Encore Trois Jours A Lille

Three days and three beers. Leffe and these two.

3 Monts (an interesting name for a beer from Flandres) is a heady 8.5% and tastes like it.

3 Brasseurs is a micro brewery near Lille Flandres station (turn left as you exit and you cannot miss it). We went for the Brune (dark as porter but crisp and light) and then saw someone else order a sample glass of all four of their beers.

Dinner on Thursday was at Le Compostelle. Third time I have eaten there and it just gets better every time. Applied the Scallops rule: if they are on the menu they must be ordered. For dessert continued the rule of 3 by ordering the "trilogie de creme brulee" (another weakness). Stunning.

If in Lille you must eat there.

Back To The Brand...

...and of course Seth puts it better than I did.

The final paragraph neatly sums up where we are at the moment.

Moving The Furniture Around

The last thing I did on Wednesday last week before heading for Lille was read a post by Adriana Lukas.

Having read "give your employees freedom to start moving the furniture around" I looked up to find them literally doing just that.

Not exactly what Adriana meant but it had the effect of underlining her point very loudly.

Trois Jours a Lille

Martyn and I took our open business philosophy to Lille during the latter part of last week. Of the three meetings during the trip one stands out.

We have the opportunity for a deal. We hold 90% of the cards. We could dictate terms and put the other party in a position where we retain absolute control of the relationship.

So of course we put a proposal to them that gave them control, autonomy, and freedom of manoeuvre. We also threw in significant financial assistance.

Why?

Because we believe "collaborate don't dictate". We play open straight and simple. We think this will get us further faster faster.

It usually works.

China Syndrome

I have been drawn into a steady trickle of conversations recently that indicate a drift back from China.

The voices have come from many quarters and from France, Israel, Italy...

The evidence is thin. The volume is small. But the evidence is definite nonetheless.

There are stories of quality tailing off. Delivery times elongating. The cash demand of a long supply chain proving a bigger burden than anticipated (no surprise there).

But I wonder if something else is stirring out on the streets.

From the Brand side: If everyone else is buying "cheap" in China you can stand out from the crowd by stating loudly: I am not. And "cheap" is all in the mind.

Example: financial service companies who are now loudly trumpeting their UK call centres (yes I know the alternatives are in India not China but the principle is the same).

Similarly if a malaise sets in for all things cheap and China sourced... who wants to be caught in a malaise! And even if your goods are not manufactured in a horror story it makes no difference if a horror story breaks. You will be tarnished.

Also, in our era of everything that everyone wants is available. There will be a growing body of people who do not want to buy made in china because everyone else is. Some of us like to stand out and we will seek out the things that meet our preferences.

From the MD/CEO side of me: For those of us who don't believe in China, who never left in the first place, that there is a drift back is interesting but no surprise.

Jon, a drinking buddy, is a sourcing agent. He buys in China. "Why don't you bring your stuff in?" He asks. My answers run along familiar themes:

1. I like my cash in the bank... not in the warehouse, not at the docks waiting to clear, not on the water for six weeks, not at the docks waiting to be loaded, not in someone else's warehouse waiting to be shipped. And when I say bank I mean my account not the bank's tangled up with the complexities Letters of Credit.

2. Stock is the enemy. Demand is fickle. We have month's where demand for some items doubles or halves. If my supply chain extends from Somerset to Guandong...

3. If we were to shut the plant. Outsource production to China. Shed jobs. What happens? Our liabilities change. At the moment you could argue our liabilities lie with my responsibility for the people we employ. If we outsource, our liabilities will turn into stock at which point I start to repeat myself.

UPGA pt.2

Jon Wareing emailed today offering me a spare copy of UPGA: The Unilever Plan For Great Advertising in response to my post of 7 April. Very kind. Proves how effective a blog post and a Google search can be!

I look forward to seeing if it proves as useful as my memory tells me it will be. Expect some comment sometime soon.

In the absence of UPGA I have this week found Jennifer Rice's Succinct Positioning thought provoking and worth a look if you haven't already.

I like the 4D rule and the 5 word rule though I am struggling so far!

Another element I am interested in is the correlation between intensity / depth / height of satisfaction with the performance / experience of the brand and the length of the use / experience cycle.

We have found that if when we deliver high on the first and the second is elongated, repeat purchases are higher. Food for thought.

I put this under the 4th D in Jennifer's model.

Brands Brands Brands

I am conscious that I have not completed my answer to the question from David Koopmans.

Adriana Lukas has answered the question succintly in her Musings on meaning of brand.

Not sure I can top that but here are some thoughts from small business land. Before reading on please remember that:

1. Severn Delta lives in a FMCG manufacturing world and
2. I am an old washing powder man and whilst you can take the boy away from the OMO you cannot ever completely take the OMO away from the boy!

Brand in my land starts with the name on the box. The logo stamped onto the bar of soap. Back in the history of my history the Brand was seared into the surface of a bright yellow lemony cake of soap as a mnemonic of quality. As a promise of satisfaction. A reassuing signal that "we will not let you down". "This bright yellow cake will do exactly what you expect and when it does and you need some more you will look for my name again".

122 years on this holds true.

It makes no difference whether it is the name over the door of the hotel, the bright orange tail fin on the aircraft, or the name of that hot off the press photo blog package that has knock you off your feet features (and that your seven year old daughter is now addicted to!).

Seth Godin tells us this isn't enough anymore and that the experience needs to be Remarkable. Remarkable inspires evangalists. I buy that.

But I am also very very aware that once we send our Brands out into the world. They stand on their own and what they are and who they meet and hook up with out on the footpath will in time define them as much any intention of mine...

Seven Severn Delta Sites Go Live !

They are up! All seven of our sites in progress went live tonight.

One for Severn Delta the company and one for each of our gaggle of nascent brands: Sarah Smith, Black Kite, Harry Hound, Verdanté, Kate's Kitchen and Hycare.

The Company Blog will follow.

There was of course a predecessor to the Sarah Smith site which as Dennis rightly pointed out had a rather ponderous intro (it seemed like a good idea at the time).

All seven sites are built on a common platform and back into the new enterprise system we are building (see Dennis's Open Source for SMB in Practice.)

Sterling work from Jake and the team at Senokian.

Learning Not to Push

We have been at it again: indulging in Push.

But we are learning not to. This week's examples:

1. We have a product that elicits more complaints than the rest of our 60 SKUs put together. All for the same reason. To date we have tried to explain our way around it with a "Yes but..." excuse Push.

2. We tried to get over some inflexibility from one of our suppliers by Pushing a specification change on a customer who didn't want it. Nearly broke the relationship in the process having completely failed to comprehend how important the existing spec. was to our customer.

3. We have an NPD project in play for a client. They have a "must have" criteria that our "preferred" supplier cannot meet.

So what are doing about it?

1. Re-engineering the product to fix the problem. Sat down with our supplier this week and we have a plan.

2. Building bridges. Hopefully not too late.

3. Re-written the brief to our suppliers to deliver exactly the criteria requested.

Another opportunity popped up this lunch time.

We had proposed a product to a big customer.

"We like it." They said. "But its too big. Can you reduce this particular attribute by a third?"

Guess what...

We said "Yes"!

Sarah Smith No. 2 in Daily Mail's "Femail" Top Ten

The Daily Mail's "Femail" section has put one of our Sarah Smith products at no.2 in its Spring Cleaning Top Ten.

None of our 5 closest competitors made the list.

Cost: zero english pounds

Not there at the cutting edge of extreme programming I know, but its this kind of word of mouth that has helped quarter one sales for Sarah Smith to triple vs. Q1 2006.

MBO Attempt No.3 "Call Me Santa Claus"

Martyn is shredding old files today being the tidy fellow that he is, and has just handed me a memo issued by BFF in October 2002 announcing our third (doomed) MBO attempt: "Call Me Santa Claus".

It was a complicated proposal put to us by the CEO of Lamont Holdings Plc. He had only been in the joint chair of Lamont and BFF for about three hours when I introduced myself to him with the words "my name is Clive Birnie and I am going to buy your consumer goods business".

"Er right..." He said. "Let me get my feet under the table and we will talk."

A few weeks later he put the deal to us. It clearly was designed to leave him with as much control as he thought he could get away with whilst pumping as much cash back into the empty coffers of Lamont as possible. He thought it was the best deal anyone would ever give us.

"You should call me Santa Claus!" he beamed.

We sat down with our lawyer Richard Tall. "As long as we proceed cautiously I see no reason why this cannot work out for you." He advised. So proceed we did.

Why? Because our view was bank this deal and increase control by attrition once we are in the chair.

Why did it fail?

Too complex. Too clever. Too Late. And no one asked The Bank if they could sell 1% of the assets covered by the ALL Assets Debenture they were holding.

By late December we were sat in the offices of the opposing lawyers, pens out, ready to sign.

One document was missing. The release from The Bank. It never arrived.

"We just want our accountants to have one final trawl through the books." They said, and six weeks later put the whole group into Administrative Receivership.

Our 1% turned out to be pivotal. Because it had always been treated as a low priority distraction internally there was an assumption that The Bank would be ambivalent.

They were not.

But, every cloud and all that. On 27th March 2003 we completed our acquisition from the Receiver. On our terms. At a lower price. For 100% of the equity day one.

Lessons:

Be a realist. If there is only one deal on the table it is the one you have to consider.

Be patient. Be tenacious.

If everyone else is playing short: play long. If might just play out your way after all.

A Credibility Issue?

Seth Godin lists Two Reasons Why People Say No To Your Good Idea.

We frequently come across both, but also a third:

3. Because we are based in Somerset UK not Guandong.

A good example happened a couple of years back. I was talking to a buyer trying to interest him in one of our products.

"I buy that sort of thing in China" He said.

"OK" I said, "how much do you pay?" (Figuring if you don't ask...)

"X" He told me.

"I could sell to you at the same price" I said "and I'll give you a weekly delivery which will reduce your stocks and credit terms that will improve your cash flow."

....

(Long Silent No.)

It took me a while to work this out but I figure that if he had walked in to his boss and said "Hey I have just got a great deal from a little company in Somerset" his boss would probably react by saying "You fool the price will be lower in Guandong". If he walks in and says "I just got a great deal from a company in Guandong." his boss says. Good work have a cigar.

Even if the price is the same.

Variable Labour Cost Does Not Exist

I went to the Zoo on Tuesday and became trapped in the Lemur enclosure with Ilan Nissim , Supply Chain Director from Reckitt Benckiser Israel.

Whilst trapped with the Lemurs Ilan and I talked business of course. He is concerned that I think too much like a marketer and not enough like a manufacturer. I countered this by saying that I am very much a manufacturer but that Variable Labour Cost Does not Exist.

An Error message from his brain caused much frowning and furrowing of the brow. So I explained another of Martyn and Clive's fundamental theories of survival.

For the most part we employ our manufacturing people on permanent full time contracts. This means they are paid for being employed. If we have orders for 1 million units a month they are employed to make 1 million units a month. If we have orders for zero we still have to pay them. They are a fixed cost so we treat ALL people costs as... Total People Costs, and as an "Overhead".

Having worked in companies where bonuses were paid for "Variable Labour Cost Variance Improvement" by essentially making mountains of stock (which is of course the enemy) and of course for "Purchasing Unit Cost Variance Improvement" by essentially buying a mountain of stock (... enemy) we were clear we needed another approach.

Now I like to sell stuff. Orders are good. So this example from the old company explains the theory:

A large piece of potential new business was turned away because the margin was considered too thin. The capacity was there to supply but the product costs on which the decision was based included both Variable and Fixed Labour Cost allocations. I thought these were ghosts and put this to Chris, the FD or as he was also known, Director for Business Prevention:

"Are we delivering the budget volumes." I asked knowing that the allocations were included at rates established in the annual "Budget".

"Yes"

"And do we have the same number of people as budgeted?"

"Yes"

"And we have the capacity with current head count?"

"Yes"

"Then the labour cost for this extra business is Zero."

"?" Error message.

Cash Belongs in the Bank, Not in the Warehouse

I have a customer who cannot understand why our warehouse is so small. Our reluctance to hold months of raw material cover is similarly met with bemusement. But it is simple:

Cash belongs in the bank, not in the warehouse.

If we make the warehouse bigger there will be a danger that someone will put more stock/cash in it.

I remember a conversation with my colleague Karen Andrews, a Severn Delta stalwart, back in Jan 2004 during the whirlwind described in "You Can't Grow Your Way Out of a Hole 2.0":

"You are getting really good at just in time manufacturing" I complained "but can I have a little more just in time purchasing to go with it."

It was one of those moments when you see the light bulb go on. Sure enough stock came tumbling down in short order.

We don't always get this right and to be honest stocks are clmbing again at the moment but it is in my sights and will get dealt with.

It seems simple and natural but maybe its another instance of having to go there to come back. Repeat after me:

Stock is the enemy. Stock is the enemy. Stock is the enemy.

Business is Marketing / Marketing is Business

David Koopmans replied to a comment I made in response to his recent post Advertising agencies are not the real problem that unless I define what I meant by "Marketing" and "Brand" he wasn't sure that people would understand my comment. Brand can wait for another day, but as the title suggests my view is: Business is Marketing and Marketing is Business.

To be in business is to go to market, put up a table, present your wares and engage with those willing to pay for whatever it is your business wants to exchange for cash. By being in business you are "Marketing".

Business is Marketing.

Marketing is Business because everything you do as a business contributes to how your business is perceived.

Everything.

If you do not have a web site, do not Advertise, do not have any promotional literature, and sell only by peer to peer recommendation to the very tiny group of individuals engaged in very obscure field of scientific research who have a need for your service... you are marketing your business. It doesn’t take a multi million dollar ad campaign to qualify.

Marketing is business.

Severn Delta has not printed a single page of self promoting literature, our web site remains a work in progress, and we do not even have a credentials presentation for use in opening meetings with new clients. We have never Advertised. But we are engaged in marketing the business everyday in everything we do. We pick our fights, do not openly invite new business enquiries, and punch above our weight. We play to win and this attitude says more about us than a shiny brochure.

But it is deliberate Marketing nonetheless.

UPGA: the Unilever Plan for Great Advertising

I have lost my copy of UPGA: the "Unilever Plan for Great Advertising". This has left me with a surprising feeling of loss, for although I have not referred to for a few years now; it was good to know it was there on the shelf.

I was looking for it because a number of things have got me thinking about "Brands" at the moment:

1. Hugh McCleod's posts: "buying space in someone else's brain is far harder than buying space in someone else's media" and "Advertising 2.0 does not exist";

2. David Koopmans's follow up to the latter: "Advertising agencies are not the real problem";

3. Reading David (DJA) Arkwright's (unpublished?) book on "Dirt is Good": "Detours on the Road to Damascus";

4. The gaggle of infant brands we have sent out into the world with scarcely more than a train ticket and a packed lunch to see them on their way.

Having posted comments on all three of the blog posts mentioned above and emailed DJA with an enthusiastic response to "Damascus" I reached for UPGA only to find an empty space where my wayward memory told me it should be.

UPGA for those who are not familiar with it is full of useful stuff like guidance on defining brand positioning. It talks about brands in terms of BIG IDEAS. When I worked at Unilever (89-97) it was rather out of fashion, its first draft being older than I am, but I always found it damn useful.

So, if anyone has a copy going spare. Maybe a scan / pdf... my email address is just over there.

Target Practice

Sig Rinde's post "Target Practice" and the subsequent addition on the same theme by Dennis Howlett this morning really hit chord for me. Sig writes "Target means push is afoot. Push is yesterday, thank you very much.". Spot on, as recent experience here has taught.

Back in Nov. 05 we launched a new product. A variation on an everyday item. You will find one in most homes in the western world. Our version was cutting edge, latest technology. Performance all the way but with a dash of beautiful design.

Sales were poor. A fair percentage were returned to us.

"We don't like it" People said or, "Its a bit odd".

"Yes" We said "We know, but the technology! the performance! the beautiful design!"

"Sorry" came the reply "we like the beautiful design but not the technology. Can't we have the old fashioned format but with the beautiful design?".

Our retail customers were similarly unconvinced. We put this down to the second of Seth Godin's "reasons people say no to your ideas" and kept on pushing, mistakenly encouraged by the fact that one of our multinational competitors liked it so much that they copied it. The only difference with their version is that it lacked the beautiful design and it doesn't sell in seven countries rather than just the one.

The epiphany came in a meeting with my second largest customer in December.

"People keep asking for the beautiful design in a traditional format" I sighed.

"I think that would be absolutely brilliant!" she replied.

I stopped. I listened. I thought.

It was Wednesday. When she returned to the office the following Monday a traditional format prototype was waiting on her desk. It is now April 5th and two days ago we shipped the first order.

It was larger than the total sales since Nov 05 of the technology version.

The power of pull.

The Long Silent No

I first came across this term during The Great George Street Conspiracy. It will be familiar to many of you. Often preceded by an "I'll call you back" or a "Call me back in two weeks" it is a sign of a reluctance or inability to give a straight "no" when one is needed.

The Great George Street Conspiracy started when Martyn Shiner and I called the three other parties involved in our first MBO attempt to the offices of The Engine Room (an excellent Bristol design company) on Great George Street in Bristol in November 2000. The five of us cooked up the plan and Steve Barrington, then Marketing & Sales Director at BFF and the only board member on the team, was delegated to approach the CEO of the Lamont Holdings PLC.

Steve met the CEO at the next quarterly review and reported back to me later that day.

"How did it go?" I asked.

"He said the one thing he won't do is give us a long silent NO." Steve replied.

We never heard from him again.