Can A Strong Brand Beat a Recession?

Despite dismal economic and business conditions, two companies with strong brands seem to be oblivious to the chaos that surrounds them. In an environment that seems to have no silver lining, Colgate Palmolive and Apple Computer have posted results recently that would make any business envious. How did they do it? Good management and a strong brand appear to be the magical combination to beat even the worst of recessionary conditions.

The current economic environment over the past 12 months has been anything but encouraging. The Dow Jones Industrial Average (DJIA) and NASDAQ Indices are down over 35% since this time last year. The U.S. unemployment rate has risen by 2.3 percentage points - to 7.2 percent - since the start of the recession in December 2007, according to the Bureau of Labor Statistics. The Consumer Sentiment Index reached a 28-year low in 2008, according to the University of Michigan.

Needless to say, the past 12 months have not been conducive to profitable business growth. Yet two companies with strong brands have managed to weather the storm quite well. The strength of their brands has instilled deep customer loyalty that appears to be unbreakable, even when consumer spending is under tremendous pressure.

As economic prognosticators continue to predict doom and gloom, consumers appear willing to spend their hard-earned and well-guarded cash on the brands that they love and trust the most. Consider the recent earnings reports from two brands that lead their respective product categories: Colgate Palmolive and Apple.

Colgate’s (CL) 2008 fourth quarter earnings jumped 11%. Their net income rose to $401.2 million, or 73 cents a share, from $361.2 million, or 65 cents a share, a year earlier. The company, whose brands include Colgate toothpaste, Irish Spring soap and Ajax cleaner, said sales rose to $3.21 billion from $2.9 billion a year earlier. Colgate achieved this stellar performance despite the reduction of worldwide advertising costs by 140 basis points.

Apple (AAPL) recently reported the best quarterly revenue and earnings in the company’s prestigious history. The company posted record revenue of $10.17 billion and record net quarterly profit of $1.61 billion. All of Apple’s key brands showed strong growth: Apple Macintosh® sales grew 9%, iPod sales grew 3%, and iPhones sales grew 88% over the year-ago quarter.

These companies were able to achieve outstanding results in a recessionary environment by establishing and managing a strong brand. That is good news for businesses and economists that are seeking a path to success through the fog of recession.

Apparently, a strong brand can beat a recession. Establishing a strong brand just may be the most critical strategy for any company looking to weather the current – or future – economic storms.

Establishing a strong brand, however, does not happen overnight. A brand is not simply a logo, a tag line, nor a snappy ad campaign. The brand, in fact, is not even defined by the company – but rather the perception that is created in the minds of the consumer. Establishing such a strong and differentiated brand perception takes time and an outstanding customer experience.

As a sign of hope in tough times, companies that have successfully built a strong brand have shown that they can indeed beat the recession.

Improve Maturity with Capabilities

When projects need a strong dose of strategy & direction, leaning solely on requirements just won’t cut it anymore.

If you’ve been a part of any business project during your professional career, you’ve seen the basic formula before: Project teams analyze the current state, identify requirements, and then implement a solution that best meets the requirements. Once the solution is implemented, management turns its attention elsewhere – never to think about that specific area of the business again. This ‘check the box’ thinking can be risky business in an environment where new competitive threats can appear anywhere and anytime.

In today’s fast-paced business environment, businesses need a performance framework that can grow over time, be benchmarked against the competition, and stretch the imagination of employees and stakeholders. Although requirements development will always be a mainstay for any project management discipline, the incorporation of capabilities and maturity models can better position your business for future competition and unforeseen threats and opportunities.

Business requirements will always be a critical element in any project development lifecycle. But they can only take you so far. Requirements – to be effective – must be relatively static and defined to the lowest level possible. When the business solution is ultimately implemented, the determination whether it met the individual requirements is answered with a simple ‘yes’ or ‘no’ with little room for interpretation or improvement.

When project teams are attempting to identify requirements, whether they realize it or not, they are typically simply restating how business currently gets done. New and forward thinking requirements are difficult to identify without some external influence, benchmark, or reference point. This is hardly an effective approach for identifying provocative strategies that will position the business to win in the long term.

Leading businesses and project managers are discovering a new approach to developing – and maintaining – provocative business strategies and solutions that can grow and change over time. They utilize a capability maturity framework that serves as a blueprint and yardstick for continuous improvement. Perhaps one of the best-known and well-established capability maturity models is the Software Engineering Institute’s Capability Maturity Model, which is often referred to as the SEI-CMM or SE-CMM.

The Software Engineering Capability Maturity Model serves the Information Technology function and outlines in clear and specific terms how the software development ‘capability’ can grow and mature over time. The SE-CMM defines maturity for the capability in five distinct levels – with level 5 being the highest or most mature capability.

The capability maturity model provides three important benefits:

1. Capability Maturity Models establish a tangible yardstick for a specific business capability (such as software development) that businesses can measure themselves against. By doing so, businesses can more honestly and accurately identify their current level of abilities.
2. Maturity models identify a specific best practice level for the capability that businesses can strive to achieve. By establishing a tangible continuum, the capability maturity model allows businesses to more clearly gauge the gap between their current and desired capability levels.
3. For standard capability definitions that are widely adopted across businesses and industries, businesses can benchmark themselves against key competition.

Utilizing capabilities as a tool in your project management portfolio has other significant advantages as well. Capabilities provide a framework that can help spur innovative thinking and challenge project teams to think beyond current state requirements. Capabilities, if well defined, can also help project teams to frame out high level requirements more quickly and efficiently than the traditional blank-slate requirements definition effort. Finally, and most importantly, capability maturity models provide a framework for continual improvement; if utilized as a management tool, capability maturity models can measure progress over time and challenge employees and stakeholders to get to the next level.

While simple business requirements development has been a tried and true approach for decades, simple and static requirements can only take you so far. Leading businesses and project managers are discovering that capability maturity models can contribute to developing – and maintaining – provocative business strategies and solutions that can grow and be continually improved over time.

While capability maturity models are best known in the software engineering area, business professionals specializing in areas such as Customer Relationship Management (CRM) and Supply Chain Management (SCM) are developing and utilizing the CMM frameworks to define, develop, and measure their solutions and strategies.

It’s about time. Businesses have been relying on a simplistic model of requirements definition for decades. While this model has served them well, requirements alone can be static, difficult to measure, and often represent only the current state of business. Capability models, on the other hand, can provide businesses with a blueprint and yardstick that can identify tangible long-term goals and measure progress along the way.

Leaning solely on requirements just won’t cut it anymore.

Get PAID: A Unique Approach to Customer Experience Design

Customer experience management can be a complex animal. In order to deliver a holistic solution that works, businesses must effectively align people, process, and technology dimensions across geographies, markets, and channels.

Experienced project managers know that aligning people, process and technology is critical. There have been many business methods, tools, and techniques for aligning these dimensions, but some fall short in tying them together.

A relatively new and straightforward approach for designing holistic and comprehensive customer experience solutions is PAID Diagramming. While the elements of PAID Diagramming are relatively straight forward, the single illustrated view that it provides represents an innovative and holistic approach to customer experience solution design.

The exact origins of PAID Diagramming are not known, but I’ve formalized and refined the technique with numerous clients and projects. P.A.I.D. is an acronym that stands for Process, Application, Integration, and Data:

1. Process Layer: Identifies the high-level business process that enables the customer experience. This layer may also be utilized to represent the customer experience process from the customer’s perspective.
2. Application Layer: The application layer identifies the set of applications that are utilized to support the process layer. Simple lines are utilized to represent which application enables each discrete process step.
3. Integration Layer: The integration layer identifies the major information subject areas and illustrates the linkage between applications and data sources.
4. Data Layer: The data layer identifies the various physical or logical data sources and illustrates how data is integrated with various applications.

A PAID Diagram combines these layers in a series of swim-lanes to provide an architectural view of how processes are enabled by information technology:

THE PAID DIAGRAM MODEL

While the PAID Diagram approach may appear simplistic and straightforward, the approach provides numerous benefits when dealing with complex processes such as customer experience management:

1. Creates a Holistic View: The PAID Diagram combines process and discrete technology enablers in a single view. This provides a clear linkage between process and technology that is typically overlooked in process modeling or technology-based data flow or use-case modeling.
2. Enforces a Process Centric Approach: The PAID diagram starts with the process-layer; an approach that establishes and reinforces a process-centric viewpoint for solution design.
3. Enables Detailed Analysis: Current State PIAD Diagrams provide a holistic view of potential ‘pain points’ in the customer experience process. For example, the process layer can illustrate bottlenecks or disconnect, the application layer can illustrate capability gaps or unnecessary redundancy, and the integration and data layers can illustrate where duplicate and disconnected customer data may reside.
4. Clarifies Future State Visions: PAID Diagrams can be created to reflect the current or future state environment. A future state PAID Diagram provides a single view of how a proposed solution would enhance the customer experience process or specific capability areas.
5. Provides an Architectural Viewpoint: The holistic nature of the PAID diagram provides business and technical architects with a modeling tool necessary to align the various dimensions of the business. When applied across multiple functional areas, PAID Diagrams can be combined to create an enterprise-wide customer experience blueprint that can help to drive customer relationship management, operations, and information technology strategies.

Like most solution modeling methods, PAID Diagrams work best when the appropriate level of structure and discipline is applied to the model. To get the most out of the PAID Diagramming method, businesses should follow some basic best practices:

• Create a Process Hierarchy: PAID diagrams are based on processes. If your company doesn’t have a formal process model, create one. A more formal process model will help to drive the PAID diagramming exercise.
• Keep It Simple: Don’t try to map all processes on a single PAID diagram. Instead, break your processes and diagrams into a hierarchy so that additional levels of detail can be illustrated on a separate PAID Diagram, as appropriate.
• Don’t Over Think Technology: Don’t over think the exact structure or location of physical technology assets or databases. The intent of the PAID diagram is to illustrate enabling relationships. The PAID Diagram is not intended to be a formal IT Architecture Model (but it can help in that regard too.)
• Annotate the Diagram: The more details you can provide with each link, the more meaningful the diagram will become. For example, showing the specific data elements that are being pulled from a database will help identify potential issues or opportunities.
• Use a Standard Modeling Tool Like Visio: For Windows-based computing environments, businesses should utilize a standard business-modeling tool such as Microsoft Visio to create and maintain your PAID Diagrams.

Having helped to design, develop, and implement countless business strategies and solutions in my career, I can honestly say that the PAID Diagram is one of the most useful tools in my toolbox. In businesses where I have used this technique, nearly every one of them have adopted the method as part of their stand solution design methodology.

It just goes to show you that often the simplest of techniques are often the most effective.

Got Blueprint?

Customer Experience: Fine Architecture or House of Horrors?

Imagine what would happen if you had dozens of architects and hundreds of contractors all working on your business. Now image if there was no master plan and each individual spoke his or her own unique language. It’s not hard to imagine that you would have something that would resemble the Winchester House - the now-famous 160-room house that was cobbled together over a 38-year span with no master plan. The house is notorious for stairs that go nowhere, doors that open to a 2-story drop, and a maze of rooms, hallways and doorways that can perplex even the most seasoned of navigators.

Losing site of the big picture can happen to even the best of businesses. When short-term business challenges inevitably arise, decisions can be made in haste to address them. Without a master plan, those seemingly innocent decisions can begin to create a burden for the company in the long run. Independent and uncoordinated business initiatives can result in processes that don’t connect, systems that don’t play well with others, and departments that develop their own unique business lingo that is not universally understood by others.

Like the Winchester house, each individual project may seem like the right solution at the time. However, the compound affect of numerous independent and uncoordinated projects and solutions can result in an Achilles heal for the company: True change becomes increasingly hard to accomplish; integration and sharing of key business data slows to a crawl; and enabling cross-functional processes (aka end-to-end processes) becomes nearly impossible to accomplish. Each function may seem content, but the business as a whole can begin to suffer due to inflexibility, knowledge hoarding, and turf wars.

Indicators that your business may suffer from the ‘Winchester House’ syndrome:

1. Process Indicators: Business processes are not well defined or understood and each function prides itself on simply doing whatever is necessary to ‘get the job done,’ even if it requires winging it now and then. Each functional area designs, develops, and manages its own unique processes with little or no sharing of best practices across functional areas.


2. Technology Indicators: Each functional area has its own set of business applications and data. Applications often don’t work well with others and data is not consistent across departments. Key business information is fragmented and stored in multiple locations and collecting data to conduct company-wide analysis is a long, difficult, and largely a manual process.


3. People Indicators: Individual functional areas have very specialized people, and it takes years to train new employees to ‘learn the ropes’ of the business. Employees care only about their functional area, have their own set of performance goals and metrics, and don’t understand how or why other functional areas get things done.

Unfortunately, when companies lose sight of the bigger picture and become a victim of the ‘Winchester House’ syndrome, the customer experience invariably suffers. Customers can be inconvenienced by inconsistencies between touch points, lack of integration between channels, and absence of a meaningful relationship between customer and company. The company’s internal processes, policies, and infrastructure often ‘get in the way’ of providing the customer with what they want; an emotional connection to the company powered by great service.


See the Forest Through the Trees

Businesses that want to avoid this fate can and should establish, adopt, and diligently adhere to an enterprise customer experience blueprint; a holistic model that defines how every component of the company should work together in a seamless and consistent manner to enable and optimize the customer experience. Furthermore, the enterprise blueprint can help a business to develop a detailed master plan for where the business is today and where it is going.

An enterprise blueprint can help any business to avoid the ‘Winchester House’ syndrome by serving as a detailed model for how the customer experience is influenced and enabled by the compilation of people, process, and technology assets. A comprehensive enterprise blueprint will consist of a detailed definition and model for each major component that comprise the business. This model can be invaluable for identifying any current deficiencies as well as charting a future course for the business.

A comprehensive enterprise customer experience blueprint includes several key dimensions:

1. Customer Experience Lifecycle (Customer): A formal definition of the customer experience lifecycle process from the customer’s perspective. The process includes a complete end-to-end view of how customers are attracted, acquired, facilitated, served, and cultivated well after the point of purchase.


2. Enterprise Business Process (Process): A formal and detailed enterprise process model that defines all major processes, sub-processes, and activities that comprise the enterprise. Ideally, the process model should be defined as a hierarchy to allow both low-level analysis and optimization as well as executive-level roll-up of detailed activities into larger process areas.


3. Enterprise Systems Architecture (Technology): A complete information technology model that identifies and defines key IT capabilities, applications, data, and infrastructure. Ideally, the components of the IT architecture model should be expressly linked to the customer, process, and people dimensions of the blueprint.


4. Enterprise Organization Chart (People): An enterprise-wide organization chart that includes an up-to-date definition of the reporting structure, roles, and responsibilities.


5. Enterprise Business Metrics (Value): A standardized definition of all key business metrics that includes a definition of how the metric is calculated and where key data is sourced from in the enterprise.


6. Corporate Strategy (Strategy): A clear and well-defined strategy that sets the long-term goals and directions for the company. The corporate strategy should include components to define specific strategies for areas such as the brand, market, product, service, price, promotion, channel, and customer experience.

Enterprise Blueprint – It Does Your Business Good

Businesses that are seeking clarity to their current and future business environment can develop their own enterprise customer experience blueprint by identifying and analyzing their key business assets:

1. Assemble available business artifacts: Gather all available customer experience processes, business processes, technology architectures, organization structures, business metrics, and strategies that are available for the business.


2. Identify gaps and inconsistencies: Evaluate the existing business artifacts to identify what is missing, where inconsistencies or duplications occur, or where additional detail is lacking for each of the major dimensions (customer, process, people, technology, value, and strategy).


3. Create standard definitions and assemble the blueprint: Create and agree to a common set of standards to accurately define and describe each dimension of the blueprint and close any gaps that are identified. Consolidate and summarize all artifacts into a comprehensive enterprise customer experience blueprint and keep them up to date. Use the blueprint as a management tool to guide the business going forward.

Developing and using a comprehensive blueprint has its benefits; businesses that define and maintain a comprehensive enterprise customer experience blueprint can improve their return on investments, increase productivity, and improve the customer experience:

• Improved ROI: Initiatives that are better aligned with the enterprise blueprint can result in fewer conflicts and duplication of efforts. Furthermore, short-term efforts can be better aligned with long-term goals so that all resources are rowing in the same direction.


• Increased Productivity: Business can run more smoothly and produce more for the same or less effort by leveraging common resources, speaking the same process and business metric language, and by using a common and consistent set of information. Furthermore, businesses can make better decisions based on a more holistic and consistent view of enterprise-wide capabilities, issues, risks, and opportunities.


• Improved Customer Experience: Businesses that have aligned their people, process, and technology components are better equipped to provide meaningful customer experiences. When aligned and consistent, the business infrastructure can serve as a true enabler – rather than a hindrance – to powerful customer experiences.

Executive Summary

Over the course of the lifetime of a business various business challenges, opportunities, and issues will arise and be solved by numerous and seemingly innocent business decisions; decisions that result in new processes, organizational structures, and systems. Without an overarching blueprint to guide these decisions, however, the legacy of various and uncoordinated initiatives can be crippling. As more and more independent decisions are made, the weight of inconsistent processes, duplication of duties, and incompatible systems can burden both the company and the customer.

Business that want to avoid this fate can and should establish, adopt, and diligently adhere to an enterprise customer experience blueprint; a holistic model that defines how every component of the company should work together in a seamless and consistent manner to enable and optimize the customer experience. A comprehensive enterprise customer experience blueprint includes several key dimensions including a 1) Customer Experience Lifecycle Process (Customer), 2) an Enterprise Business Process Model(Process), 3) an Enterprise Systems Architecture (Technology, 4) an Enterprise Organization Chart (People), 5) Enterprise Business Metrics (Value), and 6) a Corporate Strategy (Strategy).

If your business were a house or building, what would it look like to your employees and customers? Would it be structurally sound, open, and inviting? Or would it be cluttered, broken up and difficult to navigate?

Having the right blueprint can make all the difference.

If the Economy Sours, What Will Your Customers Do?

Recent news coming from Wall Street won't exactly fill your stockings with Holiday cheer. In fact, it may make you think about tucking a bit of your discretionary cash under the mattress for the proverbial rainy day. If the economy does sour, what will your customers do? Will they continue to spend as they always have, or will they begin to pare back spending?

Typically, the U.S. consumer is a hearty bunch. Despite previous economic setbacks, consumer spending has kept the economy moving forward; the result has been six consecutive years of U.S. GDP growth, including a robust 4.9 percent growth rate in the 3rd quarter of 2007 according to the U.S. Department of Commerce. But the latest round of economic signs should prompt all businesses to think twice about where the economy might be headed.

The economy may very well weather the latest storm of rising energy prices, falling home values, and tightening credit markets and continue its long running growth trend. If so, then businesses should simply ignore all of the shouting and arm waving about a potential recession. But what if consumer spending doesn’t bail out the economy this time?

Recent economic news won’t do much to comfort the U.S. consumer psyche:

Consumer Confidence Drops: The November 2007 Consumer Confidence Index as reported by The Conference Board fell to 87.3, continuing a downward slide since the feel-good ratings of 105.6 posted in August.

Property Values to Decline: The U.S. Conference of Mayors report that property values could decline as much as $1.2 Trillion across the U.S. in 2008.

Personal Income Growth is Slowing: Personal income grew only 0.2 percent annually in October, down from 0.4 percent in September according to a report published on CNBC.com.

For more news on the US economy, see the article US Economy Sees More Signs of Weakness posted on CNBC.com.

Perhaps nobody can truly predict how the economy will perform or how consumers will respond. But the U.S. consumer is being squeezed on a number of different fronts. Personal income growth is slowing, home values are declining, and variable rate mortgages will affect millions of households. As a result, consumers may change their spending behaviors to respond to these financial pressures.

Being prepared for a potential change in consumer spending behavior may be the best medicine for your business. Don’t be caught off guard if your customers cut back spending or defect altogether because of increasing price sensitivity. Instead, develop a strategy that can better prepare your business for a variety of potential scenarios.

Every business should incorporate some form of scenario planning into their business strategy, especially in times of economic uncertainty. Scenario planning is a strategy planning method that identifies and anticipates how the business will respond given a series of potential economic or business outcomes.

For example, how would you compete for customers if your competitor cut prices by 25%? Or 50%? What would happen if an economic recession cut the demand for your product or service in half? Would your business be in a position to capitalize if a chief competitor went out of business? What would your business do to prevent a spike in customer defections? Although not every scenario is equally probable, being prepared with a plan or strategy can better position your business to weather any potential economic storm.

Begin your preparations today by creating a comprehensive list of potential scenarios that could impact your business. List all scenarios, regardless of how outlandish they may seem. Then assign a probability factor to each scenario. Those scenarios that have the highest probability should form the foundation of your business strategy in the short term. Evaluate your business’s ability and readiness to respond to each scenario then develop a plan to fill any gaps.

Changing economic and market conditions can have both short and long term affects on consumer behavior. Therefore, businesses should review their list of scenarios regularly and continually adjust the probability of each scenario. By doing so, you just might be better prepared to handle whatever the economy might throw at you and your business.