Communications Basics

Dealing with reality vs. infographics

Over the past few weeks I've been wrapping up the beta project for our new business model and, as a result, I've been putting off a lot of writing.  So for the next few posts I'm going to be cleaning up the flotsam and jetsam that's accumulated on my desk.  First off, Infographics

The recent web fad of reducing an argument to a trite graphic is really irritating to me... especially when the position taken is so poorly researched that it negates the senders' credibility. I usually only comment directly back to the sender about the error, but back in March I got an unsolicited email (from someone who did not identifiy what axe they wanted to grind but I was able to discover it anyway) asking me to comment on it in my blog.  Here's my comment.

What a load of crap.

Here's the infographic.

 

Via: Open-Site.org

Right from the beginning the hucksters pushing this information start out with a prevarication: that Wikipedia forced Encyclopedia Britannica to leave print.  It's not true.  It's not even sort of true.  Encyclopedia Britannica did announce it was leaving print this year, but not because of Wikipedia.  It did it because it can more easily update its information on line than it can in print.  Print sales of the EB were declining for years before Wikipedia came on the scene simply because people could look up information.  The company is actually doing quite well.

Now every other piece of information on the graphic could be correct, but by leading with something that is so blatantly false it makes it difficult to believe anything else.  That's where I have so much difficulty with this kind of information dissemination. 

The internet is full of crap, just as every other form of media is full of crap.  But what makes the 'net so different is that it is relatively easy to find out if the crap you are reading or viewing is true or false.  That's why I love social media and the internet.  I don't have to believe anything.  I can check everything.  That's also why a lot of marketing people and entrepreneurs (outside of web-based businesses) really prefer to avoid doing their work on the web.  Static printed graphics can make outrageous and/or vague statments without potential customers checking up on them immediately.

Now the publishers of the above crap added a bunch of url's to try to add and image of veracity to their stuff, but since they can't be clicked or copied it's difficult to check up ont heir sources.  This, too, is part of the practice: Give the illusion not the reality.

So, that's what I think of the infographic from open-site.org, a company looking to replicate Wikipedia's success by disseminating poorly researched information.  I would highly recommend avoiding their practice.

Print is still relevant. No, really. It is.

Been having some interesting discussions with social media marketing/techdev types the past few weeks and I've come to realize that the SM industry is about as inbred as an industry can get.  That's not good.  Here's the background:

I am still very tied into the old media world through very deep relationships.  I have good friends that not only work for newspapers, they own them.  5 years ago these friends saw they businesses crumbling but they still thought there was a chance to turn it around and the SM was just a fad.  Today it is quite different.  They understand they were wrong now, but they still don't understand how to put it into the context of their audience... because the SM industry doesn't care about context.  They care about selling stuff... through relationships.  In other words, an industry built on Amway marketing philosophy.

But that's not what social media is supposed to be about.  SM is about building community through shared information.  The health of that community is specifically tied to the validity of the information.  If your core of information is subjective gossip and self-promotion, you will have a very sick community.  If that community is based on objective information and common purpose, you have a healthy community.

That's where the headline comes in.  Our objective information core is still in print and old media.  When I hear people, whatever the age, sit down and talk about the state of the world, their opinion is still based or at least directly influenced by something they read in a newspaper or what someone they know told them about what they read in a newspaper.  Of course it is socially acceptable to say bad things about that source, or whether one actually agrees with the content.  But nonetheless, the core is still a newspaper and generally a local one.

But what happens if that information core goes away, like so many are? John Paton, the new CEO of MediaNews has said he is all in on digital for the future of newspapers, but at the same time MediaNews has been steadily shutting down local papers it buys and creating single entities for large metropolitan entries.  For, example, the respected Contra Costa Times is soon to be melded into a large entity covering everything from Walnut Creek to San Jose.  Good luck getting the news of your town's city council when that happens.  The community essense will be going away and with it an informed local electorate.

Even when a newspaper has only 10 percent of the local population reading it, that means 1 in 10 people you know are reading that paper and are influenced by it.  Ten percent of the electorate is nothing to sneeze at.  President Obama would kick his dog if it would boost his rating by 10 percent right now.  So why would a social media company turn up it's nose at the opportunity to reach 10,000 users every single freaking day?  I don't know either, but they are.

Communications is not an either/or process.  We have been hearing that social media will kill newspapers for a long time, but they are still there (and in fact are growing at 10 percent per annum outside of Europe and the US). TV was supposed to kill radio, but it is still there, too.  In fact, every form of communication since the dawn of media is still in use somewhere (What about stone carving, you ask? Anyone read --- in newspaper probably --- about the Martin Luther King Memorial).  There is a large as yet untapped market out there ready to be taken.  For the social media company that realizes that partnering with an old media company-- and making themselves relevant to their needs -- it will be the golden key to success.  All those that don't will end up following MySpace into irrelevancy.

Social Media Failure? Don't blame the tool. Blame the workman.

Last week a blog post popped up last week on the Ad Contrarian about the "massive failure" of the Pepsi "Refresh" campaign.  The author, Bob Hoffman of the redoubtable Hoffman/Lewis add agency, was claiming this proved that social media didn't  work.

Let's not point out that the advertising effort Pepsi was putting out before they tried social media wasn't helping them gain market share, which is the reason they went to a social media effort.  Because that would just prove that advertising doesn't work, using Bob's logic. Instead, let's take a page out of Bob's own book.

Bob says: 

1. Advertising is most productive when it is focused on changing behavior, not attitudes.

2. Advertising messages should be created for, and directed at, the heavy-using, high- yield customers in your category.

3. We don’t get them to try our product by convincing them to love our brand; we get them to love our brand by convincing them to try our product.

Now let's point out that all three of those points are also the effort of a good social media campaign.

Finally, let's point out that Pepsi's campaign did none of those things.

The Refresh Project asked Pepsi users to tell Pepsi what their favorite charities were and then vote for those charities in a contest to get some $20 million donated to those causes.  At the end of the project, Pepsi lost 5 percent of their market share.  How did that happen? All the people whose causes did not get picked got pissed off, that's how.  

When you have a product that is not ABSOLUTELY necessary to the everyday life of your customer, then you have to be careful what you say to them.  The Refresh Project did not tell Pepsi anything about the junk food/drink perception of any current or potential customer.  It did nothing to change attitudes of non-customers, nor how to keep current customers. It didn't target major outlets of soda pop distributors.  It was the result of a bunch of clueless people within Pepsi sitting around a table and making stuff up.

And it was primarily an outbound marketing effort... and social media is ALL about the inbound.

So it wasn't a failure of social media as a means to improve market share. It was the failure of Pepsi to use it properly.

Anyone getting this?

 

Communication takes another hit in EDA

Disturbing, though not surprising news out of the EDA industry this week.  I've stated a few weeks ago that Cadence has been going through another round of culling in the marketing departments and last week I learned that Synopsys, too, has been quietly downsizing marketing (why market when you're number one and your competitors aren't even trying).  Haven't heard a peep out of Mentor, but with Carl Icahn barking at their heels they have other problems... and Magma cuts it's marketing budget every year so that's nothing new.

None of that is disturbing, though.  At a recent company meeting in Cadence fairly recently, the executive team did a panel presentation on where the company was heading.  My sources (confirmed twice) reported that after the presentation, one brave soul rose to ask someone to clarify the vision for the company (because it just wasn't clear in the presentation).  Charlie Huang, chief strategy officer took the microphone and said, "We are going to follow the same strategy we have had for the past 20 years..."

And not a peep from EDA360 guru John Bruggeman. 

The entire premise of EDA360 is that business in EDA has to be done differently and it is a premise I completely agree with.  I've said before that I thought the philosophy Bruggeman brought to Cadence was bold while not entirely original, but definitely a direction Cadence and the rest of the industry needed to consider seriously.  I've also had my doubts that the powers that be and have always been in Cadence -- and the rest of the industry -- would ever allow the vision to see reality. 

The vision of EDA360 was pretty sweeping.  in Bruggeman's own words:

"First, the EDA and semiconductor industries have until now focused on design creation. With $100 million development costs on the horizon, there will be far fewer creators. Many designers will become integrators who make heavy use of pre-designed IP [intellectual property] to build SoCs and systems. EDA tools so far have only addressed creators, and this must change.

"Second, EDA until now has primarily focused on helping creators overcome the productivity gap. This work must continue, but what integrators are most concerned about is a profitability gap. Closing this gap requires new tools and approaches that can reduce design costs and bring in more revenue.

"Third, design going forward will be driven by apps. People will start with the applications and then build, or source, highly optimized hardware/software platforms. The traditional approach, in which hardware is built first and software and applications are tacked on later, has become too inefficient and costly. Thus traditional design tools and methodologies must evolve, and EDA360 will accomplish that."

So, doing things as you have for the previous 20 years...? Not so great an idea.  And yet, that is the plan.

I'm not picking on Cadence, just to be clear.  The entire industry's vision is sclerotic.  The EDA360 team came in with what was, essentially, a revolutionary approach to make the industry grow again.

But all of this is still not the disturbing thing.

The disturbing thing is that I have know some pretty amazing marketers and communicators in EDA and just about all of them have given up on the industry and are leaving.  Some, who are out of work now, have resolved never to return.  That means the ability to communicate with the market is leaving the industry altogether.  That's not good.

EDA is an important industry, but it's not set for growth anytime soon with the current leadership.  That makes Icahn, possibly, its savior... as distasteful as that may be. 

It's not just the Semi industry that's clueless

I got an invitation to attend a webinar on best practices for Facebook pages from an organization I have often communicated with and considered a good information source.  So I signed up.

That's 30 minutes of my life I'll never get back.

Yes, you should provide interesting content on your page.  Yes, you should encourage engagement on your page.  Yes, you should post consistently and often.  Yes, you can do demographic research through the ad services for free.  And all the people on the seminar echoed everything being said on the seminar on the Twitter pages.  It made me want to scream.

The social media industry is becoming as clueless as those industries that claim social media is stupid.  They are patting themselves on the back and cross-selling to their buddies while there is a huge underserved market out there who desperately want to know how to make it relevant to their audiences. 

 It's no longer important to show people how neat it is to be the "mayor" of your local barista shop.  We all know it's neat.  But people want to know why they should care. Friends, social media has leaped the chasm and is now cresting into the long tail.  More than half the United States is engaged in social media, even if they don't know they are.  It's being used to shape new governments in some of the most economically and sociologically backward places in the world. But like the electronics industry has separated itself from its real market (with the exception of Apple), social media is glad-handing themselves into irrelevance.

I dunno.  Maybe I should keep my mouth shut.  Being able to explain why social media is important is starting to turn into a pretty good gig.  

Catharsis

Following up on my last post this morning, I needed to vent.  This is what I came up with.

The kind of marketers available to the EDA world

 

Their reward for their efforts

 

EDA executives discussing what they really want in a marketing program after they have punished the marketing team and/or cut its budget.

Where EDA executives go to look for marketing and PR to replace laid off marketing teams or fired agencies

 

The type of customer EDA executives are trying to reach

 The type of customer that would respond positively to the message the executives come up with

 How EDA executives view the power of the messages

How EDA customer view the messages EDA executives produce

I feel better now

I.... just ... can't.... take .... it.....

From the depths of EDA comes a common cry.

Innovation!

 

John Cooley posted a kudo to an East Coast company from "West Coast EDA," praising it for an advertisement that was stolen directly from a four-year old, and very tired, insurance company campaign.  They even stole the face of the spokesperson for the company.  And "West Coast" called in an innovative concept. 

Unbelievable.

Who's in charge? Finale

The announcement of Steve Jobs taking another medical leave is an unfortunate but timely bit of news to put this series wrap up in perspective.  Jobs has established Apple as the leading consumer electronics company in the world.  For all intents and purposes, what Apple does drives the rest of the industry. Apple did not introduce the media player, it just made one that most people could use.  Apple did not introduce music sharing, it just made it legally acceptable.  Apple did not introduce the smart phone, it just made the smart phone practical for the mass market.  Apple did not introduce the tablet computer, it just reintroduced it when the public actually wanted one.  Jobs was at the center of all these decisions. 

Important to note: Jobs is not an engineer.  He has some technical experience but he has stated the college course that was most responsible for the creation of the Mac was a calligraphy class he audited at Reed College, shortly after he had dropped out of the school.  What made him successful was not technical knowledge.  He knew smart engineers that could realize his ideas, but the engineering never interested him.  The user experience did.  This is the man that has driven the direction of the electronics world for most of the past two decades.  But if he showed up today at any of the leading electronics companies for a job, he would not even get in as a janitor.

Yesterday, after establishing my evidence for the lack of vision or even understanding of the consumer market within the leadership of the electronics industry (most of whom are engineers) I said something drastic had to be done.  I repeat my assertion from the first part of the series: Engineers need to be removed from the management of the electronics industry. Specifically:

1. Any member of management, in fact, that cannot demonstrate a basic understanding of modern communications practices (yes, that includes Twitter) needs to be contained in the engineering division and kept away from the financial and technological marketing decisions.  This includes anyone in finance that continues to defund marketing programs. These people should be replaced with personnel within the company that have this knowledge, or my consultants who can step in immediately. (I can make recommendations.  In fact, I know several in EDA companies that should be recruited)
2. Any marketer who utters the phrases: "We know who our customers are...," needs to be reassigned.
3. Any employee who asks: "What is the ROI...?" and cannot answer the same question for the company's product in specifics and on his own job, needs to be shown the door.
4. Budgets must be immediately reworked.  At least 1 percent of R&D budgets should be reassigned to real market research.  If staffing does not provide for that research, it must be acquired either through personnel or outsourcing.  At least 10 percent of all trade show budgets should be applied to social media budgets, including measurement tools (If you want to know how, my rates are reasonable. If you don't want to work with me I can suggest a lot of good people) At least 10 percent of sales collateral budgets, including that assigned to press releases, should be reassigned to advertising, based on the information developed by the new market research and input from the conversation developed from the social media program.
5. Everyone in the company with any connection to the decisions of company direction and vision should be required to spend at least 15 minutes a day maintaining a social media presence and conversation, and then providing regular reports to management about what they have found. (there are tools available to manage this process.)

I would make a comment about venture capitalists working in the electronics industry, but they abandoned it long ago so I don't think there is any point in bringing it up

We have a very short window to turn this mess around.  Let's get to work now or call the grave diggers.  There will be no bail-out this time.

Who's in charge? Act 3

In the past two posts I've shown that the consumer electronic industry, with few notable exceptions, has consistently failed to address and meet the need of the buying public; that the semiconductor industry that follows that lead has delivered suspect information regarding market demand; and that the support industries to the semi industry has no solid idea what their value is to their customer, much less express that value to them.  How have we got to to this place?

First off, we have a leadership in place; and a generation of engineers in marketing that were trained by that leadership, whose frame of reference rests in the 1980s markets -- back when electronics was still in the entrepreneurial phase of its life.  In the 1980s, Lockheed Missiles and Space Division was still putting together technical documents with pen, ink and typewriters.  Semiconductor-based products were just the province or technology early adopters (nerds) and were considered generally beyond the ability of less mortals to comprehend, much less work with.

Today, however, there are people in IT departments with high-school equivalency certificates building desktop computers with components they get at Fry's.  Most cell-phones are upgraded every 20 months and some are considered disposable.  Consumer electronics has crossed the chasm and marketing needs to focus on late adopters to expand the market.  But what does the industry market to?  Engineers who think Twitter is stupid.  

No, that's not fair.  There are many engineers that find Twitter to be quite valuable and they buy these products.  No, it is more accurate to say that the market is addressed by companies, run by engineers who think Twitter is stupid.  The people who buy the products that are made by these companies have adopted social media in totality.  More than half of the US population has Facebook account.  These people are talking among themselves about these products, but the engineers in charge of marketing... or at least those engineers in management who are telling marketing that Twitter is stupid... have no idea what is being said.  Instead, they are talking, by email, phone and tradeshow meetings, with their friends who agree that Twitter is stupid about how smart they are.

They are living in a virtual biodome of their own construction that has preserved a 30-year-old paradigm perfectly.  It is a fantasy.

Is Facebook really worth $50 Billion?  They create a product that more than half the country uses and has spawned multiple additional industries with companies also valued in the billions.  The company is creating a lot of wealth and business.  It is a source of optimism and news.  The real question is, what is an EDA company really worth?  They create products used by a very small group of users to create products that 95 percent of the market will send back because it isn't what the customer wants.

So what is the answer to this problem? I really think it comes down to management.  And the electronics/semi industry management is filled with engineers who are making marketing decisions based on 30-year-old paradigms.  These guys are remarkably talented and knowledgeable -- when it comes to making complex technology, but they need guidance from people who are equally remarkable in talent and knowledge about the market.

A few weeks ago when I was considering writing this series, I got a call from a journalism buddy who encouraged me to go for the jugular on this subject.  He was royally PO'ed at a particular industry that does little to no advertising for the simple reason "they say they know their customers and what they want" so advertising doesn't help them.  And yet, this editor says he gets calls from company after company, that uses this same excuse for not supporting an industry publication, and that still expects the magazine to take their calls, send out editors, take meetings and write stories about their cheap little companies.  "If the customers already know everything they need to know about these companies," he wondered.  "Why do I need to write about them?  Why do they still send me their lousy press releases?  Why do they even go to trade shows?"  And why are they still not profitable?

Over the past 20 years, B2B publications have taken a major hit as more companies took this attitude to the point that we almost lost them altogether. What many people may not realize is that these publications found gold in social media and are using it to gather information about companies while, at the same time, creating sources of revenue.  They no longer need top go after these little companies to advertise once or twice a year, because they can sell their content to engineers who DON'T think Twitter is stupid.  They have found new, exciting industries to write about and less and less of those industries reside in the electronics world.

The engineers running the majority of electronics, semiconductor and EDA companies have run the market into the ground.  They have received a brief stay of execution in the current turn around, but don't expect it to last.

To get out of the cycle some drastic changes need to be put in place.  

To be continued.

Who's in charge? Act 2

So yesterday I talked about the failure of the semiconductor industry, as a whole, to accurately anticipate much of the market need.  I identified the causes of that failure as an inadequate funding of the marketing effort as well as a pervasive preference to withhold accurate data from industry analysis that is relied upon to develop new products.  How deep does this go?  I’m going to use the Electronic Design Automation (EDA) Industry as an example.  They support the semi industry with the tools they need to design and analyze complex products.

At the Electronic Design Automation Consortium (EDAC) industry forecast meeting this month it was pointed out that while semiconductor revenues have increased by double digits in 2010 while EDA is still in single digits (although it had decreased the previous two years).   Aart DeGeus, CEO of Synopsys, repeated an observation he has had many times in the past that EDA is not “getting its fair share” of the value it creates for its customers.

 Well, there are three reasons for that.  It could be any and all of them.

1. EDA is basing it’s forecasts on information provided by the industry analysis it’s customers provides... which we’ve already seen to be flawed.  So EDA is building products to support semiconductor and systems development that is going the wrong way.  (That may be a stretch.)
2. EDA has not done sufficient research into market needs to understand the what their customers value and is not communicating how they provide that value.  (That’s getting pretty close.)
3. Because EDA spends so little on real marketing and relies on rumor and tradition primarily as market research, it is not building products their customers’ value.  (I think we may have a winner.)

Here’s why I think the latter is more accurate.

Like many of his colleagues and competitors, DeGeus likes to trumpet how much money they spend on research and development.  I remember some years where it is as much as 20 percent of revenue for Synopsys.  I also know most of the companies in EDA have been increasing sales staff budgets every year.  I also know that every company in the industry has been cutting its marketing budget by an average of 10 percent every year for the past 10 years.

Now if you look at marketing as a function of sales, and that it’s duty is to crank out press releases, advertising and brochures; and to run trade show operations, well then you probably should look at ways to economize.  But marketing --real marketing-- is the advocate for the customer.  A marketer is supposed to converse with the customer through media, conduct professional surveys, and set up two-way channels of information between the company and the customer to get an accurate picture of what the customer needs before he know he needs it.  It’s a research function first and foremost. And that’s pretty much the way marketing works in every industry... except semiconductors.  And it’s even worse in the EDA world.

If Aart decided to take one percent of his R&D budget and put it back into marketing to do that kind of work, he would quintuple his marketing effort and possibly find out what the next big thing is going to be, not for EDA, but for the electronics industry.  It would make Synopsys the thought leader for his customers’ customers.  He would be able to explain his value clearly in hard numbers.

In fact, forget Synopsys.  Any EDA company, including the smallest startup, could do the same thing if they put some effort into marketing.  That means hiring a real marketer, and not an engineer with an MBA who once took a course on communications.

Instead EDA has marcom admins running Surveymonkey polls that make the statistician in my cringe.  

I recently got the results of a survey that I had participated in a few months ago.  The survey started out with an explanation of what engineering discipline was being explored.  

Right there, if I was an engineer from a different discipline, I would take a pass on the survey, so the only people that would take it are in that discipline.  OK, I can accept that in an effort to winnow out the non-relevant.  the next question was, “How important do you think (this discipline) is?” 

Gee, I wonder what the answer was? Sure enough, the survey result showed that a great majority of the engineers polled thought it was very important.  Whodathot?

The rest of the survey was pretty much the same: leading questions and obvious answers.  

What really caught my eye in the summary was a statement in the summary that estimated the savings a customer can realize from using this company’s technology was $5 million annually.  There was nothing in the survey that asked questions about costs.  There was one about “time savings.”  So I sent the CEO a question about how they arrived at that number.  They extrapolated that number from an assumption of the number of engineers a customer has and what they might be paid.  

This is a practice I’ve seen in every... I mean every... EDA company when I ask how they justify their product.  It’s based on sheer guess work.  they have no idea how much the customer is paying.  They don’t know the size of the engineering teams of the customers.  They don’t know anything about the market, other than the one or two companies they have actually sold product to.

So to answer the question: How deep does this lack of real marketing go?  Right to the core, baby.

To be continued.