Monthly Archives: July 2014

Mr. Selfridge’s Philosophy is Timeless – And Still Valuable

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Originally posted on StratGo Marketing. Plug-in marketing department services.:
Photo: PBS.org Thanks to the PBS Masterpiece series Mr. Selfridge, viewers on both sides of the pond have been introduced to the world of retail marketing and merchandising innovator Harry Selfridge. In 1909, Harry Gordon Selfridge launched his eponymous London department store Selfridges, which today is…

Microsoft’s Epic S*** Sandwich RIF Letter

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Elop

We’ve all seen letters/press releases announcing reductions in force  – – usually brief, sometimes using euphemisms – – and many of us have been impacted by them.  Not fun.

We’ve also been schooled that when you have something unpleasant to say (say, in a private performance review), surround it with a positive lead-in and a positive ending – the so-called S*** Sandwich.

We have now seen what happens when a senior executive (seemingly without adult supervision) attempts to use said Sandwich approach on a massive scale, publicly, with consequences that impact an enormous number of people.  And it ain’t pretty.

Yesterday, Stephen Elop, inherited when MS bought Nokia and now running Microsoft’s Devices Group, sent a letter to MS employees announcing a huge reduction in force (12,500 employees).  He drops this bomb after 10 paragraphs of corporate-speak (bread #1), and then devotes all of 2 sentences to huge staff reduction, one of which is reserved to cover the human impact.  He then goes on to describe other steps being taken to achieve the corporate goals (bread #2).

You can read the entire letter below.  By doing a quick scan, you can see that there is a single number in the entire 1000+ word missive:  12,500.  And you can bet that that number is the one takeaway shared by all MS employees.

This letter is not a secret: it is posted on Microsoft’s own site:  http://www.microsoft.com/en-us/news/press/2014/jul14/07-17announcement2.aspx

This has the feel of someone who is trying to sneak in some bad news without the other person noticing: “Hey, how ya doing?  Like the new haircut.  Cool about LeBron coming back to Cleveland.  Sad news about Johnny Winter.  I ran over your dog.  Hey, I think the Cubs can make a comeback in July”.

Anyone who has gone through the trauma of being involuntarily detached from their livelihood knows that it is always shocking and usually devastating.  It needs to be treated with sensitivity, with regard for the dignity of those affected.

It is nice to know that this RIF is in the service of the very detailed strategic corporate goals outlined in Mr. Elop’s letter.

So for those of you who are affected:  my sympathies, both in the event and in the way it has been positioned
To Mr. Elop:  Easy for you to say

Below is the entire text:

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Hello there,

Microsoft’s strategy is focused on productivity and our desire to help people “do more.” As the Microsoft Devices Group, our role is to light up this strategy for people. We are the team creating the hardware that showcases the finest of Microsoft’s digital work and digital life experiences, and we will be the confluence of the best of Microsoft’s applications, operating systems and cloud services.

To align with Microsoft’s strategy, we plan to focus our efforts. Given the wide range of device experiences, we must concentrate on the areas where we can add the most value. The roots of this company and our future are in productivity and helping people get things done. Our fundamental focus – for phones, Surface, for meetings with devices like PPI, Xbox hardware and new areas of innovation — is to build on that strength. While our direction in the majority of our teams is largely unchanging, we have had an opportunity to plan carefully about the alignment of phones within Microsoft as the transferring Nokia team continues with its integration process.

It is particularly important to recognize that the role of phones within Microsoft is different than it was within Nokia. Whereas the hardware business of phones within Nokia was an end unto itself, within Microsoft all our devices are intended to embody the finest of Microsoft’s digital work and digital life experiences, while accruing value to Microsoft’s overall strategy. Our device strategy must reflect Microsoft’s strategy and must be accomplished within an appropriate financial envelope. Therefore, we plan to make some changes.

We will be particularly focused on making the market for Windows Phone. In the near term, we plan to drive Windows Phone volume by targeting the more affordable smartphone segments, which are the fastest growing segments of the market, with Lumia. In addition to the portfolio already planned, we plan to deliver additional lower-cost Lumia devices by shifting select future Nokia X designs and products to Windows Phone devices. We expect to make this shift immediately while continuing to sell and support existing Nokia X products.

To win in the higher price segments, we will focus on delivering great breakthrough products in alignment with major milestones ahead from both the Windows team and the Applications and Services Group. We will ensure that the very best experiences and scenarios from across the company will be showcased on our products. We plan to take advantage of innovation from the Windows team, like Universal Windows Apps, to continue to enrich the Windows application ecosystem. And in the very lowest price ranges, we plan to run our first phones business for maximum efficiency with a smaller team.

We expect these changes to have an impact to our team structure. With our focus, we plan to consolidate the former Smart Devices and Mobile Phones business units into one phone business unit that is responsible for all of our phone efforts. Under the plan, the phone business unit will be led by Jo Harlow with key members from both the Smart Devices and Mobile Phones teams in the management team. This team will be responsible for the success of our Lumia products, the transition of select future Nokia X products to Lumia and for the ongoing operation of the first phone business.

As part of the effort, we plan to select the appropriate business model approach for our sales markets while continuing to offer our products in all markets with a strong focus on maintaining business continuity. We will determine each market approach based on local market dynamics, our ability to profitably deliver local variants, current Lumia momentum and the strategic importance of the market to Microsoft. This will all be balanced with our overall capability to invest.

Our phone engineering efforts are expected to be concentrated in Salo, Finland (for future, high-end Lumia products) and Tampere, Finland (for more affordable devices). We plan to develop the supporting technologies in both locations. We plan to ramp down engineering work in Oulu. While we plan to reduce the engineering in Beijing and San Diego, both sites will continue to have supporting roles, including affordable devices in Beijing and supporting specific US requirements in San Diego. Espoo and Lund are planned to continue to be focused on application software development.

We plan to right-size our manufacturing operations to align to the new strategy and take advantage of integration opportunities. We expect to focus phone production mainly in Hanoi, with some production to continue in Beijing and Dongguan. We plan to shift other Microsoft manufacturing and repair operations to Manaus and Reynosa respectively, and start a phased exit from Komaron, Hungary.

In short, we will focus on driving Lumia volume in the areas where we are already successful today in order to make the market for Windows Phone. With more speed, we will build on our success in the affordable smartphone space with new products offering more differentiation. We’ll focus on acquiring new customers in the markets where Microsoft’s services and products are most concentrated. And, we’ll continue building momentum around applications.

We plan that this would result in an estimated reduction of 12,500 factory direct and professional employees over the next year. These decisions are difficult for the team, and we plan to support departing team members with severance benefits.

More broadly across the Devices team, we will continue our efforts to bring iconic tablets to market in ways that complement our OEM partners, power the next generation of meetings & collaboration devices and thoughtfully expand Windows with new interaction models. With a set of changes already implemented earlier this year in these teams, this means there will be limited change for the Surface, Xbox hardware, PPI/meetings or next generation teams.

We recognize these planned changes are broad and have very difficult implications for many of our team members. We will work to provide as much clarity and information as possible. Today and over the coming weeks leaders across the organization will hold town halls, host information sharing sessions and provide more details on the intranet.

The team transferring from Nokia and the teams that have been part of Microsoft have each experienced a number of remarkable changes these last few years. We operate in a competitive industry that moves rapidly, and change is necessary. As difficult as some of our changes are today, this direction deliberately aligns our work with the cross company efforts that Satya has described in his recent emails. Collectively, the clarity, focus and alignment across the company, and the opportunity to deliver the results of that work into the hands of people, will allow us to increase our success in the future.

Regards,

Stephen

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Jobs Cut

A Non-Techie’s Guide to the Internet Commerce Trade Show (IRCE)

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This year was the 10th anniversary of the Internet Retailer Conference and Exhibition (IRCE) and my first year of attendance.

IRCE logo

Trying to neatly summarize this sort of confab without a experience as an e-commerce operator is sort of like assuming you can translate Portuguese based on having watched the World Cup.  The show was large, chaotic and alien – sort of like walking into 100 Star Wars bars simultaneously.

So while I have decent e-retailing experience, I will not attempt to make sense of all of this.

But I do have some observations.

E-Commerce is based on a few simple objectives, not too different from the marketing funnel used for any other product marketing, but with different terminology:
– gain the right customers’ attention  (‘engagement’, ‘click thru’, ‘open rate’)
– encourage purchase (‘conversion’)
– efficiently delivering (‘fulfillment’, ‘final mile’)
– establish a relationship (‘customer experience’)
– encourage repeat purchase (‘loyalty’, ‘retention’)
– encourage WOM, referrals (‘evangelism’)
– etc.

Simple, no?  I mean, we all shop online, how difficult could it be?

Well, let’s illustrate some of the complexities using a typical grocery store as the template.  Imagine running this store.

This is a store where:
the store itself serves the entire world — yet it needs to be built to serve the right volume of customers profitably
– finding the store requires a guide — yet the description that will lead to your store changes every 6 months
– your most loyal customers can be lost if a competitor offers to carry the groceries to the car for free
one of your big vendors (i.e. ISP) can have a bad day and you are unable to open, with no control
competitors can pop up virtually next door – instantly – and go away just as fast
– about 4 in 10 customers fill up their carts and then exit the store, leaving the cart in the aisle
a person with bad intent could lock the doors of your store –  from thousands of miles away
your loyal shoppers are barraged with promotional messages from stores right next door – and around the world
your competitors’ customers don’t necessarily live nearby – – but you still have to find them
– some of your competitors sell products to an enormous store that’s in every market, and which sells them cheaper (hint: starts with an ‘A’)
– and all of this is changing at light speed — Yikes!

On the other hand, all is not lost.  Imagine if your store could:
remind customers when important events are, and even suggest items to buy for the occasion
– send customers totally personalized communications, including catalogs – – as often as you want, for almost nothing
make recommendations to your customers about what they might love, based on what they’ve already bought
– send customers not just promotions, but at the exact time that you know they typically buy, and the deals that they respond to
enable your customers to tell all their friends about your great store – – instantly, when they’re most excited
follow up every single purchase to make sure everything is ok
dress your store up for the holidays or another event – – instantly
change what your store offers based on what your customers are buying elsewhere
enable customers to order merely by touching the picture in the ad

This is the magic of e-tailing.  The ability to reach and influence is remarkable, and the rules are constantly changing.

Here are a few companies whose products looked interesting:

Ship 2 My ID – – from their website: “Ship2MyID is a social commerce enabler that will allow users to buy items online and send them to others without needing to know the receiver’s physical address. Both the sender and the receiver’s physical addresses are kept hidden from each other, and the receiver has to accept the shipment, ensuring security.”  Got it?  You give them your email or social media ID, they help someone ship something to you without their knowing your address.  yes, me too.

ShipToMyID

 

OrderGroove – encourages all-important loyalty by enabling subscription ordering (i.e. they figure out when you run out of vitamins, diapers, dog treats, whatever, and facilitate having the manufacturer send to you.)

Ordergroove

Bitpay – Still don’t understand bitcoins?  Doesn’t matter.  With these guys, your store can still accept them.

From their site:  “Instant conversion, no transaction fee, and bank deposits in US Dollars, Euros, GBP, CAD and more. We take the bitcoin exchange rate risk, your customers get the best rate on the market, and you get a payment you can count on, every time.”

Sounds pretty low-risk to me.

Bitpay

FeedVisor – Algorithmic Repricing for Amazon Sellers!   I will admit – – not 100% sure what these guys do.  Maybe not even 50%. There was a crowd of intimidating techies crowded around the booth so I just gave them wide berth and moved on.

Algorithmic Repricing

 

The IRCE show is one trade event that is actually worth attending every year, because you know that in a year everything will be completely different.

 

Direct Mail’s Identity Crisis

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We’ve all noticed that as emails have multiplied, the complexion of our snail mail has changed.

It seems that Direct Mail is an industry in dramatic transition.

Not only are marketers more able to individually profile and target consumers, but technology is starting to make it possible to eliminate most junk snail mail altogether.
– Consider PaperKarma, which automatically unsubscribes you from junk mail.
– Or more dramatically, the late, great disrupter Outbox, which went for the whole bundle in working through the USPS to allow consumers to digitize all of their postal mail so that individuals could get rid of junk mail, keep important things organized and never have to go out to their mailbox again. Despite strong market response, the USPS squashed Outbox.  See their very interesting story here.)

And yet, there are plenty of signs that there’s a lot more work to be done.

Consider the following examples:

1) Restoration Hardwareas posted last year, RH again sent its grandiose collection of ‘Source Books’ — only instead of 7 lbs, we got 15 lbs in the form of 12 separate catalogs with over 3000 pages.    We didn’t request this catalog, nor did we buy anything from RH in the last year (nor did we actually open the last shipment).

Restoration1

– The apparent environmental plunder generated predictable outrage, including a clever Tumblr called ‘Deforestation Hardware’.

Seems like an enormous waste to print and ship.  Yet RH claims that by sending once per year on heavy stock, they actually print fewer pages than many competitors, and encourage online shopping, which is a growing % of their business.  At the same time, the shipping label claims ‘UPS CARBON NEUTRAL SHIPMENT’, whatever that means.  You can find their whole array of disclaimers here.

Personally, I doubt that many consumers keep these things on the coffee table for a month, let alone a year, and the optics are a PR disaster.  It seems more like an ego play by the boss, Gary Friedman.  I’m just glad I didn’t run into my mailman the day he had to deliver these to the neighborhood.

Lesson:  As online shopping continues to morph, the role of ancillary vehicles (like direct mail) will continue to morph as well – – in this case, moving from an immediate revenue-generation prompt to (theoretically) serving as a visual brand reminder, much as broadcast media has traditionally done.

2)  Effective Targeting,  Or Not.   In the same week I received the RH catalog/doorstop, I also received glossy pitches for, in ascending order of preciousness:
a) Audi A8  (starts at $77k; optionable to $120k).  Nice car, but nope.

audia8

b) Around the World by Private Jet (sent by a company called TCS Expeditions and sets you back about $180k per couple for 25 days or so).  Apparently there are lots of these types of tours available; you can save $80k by going as a single!  Nope again.

WorldTravel

c) The jet itself.  Specifically the new Falcon 8X from Dassault.  Yes, I actually got a sales pitch for one of these.  About $58 million.  Nope yet again, even if the garage were bigger.

FalconJet

Somewhere someone has decided that I’m a good target for these extravagances.  I am not, nor is there much in my background to suggest that I am.

So I can’t understand why in this age of micro-targeting, Big Data and 1:1 marketing, that I’m being targeted.

3) DEX.  Like Gene Simmons, the Yellow Pages just won’t go away.  The days where YP was a household staple are long gone; they are now obsolete the second they land with a pathetic thud on your driveway.

Ironically, there is a QR code on the front of the book, which like a snake eating its own tail, leads you to the Dex app (below), as if to hammer home the printed version’s obsolescence.  And in case you needed a further reminder, there is a recycling link to help you dispose of the printed directory you just received.

Dex App

Clearly all of this cannot go on forever.  There are not enough dollars, hours, or trees to sustain this wasteful direct mail.

Lesson: at some point, the ability to get high-quality, appropriately targeted mailings might make a huge difference in an email-cluttered world.  But we’re not there yet.