Employee Strategy: (in?) Flexible Work Program @ Yahoo!
This past week Yahoo! HR head purportedly issued a memo revoking work-from-home arrangements for employees. If the "internal" memo at the above link is to be believed, the HR Head, among other reasons cited "Speed and quality are often sacrificed when we work from home" as being one of the reasons for the change. Holy smoke! If this is true, then essentially this is an admission on HR's part that in this day and age when telecommuting is a way of life, they have failed at instilling a corresponding performance management culture that can leverage this awesome advancement in work culture to happen in a 100 years. With the right performance tracking processes and communciations protocols, telecommuting can increase productivity several fold. I say this because I am surrounded by people who do this every day (including myself) and everybody is working well over the mandated 8-hour workday, actually getting stuff done. So if this is all true (I still don't believe it), then Yahoo! just admitted they failed at getting telecommuting right. Corporate culture is a two-way street, the company has as much a responsibility of creating an atmosphere of accountability as well as trust as employees have of being diligent. Every CEO probably has at least one decision they are going to regret for the rest of their career and, if this is really her decision, Marissa Mayer may just have made the one that will top her "I wish I had thought this through a bit more" list!
SetFocus: Revisiting your 2013 Marketing Playbook
The
U.S. Economy in 2013…
General
consensus among economists is that of weak to moderate growth in early 2013, and
a stronger recovery coming in the later half from the Housing sector, but there
are other headwinds at play that could have a dampening effect early in the
year, including the debt ceiling debate (once again), expiring tax cuts and
spending reductions (collectively known as the “fiscal cliff”). On Jan 23, the “No
Budget, No Pay Act” temporarily suspending the Debt Ceiling until later in the
year, but without congressional action this issue will resurge before year end
if there is no budget adopted by Senate by then. The recurrence rate of this
issue is taking a toll on consumer confidence and capital investment/job
creation, as indicated by low readings of the Michigan Consumer Sentiment- this
indicator, has been exceeding consensus expectations for the last couple of
months – today’s reading at 76.3 is above expectation of 75, but still well
below the low 80 readings going into 2012 year end.On the positive side, there’s some indication including forecasts from The World Bank Commodity Price Forecast, of lower commodity prices in 2013, which can provide some tailwinds[1]. The DOE also predicts lower gas prices in 2013[2], which generally helps consumption by freeing up disposable income and driving shopping trips up.
The Employment report in February (for January) came in a bit below expectations at +157K, which is lower than the previous revised number of +196K- 2012 average growth was 181K/month.
What does this mean for your 2013 Marketing Strategy?
If economic uncertainty continues building up into mid-2013, then marketing strategy early in the year should emphasize your value proposition, focusing on share growth through Trade and Consumer promotion investment. Any relief in costs from favorable commodity pricing changes should be passed through 100% to consumers. Advertising focus, both online and off-line, should be on lower funnel that aims to increase conversions by “nudging” consumers sitting on the fence on your brands and retaining existing consumers that may be vulnerable to competitive promotional incursions. Paid Search is especially a good way to get in front of consumers one step before the purchase decision. Paid Search importance is going to be even greater in driving conversion with Product Listing Ads (Google Shopping’s new rich ads functionality[3]).
As
the economic uncertainty abates towards mid-2013, focus should shift to
longer-term brand building and differentiating your brands to reduce dependence
on promotions through strong upper funnel advertising activity. Later in the
year is also a good time for new product launches as consumers tend to be more
open to trial under lesser economic uncertainty. This shift to shoring up brand
equity should help position your portfolio for a strong finish to 2013and
create a strong momentum into 2014.
Hurricane Sandy and Income Inequality debates..
Came across this article on Reuters from Pulitzer-prize winning columnist David Rohde "A Hurricane's inequality". The article points out how even a natural disaster like Hurricane Sandy affected the rich and the poor differently and how the event highlighted income disparities in New York. The author used examples like the rich evacuating to hotels while service folks continued servicing. He then goes on to point out that "Last year the wealthiest 20 percent of Manhattan residents made $391,022 a year on average, according to census data. The poorest 20 percent made $9,681".
While I appreciate the point he is making, I am not sure the analysis is entirely fair. First of all the fact that everyone, irrespective of being rich and poor should have been able to retreat to safety. I view the fact that service folks continued servicing as a failure of the City authorities to enforce safety measures- businesses had no business (no pun intended) keeping employees back beyond a certain point.
That said, the income disparity between the top vs. the bottom quintile shouldn't be surprising based on economic behavior. The top 20%'s earnings being high is an artefact of NYC's ability to attract highly skilled labor that commands a wage premium, which in turn creates an abnormal demand for a secondary market of relatively lower skilled labor (nannies, waiters etc). Urbanization is known to create income inequalities for this reason- cities tend to attract from cheaper labor markets (immigrant, students etc). This is partially related to the Kuznets curve effect:
Except that the inequality continues to rise exponentially due to a free inflow of unskilled labor that is willing to compete on price with existing unskilled labor. Comparing top-bottom quintile income disparity in a city that is only ~400 Sq miles yet boasts 1.2 Trillion dollars in GDP is pointless- there is an extreme division of labor and a continuous supply of labor (skilled and unskilled) that is more than willing to compete on price. Profits/income are inversely correlated to competitive intensity, labor markets are regulated in order to contain this profit-maximizing behavior within rational limits. Now what is worrysome is that based on New York State's minimum wage and a 40-Hour work-week, the lowest wages should be ~$15,000 p.a, the fact that it averages $9,681 in the bottom quintile could indicate a significant number of the labor market working below minimum wages, which probably reflects a failure in enforcing minimum wage discipline.
While I appreciate the point he is making, I am not sure the analysis is entirely fair. First of all the fact that everyone, irrespective of being rich and poor should have been able to retreat to safety. I view the fact that service folks continued servicing as a failure of the City authorities to enforce safety measures- businesses had no business (no pun intended) keeping employees back beyond a certain point.
That said, the income disparity between the top vs. the bottom quintile shouldn't be surprising based on economic behavior. The top 20%'s earnings being high is an artefact of NYC's ability to attract highly skilled labor that commands a wage premium, which in turn creates an abnormal demand for a secondary market of relatively lower skilled labor (nannies, waiters etc). Urbanization is known to create income inequalities for this reason- cities tend to attract from cheaper labor markets (immigrant, students etc). This is partially related to the Kuznets curve effect:
Is your Vision damaging your business?
…it is if your business planning cycle is typically 3 years or lesser. The longest planning horizon for most businesses entails new product development or acquisitions at around the 3-year horizon mark and marketing activities like advertising communications and pricing/promotions are typically planned annually.
Brands aren’t built overnight and sustainable brands need an evolving strategy that will navigate economic cycles that are a lot longer than 2 or 3 years, in fact typical economic cycles are 7+ years.
What you are missing out on is an opportunity to understand how your customers are adjusting their consumption behavior as the economy waxes and wanes. Granularity of information flooding researchers in recent years has motivated business strategy to be focused on maximizing short term profits and opportunities. Don’t get me wrong, short-term planning is important- the short-term is the bridge to the long-term and public companies are answerable to shareholders in the short-term. At the same time the most sustainable brands and businesses are the ones that have the information and experience to help them adjust to economic changes. In that respect, Businesses need to be like Neural Networks- learn and adapt based on past experiences, while adjusting to newer paradigm shifts. While lifestyles evolve and change much more rapidly today than they did 10 years back, there are some consistencies that business managers need to take into account especially if they are in the B2C domain.
For example how people adjust to economic upheavals, what spending categories do they curtail during a downturn and which ones do they prioritize coming out of a downturn. If you compare the growth in Retail spend data by segments from the U.S. Census Bureau from 2004 to the spending from 2011 (2 years post the respective recessions), you will notice some remarkable consistencies. The top 3 segments by growth vs. prior year in both cases were Building Materials, General Merchandise and Restaurants, while Electronics, Apparel and Sporting/Music stores were bottom segments.
How cool would it be if you could predict how your customers are going to change their consumption preferences in a sluggish economy and an expanding economy, what trade-offs in terms of share of wallet would they make as the size of their wallet shrinks or expands? And how cool it would be if you were able to anticipate these changes in consumption preferences and adjust your product portfolio, assortment and marketing/pricing strategies accordingly? So one would think it is easy for businesses to compare what their customers did in the Great Recession vs. the 2001 Recession, but you would be surprised even with big data how few companies have less than 5 years of data readily accessible for analysis. However different we are today compared to 10 years back, some elements of history do tend to repeat and if you chose not to learn from history you may well be condemned to repeat it.
For example how people adjust to economic upheavals, what spending categories do they curtail during a downturn and which ones do they prioritize coming out of a downturn. If you compare the growth in Retail spend data by segments from the U.S. Census Bureau from 2004 to the spending from 2011 (2 years post the respective recessions), you will notice some remarkable consistencies. The top 3 segments by growth vs. prior year in both cases were Building Materials, General Merchandise and Restaurants, while Electronics, Apparel and Sporting/Music stores were bottom segments.
Redefining Risk-Free...
For the longest period of time the classic proxy for the theoretical risk-free rate has been the 3-Month U.S. Treasury Bill, this may have to be re-thought given the U.S. debt-crisis that just got "resolved" today. The crisis brought home the realization that the U.S. Ecoomy, far from being infallible, is actually vulnerable in it's present state.
The longer-term ramifications of both the crisis itself and the solution that was agreed upon today are going to be profound. The United States has re-discover its place in the global economy instead of relying on past laurels, and soon, while the other developed nations still look to it for economic leadership and haven't realized that this need is more psychological than anything else...
The longer-term ramifications of both the crisis itself and the solution that was agreed upon today are going to be profound. The United States has re-discover its place in the global economy instead of relying on past laurels, and soon, while the other developed nations still look to it for economic leadership and haven't realized that this need is more psychological than anything else...
Employment Outlook: ADP vs BLS...
Earlier this week the Markets were buoyed up by some favorable economic reports coming out, but most significantly by yesterday's ADP Employment report that predicted a 157K increase in private jobs. Traders that were holding short positions given the low seasonal performance of markets in summer months, further drove markets up in a "short squeeze rally".
Come Friday morning, the BLS Employment report came out, and proved ADP wrong...yet again. According top BLS estimates, only 18K Non-Farm jobs were added in June, much lesser than the 105K economists were expecting and a miniscule fraction of the 157K ADP predicted. And this is a consistent pattern in the past year, ADP has been off vs BLS by 50% or more on at least 6 occasions. That is a coin toss. So I say either ADP proves why they have a better read on employment than BLS or they stop reporting this number in the public interest...as it is the markets are jittery and beyond the implications to investors, the markets have a direct bearing on consumer and corporate morale. We do not need another volatile factor added to an already chaotic mix of indicators.
Come Friday morning, the BLS Employment report came out, and proved ADP wrong...yet again. According top BLS estimates, only 18K Non-Farm jobs were added in June, much lesser than the 105K economists were expecting and a miniscule fraction of the 157K ADP predicted. And this is a consistent pattern in the past year, ADP has been off vs BLS by 50% or more on at least 6 occasions. That is a coin toss. So I say either ADP proves why they have a better read on employment than BLS or they stop reporting this number in the public interest...as it is the markets are jittery and beyond the implications to investors, the markets have a direct bearing on consumer and corporate morale. We do not need another volatile factor added to an already chaotic mix of indicators.
"Mix Modeling on its death-bed" Starcom MediaVest Group CEO Laura Desmond
http://www.adweek.com/internet-week-blog/laura-desmond-wants-her-industry-deep-six-its-market-mix-132255
Starcom MediaVest Group CEO (and #57 on Forbes 100 most powerful Women in 2008) Laura Desmond believes that Marketing Mix Modeling, platform for measuring Advertising ROI is on it's death-bed, citing backward-looking focus and lack of ability to evaluate consumer attitudes as part of the reason it is becoming obsolete.
I think Marketing ROI as a concept won't go away (taking care to distinguish Mix Modeling as the device and Marketing ROI as the objective) for at last a couple of reasons:
-Elegance in evaluating Marketing Strategy was not the primary raison d'etre for the approach, it came about as a means for stakeholders outside the Marketing Department to understand how the dollars they were pumping into advertising was contributing to topline growth (and bottomline performance)- in other words the "business performance" focus she faulted. After all influencing consumer attitudes is not the end-goal of advertising, growing sales is (by influencing consumers positively), so successful advertising needs to demonstrate ability to drive both, not just any one of the two purposes.
-Today the approach does more than that and can simultaneously evaluate both business performance and consumer attitudes, depending upon how much effort you want to put in. I have already written in the past that consumer attitudes not only can but should be measured in marketing-mix models (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1411790)
Starcom MediaVest Group CEO (and #57 on Forbes 100 most powerful Women in 2008) Laura Desmond believes that Marketing Mix Modeling, platform for measuring Advertising ROI is on it's death-bed, citing backward-looking focus and lack of ability to evaluate consumer attitudes as part of the reason it is becoming obsolete.
I think Marketing ROI as a concept won't go away (taking care to distinguish Mix Modeling as the device and Marketing ROI as the objective) for at last a couple of reasons:
-Elegance in evaluating Marketing Strategy was not the primary raison d'etre for the approach, it came about as a means for stakeholders outside the Marketing Department to understand how the dollars they were pumping into advertising was contributing to topline growth (and bottomline performance)- in other words the "business performance" focus she faulted. After all influencing consumer attitudes is not the end-goal of advertising, growing sales is (by influencing consumers positively), so successful advertising needs to demonstrate ability to drive both, not just any one of the two purposes.
-Today the approach does more than that and can simultaneously evaluate both business performance and consumer attitudes, depending upon how much effort you want to put in. I have already written in the past that consumer attitudes not only can but should be measured in marketing-mix models (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1411790)
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