Overcoming the pain of Technical Debt

Many businesses are hamstrung by expensive and inflexible information technology. To wit: The average firm’s spend on IT has swelled to the equivalent of between 4 percent and 6 percent of revenue, thanks in part to neglect, poorly executed integrations and the breakneck speed of technological change.

While the exact toll of lost productivity and hampered innovation for any given firm is difficult to quantify, it’s safe to say that the true cost IT is greater than what appears on a company’s ledger. Research firm Gartner estimates the total cost of poor systems architecture, design and development will reach US$1 trillion in 2015. Put another way, that’s an average of US$1 million per organization, according to analytics firm Cast Software, and US$3.61 per line of code.

This hidden expense is referred to as “technical debt.” Reining in technical debt is an ongoing challenge for IT leaders because the cost of lost opportunities is tricky to peg while the cost of modernizing legacy systems is immediately tangible and often significant. But understanding technical debt is vital for organizations angling to improve performance through new technologies, improved agility and tighter cost controls.

I first encountered the dangers of technical debt when I did consultant work for a medium-sized manufacturer. In our search for savings, we found that maintaining one legacy system was consuming nearly 85 percent of the firm’s IT maintenance budget while rendering the integration of new applications difficult and risky. Worse, support activities were diverting scarce resources away from growth-enabling automation initiatives.

In that instance the firm was able to successfully phase out the old system while phasing in a new, more effective and cost-efficient replacement. But the question remains: Why did the firm’s IT leaders run up so much technical debt in the first place?

“The challenge is twofold,” explains Mike Grossman, founder IDI Systems, an automation development firm that regularly confronts technical debt in the course of infrastructure projects. “First, how can you economically and practically support current processes and business capabilities with existing — and potentially deteriorating — code, tools and processes? And second, how and when are you going to transition these old systems to support your new business objectives?”

Think of a legacy IT system as an old clunker. The driver understands that buying a new car is cheaper and easier in the long run, but either doesn’t have the down payment on hand or can’t spare a day without wheels. So instead of efficiently getting where they need to go, they’re stuck trying to keep an old car running by repairing old parts and adding new ones.

Where the metaphor falls flat, however, is in underscoring the value proposition of abandoning the old. The difference between a messy legacy IT system and a modern, fully integrated and efficient one is greater than the difference between an old car and a new one. While either vehicle will get you where you want to go, a world-class IT system can take your firm places that your current infrastructure would never allow. This is due to the opportunities for innovation that arise from a top-notch system.

That’s not to say that eliminating technical debt is as simple as hiring a team of developers to rebuild your infrastructure from the ground up. Before any such decision is made, consider the following steps:

  • Calculate your existing technical debt. To do this, compare the capabilities of your current software and hardware to industry-leading versions.
  • Determine your firm’s goals. Consider both the extent to which your current activities depend on your legacy system and what new functionality you will require for future, growth-generating activities.
  • Identify and align around the priority areas for remediation.
  • Find and deploy talent to replace or redesign legacy systems.
  • Measure and track progress at a senior level along the way.

And remember: Even after you’ve successfully upgraded your IT systems, the threat of running up technical debt remains. This is due both to the changing nature of technology and of business. While senior leaders ought not to obsess over technical debt, keeping a vigilant eye on the efficiency and capabilities of IT operations can be the difference between running in place and forging forward.

For more information on our work and service, please visit the Quanta Consulting Inc. web site.

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Gamification boosts customer engagement at Insurance firm

What is more boring, but useful, than learning about your workplace RRSP plan? What is more fun, but useless, than playing games at work?

“We regularly look outside our industry for innovative ways to help our customers learn more about retirement savings,” says Nadia Darwish, vice president, Market Development at Sun Life Financial. “Gamification was a natural fit.”

Gamification is less convoluted than the word implies. Essentially, the idea is to combine the basic appeal of video games — purpose, competition and the desire for mastery — with behavioral psychology to increase revenue. This could mean improving productivity, enhancing engagement or increasing sales.

Ms. Darwish and her team released an online game called Money Up in late 2014. Money Up features “missions” exploring the basics of retirement planning, investment asset allocation and different financial products. Players are quizzed about what they’ve learned before they can proceed to the next level and, like a classic arcade game, there is a leaderboard so employees know how they stack up against their colleagues.

The business results exceeded management’s expectations, Ms. Darwish says, generating significant improvements in participation, contributions and product penetration. She attributes success to the game’s seamless integration with Sun Life’s broader “financial literacy” program and is particularly happy that Money Up reached “the unique Generation Y audience in a way that resonates with them.”

Making simple, functional games is easier today than ever before. With a modest investment, a behaviour-changing game can be designed, tested and released within six months. Here are five tips for developing a gamification strategy based on the experience of Ms. Darwish and her team:

Don’t treat gamification like a side project. Gamification must be considered a strategic initiative and should incorporate input from senior leaders.

  • Don’t gamify in a silo. Adopt a collaborative approach by soliciting feedback from both internal and external stakeholders at every stage of development.
  • Don’t lose sight of your goal. Work backwards from your desired result (e.g. educate customers) to ensure that your game is more than just fun.
  • Don’t lose sight of your audience. Put the needs of your potential players ahead of your messaging by developing a product for them, not you.
  • Don’t set it and forget it. Monitor performance and solicit customer feedback after launch in order to develop fixes and improvements on the fly.

When a gamification strategy fails, it’s rarely for lack of enthusiasm. Here are three common pitfalls:

  1. Uncertain ownership. It can be difficult to determine who should ‘own’ a project that necessarily spans multiple departments within an organization.
  2. Narrow thinking. It can be difficult to articulate a compelling business case for something with which an organization has no prior exposure.
  3. Lack of knowhow. It can be difficult to develop a successful gamification strategy without experience in game design and behavioural psychology.

But the potential benefits of gamification are too significant to throw the baby out with the bathwater. The trick is tempering ambitious vision with lean resource allocation and a willingness to pivot along the way to mitigate risk and keep the project within its intended scope.

For more information on our services and work, please visit the Quanta Consulting Inc. web site

The Internet of Things is here

We are entering the age of the “Internet of Things,” where sensors, computers and devices are connected in a self-managing ecosystem. At home, this could mean your alarm clock communicating with your coffee maker or your thermostat communicating with your window blinds. In business, this could mean your barcode scanners communicating with your suppliers or your assembly lines communicating with to your repairmen.

In other words, the Internet of Things automates an entire activity, such as building management, medical diagnostics, logistics or manufacturing.

For example, Apple has developed an Internet of Things ecosystem that enables various devices to communicate with each other with the express goal of one day “owning the living room.” Google is also aiming to enter the space by developing driverless cars and increasingly sophisticated remote home monitoring systems.

Some of the technological drivers behind The Internet of Things include: the rise of affordable, high-performance computing, the availability of inexpensive and accurate sensors, widespread access to high-speed wifi, the emergence of sophisticated algorithms and the ability to tie everything together through software interfaces.

The Internet of Things affords tremendous opportunities for increasing productivity, inventing new services and freeing up human capital to re-focus efforts on strategic rather than menial initiatives. Firms that are first movers in the space and that are able to develop the right business models will not only resolve big customer problems and cut costs but also recast the markets in which they operate.

In short: The Internet of Things is coming to every market that has been — or can be — digitized.

Case Study: Sahara Force India Formula One

Competing in the Formula One circuit is one of the most challenging and technologically advanced undertakings in the world. Increasingly, advantage goes to the team that can better leverage insight drawn from data generated in practice and during races to execute real-time enhancements to the car and provide critical information to the driver.

That’s why Sahara Force India partnered with Univa, a cloud-technology vendor, to create an integrated, closed-loop platform of sensor feedback, advanced data collection and analysis and on-the-fly hardware and software optimization.

“Sahara Force India is second-to-none in pushing boundaries to achieve speed, innovation and capability,” says Gary Tyreman, chief executive of Univa. “Leveraging the Internet of Things enables SFI to reduce development engineering time and money, and take in-race performance to levels which once were considered impossible.”

Here’s how it works: The Sahara Force India analytics team monitors and models car performance in race conditions, generating more than one terabyte of data over the course of a typical race. Trackside engineers and the driver then use insight derived from this influx of information to adjust things such as brake sensitivity and suspension, thereby improving car performance and informing seasonal development plans.

This raises an important point. The Internet of Things requires more than an investment in connectivity-enabled hardware and software. It also requires developing the human knowhow to manage, draw insight from and optimize the system based on the data that’s being captured.

How you can benefit from the Internet of Things

For many firms, the Internet of Things poses a significant threat due to its disruptive nature. For others, it stands as a significant opportunity to outflank the competition. But regardless of how each firm reacts to the rise of the Internet of Things, the fact remains: every company will be affected. This is because the need to serve customers better, faster, with greater ease and at a lower cost will invariably spur Internet of Things investments and strategies.

With that in mind, here are five things you should consider before implementing an Internet of Things strategy:

  1. List the current and emerging needs of customers, suppliers and distributors that your firm is not currently equipped to provide.
  2. Identify how an Internet of Things offering might address those issues and generate value within your enterprise and market. For example, you may want to improve your understanding of customer behaviour in order to improve service.
  3. Think more broadly about an Internet of Things offering than bottom line impact. How could it position your firm for future competitiveness?
  4. Consider your potential Internet of Things offering in terms of its key components: software, hardware and people. Can you leverage existing resources to cut costs?
  5. Analyze how your organization would need to be restructured in order to deliver a successful Internet of Things offering.

For more information on our services and work, please visit the Quanta Consulting Inc. web site

Internet of Things offering than bottom line impact. How could it position your firm for future competitiveness?

Consider your potential Internet of Things offering in terms of its key components: software, hardware and people. Can you leverage existing resources to cut costs?
Analyze how your organization would need to be restructured in order to deliver a successful Internet of Things offering.

What business leaders can learn from the Seattle Seahawks

Now is probably not the most fashionable time to praise the Seattle Seahawks. Last weekend’s Super Bowl saw the team give up their lead with 2:02 left on the clock and proceed to come up just short of winning by throwing an interception in the last minute. But individual failures do not make of break a team. The long game is what matters, and the Seahawks have demonstrated two years running that they are among the most elite, dependably top-performing franchises in the league.

Below, I’ve outlined some characteristics of the Seahawks’ formula. No doubt, the team’s philosophy can seem a little hokey, but there is no denying that their transparent, competition-driven approach works. These insights should be of great interest to business leaders looking to maximize productivity at the lowest possible cost, and the lessons therein applicable to firms looking for better ways to find and manage talent, develop a supportive culture and align their organization around a central mission.

Recruiting talent

During recruitment, companies talk about their values and expectations — but often in an ad hoc or incoherent fashion. This is because many firms do not invest sufficient time and energy in identifying what kind of organization they are. As a result, new hires often discover they’ve been sold a false bill of goods. This can result in reduced engagement and performance and, worse, increased turnover.

The Seahawks recruit differently. Here’s an excerpt from the brochure they provide to prospective players. According to Coach Pete Carroll,

“We wholeheartedly believe in competition in all aspects of our program, and the only way to compete is to show it on the field. We’re dedicated to giving all of our players a look to find out who they are and what they’re all about so we can field the best team possible.”

This document details a philosophy of competition that is clear and direct. It sets an accurate tone from the original point of contact, letting every prospect and their agents know what will be expected and how they will be measured. This simple step helps to mitigate the likelihood of unpleasant surprises down the road.

Managing talent

The fact that more and more can be measured now — both in terms of productivity levels and strategic success — can put managers under a microscope. This inevitably results in an adversarial, “what have you done for me lately” management style and a general risk aversion when it comes to decision-making. Needless to say, this in turn can lead to diminished long-term competitiveness, poor morale and, again, increased turnover.

Seahawks management takes a different tack. Despite poor play for much of the final game, Coach Carroll never wavered from his season-long game plan and reliance on all players in his line-up. He stayed loyal to key players such as Russell Wilson. And, he was not shy about using new players like Chris Matthews. While Mr. Wilson was mediocre during most of the first half, he did lead the team back strong in the late 2nd quarter to the end of the game.Mr. Matthews led the Seahawks in passing reception yards in the final game, despite not catching a pass for the entire season and being a shoe salesman not too long ago.

Rewarding talent

Recruiters tend to bring certain assumptions to the table regarding what kind of person is best for a certain job. These biases often include a preference for candidates from a certain school, possessing a certain degree or having had certain work experience. These assumptions usually go unchecked because many organizations lack the performance measurement systems necessary to uncover what actually works — and what doesn’t. This can result in qualified, and often less expensive, talent being overlooked. Just as troublesome, it can result in weak performance being unwittingly rewarded in terms of hires, promotions and salaries.

The Seahawks, on the other hand, are hard-nosed and pragmatic in their approach. Everyone must compete for their positions every day, regardless of where they come from or what salary they command. Crucially, the Seahawks aren’t afraid of putting un-drafted and untested free agents on the field. These players tend to put in their best effort in exchange for the opportunity. For example, they signed Russell Wilson, who many teams passed up on because he was considered too small, for less than $1-million per year. He went on to be an all-star quarterback. This not only provides the Seahawks with more affordable talent, it motivates their big guns to avoid resting on their laurels and to continue to demonstrate why they deserve to be on the field.

For more information on our services and work please visit the Quanta Consulting Inc. web site.  Also, please follow me on Twitter: @MitchellOsak

Traditional media companies reboot

When I was growing up, watching TV was a family affair. We gathered around one cathode set at the same place at the same time to watch the same shows as everybody else. How times have changed. Nowadays adults spend more time online and on mobile devices than they spend watching TV, listening to the radio or reading the printed word.

Yet some things have stayed the same: We’re still watching TV shows. Only now we’re not necessarily watching the same shows, or watching them at the same time, or even watching them on TV. This trend, which shows no signs of abating, has significant implications for traditional TV cable and content providers, says David Purdy, Rogers Communications Inc.’s senior vice-president, content.

“We’re playing in a market now that has a solid mix of traditional cable subscribers, a growing group of ‘cord shavers’ — those who are tuning in less to traditional cable and more to online sources for TV and movies — and ‘cord nevers,’ many of which are Millennials.”

The move toward the digital consumption of television content is spurring a series of watershed developments in the industry, such as:

  • The rise of high-quality original programming exclusively available on streaming services (e.g. Netflix)
  • Increasing competition from vendors that historically haven’t offered professionally produced content (e.g. YouTube)
  • Increased crowd sourcing to determine which shows get produced, cancelled or resurrected (e.g. Amazon)

Traditional media companies and cable providers should be concerned. All of these developments reflect the fact that more consumers have relinquished cable and forgo live programming, opting instead for cheaper online services.

Rogers is transforming its business to address these shifts, says Mr. Purdy. “We recently partnered with Vice Media to bring more compelling content to the Canadian market. We also invested in and launched Shomi, a video-streaming service.”

How will these trends change advertising?

Online video is changing the way people interact with each other and relate to sponsoring brands. As a result, media companies are facing flat — and in many cases reduced — advertising spending, as ad buyers shift their dollars from well understood TV to new (and unproven) digital formats.

In some ways, however, advertising will become more valuable as TV watching becomes more, not less, social. For example, a growing number of people are having real-time conversations on Twitter about the shows they’re watching. Some viewers have even begun purchasing products they find appealing right from a show, with eBay and other sellers offering apps that enable viewers to browse and buy items related to what they’re watching.

But in other ways viewers are becoming less engaged with programming, and thus with ads, as fewer people watch the same shows (with the notable exception of live sports and a few big television productions such as Canadian Idol). This could translate into more complicated ad buys, more fragmented marketing strategies and harder times ahead for traditional broadcast media companies.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.  Follow me on Twitter @MitchellOsak

Grow by assembling an ecosystem

The software industry is hyper-competitive, with thousands of global firms jostling for “winner-take-all” market share and financial returns. What separates the winners from the also-rans and failures? Increasingly, the differentiator is less about the software itself and more about business practices.

Many CIOs are realizing that high-performance IT is about more than serving customers better, improving product quality and driving higher operational efficiencies. Increasingly, it’s also about accelerating software development cycles, integrating disparate systems and delivering a consistent “omni-channel” customer experience.

To satisfy these needs, an increasing number of firms are adopting an “ecosystem strategy.” In the natural world, an ecosystem is an interdependent community of living and non-living things. In the business world, an ecosystem is an interdependent community of producers, suppliers and stakeholders.

An ecosystem strategy better delivers on customer needs and shareholder value by focusing attention on a single core offering, and then bringing in partners to provide secondary products and services that support, and are supported by, the core offering. Some well-known practitioners of the ecosystem strategy include Apple (third-party developers, accessory suppliers), Facebook (third-party developers), IBM (third-party developers, hardware suppliers) and Amazon (third-party book vendors).

Case study: Perfecto Mobile

Perfecto Mobile provides cloud-based quality assurance testing for mobile apps. The Israeli-based multinational’s strategic pivot in 2013 offers a good example of how a firm with startup-level resources can thrive by constructing a healthy business ecosystem within a staid market.

The traditional approach to software quality assurance is to test new code at the end of each development cycle. This approach, however, can prove too slow, risky and expensive in the faster-paced, higher-risk world of mobile computing, where devices, networks and tools change on a regular basis.

“The rapidly-evolving market is driving organizations to deliver better apps faster, while managing quality and reducing risk,” says Eran Yaniv, chief executive of Perfecto Mobile.

Perfecto concluded that the only way to meet the market’s needs would be to provide customers with an end-to-end, flexible, on-demand solution that embeds quality assurance testing throughout the entire development cycle. The problem: Perfecto did not possess the resources to provide this level of service while still keeping up with technological and market trends.

Going it alone, Perfecto’s choice was: either/or.

So Perfecto opted for an ecosystem strategy to provide what Mr. Yaniv calls “continuous quality.” “Perfecto’s continuous-quality strategy leverages not only our unique technology but also an extensive ecosystem of partners, from global system integrators to regional services providers,” he says. “We empower these partners with the expertise and knowhow of utilizing our Continuous Quality Lab to expand their business as well as ours and provide true value to our customers.”

Perfecto’s Continuous Quality Lab includes everything required to test mobile applications quickly and effectively — specialized testing practices and standards, infrastructure, automation and multiple device support — all delivered through the cloud. It has helped catapult the firm to market leadership, winning Red Herring’s Top 100 Global award for business innovation in 2014.

Takeaways

An ecosystem approach makes great business sense for software vendors for the following reasons:

  1. It fully delivers on customers’ bespoke testing and product needs on a “when needed, as needed” basis.
  2. It enables rapid operational scalability and flexibility.
  3. It deploys best-in-class capabilities that minimize integration concerns that come with working with unrelated vendors.

However, completely reimagining how you structure client-facing and operational IT can be a tall order. Legacy systems, operational complexity and cultural stasis are just a few of the potential roadblocks. To help address these problems, firms must develop certain competencies and cultural norms, including:

  • Ambition: Companies need gumption to tackle big business problems and address persistent customer demands.
  • A medium-term vision: It takes time to identify, attract and integrate the right technologies, practices and partners.
  • Open interfaces: Software companies need powerful APIs (application protocol interfaces) and methodologies to seamlessly connect their technology with complementary applications and protocols.
  • A partnering mindset: Striking partnerships is good. Cultivating them to maximize their benefits is better.
  • The right systems: Deploying and managing an ecosystem strategy requires strong IT and business processes, including: good reporting, trouble-shooting and collaboration mechanisms.

For more information on our services or work, please visit the Quanta Consulting Inc. web site.

 

Digitally disrupting your company

Disrupt or be disrupted. This is the stark choice with which many senior managers are faced as emerging technologies and corresponding behaviours continue to reshape the marketplace.

Given the choice, most would understandably choose the former. The problem, of course, is that many organizations are crippled by organizational inertia. Market leaders and public companies are particularly vulnerable, as they tend to possess deeply entrenched operational structures, revenue models and cultural values. Either they don’t see the change coming or, more likely, can’t muster the organizational willpower required to do anything about it.

Case study: OLG

Five years ago, Ontario Lottery and Gaming Corp. found themselves in this position. Senior management observed that Millennials are less interested than previous generations in gambling the old-fashioned way. Natives of the Internet and accustomed to the conveniences afforded by smartphones, many were turning away from corner-store kiosks and toward online poker and other “casino-style” games that can be found easily, if illegally, on the Internet.

At the same time, the OLG found itself struggling to hold on to its existing customers. Not only were fewer Americans visiting their casinos, U.S. competitors were also making inroads in luring Canadians south of the border. Both trends spelled a slow slip into irrelevance for the crown corporation.

So they decided to do something about it.

Rather than merely mitigate risk, senior management sought to develop a digital strategy that would enable them to capitalize on these trends. They began by asking the following questions:

  1. What business are we in?
  2. What business should we be in?
  3. How can technology facilitate this transformation?

What they concluded was that they are in the lottery and gaming business, not (merely) the casino and scratch-card business. “OLG’s goal is to provide the games our customers want to play where they want to play them,” says Tom Marinelli, OLG’s acting president and CEO. “As we transform, our advances in technology are giving us a new opportunity to continue to be relevant to our customers.”

In response to changing customer needs and demands, the OLG began work on an online lottery and gaming hub. Set to launch this year, PlayOLG.ca will provide online gaming and sell digital lottery tickets. The idea is that by matching or exceeding the experiences offered elsewhere on the Web in a manner that is both secure and legal, the OLG will be able to attract younger adult customers and fend off illegal international competitors.

The execution strategy for PlayOLG.ca was informed by paying close attention to how the Internet and mobile technology are affecting the gaming and lottery business at large. In doing so, they identified and implemented a set of best practices. Here’s what they came up with:

  • Place technology-savvy leaders at the forefront. For the OLG, this meant selecting Mr. Marinelli, who has a background in both IT and operations, to lead the transformation.
  • Consider change holistically, involving all stakeholders. Because the lottery and gaming industry is highly complex and regulated, all aspects and implications must be considered when implementing any kind of change. The concept of “responsible gambling,” for example, must be applied to all customer-facing products.
  • Communicate plans regularly to employees. With up to 30% of the OLG’s 8,000 employees unionized, poor communication could very well spell disaster.

Even with these pivots, the future of the OLG is uncertain. Currently they’re seeking new ownership, with both Bell and Rogers rumoured to be potential buyers. But whether the OLG stays public or goes private, going digital will surely go a long way toward ensuring the long-term viability of the organization.

Takeaways

Many of the lessons learned by the OLG can be of value to other organizations similarly faced with disruption. To undertake a digital transformation initiative of your own, you should begin by asking yourself the following questions:

  1. How can a new technology help improve operations or better serve customers?
  2. How difficult will deployment be, and at what long-term cost?

To answer these questions, you’ll need to develop a 360-degree view of both your organization and the market in which you are situated.

  • Where are we going as a company?
  • What capabilities and organizational model do we need to adopt in order to capitalize on the new technology?
  • How will customers and other channels be affected by the new technology?
  • What is the potential economic impact of the new technology?
  • What can we learn from other firms’ experiences?

Regardless of what your answers are, any digital transformation of a scope similar to that of the OLG will require the following: support from the board, enterprise-level expertise in adopting and managing emerging technology, a clear understanding of where profitability comes from and a functioning capital and resource allocation process. Above all, however, a successful digital transformation requires just two things: strong senior management and a willingness to change.

For more information on our services or work, please visit the Quanta Consulting Inc., web site.

Unbrand to stand out in the market

For organizations hoping to grow, the mantra is often: faster, better, cheaper. But is this an effective way to build and sustain a brand in an age of consumer skepticism, marketing noise, economic uncertainty and declining product differentiation?

Studies show that as consumers move online, buying decisions increasingly hinge on factors such as social proof, honesty and regular engagement. Firms that fail to pivot their marketing strategy to address these trends increasingly lack integrity and purpose in the eyes of consumers and put themselves at risk of becoming targets of fickle, social-media-enabled customers and activists (see: J.P. Morgan’s #AskJPM campaign).

That’s why some companies are embracing what I call “unbranding” to maximize brand equity and minimize risk. While traditional branding appeals to the left side of the brain — faster, better, cheaper — unbranding appeals to the right side: trust, aspiration, purpose.

  • Trust is is achieved by building credibility through transparency (see: Costco).
  • Aspiration is achieved by developing a brand that aligns with who the customer wants to be (see: Coach).
  • Purpose is achieved by articulating a clear set of values that permeates the entire customer experience (see: Apple).

McDonald’s Corp. is perhaps the most successful unbrander to date. Spurred by customer research and in response to socio-cultural developments, they launched “Our Food. Your Questions.” — a digital hub where McDonald’s employees, suppliers and nutrition experts answer questions from curious consumers and dispel myths that have long plagued the global fast-food giant. Here is a sampling from the site:

Q Is your meat made of cardboard?
A “Cardboard is for moving boxes, meat is for eating.”

Q Did McDonald’s hold a competition to make an edible burger out of worms?
A “We’ve never held such a competition.”

Q Is your beef processed using ‘pink slime’ or ammonia?
A “No.”

Q Why is the food at McDonald’s so cheap?
A “Buying power.”

Q Is your food tasty?
A “Is the Earth round?”

This program is not about bragging, preaching or evading. Rather it’s about dialogue, humility and openness. For McDonald’s, this represents a paradigm shift in how the company builds its brand and reinforces its core message of quality.

“Today, brands need to get comfortable with being uncomfortable and challenge convention,” says Antoinette Benoit, senior vice president, national marketing, McDonald’s Canada. “It’s important for us to have an ongoing and transparent two-way conversation with our customers in order to make a meaningful and long-lasting connection with them. This not only enables us to tell our story but also to evolve our brand based on what’s important to our customers.”

This unbranding strategy has contributed to improving the overall perception of McDonald’s. The idea came out of the Canadian wing of the company, but benefited from further development by McDonald’s France and McDonald’s U.K., both of which were able to overcome business and public relations challenges and grow revenues. The campaign has now been adopted in Australia, New Zealand, the United States and parts of Latin America.

Behind the success of this unbranding strategy was an up-to-date understanding of consumer needs, a return to focusing on historical core values (“quality” in the case of McDonald’s) and courage on the part of management to follow though on the program’s requirement for honesty, transparency and directness. Moving forward, McDonald’s will build on the strategy’s success by incorporating these learnings across the entire customer and partner experience through new training, advertising and more.

How can you make unbranding work for your business?

  1. Understand who you are as company. This should be based on your institutional values, history and how you are perceived within the marketplace.
  2. Identify your customer’s needs. This should be accomplished through both traditional and new marketing-research techniques.
  3. Create a vision or ethos for your company. This should encapsulate who you want to be and how you want to be perceived as an organization.
  4. Select the appropriate communications methods. Understanding how to articulate your message is as important as knowing what your message is.
  5. Unify your message across all customer touch points. Consistency is key in articulating a message that will both resonate and change perception.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

5 steps to rebrand your business

The successful rebranding and strategic pivot of Tangerine, formerly ING Direct, was the product of strategic insight, thorough analytics and diligent planning. Just as critical was the firm’s ability to pull off a complex transformation in a time of market uncertainty and regulatory change. With 70% to 80% of change initiatives ending in failure, Tangerine holds many lessons for companies looking to strategically reposition themselves or undertake other change initiatives.

“Managing change can be both challenging and rewarding,” says Peter Aceto, president and CEO of Tangerine. “Since we all perceive change differently, it is a journey that must be met with honesty, regular communication, reassurance and, above all, a positive attitude.”

ING Direct was purchased by Scotiabank in 2012. The new entity had two ambitious goals to be achieved by 2014: first, to rebrand under a new name and identity (soon to be Tangerine); second, to expand beyond the firm’s core positioning (tagline: “Save your money”) to include new services and products relevant to their Web-based customers (tagline: “Forward banking”).

Execution missteps, such as ignoring cultural issues, poor planning or lack of management follow through, make real change very difficult to pull off. The challenge for a 1000+ employee bank like Tangerine is to execute major change initiatives with existing resources without compromising existing revenues, service levels or regulatory compliance.

“While it definitely had its challenges,” says Mr. Aceto, “I can say that we’ve come out stronger than ever before while staying true to our core values and the brand that Canadians know and love.”

Tangerine’s leadership deserves credit not only for formulating the right strategy, but also for executing on that strategy — arguably a much bigger challenge. The company pulled off the repositioning without missing a profitability beat or alienating its parent company. Since announcing its name change, Tangerine has exceeded its profitability and custom acquisition goals without compromising its image.

What best practices for managing change can other companies learn from Tangerine?

Start at the top

Successful change requires cross-functional involvement by senior leadership throughout the entire transformation process. Management accountability ensures appropriate focus, ownership and resources, as well as providing timely attention when unexpected problems arise (as they inevitably do). In alignment with Scotiabank, Mr. Aceto personally led the brand transition from the initial discussion through the planning and execution. He was also active in removing resource and organizational roadblocks when they occurred.

Create a narrative

A “change story” should be developed at the outset, connecting the change with who you are as an organization, how you generate consumer value and where you are going. Where cultural change is required, management needs to deploy detailed programs outlining target behaviours, processes and practices. Tangerine expended a considerable amount of effort developing a positive narrative for its customers, employees and partners — namely, that the acquisition was the best way of enabling future growth beyond the core business.

Communicate regularly

The likelihood of misinformation, rumour and uncertainty is quite high during transitions. To avoid these traps, leaders must regularly communicate to all stakeholders in a direct, honest and succinct fashion. Initially, key messages should articulate a desired end-state, a high-level roadmap and the benefits and risks associated with the strategy. Once the transformation has begun, communications should reinforce the narrative, acknowledge positive role models and provide progress updates.

Pay attention to the human element

Management actions early on signal to workers the priority and tenor of the change initiative, as well as what life will be like post-change. Successful change pays attention to each employee by creating individual metrics and adjusting priority lists. While plans and processes are important, ignoring the human dimension can scuttle buy-in and morale and increase business risk. When necessary, Tangerine’s managers undertook the “tough” conversations with employees in the spirit of mutual respect.

Don’t mess with success

Tangerine’s leadership, planning and execution were vital to ensuring the transformation happened in fewer than 18 months. However, credit must also be given to the role played by Scotiabank. Many acquirers feel compelled to take charge and be highly prescriptive in their oversight. Scotiabank’s post-acquisition leadership team understood much of what they were buying was a unique culture and aligned early on with Tangerine’s senior team to avoid over-managing during the transition or in ongoing operations.

For more information on our services and work, please visit the Quanta Consulting Inc., web site.

1:1 Marketing is here

If you are a forward-thinking manager, chances are you’re thinking about ‘personalization.’ Delivering a unique, tailored, 1:1 interaction with a customer based on previous interactions, the hardware they are using, their particular needs and location within the purchase cycle is a very compelling idea — if you can pull it off. Where do you start?

Thanks to the arrival of mobile computing, powerful smartphones and advanced data analytics, personalization is taking off. During the pre-purchase phase, firms can deliver special promotions or compelling content to make the shopping experience more engaging. Marketers can use social shopping communities to identify product trends and use these insights to enhance their product mix by segment. Companies can even target shoppers in-store in real time with relevant, personalized, location-based advertisements and promotions, thanks to technology such as Apple’s iBeacon.

Product companies are using personalization strategies to stand out by offering unique products such as do-it-yourself t-shirts, blankets and home decor featuring custom messages and designs. Web-based firms like Amazon are successfully using personalization tools to drive revenue, conversion and average transaction value. FRHI Hotels & Resorts uses personalization to create unique experiences for their three brands (Fairmont, Raffles, Swissôtel) both pre and post stay.

“The key to winning in today’s competitive marketplace is to have a universal commitment to putting customer’s first, understanding their stated and implied needs and providing solutions that address those needs on their terms,” says Jeff Senior, executive vice president and chief marketing officer of FRHI Hotels & Resorts. “It requires a holistically aligned organization, and is not a marketing initiative, but a company commitment.”

FRHI Hotels & Resorts maintains a single, holistic profile of each guest and their needs, with the ability to customize their stay, the promotions they receive and the prices they pay. This profile can seamlessly migrate from call centre and hotel to mobile device and social media platform. This personalization strategy has been an important driver in enhancing customer satisfaction and brand image, leading to market share increases in each of the past six years. Some of the best practices they follow include:

  • Align personalization strategies with well-defined brand strategies and values.
  • Act as an insight-driven organization. For example, the Company leverages big data to get a single, holistic customer profile. Furthermore, Fairmont expends a considerable amount of effort on customer research and social media analytics to define the ideal experience, with no detail escaping their attention.
  • Put the customer by segment (their needs, requirements and expectations) at the center of all operations and planning. Careful attention is paid to articulating the customer opportunity, understanding all business issues and producing creative solutions that fits local requirements.
  • Focus on real-time reputation management. Measure, track and evaluate a variety of customer metrics to better leverage existing programs and identify hiccups.
  • Optimize the operational (online and physical) and talent model to ensure alignment, collaboration, responsiveness and seamless execution.

Implementing your own personalization strategy can improve the value your firm delivers, the precision by which you target customers and the marketing efficiency of your programs. But first you need to do some serious thinking about your customers, brand and organization. Firms looking to implement a personalization model need adopt a customer-centric mindset that engages the entire organization. To do this, key activities such as IT, marketing, research and support must act in an integrated fashion, sharing the same information and strategic playbook. This four-step framework can help take a firm from a strategic vision to a personalized experience:

  1. Segment your customers by lifetime value, needs, and habits.
  2. Categorize them by the digital and physical channels they prefer across their entire purchase and support journey.
  3. Customize and choreograph your offering and experience based on where they are in this journey.
  4. Ensure your capabilities (people, systems, processes, assets) can support your personalization strategy.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.