Comments on the 3D strategy of McKinsey&Company

Big Data and large global organizations have created so much complexity that businesses often struggle to bring good ideas to the marketplace profitably. Compounding the complexity is an anemic growth environment in advanced economies.

To deliver above-market growth in today’s market, organizations need:

  1. Excellent capabilities around the three “Ds”: using data to discover insights; “translating” insights into the design of products, strategies, or services; and finally, deliver them effectively to the marketplace.
  2. Processes, structures, and tools that tightly connect these capabilities to optimize their cross-functional performance.

As companies focus on building individual capabilities within the organization, they need to see the bigger picture: how these capabilities work together to bring the best insights to the frontline and the best intelligence from the frontline back into the core of the company.

Finding growth today

While 50 percent of companies expect their rate of growth to exceed their competitors’, weaknesses in discovery, design, and delivery capabilities – and the necessary linkages across them – put that goal in doubt.

Global growth in advanced economies has slowed to a trickle. European GDP in 2013 was down 0.3 percent from the previous year, and US growth was still anemic at 1.6 percent. Earnings growth for S&P companies has declined to levels last seen in 2008. Fifty percent of companies have met cash flow goals through cost cuts, but going forward, that won’t be enough to fulfill stock market expectations.

Companies have been most successful at finding growth by acquiring new companies and tapping new markets (i.e. products, segments, geographies). Key to understanding where opportunities lie is understanding that averages lie. Analysis of broad segments inevitably leads to broad averages that don’t expose the often significant and profitable pockets of growth. By digging into the data, companies can find healthy growth at the geographic (e.g. zip codes) or demographic (e.g. Hispanic mothers) level. Pursuing a micromarket strategy starts with creating an “opportunity map” of potentially lucrative hot spots by tapping internal and external data sets from a variety of sources and using sophisticated analytics to build a picture of future opportunity, not historical reality.

With the strategy in place, companies then need to focus on the practical steps they can take to drive organic growth that can win market share in the next 12 to 24 months. That growth comes from discovering superior insights into customers, designing great products and offers, and then delivering them to the market flawlessly.

We have found that companies with that profile perform two to three times better than the market in terms of revenue growth.1 And while only 14 percent of companies in a separate survey believe they have the right investment levels across their capabilities, almost two thirds of that group has much greater confidence in their ability to beat the market compared to those that aren’t investing effectively.2

Building the 3 Ds: Discovery, Design, Delivery

To redress those issues and unleash an organization’s potential to achieve above-market growth, companies need to excel in three areas:

Discovery: Entails building a data advantage by pulling in relevant data sets, analyzing the data at high speed, turning it into relevant business insights, and then delivering those insights to the decision makers so they can take meaningful action. The discovery needs to be based on a thorough understanding of today’s customer decision journey. Only 30 percent of companies believe they understand their customers’ needs and have a clear sense of where growth will come from.3 Effective discovery requires excellence in:

  • ƒƒAdvanced Analytics. Big Data is opening the way to significant growth. Companies that use it effectively have 6 percent higher profits than their peers. However, 70 percent of companies don’t think their Big Data analytics programs are working well.4 Companies need to be creative at using data, developing effective models that can predict behavior and optimize engagement, and transforming the organization with simple tools. In our survey, we found that more than two thirds of companies admit their Big Data analytics do not deliver valuable insights about their customers. What’s needed is a customer-service mentality in the advanced-analytics team by treating the frontline like customers, meeting with them regularly to discover the insights they need, and delivering them in a way they can use.
  • Consumer Decision Journey analysis. When considering a product or service, customers today increasingly interact with a brand in multiple ways— they see an ad on TV, check out the website, or speak to a salesperson. B2B customers, in fact, use six different channels for prospecting, on average.5 More than half of all customer journeys, in fact, involve multiple interactions across multiple channels. Developing deep understanding of one’s customers requires a detailed map of their journey and awareness of where the battlegrounds are for your brand.
  • Connecting the data to the organization. Despite all the investment in Big Data, many organizations end up delivering irrelevant or complex analyses that can’t be implemented. Successful companies hire “translators,” people with specific skills that allow them to operate seamlessly among various organizational groups. Companies also need to have a clear view of how the solutions will be implemented. For sales organizations, for example, it is critical to mask the complexity of the analytics to keep it simple for the frontlines so they can act on the insights.

Design: Involves the creation of business strategies, processes, pricing programs, products, and experiences that the brand delivers to customers. Design strategists start with learning what customers care about, how they truly behave, what their needs are, and what influences them. Fed by a continuing stream of insights, strategists in business units rapidly learn what is and is not working, innovate new solutions, assess their economics and feasibility, and then work with the frontline on implementation. Effective design requires excellence in:

  • ƒƒStrategy. Clear strategies are based on a deep understanding of the customer and a clear view of growth opportunities. One global industrial conglomerate suffered from widespread risk aversion, and as a result, it had no significant investments in new product launches. To address this, it elevated the role of marketing strategy and created a more disciplined, customer-driven approach. A 22-item diagnostic of its marketing capabilities revealed that its analysis of consumer behaviors and trends was weak. The company then committed to grounding all strategy development on detailed consumer insights, which were captured regularly in a growth playbook that helped the company differentiate between compelling and poor investments. By linking the strategy to these insights, development cycles were shortened and there were more successful launches. Business units using the new approach grew two to four times more than their peers.
  • ƒƒBranding. Poor brand cohesion can create significant headwinds for a business. Almost 40 percent of marketing and sales executives admit they don’t fully understand their brands’ strengths and weaknesses.6 Without that clarity, companies have a difficult time articulating a vision that provides a “true north” against which to measure any strategy, a vision that motivates employees and binds the organization across the discover-design-deliver functions. Disney, on the other hand, has a highly developed sense of brand and builds a sense of common purpose—“We create happiness”—into every level of the organization, starting with the first day of training for every new recruit at every level. That’s the kind of brand cohesion that helps bind the organization across functions.

Delivery: All about getting the right offerings to individual customers across a complex range of online and offline channels. Orchestrating the delivery of products and offers across marketing and sales channels requires operational excellence and organizational agility in:

  • Multichannel customer experience. When considering a product or service, more than half of customers today increasingly interact with a brand across many on- and off-line channels. Creating excellent customer journeys not only increases customer satisfaction but also boosts revenue up to 20 percent and reduces service costs by an equal amount. Since customers often interact with different parts of the organization during their journeys, delivering effective customer journeys requires developing strong connections between functions to smoothly “hand off” the customer from one point to the next. Breakdowns frequently occur between points managed by different functions. Rectifying those breakdowns requires teams from different functions to come together to redesign a better end-to-end process.
  • ƒƒSales. The best sales organizations are keenly attuned to their customers. With more than 35 percent of B2B pre-purchase activities happening online, for example, companies are shifting sales resources to digital to understand latent and explicit customer demand.

(Source: http://mckinseyonmarketingandsales.com/discover-design-deliver-3D-marketing-for-above-market-growth)

My own words:

This article basically talks about the customer-centric thinking in marketing. Use the underlining data to discover people’s real behavior, divide customers into different demographic or geographic group. Then according to the findings, design the product. Finally implement your plan and deliver the value to your customer.

This process is a new definition of Marketing. In the old days, companies make a product first and promote through media, which influence people’s perception and effect people internal search stage; or make a beautiful package and print a nice introduction, which serve for the external research. But this method is more proactive, it like knows what a customer wants before the product was made. In this way, the product could fits the need more accurately and reduced promotion costs to some extent!

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