Into the Fire - An Epic Lesson in Marketing
The Book of Five Rings was written by Miyamoto Musashi, a legendary Japanese samurai. The book (circa 1645) is a treatise on strategy in battle, and is looked upon today for inspiration in life, business, and management.
"Fixation is the way to death, fluidity is the way to life".
According to Musashi, one had to think with fluidity and flexibility to assess problems from a different perspective. In business, flexible common sense is a key attribute.
In Musashi's era, being too rigid and structured led to uncertainty and death. Today, that same path can lead to business failure.
The value of planning is derived from execution. And, managing the fear of change is a prerequisite for quick and precise execution in today's competitive environment.
"Fix the problem or we are out of business!"
These are not the words that you want to hear after you have been promoted to Director of Marketing for the Fountain Sales Department of Coca-Cola USA. It may seem an exaggeration to suggest that this 100 year-old institution was in danger of “going out of business”, but the problem was all too real.
The problem was underscored by an article in Forbes magazine featuring Roberto Goizueta (The Coca-Cola Company). During the interview, Mr. Goizueta stated that "the lack of profitability from the Fountain Division was a significant hurdle in building wealth for The Coca-Cola Company”.
Simply put, the return on investment for Coca-Cola Fountain had fallen below the cost of capital as volume per outlet (which translates into revenue) had not kept pace with historic placement programs. In fact, equipment placement programs had not changed for the better part of a century.
Historically, there were two means considered to increase ROI - 1) increase the price of syrup, or 2) significantly reduce costs. Both of these options were rejected as being too short-sighted and not competitive. Instead, an entirely new source of revenue was created by restructuring antiquated equipment placement programs.
The core of this new program was "bundled" lease that was designed to double the return on assets in the local market. In addition, the lease program was structured in a way that competitors would be hard-pressed to duplicate. As a result, the program provided an competitive advantage that increased both share and profits.
A significant challenge that emerged during the execution was resistance to change. Many felt that the new placement program would have a detrimental effect on sales. In reality, the status quo represented the real threat. In the end, the success of unbiased employees provided the traction for the program's success.
The Lessons ...
I have had the good fortune to work with several businesses facing stiff headwinds (see case studies) and gained valuable insights along the way: 1) Marketing's job is to increase sales and profit, 2) Experience is the best teacher - it's hard to study problem solving! and 3) Execution (action) is more meaningful than strategy.
Sales growth is often cited as a significant challenge facing businesses. Greater marketing proficiency can yield the greatest profit velocity.