Word of Mouth Marketing I

Currently I am reading this book titled "The Secrets of Word-of-Mouth Marketing." by George Silverman. I have read until Chapter 6. In the first few chapters, it is talking about how come the word-of-mouth marketing is so powerful. The first reason is because it actually reduce the decision time and costs and depending on the word-of-mouth that the prospects listen to, the extent of reducing the decision time and costs would be different. It also talks about the nine levels of word-of-mouth marketing, from spewing bad things about your products and services to eagerly sharing what is good about your products and services.

The book also says what type of medium of word-of-mouth marketing should be used for the niche market that you want to focus on. For example, if you are targeting innovators, the keywords that should be used in your word-of-mouth marketing would be, "It's so new and unusual, no one's even heard of it. It works on a totally new principle. Most people wouldn't even understand it." Sentence of similar nature would get the innovator market to be interested in your products or services.

The book also breaks the buying process into the following stages.
1) Deciding to Decide
2) Weighing Information
3) Trial
4) Implementing
5) Expanding Commitment

In the end, I strongly recommend this book to people who are interested in marketing, no matter whether you are interested in knowing more about Word-of-Mouth Marketing. I am now reading the section about Expert to Expert/Expert to Peer/Peer to Peer Word-of-Mouth.

One point I hope to stress to users is, have you rewarded customers that persuade their friends or acquaintances to buy your product? I think this is an area that is greatly neglected by most of the companies. Imagine if you are rewarded for sharing a product that you loved, you would be extremely loyal to the product. As mentioned in many business books, it is cheaper to make a repeat sale then to make a new sale. Take note of this.

Power and Strategy Execution

Relating to Sun Zi Art of War on Army Organization. After reading Making Strategy Work, Chapter Nine. I finally notice a small difference between military and business. A point that is not specified in most of the military works that I have read.

In business, there is such a thing as power influence from other departments which is something that is not, at least commonly, seen in war. I think this may have derived from the very small difference between war and business.

According to the book, power by a certain department in a company is a result of resource allocation and functions. For example, a certain department may have certain things, that arises from resources it has or dept's functions, that another department wants in order to function. This created a dependece and in the end, power can be wield to influence this other department. And given human nature, each individual department would like to retain and perpetuate its power. This would then have an influence on strategy execution. This desire to perpetuate power is what is commonly known as office politics.

The department that wields the most power will have an influence on whether the strategy would be executed successfully. So high level management, please take note of how much power you have given to specific departments through resource allocation and function scope (a result of structure). Having too much power concentrated on one or a few departments could jeopardise the successful exceution of strategy.

Unity

I am currently reading the Six Strategies of Jiang Tai Gong. He is the advisor to the King Wen and Wu of the Zhou Dynasty. He helped the two kings to overthrow the Shang Dynasty and established the Zhou Dynasty.

There is a paragraph that mentioned the importance of unity. With unity, then the troops can be used to achieve the objectives of war, because a disunited troops will not act as a strong unit but act as several small units that would be easily overcome.

In Sun Zi Art of War, there is mentioned of unity as well. The people of the nation is united behind the ruler and the troops move in one single unit. Many of the troops deployment and movement strategies requires troops to move in a single unit. For example when attacking, it is required that the troops concentrate on the weakness of the enemy. When feigning weakness, the whole troops must work together to make sure the enemy will perceive them in disarray which would require that the troops work together as a unit.

So how do we ensure unity in business, well there are many ways. One is to improve communication between everyone in the company. One is to flatten the structure, but that may result in a need for change in business strategy and culture. Because corporate structure can affect your execution of business strategy and corporate culture.

But communication is the one and only method to ensure unity. Communication is both and art and a science that will take years to master even if it is corporate style. Other things that can ensure unity is during goal setting time within the departments. And again the values, vision and mission of the company will also keep the company united as one.

As I mentioned before, in the book "Built to Last", the visionary companies focus on getting the people that will fit into the values, mission and vision of the company first before capabilities are considered. Thus, again shows the importance of having unity in the companies.

So as we can see, there are a lot of business applications we can find from these Art of War from Ancient Chinese Military Strategists. Cheers!

Rewards and Punishment Part II

As most of you may know, I am reading the book "Making Strategy Works" published by Wharton School Publishing. Inside, the book it is talking about the components that are critical in making your corporate or business strategy works. So one chapter was devoted to Rewards and Punishment. As I mentioned in my previous blog, in many of the ancient chinese military works, there are many mentioned of having a good system of rewards and punishment. So I just want to share some of the thoughts and stuff that I have read here.

There are many brief mentioned of the system of rewards and punishment in many of the works, for example, Sun Zi Art of War, Six Strategist by Jiang Taigong, Han Fei Zi and many others. They only mentioned that the system must be transparent and should be the same regardless of who. Which means, there is no such thing as biasness, all are treated equal under the system.

The system is suppose to reward the correct behavior and rectify the undesirable behavior in the army, thus it is necessary as it impose certain level of discipline and unity into the troops which is critical because how can one fight an army that has a mind of its own or, each individual in the army act according to what they deem fancy.

Bringing this to business will be actually, rewards and punishment should help the company's staff to focus on getting the short term goals that would ultimately lead to the success of execution of strategy. So rewards must be given immediately when the target has been reached and like I mentioned in another set of blog, the goals set must be clear-cut. There is no such thing as grey area. It is either achieved or not achieved yet. And once it is achieved, rewards must be given out quick so as to send a signal that you value and recognize the staff's contribution to achieving the short term goal. Thus would incentivise him to quickly achieve the next goal, knowing that once he achieved it, the rewards would be given as promised. This is just one side of the integrity of the rewards and punishment system. When rules are broken, some form of punishment must be meted out as well, but one must also built in the consideration of the circumstances as well. For example, if the goals set was to achieve, 20% increase in sales revenue, but the manager only achieved 16% but his peers in other companies only achieved 12% due to the industry conditions, then punishment should still be meted out but one must be lenient not to enforce the full extent of the punishment. Even if the person committing the mistake is of the highest level of authority, he must also show that he is liable for punishment as well. Or else he himself would compromise the integrity of the system and in the end incur an even larger costs to the company.

In Romance of Three Kingdoms, in one of the scenario, Cao Cao order his troops not to trample the rice fields of the commoners, those who committ the offense will be executed, but during the march, his horse was startled by the birds that suddenly appear from the rice fields, his horse ran through the rice field, trampling a good part of it. He wanted to execute himself, to maintain the integrity of the system, but his advisor knows his intention and told him how can the leader be executed, so in the end, Cao Cao cut his hair to represent that he has been 'executed'. (In the past, hair is not cut because it is believed that since any part of the body is given by the parents, it would be unfilial to cause 'hurt' to the body) Thus, Cao Cao was able to maintain the integrity of the system.

Of course in business, things are not so straightforward. The extent of rewards and punishment is also important as well. One must reward enough to make his staff motivated to achieve short term goals on time. Too small an extent of reward does not have a good effect of motivation, too large an extent would incur unnecessary costs to the company. Too small an extent of punishment, may cause the mistake to be repeated. Too large an extent may actually weaken the morale of the staff, because the person being punished may hold grudges and consequences maybe unthinkable. And the extent may be difficult to grasp when the rewards promised or punishment meted out maybe to a group of person.

So this system is a critical part of strategy execution, and definitely it is an art and science to implement it successfully. Hope I can discover more of it and share it with readers here.

Cheers!