innovation playground Idris Mootee

The Hottest New Agency For The Year Is WANAA!

The hottest new agency is WANAA (We Are Not An Agency). Ok, there is no agency called WANAA. You get the point.  Headhunters are calling everywhere tyring to recruit new heads for interactive agencies as many have plans to replace theirs. The problem is the interactive heads just move around from one agency to another...with little result...sadly. This is not going to change anything. Coming back to the topic of agency consolidation, these are the questions:

- Would agency consolidation now starting move beyond ad agencies?

- Will technology firm start buying agencies and blurr the line between marketing technology vendors and agencies?

- Will the centralization of marketing services will move outside of agency holding companies?

We are seeing a polarization between deep-specialization and skilled integration, it is hard to survive in the middle.  Most ad agencies are in the middle. Everyone’s wondering what’s the next game for agencies? What’s the future of these big names Ogilvy, Y&R, FCB, BBDO, JWT?

Read  this statement from Dell's blog regarding how they work with of WPP for their $4.5 billion global business: "Together with the WPP agency, Dell is creating a new marketing model designed to further propel Dell's growth. We've been calling this 'Project Da Vinci' because we've been looking for the combination of artist and scientist-an agency that has both the creative horsepower and ability to measure the business impact of their work."

Large agencies are not having an easier time than smaller agencies just because of their reputation or scale.  My dialogue with CMOs are often centered around how disappointed they are with their (big) agencies and how these agencies became marketing procurement partners rather than idea partners.

WPP has the smartest strategy at a holding company level. WPP’s strategy is remarkably smarter than Omnicom and Interpublic. As agencies struggle to meet the demands of client, WPP is actively securing new media and services and for its client base in addition to its pursuit of interactive service expertise. They invested in Wild Tanget, LiveWorld, JumpTap, Video Egg and 24/7 Real Media. This is in line with their strategy as WPP sees challenges/opportunities as follow:

- Globalization /Americanisation / BRICs

- Overcapacity, shortage of human capital

- The Web (internet penetration, e-commerce, mobile)

- The pace of technological change

- Retail concentration

Unfortunately, many of WPP’s agencies are slow or failed to adapt these challenges. The need for agencies to have deeper strategic capabilities and technological competencies is causing pain.  I have not met a so-called “digital” strategist or planner or director from Ogilvy’s that I personally think meet the minimum standard in terms of understanding the digital space. Not to mention how disappointed I was every time when I interact with another “digital” or “interactive” experts from other agencies like DRAFT FCB or JWT which I held a lower than standard than Ogilvy's. I think this is not an easy problem to fix. There are so many structural issues that need to be fixed. It takes a lot of effort and energy to insure an agency to bring digital thinking to the core of everything they do.  It is about pull-marketing, software as a service, social networks, emotional connectivity; widgetnomics and collaborated search. The opportunity for brands to regain consumer trust and engagement is not only about tools, it is about whole new mind set about what the new role of marketing. If one of these guys show up on my office and ask me to help them to fix this, I would say this is a 3–5 year undeertaking. I'd other better opportunities.

Business Schools and Interdisciplinary Thinking

I usually never bother too much on business school rankings whether it is Business Week or Financial Times rankings. I came across the latest rankings from Financial Times and a few thoughts came across my mind. The results for this year for top MBA schools globally are as follow:

1/ Wharton School of Business

2/ London Business School

3/ Columbia Business School

4/ Stanford Graduate School of Business

5/ Harvard Business School

London Business School has achieved the highest position in the Financial Times ranking of full-time MBA ever attained by a European school. It is ranked no. 2, highlighting the fact the European school although much smaller in scale is really competitive in a sector which has always been dominated by US schools. Another proof is even one of the UK’s youngest business schools, the Judge Business School at the University of Cambridge, which began its one-year MBA program only 11 years ago, came 10th, up from 15th last year. LBS overtook Harvard, Stanford and Columbia, rising from 5th last year to 2nd. Good work LBS folks!  The Wharton school has occupied the top spots for many years. Harvard, in the minds of many, is still the best school doesn’t matter what the rankings are. As far as I know, even if they rank the bottom there’s no impact on recruitment. One interesting fact is for the first time an Indian business school achieved a place in the top 100. This is really good news. The Indian School of Business in Hyderabad is at number 20. Good work ISB! Many believe that the increase in the number of Asian business schools are driving a new wave of innovation. The FT rankings primarily assess schools in three categories: the success of their alumni; the global focus of the school; and its record in generating ideas. LBS scored highly this year because it ranked third after much bigger schools Harvard and Wharton in research. They have been investing in this for almost decade.

Rotman, University of Toronto (ranks 40^th globally) is the highest ranking Canadian school. The Dean has done an impressive job in differentiating the school in a very competitive environment. I really like to see more top schools doing what Rotman is doing, bringing Design and Business together in an interdisciplinary fashion.

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I am seeing a bit of that happening in Europe, Design London was launched in 07 with £5.8 million in funding and the goal of encouraging integrated teaching and research in the areas of product and service development and design. The project is therefore an interdisciplinary effort: Imperial’s engineering department, its Tanaka Business School and the Royal College of Art are involved. The educational ambitions of the project are somewhat impressive. Design and innovation will become core modules this year for students doing an MBA at Imperial. Fellowships will also be on offer to help RCA and engineering graduates learn business skills. In the medium term, it hopes to offer new teaching programs from Jan 09.  Design London will improve the integration of engineering, design technology and business.

That’s exactly the kind of people we need to hire for my company. This is what makes our organization unique in addition to our innovation methodology. This is what you’ll find in our job application:

Including with you application please include a piece of work demonstrating that you have engaged in interdisciplinary thinking.  “Interdisciplinary Thinking” means using the perspectives, methodologies or modes of inquiry of two or more disciplines in exploring problems, issues, and ideas as you make meaning or gain understanding.  You work in an interdisciplinary way when you integrate or synthesize ideas, interaction, or processes across traditional disciplinary boundaries.  You should not assume that you are generating interdisciplinary work if you merely use essential skills like writing, speaking, a second language, or to explore content, perspectives and ideas in only one discipline.

Call Sam's Club For Your Search Markeing Needs?

Sam’s Club (Walmart owned) is now selling search engine marketing and pay-per-click packages. This sounds a little crazy but it is happening. They have selling anything from appliances, office supplies, and jewelry to small business and is now expanding to is online marketing services. For only $25 a month, Sam's Club will work to improve your site’s ranking on search engines, and for $50 a month a company can get pay-per-click advertising services. Sam's Club also offers Web site design and e-commerce services.

I believe Sam’s Club’s LeadConnect (they are reselling Innuity LeadConnect) offers McMarketing for small businesses which does not have the time to do search marketing themselves and sees an easy $25 per month payment plan for their site as an alternative to the Verizon Superpages and other pay-per-month services. Not sure if they include monthly AdWords ads or locally targeted advertising.

What’s next? Turn key "Social Network" solution from Sam’s club for $50 a month? How about off-the-shelf downloadable "Persona" to help design for 99cents each, cheaper than iTunes?

Everyday Things Can Be Both Pretty and Functional

There are so many everyday things (and experiences) that are so poorly designed as if no thoughts were put into them. I can easily name a dozen. Top o fmy mind includes bathtub, radiator, air conditioner microwave oven, tea maker, DVD players, home audio systems and super ugly home PCs. Obviously there are some exceptions. I can think of two brilliant designs for bathtub and radiator.

The Dutch Tub is definitely one of those ingenious ideas where you wonder, ”Why didn’t someone thought of this before?” It’s a bit like an old-fashioned wood fired hot tub, but it uses a bit more advanced coiling system to heat up the water. In addition, it’s also a barbeque complete with a wok that sits on top The tub is relatively light, which means higher portability. You can move them around easily.

Danish designer Anna Gotha has designed an attractive heating installation that you can actually take to bed with you, or bring with you to sit in an outdoor café. She was asking the questions “Why is it not possible to make more use of the heat from a radiator?” Her answer to this question was by designing a radiator with multiple functions. Existing radiators take up too much room and the design is often conservative and ugly. With the new radiator, Gotha has made use of the heat, and at the same time given the user a more functional and elegant design.

She called this Modulo, and it is a new way of exploiting the heat. You can add or remove modules as desired and hide them in your wardrobe drawers when you want to repaint, or when you just want to use the floor space as optimally as possible. But the radiator has more to offer. The modules are designed with an upholstered aluminum core that gives you the opportunity to use the installation as a piece of furniture to lean up against. Also, the core is warmed up by the radiator and therefore you can take it with you to bed, or even to the shopping mall.

We need more designers that can combine technique with aesthetics and at the same time create a design that to a greater extent emphasizing modularity
and the possibility of variations. The result is an aesthetic radiator with multiple functions and a design that can be adjusted to the individual and fit in with different design environment. May by they should be selling this in the Apple stores.

Anoher interesting design is P-Per Mobile phone by Chocolate Agency. It explores the many possibilities of sustainable design. It is made of only four layers, with one being an e-paper screen that wraps the entire handset. The high sustainability of P-Per lies in its corestructure: it is designed to follow the rule of “one function–one part–one material”. P-Per is made out entirely of sustainable materials, such as extruded polycarbonate to cope with its physical functions (body, screen protection, unique click); hypoallergenic and recyclable titanium parts; the e-paper screen to display images with no distortions, and without the need of power supply; and an Organic Radical battery that is free from heavy metals. It also allows user sto warp the phone with the their personal pictures. It has a screen located on each of its two sides – mobile phone and messaging functions are displayed on one, and a camera (with a panoramic wrapped viewfinder) is displayed on the other. Its design incorporates a big screen, a haptic touch-screen, and a menu-less intuitive user interface with a rotating-screen function and a simple bar for quick access to all functions. Would you still prefer the iPhone?

If you are an Apple addict, here's something for you. An iPring h awith wireless Bluetooth connectivity with your iPod and iPhone, designed by Victor Soto, it allows you to control playback and volume on any of your Apple media devices. You won't catch me wearing one.

Ad Agencies and The Perfect Storm - Adv Giants Like Ogilvy's Are Facing the Biggest Challenge in 50 Years

I’ve seen a few downturns and what happened to ad spend. In most cases ad-spending plunges 8-12% when there is a slow down, but I think this time is little different. I was having lunch with a friend who is the CEO of a vertical content and search company in California and we’re talking about this subject and we shared the same opinion. Digital media will be a shining star in this downturn.

This downturn will be a perfect storm for the agencies. Many are not properly geared up to deal with the digital age especially the very big names. Ogilvy’s announced to cut 75 jobs from its NY headquarters (around 4% of total workforce). Most of cut comes from Ogilvy One which is the DM and interactive arm. Yes, it has always been treated as an “arm” and there were never any vision of serious investments in it. Their largest clients including Dove (they did some good work for them) and IBM are moving money to branded content and digital initiatives. Anyway they were never considered a key player in the digital world. Ironically, they produced one of the best campaign for Dove which is an exceptional piece of work.

Bob Greenberg (co-founder and ceo of R/GA) who is a pioneer in the advertising and communications industry for decades (R/GA was named Creativity's Interactive Agency of the Year for 2007 for creating integrated marketing campaigns) pinpoined exactly what was the problem with the ogilvys of the world. This is what he said in Adweek:

"When a single TV spot or print ad used to be able to simultaneously drive awareness, consideration and preference, marketers got a lot of value out of this ad. But now the best ads can do is start the consideration process, which more often than not is happening online. And although a punchy line might trigger awareness, it plays almost no role during consideration. Here, the "rational" experience of brands trumps the "emotional" delivery of a clever tagline or visual. Yet ad agencies have almost no experience in the former and way too much comfort in the latter. Even when they develop online campaigns, traditional agencies tend to approach the Web as just another place to deliver a metaphor. So instead of creating useful tools, applications, demos, customer support communities or streamlined ways to complete a transaction, they fall back on familiar stunts and gags, such as viral videos."

Ogilvys is also facing another test. WPP (Ogilvy's parent) is considering to refinance its $570 million debt and will put pressure on Ogilvy’s and other agencies to reduce its staff to cut costs. Not sure if this helps as it reduces their ability to compete, so they are locked into a no-win game. Expect the same for other big agencies in the group (JWT, Wunderman) . The industry expects the bigger ad-spend cut will only come in 09 and not this year due to three reasons: US election, Olympics in Beijing and the European football championship. Many expect a 0.5% to 1% additional growth to ad-spend. 09 will be the tough year. Although this will not be like the dot.com ad-spend downturn. There is still a big gap between the time people spend online as a fraction of their media consumption (about 1/5) and the fraction of marketing budgets spent on the internet (about 7.5%). Many companies are trying to narrow the gap, which will sustain internet advertising during a downturn. My clients are moving from 6-7% to 12% to as high as 23%. Search advertising will continue to grow. The internet's interactivity and engaging nature make it the best means of generating sales-driven campaign—whereas TV is best for long-term thematic. Those who work in the digital space will not have any problem at all. That is because the internet has allowed greater accountability to advertising. It is al about measurable results. Marketers can now prove that a click on an online ad can generate sales.

Investment analysts disagree about ad-spend in 08. UBS predicts that expenditure on ads will increase by 5%, whereas Goldman Sachs forecasts that it will decline by as much as 5%. (Who says you can trust any economist) At least everyone agrees on one thing: underlying growth in ad spending will come mainly from emerging markets and from emerging digital media. Emerging markets now represent 1/5 of global expenditure on advertising. Developing countries can add as much as $50 billion in new ad-spend in the next 3-4 years whereas developed markets will add only $38 billion.

Let me make a prediction. IPG (currently valued at a little below $4 billion (Omnicom and WPP are both cap at $14.5 billion plus and minus) will be bought in 6 months. This is a very poorly managed holding company but own some crown jewels. This is a "buy" at the current price for Publicis or Havas. Probably Havas I think. Anybody cares whether there will be only 4 or 5 agency holding companies left?

In 3-6 months, there will be one less agency holding company (IPG will be acquired) and one less media/search company (Yahoo will be acquired). Have a great weekend!

Is One Dollar Starbucks The Future? Be Prepared To See Them Closing Stores.

I am away in warm weather (Newport beach) all week with my clients. The weather is not warm by Southern Californian standard and it was raining. I am writing this post sitting in Air New Zealnd Business Lounge in LAX waiting for my red-eye flight home. This is a much better lounge compare to United or Air Canada's by North Amercian standard. Since they are all part of Star Alliance so rather use their facilities. The Luthansa and SAS lounges are the best. Air New Zealand lounges serve decent food and a some good New Zealand wines for tasting. Service is excellent. Talking about service, I started thinking about Starbucks. Only two weeks ago, there was a story about McDonald is now competing with Starbucks on high quality coffee and research are showing some promising signs. Obviously this would be something you’d never heard of a few years ago when new Starbucks continue to pop up every corner of the world.

People are spending $7-$15 every time they drop by a Starbucks for a coffee. So Starbucks (for the first time) is taking competition (especially low end competition) seriously. They are now experimenting with offering the $1 "short" brew in the Seattle area as a pilot. Starbucks is now fighting a war on the high end with niche competitors slowly eroding their market share and at the same time being attacked by deep pockets at the low end of the market. The eight-ounce short size isn't on Starbucks's menu but has long been ordered by in-the-know patrons. Typically, a short, brewed coffee would sell for around $1.50, although that can vary by several cents depending on the store. They also testing the offer of free refills for traditional-brewed coffee in the Seattle area. May be they'll start giving away free muffin soon.

I think within the next 3 months Starbucks will start to get rid of some of its product lines (breakfast sandwiches and CDs possibly) and start closing some of their underperforming stores in the US over a 12 months period. I think we can expect a layoff in the next 9-days and this is only the first one starting from the corporate office. This is very predictable and is a logical step and is the beginning of a different stage of Starbucks lifecycle. It is also avoidable. It is not a growth business anymore, unless someone can help them with a growth strategy.

My friends and I kept wondering why Starbucks continues to miss the whole Internet opportunity. Particualr the whole social network thing. Their stores attract young, affluent, tech-savvy customers and there are those free agents -- exactly the sort of people who spend time on Facebook and make Starbucks special in the first place. In 1999, they estimated that 70% of its customers were Internet users, and the number should be at 98%.  They still don't have a strategy to integrate the Starbuck experiences..I remember they did have a wireless-connectivity initiative that never took off. It is not too late. But need to move fast.

Why Is It Even Harder For Leaders To Innovate?

Here I am with Adam (a smart and creative guy who started with us only for a week) in our new office. He was given three tools to get started: 1/ a power drill 2/ a IBM tablet and 3/a blackberry. He has a typical profile of the people that we carefully select ..the left and right brainer..the raw material for an innovaiton provocateur.

Why is it hard for industry leaders to innovate? Here’s another paradox: As our specialist knowledge increase after being an industry leader for 15 years, our creativity and ability to innovate also tend to taper off. If you are a smart EVP of a Fortune 500 and have deep experience in your industry whatever it is, the chance is you will be struggling wiht innovation.  The theory is ...the smarter and wiser…the more difficult it is to innovate (I am not saying less intelligent people can innovate either) Why? Because the deep experiences that we acquired based on proven theories and practices actually weaken our ability to reinvent.

Intel longtime CEO Andy Grove put it well when he said “When everybody knows that something is so, it means that nobody knows nothing”.  In other words, it becomes nearly impossible to look beyond what you know and think outside the box you’ve built around yourself.

I call this the curse of "winners". This means that the time you’ve become an expert in a particular subject, it’s hard to imagine not knowing what you do. Your conversations with others in the field are peppered with catch phrases and jargon that are foreign to the uninitiated.  Your best practices stifling innovation as they barrel along the well-worn path. That’s why transfer of management talent between industries is one way to solve this problem. The other way to do this is to hire External Innovation Provocateurs like the people that we are hiring. It is not about inventing or innovating new products, it is taking a totally different look at innovation from “experience innovation” to “social innovation” or “business model innovation”. Some might think it is a dangerous idea to open up innovation process to outsider.  The idea is to bet on diversity with a multi-disciplinary approach to looking the problems. It is important to have people whose job is think about innovation every day and night as most managers jobs is operational in nature.

Elizabeth Newton, a psychologist, conducted an experiment on the curse of knowledge while working on her doctorate at Stanford in early 90s. She gave one set of people, called “tappers,” a list of commonly known songs from which to choose. Their task was to rap their knuckles on a tabletop to the rhythm of the chosen tune as they thought about it in their heads. A second set of people, called “listeners,” were asked to name the songs.  Before the experiment began, the tappers were asked how often they believed that the listeners would name the songs correctly. On average, tappers expected listeners to get it right about half the time. In the end, however, listeners guessed only 3 of 120 songs tapped out, or 2.5%. The tappers were astounded. The song was so clear in their minds; how could the listeners not “hear” it in their taps? That’s a common reaction when experts set out to share their ideas in the business world.

The New MacBook Air Is For The Innovation Provocateurs

The MacBook Air is so beautiful, it matches with our office design and settings. but not sure how well it fits ours or other enterprise needs. First, the battery is not replaceable (not us) and a not so impressive battery life especially we’re on a plane all the time. Second no Ethernet. Third, no ram upgrade. Why did I buy it?

It is beautiful. It is elegant. It’s also sturdy. it's a piece of art. It’s great user experience. It reflects who I am. It’s all a part of their personal brand.

This is Apple’s beach head strategy into the enterprise. It is aimed not aimed at power Mac users or designers or film producers. They will stick to the MacPro. It is quietly targeted at heads of enterprise (the fast companies of the world). Traditionally, these customers have been Windows users. This ultralight air will motivate their adoption and in turn signal the acceptance of Apple in the enterprise market since the IT folks who set the standard will now need to support Apple in the enterprise. If the CEO of a Fortune 500 company is using a Macbook Air, sure the It folks will be supporting it. Look out for a more practical MacBook for business..may be 12 months. Shall we call it MacBook Lisa?

The big question is: Sounds like everybody knows the secret to Apple's success, why don't people copy it? Or at least ask the top guys to wear black turtle nech, jeans and New Balance? I imagined other companies like Sony, Compaq, LG and Dell and even IBM executives publicly professing admiration for Apple's great products, while secretly laughing at the foolishness of many of their moves.  They think they are smart by just cherry-pick any interesting new ideas from Apple, incorporate them in their own products, then crush Apple through better distribution and low cost. This is a strategy that works only in paper. The competitors don't want to respond.

They think Apple can't keep pulling rabbits out of its hat forever; that someday it will fall flat on its face(Newton and Lisa). Apple did not win on products, thy win becasue they go back to their core as an innovatin company, not a computer company (they dropped the word "computer" two years ago) and provoke the market with game-changing paradigm-shattering new products/experiences.  While everyone is risk averse whiel Apple is proving over and over and over again that innovation and embracing risk is the key to success?  Apple is all about exploring adjacent sector innovation (see my post yesterday) and so happen all they need is one Provocateur named Steve. Adjacent sector innovation is the most convenient white space. Other just don't get it. If you need an external Prrovocateur, call us. We'll bring our MacBook Air.

Exploring Adjacent Sector Innovation Requires External Provocateurs

I finally got some time today to visit our new office. I really like this space as it has three sides of window in a very hip area. We were trying to visualize how all our innovation space should come together and what to do with each "innovation playroom". Here are some photos. I guess it will take another 3-4 weeks before it is fully functional when other Herman Miller (They did a partial delivery today of 30 Mirra chairs) furniture arrives. It is a 6 week order cycle. My batch of new MacBook Air will probably come before the desks.

I’ve also met with a couple of very talented people today who were exploring opportunities with us and they were all excited about how we bring customer-focused innovation to organizations. Today customer-focused innovation is definitely on many corporate agendas, but what exactly are they doing and who’s in charge of it? These questions often remain unanswered.

When people talk about exploring white space, they are mostly referring to adjacent sector innovation; they like this because it is next to the core. So what is needed is to extend outside the core? The easiest way is to explore adjacent sector innovation to correspondingly bring in new ideas from outside and into their core markets or product sectors. Organic growth is seen to be more successful and generally more manageable than acquisiiton- driven growth. Questions are asked about the ability of organizations to achieve higher levels of growth from existing operations only by continuing to deliver new products or extending them into new experiences. Due to converging technologies and blurring channels and markets, new approaches to enable better identification and transfer of ideas and technologies across sectors are desperately needed. Help is also welcomed. Companies are searchng for best approaches to do this, adjacent sector innovation is the most convenient white space. To explore this space need external provocateurs acting as “thought leaders”. We can’t expect teams to be imaginative and visionary if they have an inwardly-focused world view. Without fresh stimulus it’s hard to think differently. External thought leaders that include inspirational provocateurs and visionaries – are the essential catalyst for organizations that seek breakthrough innovation.

The open innovation movement is more about licensing concepts in and out of the organization from and to wherever new revenue can be generated, adjacent sector innovation is more focused on proactively spotting trends in parallel spaces and identifying ways to adopt and exploit them within your sector. In this case, comparative analysis rather than competitor analysis is needed. The more sophisticated companies have chosen to use new tools (design thinking) to uncover wider opportunities that may lie over the home sector horizon. Adjacent category innovation is growing in response to the need for greater, faster and higher impact innovation across sectors; both in ‘customer-visible’ products/services as well as in ‘customer-invisible’ processes. It is simply being driven by a change in strategic perspectives of where new innovations can come from and go to. In order to deliver the promise, there is also a demand for a change in internal capability to identify, enable and manage associated innovation opportunities. Organizations that are successful in this area are building efficient innovation networks to highlight opportunities. That’s what we are doing with our clients (and sometimes their ad agencies), we work with them to create future growth aspirations with a range of opportunities by bringing in fresh, future-oriented perspectives from outside the organizations. The interim deliverable of the process a set of “industry foresight” and with that we create “tangible futures” that organization can touch and feel. In fact, we are prototyping business opportunities across the adjacent sector innovation spectrum.

Design Thinking, Fuzzy Logic and Marketing Manipulation

It is late, 1am and I've just finished a conference call with my team. Tired and still two days behind in terms of my work, so I am not sure what I want to write. The last 24 hours I was constantly making decisions on complex issues with so many variables, so I want to write something about decision theories. I just try to put some random thoughts down and see if they make sense to you.

Design Thinking is a fuzzy way to look at problems (business as well as everyday life problems) and help us not to be confused with the misconcluded nature of clarity and vision that controls business success. Traditional western approach to strategy and management is rooted deeply in Aristotelian binary logic, where there's black and there's white 1010101 kinda concept. Strategy is about taking the "right" decision and not taking the "wrong" decision, this binary reduces complexity to an unequivoval pair of opposite decisions. But strategy is not only black or white and so is most things in this world. There are many shades of grey and for all controversy, our language is deeply rooted into practical benefits of imprecision. When I am in hurry to a meeting, I would ask the driver to drive a bit faster. Not 10mph faster or drive at 80mph plus and minus five. We don't say that. In today's world, the complexity of our system increases, out ability to make precise and significant statements about its behavior diminishes until a threshold is reached  beyond which precision and importance become mutually exclusive characteristics. Some managers are naively thinking that marketing is an exact science. It is a science, but way beyond some database modeling. Marketing is very complex. Design Thinking is the most effective way to provide answers to those complex problems.

The false assumption that the world of business (and marketing) is both certain and knowable encouragesus to look for or to discover facts that exists rather (and placed unproportional resources and attention to tradtional quantitative research) than to consider the extent to which we don't so much discover as create the world through listening, observations and creativity.  Many of today's products exists not because there were known needs. Television or iPods alike. Consumer do not necessarily know what they want until they are presented with or pursuated by marketers. Marketing is a very fuzzy science.

For some marketers who think they know what customer want. Here's an example which was proven by reserach over and over again. For example, as a prize when people are offered the choice of $350 cash or an iPhone. 70% would chose the iPhone.  When a lower end version of the iPhone was introduced as an alternative, the proportion of people chosing the iPhone rose to 80%.  The idea is by introducing fuzziness to available options, marketers can influence consumer to buy certain products.  Manupulation of choices can have strong influences over consumer behavior. Once you add personaliztion into the mix, you drastically expand your toolkit for manupualtin of choices. And this is where Design Thinking comes into play.

Polaroid's New Comeback Product- A Mobile Digital Photo Printer

This is the 70th anniversary of Polaroid, a company that once owned the words “instant pictures” for decades. They are back this year with a Digital Instant Mobile Photo Printer using ZINK's zero ink printing technology and bluetooth. So you can print photos taken with your Blackberry or iPhone. This time around it is going to be less expensive. The joy of instant prints is now more affordable ($150 for the printer). This pocket sized digital instant printer is the first truly mobile digital printer. It uses ZINK Zero Ink Printing Technology, a heat-activated printing process, to create full-color pictures. With ZINK Zero Ink -- like the name says -- there is no ink involved. Polaroid Digital Instant ZINK Photo Paper is a composite material that houses cyan, yellow and magenta dye crystals in a protective polymer overcoat. Before printing, the dye crystals are colorless, so the photo paper appears white.

Interesting enough, ZINK was founded in 2005 by private investors who bought many technologies from Polaroid as it was coming out of bankruptcy. Now Zink and Polaroid are based in the same complex in Waltham, Massachusetts and working together back in their old trade. This is an interesting product, but it definitely takes more than a hit to bring the company back.

Talking about portable printer, here's one mobile printer with thermal paper designed for people who want to print out messages from their Blackberries. This $300 Printstik from Canada-based Planon Systems is less than 2 pounds but prints in black and white. After a connection via USB cord or Bluetooth wireless, the Printstik can churn out paper copies so you can read and write your comments on the. Not a bad idea. I won’t mind one if it is cool looking, preferably with an Apple logo.

One idea that really interests me is the Fujitsu's Fabric PC concept. It is still a concept. With advances in Fujitsu's e-paper (flexible display technology) now allowing for color displays, Fujitsu was showing off the idea of a fabric PC that could open up the display for larger screen size. The technology is here but we're 4-5 years away from mainstream adoption. I would like to pre-order one with kind of a Vera Wang deisgn..all white, deliver to me 2001 before Christmas.

Agencies Consolidation and Mega Megers - Some Thoughts

While going through some my old files, I accidently discovered a small privately published book of DDB (now TBWA) in memory of 40^th anniversary of the agency. Founded by Bill Bernbach (1911-1982), one of the early advertising legendaries of Madison Avenue. I remember it was given to me by then the president of the agency in 1989. It is a collection of his words.

"The magic is in the product”

"There are few things more destructive than an unsound idea persuasively expressed”

"Because an appeal makes logical sense is no guarantee that it will work”’

He started with 13 employees and a top floor office off Madison Avenue and the agency generated $775,000 during their first year in business. Whitey Ruben, owner of Levy's Jewish Rye bread invited DDB to help their products. Their annual budget was less than $50,000; the agency viewed the account as its opportunity to gain attention in the Manhattan advertising community by introducing “ethnicity” into a marketing campaign. DDB's Levy's campaign ("You don't have to be Jewish to love Levy's") elevated the bread maker to the largest seller of rye bread in New York and helped Bill and his partners acquire the first of many big international clients. His VW ads were the most memorable and I considered them museum pieces.

He was a gentleman with brain and he represented the ideal image of an ad man/woman in those days. He was the ad man who brought “ethnicity” to advetising. Today, the industry is less glamorous and I am not too hopeful. Ad agencies used to be the marketing partners with their clients and all of a sudden that was evaporated. They have not stepped up and really added a strategic value component to the mix or simply big ideas. Instead, they are really becoming purveyors of low-cost advertising services.

Our friend David Armano asked me the question “Why do you think there are still so much consolidation and the demand for large marketing "engines"? There seem to be two competing models. Big one-stop shops or conglomerates and best of breed.” This is a great question. Three big factors that drive consolidation: 1/globalization 2/integration 3/scale.

Globalization doesn’t need much explanation. Marketing campaign often run across divergent organizational cultures, making global account management more prevalent. . There is still a need for better cost control and reporting. Clients want more visibility to agency costs. Agencies also need a clearer picture of their internal costs if they are going to maximize profits. More and more clients start seeing and buying ideas through the lens of strategic sourcing and procurement. Longtime relationships are being challenged as procurement departments take a hard look at what they get for their money. Commission-based fees are vanishing, replaced by fees based on agency costs.

Integration has always been a holy grail for advertisers. Imagine one firm that handles everything a client needs. With consolidation of the last ten years, I don’t see any progress. In fact it is more disintegrated because of the emerging of digital and social media.  Scale has its advantages, but it will reach a point of diseconomy of scale. That’s when the scale advantage cannot make up for the additional cost of co-ordination and negative impact on the culture due to bureaucracy.

What is the future of advertising in the social-media and post-TV age  and post agency mega consolidation? What would the next wave of consolidation be like? Will that extend to non-agencies acquisition?  Or do we end up having only three agencies to pick from? More next week.

The Future Belongs To Small Creative Hot Shops +Digital Strategy Consultants+Global Media Agency?

Back in the 80s clients only work with their official appointed agencies and these global agencies continued expanding their service to other below the line and other downstream promotional activities.  There were a few attempts to move upstream but largely failed. Then in late 90s during the early days of the Internet clients flocked to new Interactive shops to look for new ideas in digital marketing.  AAfter 1-1-2 years many of the first generation of interactive agencies are now part of the OMC/WPP/IPG?Publicis families.

Today, it is funny to see clients are running to small creative hot shops for big ideas again. Not only that, they are also looking for help from digital innovation set-up like us to fill the digital gap. Take Nokia for example.  They hired W+K, a mid-size agency with a strong creative reputation, and JWT, the 196-office 100+ year old agency to handle their business globally. W+K set the creative agenda. JWT only need to adapt Wieden's work locally. There must be a lot of egos and territorial issues under this arrangement. Not to say W+K does not have weaknesses, they are a great idea-driven creative hot shop that lacks serious digital capabilities. There is a bigger gap exists for digital strateist to paint a broad picture of how that drives or fits into everything.

This is an example where the big shops are not meeting the needs of their clients despite their size. Increasingly, smaller agencies have increasingly been winning big clients and offering a much more exciting place to work for many. There are more examples such as Addidas hiring Amsterdam based 108 and at the same time uses TBWA as their global agency. LG hiring BH in London and using Y&R globally.

The bigger question the big boys should be asking “Why aren't we doing this stuff?” Does the future belong to small creative hot shops +digital strategy consultants +global media agency?

Digital Marketing Will Shine IF There's a Recession

There is a 50/50 chance of an economic recession and the advertising industry has already factored in the softness for their 08 revenue forecast. One bright spot would be the Internet sector. This time around the budget cut will go to print and TV, the “engagement” and “measureable” nature of the digital marketing will make the industry resilient even if there is a recession.

Take a look at the valuations of many Internet companies and they do look like some value buy, with 2008 EBITDA mean and median multiples of 15x and 12x,respectively. I think we are still looking at 20-25% overall online ad growth this year versus 2-3% for all advertising (this is the US, Asia will grow at 6-8% with China at 18-20%). The explosive growth of social media will gradually be monetized as media owners harness both behavioral and contextual ad technologies to trigger a step-change in the profitability of consumer-generated content. This is the next phase of a much deeper commercialization of social media. It is interesting seeing how search is holding its own, dominating all other formats and becoming a US media channel in its own right. It is almost a sub-industry within the whole internet space and is dominated by one company. Search will not be slowing down at all and will take dollars from traditional customer acquisition mkt budget.

Consolidation will continue on mid-scale particularly on social networks and I don’t expect any mega-mergers such as Microsoft or eBay buying Yahoo etc. May be 2009.

Your New Year Resolution-Unlock Your Creative Mind.

This is a warm day and it feels like spring here in Washington DC, unfortunately I’ve spent most of the day in a hotel (I’d love this Park Hyatt that I am staying because they have has a amazing selection of teas ).

I was pondering over a cup of darjeeling our plan for new hires in the next 12 months and how creativity is such an important hiring criteria. There are a lot of common myths and questions about the creative minds? Wonder what makes one a person creative ? Are there certain personality traits? Are there different types of creative people? Can creative people be analytical at the same time? Can creative be separated from art? Can creative people be detailed oriented? I am not giving you answers to all of these questions, at least not today.

Becoming creative is not necessarily about becoming another DaVincci or Steve Jobs. Ordinary people can find their creative side. If you lock into your own creative juices, you can become a better leader. Creativity can be as simple as new ways for old situations. So start the New Year by re-building your creative mind. Let me try to highlight some of most obvious qualities of a creative mind:

They perceive the world differently - Creative people thrive on multi-dimensional of perceiving: sensing, seeing, hearing, touching things. These different perspectives open up their minds to unlimited possibilities. Many people who don’t think that they are creative are those who are fearful of change and prefer to work within limits with limited possibilities (within a box). Creative people enjoy to see many, even infinite possibilities in most situations or challenges. This could be a problem, 80% of creative people have this weakness.

There are sensitive to even tiny little things - Being sensitive helps creativeness in many ways. It helps with awareness of problems in the first place, known & unknown, articulated or unarticulated. Sensitivity usually comes with observant. Creative people constantly are using their senses: consciously, sub-consciously and unconsciously, even non-consciously. Now this one you cannot learn, either you have it or not. Sorry.

They can handle plenty of ambiguity - Creative people needs ambiguity, not simply tolerant of ambiguity. It allows them to flourish, just like a creative person was given with boxes and boxes amount of Lego bricks in all shapes of colors and even material so they can be even molded into other non brick shapes. And there are no instructions booklet so you don’t know what you are building. They actually love to be ambiguous to challenge other people and ideas.

They can synthesize different data intuitively - They have the ability to see the whole picture, seeing emerging patterns, grasp solutions with only just a few pieces. You can be a creative spreasheet reader and that's the quality of a good invesment  banking analyst. Creative knows and good at trusting their intuition, even if theyare right 51% of the time.

They never put money as no. 1 motivator - Money is never the first consideration. As important as money is in today’s world of luxuries and status, it is never a driving force for a creative person. Some say the most creative people generally have an intuitive sense of the amount of money they basically need and once that need is fulfilled then money stops affecting or driving them. This is true most of the time. 95% of creative people are like that. There are the 5% exceptions ( I have one in our company).