Drivers for Change

Change is inevitable and in marketing it is a constant.  Strategic marketing plans are not static documents, they live and need to be refined and amended constantly.   Too many organisations see business planning as an annual chore, something that takes place at the start of the financial year.  In previous blog posts, I have discussed the fact that many small businesses have no forward plan – and those that do probably only look forward for no longer than twelve months.

For a business to grow and to thrive in the long-term, you need, at least, to have widely defined long-term goals.  A strategic marketing plan should look forward three or five years.  There should be set aims for the end of that period.  Within the plan there should be incremental SMART objectives which must be met.  These are stepping-stones to the achievement of the long-term goals.  Incremental objectives should reflect the speed of the industry or sector within which the business operates.  For many businesses an annual goal will be the norm.  However, consider H & M, the fashion retailer, they have short-term strategic goals counted in weeks.  They can turn around their stock inventory in eight weeks, a fraction of the time of other high street fashion retailers.

Here are some prominent drivers of change:

  1.  Customer Expectations:  Do you find that ‘customers are demanding the impossible with increasing regularity’?  Consumers have become used to their needs and wants being at the forefront of highly competitive markets such as fast-moving consumer goods (FMCGs), groceries and fashion.  Now they expect the same of services and non-commercial organisations e.g. local government.  As consumer expectations intensify, concepts such as brand loyalty and retention may appear less effective.  You have to work harder to hold onto existing consumers as they become less loyal to your brand.  You certainly cannot take their loyalty for granted.  Consumers are facing an explosion of choice.  So if a consumer feels a brand is falling behind its competitors or that they are being taken for granted, they will switch to a competitor.  If you are perceived as not giving them what they want, when they want it, and at what they see as a reasonable price, they will switch.  Consumers no longer have to put up with second choice.  Loyalty has to be earned, it is not a right.  Astute managers will use customer demand for their products to drive through organisational change.   The ability to investigate and understand market changes is crucial to an organisation’s survival into the future.  It isn’t just knowledge of the factors behind change which is required.  You must have the ability to communicate those factors to all the stakeholders of the organisation.
  2. Revenues:  Cash, profits and turnover are the lifeblood of an organisation.  All to often they are the primary focus of senior management and investors.  If there is a recession, cuts will be made.  If there is a bull market, firms will expand and market manoeuvres (playing with the gears).  In downturns cost-cutting takes place (hitting the brakes) and there can be financial manoeuvring.  Such activity can quickly exhaust an organisations financial reserves.  When things start to pick up, and business sees the potential for further income and growth from their target consumers they increase activity (hitting the accelerator).  But again, customer have to be top of the agenda and marketing managers must push that agenda.  Long-term revenues come through product quality and customer retention, not price.  If you don’t build a customer-focused top line, there won’t be a bottom line to count.
  3. Competition:   It isn’t just technology that is driving increased competition and breaking down market barriers.  We discuss technological change next.  Markets are fragmenting.  Competition is increasing in every market.  It is an ever intensifying battle to gain new customers and to retain customers.  There are also an increasing number of new market entrants looking to disrupt market norms.  As consumers have more choice than ever before, it is crucial that a clear and differentiated position is developed.  You must give consumers good, simple and relevant reasons to choose your product over that of your competitors.  Customer value and customer orientation are crucial to surviving white-hot competition.  Increasing competition is a high-profile driver for change.
  4. Innovation:  There is much discussion and promotion of market disruptors; businesses which use new technological solutions to overturn market norms and ways of operation e.g. Uber, AirBnB.  There are also many column inches being devoted to automation; the use of artificial intelligence and new electronic technologies to replace jobs in service industries currently carried out by people.  For example, Associated Press have developed an application that can produce 4000 thousand short news stories per second with little or no input from journalists.  It is estimated that 40% of all jobs in the USA will be replace by artificial intelligence over the next two decades.  Priority areas for automation are the likes of customer services and routine sales.  However, innovation shouldn’t be for innovation’s sake.  Innovation should be targeted at product innovations which provide customer value, increased market share and profitability.  The innovation must produce solutions which were more relevant to consumers.  It must also be remembered that uncontrolled or excessive innovation can be a business risk.
  5. Cheap Imports:  The world is filled with cheap products made in China, India and other developing countries.  These countries often have huge levels of available human and other resources.  Labour is cheap and regulatory enforcement is low.  Does your firm want to fight these countries bargain basement costs?  Surely it is better to develop a customer focused, added value, option?

Change has to be managed but the reasons behind that change must be communicated.  I used to work in local government and can point to several examples where change was initiated terribly.  One example was the merging of two services due to local government reorganisation.  The following factors were in evidence:

  • The management tried to force a new culture onto staff from different organisations.  It must be remembered that culture belongs to all stakeholders within an organisation not to the management of that organisation.  Management controls process not culture.
  • The management initiated change which was a copy of the activities of other organisations.  They did not research whether these changes were a suitable solution for their organisation.  The local authority in question was a large rural council yet the changes to be applied came from small urban councils with staff based in a single office.  In applying the changes, the managers of the authority ignored the environment in which they worked.
  • The management of the council stated that they wanted to consult staff on the changes.  Members of staff, including me, responded to the consultation giving alternative, and in my opinion, better, and cheaper, solutions to the reasons behind the change.  These were ignored.  All management achieved was the complete alienation of the staff tasked with service provision.  they also ignored crucial factors such as economies of scale.
  • The change process became increasingly secretive and when staff questioned management decisions, all communication was shut down.  Rather than a goals down, solutions up process, the organisational change became a wholly top down dictatorial exercise.
  • As management began to realise their plans were increasingly unworkable, they began to lie.  For example, they claimed that they were creating a matrix organisational structure but all organisation charts were traditionally hierarchies.  Some staff pointed out that the new structure meant the authority was in danger of breaching its statutory obligations, in particular the law relating to staff qualifications.  These warnings were dismissed as ‘a little local difficulty’.  No solutions to these intractable issues was ever found.
  • Most importantly, the changes implemented by management were inward-looking. They were all about internal organisation and managerial power games.  The group of stakeholders who were completely ignored were the service users; the council’s customers.  Massive changes were implemented without reference to the needs and wants of the council’s customers.  There was a complete absence of customer-focus.