According to Wikipedia, the free encyclopaedia

Milton Friedman takes a shareholder approach to social responsibility. This approach views shareholders as the economic engine of the organization and the only group to which the firm must be socially responsible. As such, the goal of the firm is to maximize profits and return a portion of those profits to shareholders as a reward for the risk they took in investing in the firm. He advocates that the shareholders can then decide for themselves what social initiatives to take part in rather than having their appointed executive, whom they appointed for business reasons, decide for them.

Friedman argued that a company should have no “social responsibility” to the public or society because its only concern is to increase profits for itself and for its shareholders and that the shareholders in their private capacity are the ones with the social responsibility. He wrote about this concept in his book Capitalism and Freedom. In it he states that when companies concern themselves with the community rather than focusing on profits, it leads to totalitarianism.

In the book, Friedman writes: “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

The truth is that CSR-free businesses strive towards highest possible ROSF (return of shareholders’ funds). To do this they MUST focus on operational issues, ignore the implications and incidental costs of short-term returns over long terms position, and IF EMPOWERED, create win/lose relationships with trade partners (and even customers).

Friedman ignores two keys factors of the 8 P’s of Marketing – PEOPLE & POLITICS – the People who possess operational skills, don’t ‘get’ (or even understand) strategy. The politics of a Board of Management team that exercises OPERATIONAL strengths cannot embrace (or even grasp) STRATEGIC concepts, ideas, and approaches.

So Coles & WW have now commenced on their paths to self-destruction… two giants that DESERVE immortality, undermining their future. One is like a care with great power delivery to the rear wheels; just missing one of its front wheels… steering isn’t very good. The other is missing a rear wheel, it can only stay stable turning in a circular fashion on itself, in every widening and less efficient circles.

(If you doubt this at all, talk to Geoff Kennet, try and find a mission statement for Westfarmers or Coles, ask WW why they rejected a promotion to generate $400M p.a. in EBIT 8 years ago, because they were focused on ‘making’ Everyday rewards work, but now hang their hopes on squeezing more from suppliers, while taking more shelf space for private labels – the polices used by their abnormally high English executive team, who are applying the OPERATIONAL methods that have now damaged Sainsbury & Tesco.)

Both are building businesses for Aldi, and now Lidi… in the false race to short term ROSF while damning long term ROSF permanently. (See “Are WW & Coles sly Agents of Aldi”).

Mind you FMCG companies fell into the Corporate Arrogance trap decades ago (some are still there) and, had THEY had strategic insight and nous, they’d have control of the situation now, but alas… short term “Friedman” thinking undermined THEIR future, as well!

But CSR (Corporate Social Responsibility), or the lack of it, is NOT the issue, but only a symptom.

The REAL issue is strategic thinking vs operational thinking…. Strategic Management as opposed to operational Management… Panning for winning the war, not raining to win a single fight in a stand-alone battle.

Adopting the Hierarchies of Marketing, and embracing the need to create and maintain balance of power between OPERATIONAL and STRATEGIC thinking – mindful of the shareholder vs, stakeholder debate – is the reality that escaped Milton Friedman.

[Readers are invited to download my free e-book – “The Four Faces of Marketing – The Missing Link Between Marketing & Management” at http://j.mp/ALLmktg ]

Too many marketing strategists believe their own BS! Pricing Strategy, Communications strategy, Online Strategy, branding strategy etc. isn’t genius… it is obvious, common sense that evolves out of the fact that perfect knowledge leads to perfect decisions.

I’ve had an extraordinary number of commercial successes in my career, record-breaking ones… NOT because I am one bit smarter, more intuitive, have more street cunning or am unusually lucky, but because I persevered long enough in learning my trade to be able to recognise the one, inalienable truth of business: If you genuinely know what the customer wants and can give it to them, they WILL buy!

The absolute secret, of all extraordinary business success, is knowing the customer.

Is it REALLY that simple?

Whether it is the individual or the segment – yes!

There are so many examples of this across the internet, in each of our careers, recorded, diagnosed, studied and reported by academics around the world, and demonstrable in every case study and high return annual report… so why do we complicate and confuse, cloud and cover this fact?

Think about it…

Pricing Strategy: In particular Value-Based pricing? Know the customer!

Communications strategy: In particular advertising & positioning? Know the customer!

Retailing: In particular store layout, ranging, staffing, location? Know the customer!

Manufacturing: Everything from branding, sizing, packaging, new product development, distribution strategy? Know the customer!

Why is the business community in denial?

When FMCG hummed a merry tune, the industry habitually committed to segmentation studies annually… but as operational executives with corporate political skills rose in a culture of corporate arrogance, costs were cut to carve out larger profits, ignorant to the fact they were really blunting competitive advantage and digesting brand equity.

In adequately training marketing personnel, briefing and sustaining market research of questionable quality, undermined the payback from segmentation studies and other market research.

Over the years, the team at my firm has written strategy for transport, banks, FMCG, commodities, utilities, government that has generated record-breaking results, unimagined sales growth, and extraordinary profits… why? Simply better understanding of the customer – EVERY time!

The dynamics of the marketing world is now firmly ‘internet-centric’ .

 

At least ‘8 times more powerful than TV’ ever was, potentially more cost efficient on a cost per contact basis (although lack of skills means this does not yet hold true for many), able to target better than past media (skills allowing, again), faster, more flexible, and truly able to leap tall buildings in a single bound; internet marketing is at the future of marketing communications, at the least!

 

Now that Social Media Marketing has reached critical mass, it is vital that marketers embrace marketing theory. The multi stage mass communication model and the importance of the “Group Opinion Leader” is just one of many models that turns the medium into a deploy-able and useful tool… without it lays a HUGE chasm between mega-profits and reality

 

There is a lack of true marketing knowledge in many of the e-marketers of today… Their strong IT skills, and technical knowledge, have been won at the opportunity cost of not having equivalent knowledge in behavioural science, psychology, buyer behaviour, market maturity, the buyer adoption process, buyer readiness, market segmentation, brand adoption and the 1001 other tools trained into, familiar and understood by only those who dedicatedly devoted themselves to advanced marketing theory in academic and workplace training.

 

Technically savvy, who don’t know how much they don’t know, are costing BIG bucks, missing BIG opportunities, mis-directing energies and misaligning positioning in inefficient and destructive ways.

 

With SMM (Social Media Marketing) becoming the sizzling focus for those in pursuit of sustainable competitive advantage, PROFESSIONAL marketing know-how in these advanced strategic marketing skills are mandatory to really springboard super normal profits, using SMM.

 

Yes, trial and error, extraordinary intuition, blind luck also work…sometimes.

 

But there’s nothing like knowing what you are doing BEFORE you do it for time, and cost, efficiency.

 

Marketing theory, PROPERLY understood, and PROPERLY applied, has always secured marketing success. Now, more than ever before, are there opportunities and risks, in investing marketing spend without this knowledge.

So many businesses could boom beyond all expectations…
… If ONLY they knew how much they don’t know, when it comes to ‘marketing’.

So many still think that “marketing” is “promotion”. Others perceive it as simply ‘selling’. Dangerous CEO’s think marketing is just ‘fluff’.

Companies that have leaders with this perception are ultimately doomed… proven infinitely, too often, by companies, businesses, brands and products that ‘fail’.
In fact, companies, businesses, brands and products do NOT fail, management does!

But try telling the naïve, the ignorant and the uninformed: They don’t know how, if they’d only opened their minds, the bulletproof armour that ‘true’ marketing provides.

The complexity of this problem is exacerbated by the fact that too few senior executives were exposed to advanced marketing study at tertiary level, and that TOO MANY were so badly taught by so many inept academics, that the power of marketing methods was never revealed, ad that many students at University were so focussed on finishing their full-time degree and getting a job that they too quickly forgot the advanced skills they were taught much sooner in their careers than when they were called upon to use these skills.

When you cross-pollinate the additional issue of operational knowledge vs. academic knowledge (industry specific knowledge vs. strategic theory) the issue of corporate (and personal) arrogance raises its ugly head.

A common example of this is strategy problems that could easily be solved by product typing.

Take, for example, the B2C model of product type.
If you are selling guttering, time-share, insurance, or any other unsought good, the ‘rules’ say awareness is key. Too many guttering, all time-share and struggling insurance businesses don’t even grasp this!

Then, those that do don’t understand segmentation must be bought to turn this knowledge into profitable strategy development. Then, those that can, don’t have the acumen to brief, commission, or recognise good marketing research in terms of a segmentation study… and THAT’S assuming their management will empower them with enough funding to acquire this knowledge.

Then the organisation may not have adequately skilled people to interpret the research, brief and control the creative development in marketing communications, exercise scientific management of media variables (weight, reach, timing, competitive response, etc.) or the management of channels, production, product portfolio, pricing, people, processes, positioning, etc.

What happens in almost every industry is the LEAST WORSE battle for major market share, the completely devoid of know-how battle for crumbs.

IF a company flukes or actually plans using advanced, integrated strategic marketing, they end up with ‘unnatural’ marketing share levels of 80% plus… long term!
Look at Coke, Mars, McDonalds, and P&G: Companies embracing marketing scientists & enjoying the benefits.

Look at Ansett, FAI, thousands of SME’s that collapse annually… victims of their own refusal to believe they need marketing science.

Imagine a world where businesses, NFP’s and government bodies actually were truly marketing led and managed… utopia!

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Begin your trip towards explosive growth in sales and profits, by starting at:
http://bit.ly/MktgDef

What about the future?

November 20, 2013

Many businesses reach the height of their success just before they expire. Why?

Under the operational umbrella, they they have learned rights and wrongs, developed an understanding for their strengths and weaknesses, developed quality networks, and streamlined efficiencies.

Under the strategic umbrella, leadership and management are starved of skills.

Ignorance, being blissful – until things go wrong – remains in tact. Management blames the economy, their workforce, their trade channels, their advertising agencies, even their customers, for their demise.

The truth is they do NOT know what strategy is. They do not have strategic skills. They have not managed, or planned, strategically.

A decent strategic marketing plan protects against an adverse future, in fact it creates a utopian one.

A decent strategic marketing plan understands industry dynamics, capitalises upon competitive circumstances, caters for and creates opportunity in economic change, and prepares an organisation for evolutionary adaption to new market forces.

Life cycle stage analysis is a crucial element of strategic marketing. So is product portfolio management. So is brand portfolio management. So is trend analysis. Tracking change in market and segments alike is mandatory for strategic planning.

I was once told by the CEO of Australia’s biggest software and hardware distributor at the time (with 75% market share), “We write a marketing plan in 3 weeks”. They went broke within 2 years.

I once expressed concern to Australia’s biggest Office Equipment supplier that they needed to think about Strategic Marketing. The Sales Director replied, “Don’t talk to me about ‘marketing’, we just need to get out there and sell!” They collapsed into liquidation 18 months later.

I counselled a company for three years in photographic services and forewarned them of changes to consumer behaviour. Their CEO said, “This company has been going 44 years, and you think you can predict its demise.” Four years later he, and his business, were dead.

National Account managers in FMCG, senior consultants in global consultancies, CEO’s of multi-nationals… all can fall into the trap of mistaking tactics for strategies: Perceiving operational skills as strategic ones, with impressive success camouflaging the absence of outstanding success.

When a business becomes bullet proof, immortal, and self-perpetuating; even then there can be no rest. This is (traditionally) when the smooth talkers, diplomats and bureaucrats – overshadowing the gifted strategic thinker – win Board level roles.

Insightfullness, the ability to see the future with clarity, the skills to determine what factors are relevant, crucial or significant, is not necessarily accompanied by charisma, diplomacy, or graciousness.

It takes a brilliant mind, wisdom of the ages, entrepreneurial spirit and great basic training to lead a company to a dominant future.

This is the aspiration great leaders must envisage and pursue. This is how CEO’s should be assessed and evaluated, and rewarded. For my money, it’s ALL about the future.

[Anyone wanting to know more about strategic planning should go to: http://j.mp/markstrat ]