though it will be a weak recovery at first. And no that is not just my optimism talking, I study economics and business news every single day.

By: Elaine Fogel

Elaine Fogel — Wed, 03 Jun 2009 03:26:22 +0000

I think the answer lies with any of the following:
- optimism
- naiveté
- greed
- arrogance
- human nature
Will we find ourselves questioning our situation in the same way, the next time this happens – albeit with different players and circumstances?

By: Paul Barsch

Paul Barsch — Tue, 02 Jun 2009 17:23:18 +0000

Kevin, you bring up a great point in that it’s hard work to piece the puzzle together. Relying too much on one source, or even the same sources we’re accustomed to reading, hearing, observing etc, often just tells us what we already know, or worse confirms what we think we know. But as we’ve pointed out in the comments on this post, it’s one thing to observe the pieces of the puzzle coming together and entirely another to act upon that information. How many times must we read in the business press about executives who saw the warning signs, but continued to “dance” until the music stopped? Because the music always stops at some point. Best to leave early while the lights are still on…
What good is having executive experience and/or deep data driven analysis if we don’t act upon the output?

By: Paul Barsch

Paul Barsch — Tue, 02 Jun 2009 17:17:02 +0000

Justin, I loved the parallels between financial services and marketing. I especially enjoyed the analogy of day trading our brands instead of focusing on long term value.
Let me take another angle to your comments. In terms of branding and long term customer commitments, a stronger focus on lifetime value (LTV) would help alleviate some of the effects of treating customers as a transaction. Getting away from a transaction mentality and more towards a long term relationship with a customer requires a huge shift in mindset as you pointed out. It’s something that needs to happen for both the financial services industries AND the marketing profession!

By: Kevin Horne

Kevin Horne — Tue, 02 Jun 2009 16:40:10 +0000

Paul:
Well done. I actually submitted an article on this very topic a couple months ago to mprofs for consideration as one of the weekly articles. To me it is really about how to recognize opportunities (good or bad!) by looking for them and not having them smack you in the face – what i call “marketing by stumbling around.”
The real test now will be whether marketers will try and envision anything other than what the trade rags are continuously calling “the new frugal consumer.” What a load of bunk.

By: Justin Breitfelder

Justin Breitfelder — Tue, 02 Jun 2009 16:14:16 +0000

One more quick point to Claire’s –
As a BtoB marketer, I’ve always thought that one of the top emotional factors to build into planning is the mortgage of the executives I’m interacting with. The “Am I going to lose my job if I approve this software [or whatever] purchase thus put my mortgage at risk?” question. Most executives have upped the mortgage ante as they’ve risen through the ranks. Especially with the free flowing credit in the last few years.
The current environment obviously makes this emotional “mortgage factor” even more of an issue. Something to think about.

By: Justin Breitfelder

Justin Breitfelder — Tue, 02 Jun 2009 15:58:17 +0000

Thanks for kicking off this conversation Paul. The role and responsibility of marketing to help our companies develop sound business strategies is much the same as a good financial advisor. It’s our role to make recommendations on the marketing investments that are most likely to lead to sustainable long-term growth. And by sustainable growth I mean double-bottomline growth – not just economic growth but also social.
The reason we’re in the mess we are is that we’ve often ignored the social aspect of growth – the long term consequences to customers, employees and other stakeholders. Most companies have been essentially day trading their brands in the way they invest marketing budgets — let’s do an email BLAST or a direct mail BLAST to drive revenue this quarter because our #s are down (one-way) vs. interactively developing mutually profitable relationships over time by creating social value solving real business problems.
This won’t be an easy problem to solve as so many of our compensation systems encourage this brand day trading mentality from the corner offices to the sales force. People have gotten used to easy money and changing those perceptions — literally changing those actual neural connections — will take time, effort and smart repositioning strategies. Integrating executive and sales force compensation issues into marketing planning will be essential to turn things around and help drive sustainable growth. Greed is good only if it’s balanced by the social value that is essential to sustainable long term growth. This is an “all hands on deck” situation that calls for every marketer to keep having conversations like these to turn things around for the U.S. and global economy.

By: Paul Barsch

Paul Barsch — Tue, 02 Jun 2009 15:55:16 +0000

Claire, thank you for taking the time to add your expertise and I appreciate how much thought you put into your comments.
It’s one thing to see the warning signs all around us, it’s another to ACT on those warning signs. Good to see that you not only acted, but advised others to act as well. I hope many took your advice!
In formatting the questions at the end of this post, I tried to ask some tough queries about consumer behavior. The warning signs build up and some people ignore them – at their peril. Others wait, wait, wait until that tipping point before they act. But how does one collect those signals all around us? Is it by reading? Is it by listening? By observing? All of the above? How does one separate the signal from the noise? And then, once the picture becomes more clear, why do some people act, while others stick their heads in the sand?

By: Claire Ratushny

Claire Ratushny — Tue, 02 Jun 2009 15:37:03 +0000

Good post, Paul.
Does “marketing” have a role and responsibility in helping our companies develop sound, strong and robust business strategies? Absolutely. To be truly effective as marketers, we need to pull our heads out of our day-to-day activities and keep looking at the big picture so we can see what’s happening in the world at large and how that is going to affect us.
Marketers, what tipping points–or warning signs about the economy did you notice and at what stage (if at all) did you alter your strategies?
I began feeling uncomfortable at the height of the housing boom. By the summer of 2007, my questions were these: how could all of these people afford all of these McMansions? How could home values in various regions spike so quickly and so meteorically? Historically speaking, real estate values grow slowly and steadily. How could lenders be giving out mortgages with no money down? Where on earth did these derivatives come from and what was going to happen to the greedy companies who invested in them? Why were few talking about escalating consumer credit card bills? When was this bubble going to burst and how bad was it going to be when it did? On a personal note, we made the decision to pull our money out of our mutual fund portfolios and parked it all in cash reserves. We suggested to business associates, clients, friends and relatives they should do the same. Some heeded our advice and some did not. The market was overheated, and we knew that. Time to capture profits and get out. When the market crashed, we did not lose one dollar.
Culturally, is it American “optimism” that’s responsible for many ignoring intimations of a brewing financial crisis? That we inherently believe the good times should–and will–roll on forever? Not all economic downturns are created equal, are they? Some are worse than others. In many cases, we can ride them out. In others, many factors contribute to make them more severe. We need to make ourselves aware of what is happening. Not being plugged in to events, and nonchalance are deadly for businesses and for consumers in general. If we become aware, we can take steps to mitigate economic downturns.
Here are my questions for you, Paul, and for DF readers:
1. What are you doing to prepare for the next wave of consumer defaults? A second wave of mortgage defaults is underway due to severe job losses around the country, further impacting our overall financial health and consumer purchasing power.
2. Credit card defaults are another major consumer issue. With the average American household carrying $10,000+ in credit card debt, faced with potential job losses, and cost of living hikes across the board, how will that make you adjust your marketing plans? 3. If you provide B2B products or services, are you aware of the health of your customers? Do they have adequate lines of credit? Are they able to pay their bills?
The commercial property meltdown hasn’t even hit the economy yet, but it is brewing as cash-poor and credit-strapped businesses default on major business loans.
4. Government spending at record levels and the printing of huge sums of money will ensure tax increases at every level and inflation within a year or two. How will that impact your plans?
It is my hope that we think lean and mean to survive the coming months, professionally and personally speaking.

By: Paul Barsch

Paul Barsch — Tue, 02 Jun 2009 14:50:48 +0000

Lewis, thank you for taking the time to comment! So if many marketers aren’t changing the way they’re responding to the downturn, do you believe this is because some marketers don’t know any better, are lazy, or have misconceptions on “what works”?

By: Lewis Green

Lewis Green — Tue, 02 Jun 2009 13:56:41 +0000

Paul,
I believe we marketers absolutely have “a role and responsibility in helping our companies develop sound, strong and robust business strategies.” We are supposed know the pulse of our customers and respond accordingly. However, it seems that many marketers have changed very little in terms of responding to the downturn. Advertising is the best example, I think, of continuing to sell, sell, sell instead of responding to wants, needs and circumstances.