Outlay vs. Outcome: Why I need to diet AND exercise (or, why is “purchase intent” better than “likes” or “retweets”)

Classical scene in our house post any exam for the 8th grader child: One parent checking child’s answer against question paper. Child ofcourse answering to less-than-parent’s-satisfaction. Parent in glumpish/ lecturish/ sad/ disappointed mode. Child whining – but ma, I STUDIIIEEEDDDD – for TWO hoooouuuurrrrssss….

Actually mirrors my own scenario to a certain extent with the whole aerobics/ swimming business. I began attempting to get some exercise the beginning of this year (for the first time ever, I may add). Some 46 weeks later – very very very very marginal reduction in inches and kilos.

(Credit)

Reminds me of our early partner calls running our start-up, when we would each ask the other partner – so, what’s the sales pipeline looking like. And, one of us would always say – see, I called company XYZ, tried to catch person ABC, attempted to get a meeting with so and so….

What’s common between each of these? Effort – Much. much. much. much…. Result – Zilch. zero. zip…

The point is, most of us very often kind of give sop to our consciences saying – I put in so much effort – I studied x hourse/ did y hours of community service/ made so many calls/ research so many papers. NOT IMPORTANT – what IS important is – did you achieve what you were trying to? Did it have the required outcome/ the impact???

Honestly, if it didn’t, your effort went waste! There is a saying – don’t just work hard, work smart. It’s to do with this outlay vs. outcome thing. ROI is a key metric most smart organisations measure – how much “bang for your buck” are you getting? Are you able to get higher turns out of your resources – inventory/ capital/ people time…and, the only way to do it is to be efficient/ smart/ outcome focused.

A good tool to measure this is a time sheet – I remember in the early days of our startup, we four founders decided to fill up time sheets – one week into the game, and i had trouble accounting for my 18 hours that i burnt the midday and midnight oil at. It was astonishing for how many of the hours, I would have probably put in “email” and/ or “internet”…(ofcourse, we were a virtual organisation, hence email was important; and we were a secondary research oriented org, hence the internet was inevitable) – but still, eye opening!

It’s a classical HR conundrun also – do you hire/ keep the “well intentioned/ great attitude” employee, or the “expert” one – who probably comes with all kinds of baggage of maintenance. A smart company actually hires a mix – and the managing of this mix determines the success or not of the org.

Interestingly, this is counter intuitive advice from what the Bhagwad Gita (a well known Indian tome) gives you – Karmanyevadhikarastey, ma faleshu kadachana – means keep focussing on your work, don’t worry about the result. (looks like this has had a great impact of me one way or the other – I just realised I used it in a completely different context in an earlier blog). I think, it would have been better if Krishna said – “work ofcourse, but work towards a goal – results will come, so don’t worry about them” :).

I saw a depressing example of the flip side of this advice actually a few days ago. As most Indian corporates know, recently the Companies Act got revised, and it now includes a provision that companies have to show spend of 2% of their net profit on CSR activities. A friend (and former co-founder) now actively in the CSR space wanted to pitch advisory services to firms about how to make use of these “mandatory” funds to make an impact. The finding in most cases is, that companies don’t really care about impact – they care about the “doing” – so, its all – “We Spent XXX Volunteer hours on CSR activities” – OoooKaayyy, what did you achieve? “uh-duh…who knows, who cares, how do we find out, why should we measure”! Kinda defeats the spirit of the act, don’t you think?

Another corollary – the whole Social/ Digital Media ROI piece – most folks are chasing likes/ retweets/ shares – and calling it engagement. Sure, these are good goals to chase as a FIRST step – but thats all they should be – a means to an end. Unless it translates to actual brand health KPIs – like, consideration/ purchase intent/ recommend-ability, loyalty…its all so much “feel-good” stuff.

I read this interesting article recently on HBR – pretty much says the same thing; slamming “being slammed/ busy/ neck deep in work” on grounds of outcome vs. outlay, worth a click.

What’s the solution though – how do you make sure you keep end objective in sight and don’t get bogged down by the effort. Most of you management sorts probably HAVE the toolkits, for me, a simple daily checklist worked well (I loved the ticks against each completed task) – but this daily checklist needs to get collaborated against yr monthly / quarterly/ annual goals. (It’s end of the year, folks – I’m sure many of you are now filling out “traffic signal” sheets against goal achievement? ).

For weight loss, I’m onto a protein only, no carbs diet for some time starting, uh, tomorrow? 🙂 (I see with my own eyes the much better effect of a combi diet-cum-exercise regime on my aerobics classmates everyday!).

Credit

Regarding kids, and how one makes them goal oriented, and not effort oriented – well, I have NO answers! (Its amazing how the simplest parenting problem is so much more insoluble than the most complex corporate one isn’t it?) Anyone with any idea, DO PLEASE pitch in!!!!

Social Media: More a Research/ Analytics than a Marketing Tool?

Read an article yesterday about increasing apathy amongst college goers on brands’ social media marketing efforts. Add to that another from the flip side of the coin – CMOs. According to a recent study, only 15% of U.S. CMOs have been able to quantitatively prove Social’s impact!

It kind of points towards an old felt-but-not-quite-articulated hypothesis I had! At the time, I used to think that I felt this way because my business was more focussed on the use of social media for a “learning” experience, not so much an “outreach” one. And this despite the fact that marketers we spoke to almost always were interested in the lower hanging fruit, i.e., the marketing using SM. So, when we went in with a pitch that said – “hey, this is what social media can teach you about your consumer or your competitor or your brand”, they would say, “hey, can you help us make our facebook page better”! Maybe it was compounded by the fact that the consumer insights/ market research people, those that would truly benefit from this, turned up their noses at this “unconventional, unstructured, “qualitative”‘ data source and took whatever we said with a pinch of, no! scratch that – huge dollops of salt! (See my very first blog post on this question of whether social media research is fish or fowl! )

So my hypothesis was just this – that Social’s FIRST and BIGGEST benefit was as a data source for higher consumer understanding. After all, this was/ is a medium that is changing the way people talk/ behave/ share/ opine – in many cases, this reflects people’s needs/ wants/ perceptions/ attitudes/ usages/ purchases. Most importantly, it is PEER to PEER. And proactive/ not reactive. Why then would you not leverage it for classical research questions? (Sure, it applies only to that percentage of the population that is connected, but, a) that is a large number in most countries now and b) even where it isn’t, it can be used as a proxy for the relevant categories.)

Ofcourse, I don’t think we should be ready to junk Social Media as a marketing tool yet – in fact, my hypothesis notwithstanding, I do think that the world is getting more digital – and therefore, marketers have no choice but to follow their consumers – i.e., go where the consumers go – in other words, social..

So then, what causes the CMO’s disenchantment with the medium? Maybe its the inadequate/ non standardised measurement/ metrics piece – obviously, if you aren’t convinced about how you are measuring input and output, you will not be convinced of the ROI of your spend. (See my older post on KPIs for Social Media Measurement for a way towards metrics and KPIs)

What is your take? Marketing or Research? (or measurement?)

(Credit: conversition.com)

How to Create Social Media KPIs : The Science of Indices

Yesterday my nephew, who is an earnest young brand manager in a lifestyle/ accessories Indian brand, was staring at his computer. When asked why he was looking so perplexed, he said – We’ve created this really nice campaign on facebook, which is engaging as well as makes a very powerful brand statement. Its also a first of its kind we think. Problem is – I am not sure how to figure out whether it’s doing well, and my bosses – all they are saying is – have you doubled your “likes”?

As we all know, he is not in a minority – everyone on Social Media is chasing the ROI holy grail.

But, I really think in our quest for this elusive target, we are tending to overcomplicate Social Media.

Sure, “likes” is too unilateral and limiting – especially when facebook doesn’t allow dislikes. Everyone also knows we should also measure sentiment – positive or negative. But then comes “response” which signifies “engagement”. And then there is also “relevance” – given that Social media has a) so much spam, but also b) so much that’s just random thoughts/ opinions/ rants that either don’t give you an insight into your brand, or don’t meet the objectives you have set out for your campaign.

So, what do you do? Its simple! You create metrics for each such that you can individually measure each parameter that you want to measure.

But ofcourse, there’s the C Suite who want your elevator pitch on – how are we doing? (3 seconds does NOT allow you to say – weeellll, on likes we are better than January, but on engagement we are slower…and sentiment is half positive – half negative – and the rest neutral (yah yah I know – it doesn’t add up!). Your CMO is going to walk right out of the room.

Hence, you create this snazzy sounding “Index” – you can name it ANY godd#$% thing. Integrated Performance Index (sounds even cooler as an acronym IPI ☺ )/ Social Media KPI/ Virality Index (I used that in the old days)/ Brand Health Index… / Campaign Success Index…

What is the Index finally? It is a multi attribute weighted number (remember I had said that most management professionals must be grateful to BCG for the 2 by 2 matrix? So also should a lot of folks thank the guy who invented this decision making methodology. So, you take whichever parameters you think you should measure, ascribe weights to them, and derive your index out of the weighted average of these numbers.

Simple? A-ha! The complexity really resides in WHAT parameters to choose and, more importantly, WHAT weights to ascribe. (A quick google to get some actual statistical validity here brought me to this complex article called “On the convergence of multiattribute weighting methods” in the European Journal of Operational Research – for those who are so inclined, please delve into the advantages of the ratio vs. the swing weighting vs. the tradeoff vs. the pricing out method ☺ )

But statistical theory apart, this above is what is the most important factor in getting the relevance of your index or KPI. The weights of each parameter really depend on a few things:
a) The marketing objective of the campaign/ channel – Is it to spread awareness, to engender better knowledge, to direct towards trial, purchase or loyalty – different objectives will have different weights
b) The product category itself – Is it an introductory/ launch category; a growth one or a stable one – where exactly in the PLC does it stand
c) The competitive scenario – how active or inactive are competitors (both category competitors and mindshare/ walletshare competitors) in the social media space – what is the clutter out there that your campaign has to break!
d) How much effort – time/ money/ people are you investing behind the campaign – actually, this is a bit of a circular function as this will to a certain extent depend on the marketing objective – atleast in the ideal scenario

All the above will help deciding weights – the allocation is however likely to be a bit of an iterative situation.

So there you have it – your quick and easy guide to creating your perfect unified/ integrated KPI for your Social Media Campaign (or for that matter any other). Where’s my consultancy fee?

Meanwhile, lemme go see if my young nephew created the right algorithm to keep his bosses happy ☺

Making Exponential Money – Build Buy or Break Companies?

“Making more money is a noble pursuit” (anonymous)

For most of my generation as for me, “Pretty Woman” was the defining romantic movie – the corporate head honcho falling in love with the street girl is true fairy tale stuff. But one scene from that movie that stayed on in my mind for a long time, and resurfaced from time to time was when Julia Roberts tells Richard Gere – “so, you dont build anything, you actually break up companies and then sell the parts – like selling stolen parts of the cars”.

I’m sure all my investment banker friends winced at that scene – after all, the shipyard that Gere was “breaking up and selling” was tremendously devalued, and selling it off did make financial sense! Infact, this in essence is what makes for “abnormal returns” for most organisations – buying, selling, piecing together different parts of different companies. My husband’s company – and I’ve seen them for the past 10 years now – have made far more money buying and selling pieces of themselves and other companies in various sizes and forms than they have made by writing software — and they are purportedly a banking software product firm ( a market leader at that!)

I was reading some stuff about “differential accumulation” – which said that companies make exponential, i.e., above normal rates of profits in the following ways – by increasing “breadth” or “amalgamation” – which means hiring or buying out more employees (remember you buy out employees also when you undertake mergers and acquisitions) ; or by increasing “depth” – which could mean you work your employees more (cost cutting is one manifestation of it); or you could increase prices beyond your competitors (stagflation). Whichever way you do it, you essentially leapfrog the “growth stage” of your organisation and create exponential wealth.

But, how do PEOPLE make more money – i mean exponentially more money – abnormal rates of money? I remember my friend Adi – who is a C-Suite exec in a telecom major – coming over a couple of years ago, and saying – “i’m tired of the low ROI on my effort and my brains. Yes, i make much more money now than i did when i graduated from B School (omg, nearly 20 years ago even back then!!!) but i also have many more years of experience and i put in many more much more intense hours than i used to back then — so, its really “sweat” money — i want to now make “sweet money” – extraordinary money!

He looked hopefully at me and said OK, so you turned entrepreneur, maybe you’ll do it! At that point of time, this was laughable (if only i hadnt felt like crying) – my ROI was probably negative! I slept like 3 hours every 48, was completely bogged down with making ends meet ie paying rents and salaries, was earning zilch myself, saw my kids once a week, and they had nearly started calling me aunty!

Over several mugs of of Mallya-brew, we figured it was probably true — entrepreneurship was one of the ways to make extraordinary money. But this unfortunately didn’t happen during the journey as an entrepreneur – but at the exit – so when you sold out, or you IPO-ed. It’s true btw that economic growth of a country/ area is highly correlated to the abundance of small entrepreneurial firms in that geography! The only other way we could think about was – when you traded – i.e. you made money for your company, and by virtue of commissions, you made some for yourself (I still think the roi there isnt high either! – think of the high burnout rates)

Soon after, i was visited by another entrepreneur in the same space as my company was – this was a potential investor so we were being nice to him. We weren’t quite in the sell-out stage yet, so he was doing a bit of selling himself about why we should consider joining with him and his company. He said – you guys run a cool operation here – i can see it. On your own, you will achieve your 30 – 40% CAGR over 5 years – you will make your 30% EBIT (yep, we were in the KPO space – highly profitable!) – you may even sell off and make more money. But then, he told us about his co-founder – “Rishi is one of the few people who can do this “funny money” thing – ie, he can add 2 and 2, and make it 10, nay 20! and THATS how you will make “abnormal money” – he was again, a-la- Pretty woman, referring to deal making really – the ability to break up pieces/ structure deals differently, add non traditional pay offs, and hence catapult the company to non linear growth phases.

Its another matter that we did plod on doing our 28 hour days for another couple years after that. Even at the end, when we did sell, i dont really think we made exponential money – if you compute opportunity costs of the 8 1/2 years of low/ no salary @ 28 hour days, we probably didnt even break even.

But, as i reflect on those 8 years, i think i’m much richer now than i ever was – i touched nearly a 1000 families (amongst all employees, vendors, partners); hopefully made their lives richer (well, they all got married/ had babies/ bought bigger cars/ bigger houses 🙂 ); i built an asset in a space where none existed- outsourced social media analytics; i laughed/ cried/ swore/ failed/ tried again/ thumped backs/ celebrated…and i did, in my own small way, make a contribution to society!

So, in answer to the original question – can you make abnormal MONEY if you are entrepreneur? maybe…
can you create abnormal CAPITAL (human/ social/ mercantile) if you are one? Oh yes!

Ask Richard Gere – as he went climbing those stairs in pursuit of Roberts with flowers in his teeth!