Tunde Awe, (previous) Vice Chair, CIM South West Regional Board, explores how marketing effectiveness usually focuses on returns on marketing investment, but there is a case to also look at marketing effectiveness from the perspective of wrong investments averted.
Reflecting on an article I read recently, one of my take aways was that marketing plays a significant role in the strategic direction of organisations. Be it in setting, staying on course and altering the direction. Too often, marketing effectiveness is focused on returns on marketing investment but there is a case to also look at marketing effectiveness from the perspective of wrong investments averted. Many times, the actions required to escape a failing or wrong strategy goes beyond the standard outputs of the Marketing Information System but definitely one that a good Marketing Audit can catch. On that basis, let us consider some of the insights from the article.
The authors cited HMV’s historical business model as an example of an organisation that doubled down on a failing strategy – despite red flags to change direction. After a meteoric rise that began in the 60s and international expansion in the two decades that followed, HMV boasted almost 40% market share in Britain at the end of 90s. It was in fact floated on the London Stock Exchange in 2002, valued at almost £1billion. Despite the availability, from late 90s, of discounted CDs at supermarket chains and at Amazon as well as the launch of iTunes store by Apple in 2003, HMV stuck to its business model and kept opening brick and mortar stores! It did not open a digital music store until 2010 and unsurprisingly went into receivership in January 2013. HMV’s management held on to a failing strategy until it was too late. One really wondered the role of marketers as these events unfold.
Some of the factors the authors claimed as responsible for management holding on to a failing strategy for too long were:
- The sunk cost fallacy: Fear of losing investment to date in a failing strategy
- Loss aversion: Preference to keep investing behind a failing strategy in hope of a turn around
- The illusion of control: Overestimation of the ability to control the future.
- Preference for completion: Innate bias to complete tasks
- Pluralistic ignorance: Misleading a group due to silent dissenters
- Personal identification: Not wanting to lose face!
Certainly, we all recognise one or some of these in ourselves or our teams at one point or the other. Some of the proposals on how to spot and escape a failing strategy before it is too late were:
- Set decision making rules in advance of high stakes
- Use carefully considered decision making rules
- Protect dissenters
- Consider alternatives to improve quality of decisions made
- Separate decision advocates from decision making
- Reinforce the anticipation of regret
You can read the full article. And, for those of us interested in sharing thoughts with the CIM South West community regarding how to spot and escape a failing strategy before it is too late, you can do so via our Linkedin Group.
If you are contemplating how to spot and escape a failing personal career strategy before it is too late, attending 3rd Annual Conference of What next? Your personal career plan might be a good starting point.
Article reference: ‘Stop Doubling Down on Your Failing Strategy’ by Freek Vermeulen and Niro Sivanathan. Harvard Business Review, November-December 2017.
Originally published in 2018