Tag Archives: Marketing Communications

Social Media’s Role in the News Cycle

SocialMediaNewsStats

Social media plays an important role in the news cycle   (CLICK ON IMAGE TO EXPAND)

It should come as no surprise that the way we get news today is quite different than in the last decade. Daily Newspaper circulation, which stood at 62 million in 1990, fell to 43 million in 2010, a decline of 30% (source: The State of the News Media 2011). There are many reasons behind this decline. One is a drop in advertising revenue, which has resulted in staff reductions, less content and reduced deliveries.

Another reason is a change in behavior. According to the Pew Research Center in Washington DC, news has a place in social media, on some sites more than others (source). See the chart at right.

We are still in transition as new online venues are experimented with. Today, it seems like everyone gets their news in a different way – from a Facebook post to an AP news alert (on a smart phone) to browsing an online news site such as Google News. Of course, some still watch TV, listen to the radio, and, some still read a newspaper.

Don’t confuse this transition with diminishing importance. This change is quite different from the fate of the buggy whip manufacturer … news is still actively sought. It is the delivery mechanism that is changing.

The Impact on Public Relations

Public Relations professionals are experiencing this transformation first hand, which has significantly impacted how they do their job. Targeting a single media channel is not a viable strategy anymore to effectively get the word out. Of course, budget dictates how far and wide your “net” can swing. Not everyone can afford to run TV ads. Regardless, communications strategies must now be multi-channel.

Not only has the medium changed, so too has the timeframe. News stories now can occur at nearly any time of the day or night, and seem to break instantly on a global scale. While this speed of access may be great for the general public, it can be a challenge for reporters, editors and PR professionals.

Given this new timeframe expectation, there often isn’t enough time for reporters to adequately research a breaking story – especially when the world is watching and wanting more info. We saw this occur in 2013 surrounding the breaking story of a bombing at the finish line of the Boston Marathon. As a story from the Hollywood Reporter explained, “Questionable information from sources and a rush to be first contributed to a flurry of erroneous media reports.”

Lessons Learned

Since that event, the news industry has learned. Initial announcements, be it from a Twitter feed, blog post or other “real-time” source must first be researched before assuming true. Or, any conclusions based on these real-time media sources should be identified as such. In this way, every source can occupy a place in the hierarchy of how news distribution. As a PR professional, we need to be aware of each of these “roles” that social media plays as news breaks.

The Social Media Role of News – First Responder

Given the widespread adoption of smart phones, it is highly likely access to a live smart phone “feed” will occur as news stories break. It makes sense that the role of social media has become one of “first responder,” giving us the fastest access to a breaking news story. But, accuracy may not be 100%, given its speed. But, as long as PR professionals, news agencies and the public understand what role each communications venue plays, the system works quite well.

As a PR professional, it is important your organization has representation across each of these media, so you can contribute to the “conversation” as news develops and is reported on. In this way, social media plays a role as a communication venue – not one for lead generation. Most organizations now understand this, having invested in building a social presence online as well as continuing to maintain traditional PR network of reporters and editors. The consequence of not maintaining these connections is that over time you will lose credibility by not being part of the commentary as major news stories break, or new thought-leadership stories go mainstream.

 

Gordon Benzie is a marketing communications professional and business plan adviser that specializes in creating and executing marketing communications strategies. Gordon can be found on Google+

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Marketing Strategies to Deal with a Disruptive Event

disruptive_event_microscopeIn my last post, I presented a real-life disruptive event that manufacturers of microscopes are now facing – the emergence of a new competitor selling a product that apparently is unbreakable, can be transported to literally anywhere in the world, and, could retail for $.50 each.

I chose this example not only because it is a current, but because of the severity of the disruption. Professional microscopes used by research facilities or drug manufacturers likely cost thousands of dollars, so the price difference is significant, to say the least! Here are some observations and tips I would suggest, if I were the one responsible for realigning the strategic direction of an existing Microscope manufacturer.

Why are you in Business?

I don’t mean to imply you should just recite your mission statement, or to try and present the merits of preparing one. I am simply suggesting you look to your roots and decide why you are in business in the first place? What is the reason you started your company, or in the case of large, publicly traded companies, what difference are you trying to make in the world? Assuming it is more than just collecting a paycheck, a careful reflection on this point will help guide next steps.

For example, if your mission was to provide under-developed countries with medical assistance through the production of affordable microscopes, then I would propose you now have two choices: (1) Join forces, or (2) Exit the industry. Manu Prakash and his students at Stanford have built a better “mousetrap” as the expression goes, so you really can’t expect to disrupt his breakthrough – it is unlikely.

Alternatively, if your mission is to provide the highest quality instruments so researchers can gain insights into the deepest depths of molecules, atoms or whatever else these individuals do to help find cures to diseases, then your response might be different. The paper microscope was created to serve markets where the primary purchase decision is based on cost, ease of use and transportability. The research market, however, has money to spend and is typically is located in a developed nation where breakage issues are not a driving factor of a purchase. So, this market might see value in features that better serve its needs.

Product or Market Differentiation

Marketers like to call this strategy product or market segmentation. Ideally, it is best to “own” a particular market segment. Narrow the focus on what you think you can “own” so as to provide the best possible product to serve the specific needs of that particular group of buyers.

For example, it may be that a larger model is better suited for research purposes. In this hypothetical scenario, it might make sense to “go big” and introduce a much larger version with specific features that a researcher might highly value. This way your product gets positioned as serving a different need, so will less likely be compared to the paper product. A great way to execute upon this concept is to come up with a new name for the market you seek to dominate – it will help to make the buyer feel more comfortable, and that they are not overpaying for a product that could be purchased for under a buck!

Service Differentiation

Another business strategy to make your offering different than the rest is to include or associate a type of service with the physical product. In the software world, some clients have highly sensitive data, processes or actions that are being performed by their software at all times of the day or night. These clients will happily pay for 24/7 service to be available at a moment’s notice to fix an issue if it comes up, so as to avoid lengthy downtime. In the same way, some of the microscope manufactures might decide to come out with a highly sensitive, highly accurate model that might be the Ferrari of models – both in terms of performance and nurturing necessary to maintain that performance. Clients interested in this type of product might be willing to pay extra for the support or maintenance services associated with such a high end machine, making the focus being more on providing the valuable expertise to keep the equipment running at all times. This is certainly a different business model than that of providing the “buck” model.

To conclude, when faced with a disruptive event, it is often helpful to first think about your business purpose. This insight is more than just to include in the writing of a business plan – it can genuinely be a life saver to help you get over the shock of a disruptive event that might happen in your industry. With this insight well thought through, the choice of a responsive action might be easier to see, identify and put into place.

Do you have a disruptive event that occurred in your industry? I would be curious to hear what you did and how it played out. It will be interesting to read about the microscope manufacturing market in about 2 years to see how these industry players decided to respond.

 

Gordon Benzie is a marketing communications professional and business plan adviser that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+

 

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Leveraging a Blog in Public Relations

blog_lynchpin_public_relationsIt is no secret that social media has a bigger role in the world of marketing communications and public relations. This transformation occurred due to a couple of trends. Notably, the emergence of a “Web 2.0” world where feedback can be provided (and is expected) directly to an author. There is now an expectation that feedback can be provided easily and immediately. Secondly, in today’s digital world, it is increasingly popular and economically feasible to begin targeting ever-shrinking audiences on a wider scope of topics. The economics of yesterday’s printed media world no longer applies. This has had a profound impact on public relations.

Let me explain.

Magazines and other printed publications are really just businesses that must make money to survive. The traditional business model was to drive a large audience, representing a group of potential customers that advertisers were interested in speaking to – becoming a source of revenue for these publications. The path to growth for this business plan was simple – expand your audience. As a result, the natural evolution was a world dominated by a few, large publications with big audiences.

Then along came the explosion of the Internet and Web 2.0.

Now online “communications hubs” sprang up in all areas, on just about any topic. The online “story telling” world became highly fragmented and dispersed. Getting a story out now requires a bit more work … more publications must be sought and more placements must be achieved in order to reach the same sized audience.

At the same time, the cost structure of media publications changed. Gone is the expense of publishing a magazine on expensive paper with capital intensive printing presses. And, no need to pay for delivery or distribution costs … the digital distribution model is basically free. In this new world costs have dropped significantly. So, it can still be profitable for smaller audience publications to survive with a smaller advertiser, provided they can find one. If a value proposition can be derived that makes sense to both parties, then a business model can still exist. The digitization of our newspapers, magazines and other publications made this evolution necessary and, I would propose, also possible.

The Blog as a Lynchpin of your Social Media Strategy

Given this communications transformation, it has now become critical to have a blog as part of your public relations program. A blog provides you with a platform to support Web 2.0 activities – the ability for your audience to directly converse with you – while at the same time offers a highly focused venue for you to speak on niche or highly focused topics. Given the leveling of the media “playing field” and the need to reach out to a higher number of media venues, each with smaller audiences, it can be a real benefit if you have your own platform to manage these communications. With control, you have direct insight as to what topics are more popular, and what pain points are most “top-of-mind” for your audience, which can then be an excellent source for new articles to pitch to other publications.

From a company’s perspective, today’s digital communications world offers a unique opportunity to build an online presence through a self-managed media platform. Of course, transparency is needed, however, wouldn’t you rather find out immediately if a customer or prospect was upset, had questions or was experiencing some other issue that could be addressed? This type of interaction is much better dealt with through a forum that is actively visible to and managed by a company.

Certainly it is an investment to create and build a blog, especially if you are just starting out. But, this investment will pay off once you begin earning a share of voice in your marketplace. After all, a blog is really the only social media venue where any content can be realistically added. It is pretty tough to explain a company’s philosophy or value statement in 140 characters or less. And, even if you could, how long will that message be visible? Blog posts, on the other hand, last for years, provided each post has its own dedicated page that is searchable on the Internet. Over time, you can gain a considerable collection of published articles that are all in support of your value proposition and reason d’être.

 

Gordon Benzie is a marketing communications professional and business plan adviser that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+

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8 Ways to Leverage Search in Press Releases

search_engine_publis_relationsIt should come as no surprise that with the transition towards a digital distribution model for news delivery, the importance of Search Engine Optimization (SEO) has only grown. It simply must play a role in any digital public relations campaign. This is hardly a revolutionary thought. What makes this task a challenge, however, is the fact that the factors behind how search engines work keep changing, and the fact that you just have to think a little differently when writing a press release. It is no longer reasonable to simply try and write the best announcement – you must think about SEO as part of the process.

Take Google’s latest Hummingbird algorithm update. Many public relations leverage keyword linking as part of their SEO strategy. Now, keyword relevance has declined in importance, at least according to searches performed in Google. What is more important now are search “phrases” as said in conversation. Google is now placing more relevance on conversation queries, and how they can be best addressed from within a search engine window (ideally from a mobile device). Here are a couple of good articles: FAQ: All About The New Google “Hummingbird” Algorithm and How Google’s Hummingbird Update Impacts a PR Agency.

The take away is that you need to either invest the time to educate yourself on the latest trends impacting search engine optimization, or need to hire someone to do so.

Here are 8 other suggestions on how to best optimize your search engine placement, resulting in better awareness and exposure for your press releases that are issued as part of a public relations campaign:

  1. Be sure to pay the fee and publish your press releases through a news distribution service, such as Business Wire or Marketwire. The ones that offer a “linked” online presence is best. Your story will simply be viewed more times and seen as more relevant via Google, Yahoo and other news search engines.
  2. Use good content in your Press Releases, and publish a copy of the release on your website
  3. Offer a .pdf of your press release, optimized for SEO, on the same page to help maximize your online footprint; .pdf files are indexed just like an .html page
  4. Integrate this release page with other content that someone might want to read after finishing reading the press release, to further engage them on your topic
  5. Offer a registration page at some point during the process to then follow up with these visitors
  6. Write a complementary blog post on a similar topic, to then offer further content and support for those seeking to learn more about the news event you published
  7. Leverage any free PR distribution sites, especially if they offer HTML linked keyword submissions
  8. Broadcast the issuing of your press releases by the social media channels best for your audience so your followers get first notification, which will then also help your search engine rankings

 

As is typically the case with disruptive innovations, the scope of change is often wider than originally conceived at the point of inception. In a paper-based news world, the only distribution options were paid subscriptions and walk-up sales at newsstands. In a digital world, news is found in many different locations in different ways, which includes the searching of relevant topics by keywords. In this world, SEO plays an important, continuing role to ensure messages are heard in a timely manner, by the right audience. In fact, I would argue through a better distribution model that is more efficient than the world has ever seen.

 

Gordon Benzie is a marketing and public relations professional, and a business plan adviser, that specializes in preparing and executing business plans and marketing strategies. Gordon can be found on Google+ or at gbenzie@yahoo.com

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Are Paper-based Communications Dead?

paper-based-communicationsPaper-based media has long played a prominent role as a way to communicate. Go back in time, however, and it could be classified as a disruptive invention. Stone tablets, monuments and cave walls used to be the only options for non-verbal communications, and had done so for thousands of years. Then the Egyptians created Papyrus, which became the new medium to tell a story. This invention dramatically expanded an author’s sphere of influence.

Today a similar transformation is underway. The digitization of communications and knowledge is having a similar, dramatic effect on how stories are told. Access and speed to information has been radically changed – news stories now break in minutes – which has greatly changed how public relations and media professionals work. Marketers must now decide if it is worthwhile to pursue paper-based news publications. How should you grapple with leveraging online PR while not impacting your existing paper-based communications’ effectiveness?

In order to address this question, the right “textbook” answer is to talk with your target audience. What do they currently read? How do they get their news?

Unfortunately, this can be a difficult question to answer. The reason is that the process of how we get our news today has also changed. It is more than simply replacing paper with digital. Let me explain.

Back in the 1970s and 1980s, the way many of us got our news was by listening to Walter Cronkite, Peter Jennings and other news anchormen. They created a predictable framework for us to stay current with the news. CNN changed everything by offering news 24/7. Twitter and social media took this change to a whole new level. Now we learn about news “nugget by nugget.” If a breaking story occurs, those of us with smart phones get tweets, texts or alerts within minutes of the event. Others get news every time they open a web browser, or have a spare 10 minutes, or by still reading the paper over breakfast in the morning. As a result, the answer to the question of “Where do you get your news?” becomes complex – there is no one answer. It comes from a wide variety of sources, which can change from week to week.

As a marketer, this diversity of sources means that public relations outreach just got more complicated. The way your audience gets news has become highly fragmented. And, they have less time to allocate to any single activity. As a result, your marketing communications strategy now must span multiple sources – paper and online – in an attempt to include each of the publications and venues your audience might come in contact with.

It should also now be apparent that traditional methods have lost at least some of their effectiveness. That is why all the big newspapers have invested in building their online presence. Those that don’t will simply be left behind. New approaches are needed to cut through the clutter to gain attention of your audience, at which point they can then be in a position to actually hear what you have to say. When viewed in this light, it is no wonder why public relations professionals have embraced social media as a way to cut through the noise and get their message to a specific target audience. The type of medium isn’t so much of a problem as getting the attention of your audience.

 

Gordon Benzie is a marketing communications professional and business plan adviser that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+

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In Pursuit of a Social Media Persona

social-media-marketingIn a prior post I made a few observations on the incredible proliferation of social media, and what a great thing this social transformation has been for marketers. Never before has it been so easy to reach out to a group of prospective customers (or clients, which are different according to Mr. Godin’s recent post) that all share a common attribute, interest or buying behavior. This exercise is a given for anyone writing a business plan or hiring a business plan writer today.

The next question is “what do I do next?” How do I take advantage of this built in community?

The first step is to identify a couple of top profiles or “personas” you are most interested in getting to know. Your objective is to identify what type of person is most likely to gain the greatest value from your product or service, and hence could become a future brand advocate. Ideally, this person will become so passionate about your offering that they become an influential reference to secure new business not only for themselves, but for others in their community – your target audience.

It might be helpful to consider where some of your best customers or clients came from in the past. Were these people that bought your service or product for themselves, or were they buying on behalf of someone else or the company they worked for? Was there a life event that triggered the purchase? Or, was their purchase tied to an entertainment choice? In all likelihood, you will identify several of these personas that make up 80 percent of your buyers, based on the 80/20 rule.

Once you have identified the first profile, the next step is to figure out where this persona “hangs out” in social networks. If they don’t, then social media may not be of much value for you. Assuming they do, your next task to join that community. Here is where a line must be drawn – don’t try to fool others that you are a potential buyer – full disclosure is necessary to build trust into your relationship. Deception might get you one sale, but it won’t build you a following.

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Why So Many Social Media Groups?

social_media_choicesI remember back at the start of the 2000’s learning about Twitter and what it could do for marketing. I attended a marketing association meeting at the University of California, Irvine. Over 100 different individuals were in attendance, with each claiming that Twitter was going to change the world. I rushed home to sign up and secure my name (@gbenzie) before it was too late.

Flash forward 10 years, and Twitter has continued to grow and be relevant, even without a solid revenue model. Meanwhile, it seems like another 100 or so social media groups have formed on just about every topic you can possibly imagine. How do all of these sites remain viable and in existence? Who can read all of them?

The answer is “no one.” But, that isn’t such a bad thing.

My thinking on this topic is that social media has become a convenient platform to share a passion. If you have an interest and like to talk about it, then you will really like talking about it to many others. This helps folks to be involved, stay current and aware of changes as they occur. No one can be a member of all groups, and that is fine. Just pick the ones that are relevant to you, and then go after these groups with a passion and pursuit that will be noticed by your peers, prospects and customers. Quality trumps quantity in social media, but you still need both to be successful.

With the incredible efficiency that is now possible by creating a social media group, websites or blog, the cost of joining a new group, adding a new member or maintaining a group has plummeted. In essence, the bar to enter has been virtually eliminated, which has in turn opened the door for groups to form on just about any topic, with many new ones being formed every day.

The Need to Focus

Marketing communications professionals and public relations practitioners must make a decision on how social media should be applied to their marketing or activates mix. Part of this decision involves choosing what social media groups to pursue.

With only a limited number of hours in the day, how much time should be devoted to social media marketing, outreach and interactions? The answer depends on several factors, including where your audience is located and how active they are in these types of sites. Further, it is also dependent upon your own knowledge of social media and how much you are engaged in talking about and sharing the issues facing your target market. Let’s be honest … if you don’t have any interest in the issues facing your prospects and customers, then you might be doing more of a dis-service to try and “pretend” to be engaged. Curating a marketing or public relations program through social media can’t be “faked” very well.

In the end, I would argue that the incredible proliferation of social media sites is one of the best things for marketers that has come out of the Internet transformation. Now there is a way to reasonably and cost effectively reach your target audience in a non-threatening, advisor type of role – provided you are willing to make the investment of time and effort to get to know this audience and the challenges they face.

It is for this reason that Social Media is a pretty important factor that should be a part of every marketer’s arsenal of tools and resources. Likewise, it should be no surprise the popularity Twitter now shares with reporters, writers and public relations professionals … even if they haven’t quite mastered the revenue model. If there is a news story that is breaking, somehow it manages to be trending on Twitter before anyone else has figured out that there is a story!

 

Gordon Benzie is a marketing communications professional and business plan adviser that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+

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The Public Relations Transformation

A transformation is underway with public relationsThe role of a public relations today has changed from what it was a decade ago. Interestingly, in the same way that the Internet has completely changed how we book airline reservations, execute stock trades and write letters, its impact on journalism and public relations has also been nothing short of phenomenal.  Those of you who have worked in public relations during this transformation might now think the industry has spiraled completely out of control! Some might even argue that it is now at risk of losing its relevance.

I come from a different perspective. To start, I wasn’t a journalist prior to my current role in the industry. Instead, I began my career in finance as an accountant. After moving my way up the corporate ladder, I found a passion for marketing, which is a discipline I have now been practicing for nearly 15 years.

From what I can gather about the “early” days of PR, strict lines were drawn between what news was published, how it was distributed as well as the role that the newspapers and magazines played in getting the story out to the general public. For example, press releases used to be written just for editors and others working at news publications. It was then at their discretion as to what was printed and deemed sufficiently “newsworthy” to publish.

The Internet changed all of that. Now anyone can post any press release on a website, and with a little effort, can get their release picked up by other aggregator sites. In the end, their target market can find out about their news by simply doing a Google or Yahoo! Search by keywords. This is a completely different news distribution model, and has transformed the role of today’s Public Relations practitioner.

Given the relative ease of publishing content, the value of a public relations professional has now become more about managing that content, driving the direction of what new stories can be told about the topic as well as getting the “right” placements that matter most in the eyes of the public. After all, not all placements are created equal.

It’s a New World

With the breakdown in structure of the “old” model, traditional news organizations have lost some of their power – many more approaches now exist to tell us the news, ranging from tweets to YouTube to a myriad of news aggregation sites and the search engines. But, as the dust settles, I would argue that the traditional news media still have a “trump” card that should be played, and that of trusting their experience and knowledge to report the news accurately and fairly. Unfortunately, it appears that some organizations are not able to embrace this philosophy or execute upon it with 100% success.

We are all quite familiar with the recent events transpiring during the Boston bombing incident on April 16 where false news reports had to be retracted, based on the desire for CNN to be the “first” to break an angle of the story. Clearly this type of news reporting is less than ideal. But, on the upside is the fact that nearly anyone can write about a news event, or a story they deem as newsworthy. And, those with camera phones have given us unbelievable footage of news right as it is happening.

Meanwhile, from a marketer’s perspective, this changing of the guard brings new opportunities for “earned” vs. “paid” placements. It is amazing the amount of exposure that is now possible by applying Search Engine Optimization, cross linking and blog support. Alternatively, from an “end user’s” perspective, I sometimes struggle with how to best stay current with the day’s events as well as knowledge on my craft. But, I am getting better, and the proliferation of smart phones has certainly made it much easier to stay on top of the news that matters most to me.

The question to ask is what is your objective? Here is where my thinking like a marketer has helped my career in public relations. I continue to filter my actions into what can best support my client’s or company’s public relations objectives. If a goal is to position a company as a thought leader in a particular industry, then those are the only types of stories I should pursue. My “news” will then be focused on reinforcing that objective, be it through press releases, contributed articles or quotes in third-party stories, etc. In this regard, public relations is the same as it has always been. What has changed is the rules. The number of venues, distribution channels and publication options has increased exponentially, which is both a blessing and a curse. The complexity and volume of work has skyrocketed, but so too have the opportunities for success. Given all of this incredible increase in complexity, focus has instead turned on just getting a story out and getting it placed. The journalistic quality of articles has sometimes been given a back seat.

Is this a best case scenario? Perhaps not. For me, my goal is to strive to be better, including how I write and the quality of my stories. But, in the end, it is all about getting the word out there so my prospective customers have a favorable impression of my company, ideally just before being engaged with a sales representative from my company. Improved, positive familiarity with the brand helps to facilitate a better sales opportunity and a higher likelihood of closing. Those public relations professionals that embrace this new role and focus on achieving this objective will do well. Those that are frustrated with this transformation and still public relations as being more akin to being a news reporter might not be as well suited for the role of today’s public relations professionals.

Please let me know if you agree, disagree or have any other comments to add to this topic!

 

Gordon Benzie is a marketing communications professional and business model adviser that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+

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Saving Lives with Better Communications

According to a recent Wall Street Journal article, The Talking Cure for Health Care, research has long confirmed that improving communications between Doctors and their patients can actually save lives. The news prompting the article is that healthcare organizations are now taking actions based on this knowledge as a way to improve how Doctors speak with their patients.

Some of the stats that came out of research conducted by Doctors Co. indicate the lack of effective communications issue is widespread:

medical_communications_failure_rates

 

Here is the point I found most intriguing: This type of communication should be the MOST effective, given the setting and subject matter. If you are a patient sitting in front of your Doctor who is explaining something to you that is as important a topic as your health – don’t you think that you would be really paying attention? Given this assumption, the fact that up to 20% of all malpractice claims were derived from communications problems tells me that there are probably even greater issues in communicating effectively on other topics, which are not life and death scenarios.

Take marketing communications, for example, written by professionals trying to convey a message about value propositions, promotions or other compelling cases why a buyer should perform an action. On has to now assume that a big part of the message will likely be lost!

So, next time you venture down the path of writing a webpage, email or sales collateral, think carefully on what can be done to improve the effectiveness by simplifying what you are saying, as most likely, a big number of your readers simply won’t get it.

 

Gordon Benzie is a marketing communications professional and business plan adviser that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+

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Thinking Smarter Isn’t a Business Plan

think_smarter_business_strategyBy Gordon Benzie

 

Last week I read an interesting and well written article in the Wall Street Journal on the challenges that Alcatel is facing, titled “Alcatel Chief Is Out as Turnaround Stalls.” As you may recall, about six years ago France’s Alcatel merged with U.S.-based Lucent Technologies (former equipment division of AT&T) to create a telecom-equipment giant. Their ambitions to become a global telcom equipment leader have fallen short. Competition is tough. They compete in many lines of business, while at the same time, their revenues trail the competition, which has precluded their ability to make the necessary investments in research and development. These factors among others have translated into massive losses over the past seven years, and ultimately, CEO Ben Verwaayen’s job.

Alcatel-Lucent’s business strategy was to be an end-to-end supplier serving all telecommunications companies in the world, in virtually every markets. That means being everything to everyone, with a product line that includes everything from the submarine cables that wire together continents to the software that phone companies use to calculate and send out phone bills every month. Wow. That is a “big ass” strategic goal. In fact, I would argue it probably isn’t feasible, at least not within a high technology industry where product innovations are significant and competition is fierce.

Interestingly, when asked what the management team was going to do differently to avoid continued year-over-year losses, one of the “official” responses was “they simply have to be smarter than competitors about where they place their technology bets.” I am sure this statement sounded good in the interview, and certainly no one would argue against it. But, I am not so sure I would feel comfortable with this response if I were a member of their board of directors.

There are a few things wrong with the statement “we’ll just have to be smarter.” First, if that is all it would take, then why didn’t you do it six years ago when the merger was first completed? My next concern is that of execution. How do you lead a company to change its decision-making and business strategy by just “being smarter”? Is there a course you can take to accomplish this goal? If so, sign me up … I could always use with being a bit smarter.

The reality is that you simply can’t expect a group of employees and their managers to “get smarter” so they can make better decisions. You can lead by example as CEO, providing insights as to where new market opportunities might be, as well as to show how to operate more efficiently as an organization. I am with the belief that people are probably already doing the best work they can, or least are making the best decision they know how to … the idea to simply “make smarter decisions” is not likely.

Is it possible to embrace a new strategy and take a different direction? Of course. In fact, that is exactly what is needed. The expression of “you can’t please all the people, all the time” comes into play. Perhaps taking a perspective to consolidate and further refine their business might work better here, as a way to be more effective and focused with both strategy and execution. However, this shift would likely involve closing down divisions, which might be difficult for a French firm where strict labor laws prevent such actions.

Sadly, I suspect that if something isn’t done soon, there will be a far worse situation than just a few divisions shutting down … the entire company may go under, which certainly would be a shame. Should the management team try to make the smartest decisions to avoid shutting down? Of course. Making the smartest decisions you can is always the best course. But maybe a bit more strategy is needed than simply making smarter decisions.

 

Gordon Benzie is a marketing adviser and business plan writer that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+

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