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The Culture of Asymmetric Marketing:
Enabling Marketing Management by Values (MMBV) through ‘Culture Management Systems’
Joseph E. Bentzel, Founder
Asymmetri Inc.
‘Sobriety’ As a Values Component of MMBV
The Bubble and the Web of Wealth Entitlement
What do I mean when I assert that sobriety is a necessary values component of an asymmetric marketing culture? Am I talking about outlawing the Friday night beer (or espresso) bash? Absolutely not. I’m talking about recovering from the negative consequences of the dominant tech industry culture of the bubble. In fact, anytime you attack the issue of corporate culture (or a particular corporate micro-culture, e.g. marketing and sales) it helps to begin with an assessment of the dominant culture of the industry in which you compete. If you begin from that perspective you can see that most tech companies (despite having elaborate HR programs tied to MBO and MBI) already operate in an MBV ‘default mode’. In other words, when tough and uncertain times arrive, people revert to their core value sets and their core process values, e.g. to speak out and succeed or stay silent and protect one’s job. During the bubble and its aftermath, many marketing and sales professionals have in fact been operating under a ‘managed by values’ approach. Unfortunately, the values managing them were highly dysfunctional and continue to undermine the cultural health of many technology businesses.
It is my view that during the period preceding the bursting of the tech bubble, an entire generation of sales and marketing professionals got marketing drunk and capital dependent by participating in a web-of-wealth entitlement that hooked the entire high tech industry in the United States and elsewhere. Speaking at the CMO Council conference, Bill Campbell, Intuit Chairman, connected the dots on the web-of-wealth entitlement by pointing out that he only gets personally involved in what he called ‘product companies’ which he distinguished from the ‘market cap companies’ of the bubble. Common sense marketing and sales people who dared to make this same observation at the height of the tech and internet bubble were unfortunately beaten down like female school teachers at a Taliban rally.
What do I mean by the ‘web of wealth entitlement’? I use modern addiction treatment theory as a guide to explain this concept. If you study the decades-long experience of the U.S. treatment industry, you will find that all addicts (drug, alcohol, gambling, food, etc.) believe they are ‘entitled’ to their fix, i.e. their drug or addiction of choice. In the case of the tech bubble, the addicts felt they were entitled to major financial returns just for participating in the ‘new economy land grab’ (both real and imagined). The co-addictive roles in this web-of-entitlement were played by:
- Entrepreneurs: Many of whom should have never been funded or gone public to begin with. Having been funded, they became comfortably dependent on capital to support their very existence as they functioned in an atmosphere of speculative business models and spurious economic theory which they re-spun at will to gain new funding. This is why I use the metaphor of the ‘bubbleboy’ who lived in a germ-free cocoon and could not survive in the real world. This is the exact opposite of ‘bootstrapped’ high technology ‘garage entrepreneurism’ that is the cultural legacy of Silicon Valley.
- VCs: The venture capital industry grew dependent on a steady stream of IPO’s to recapture many times their original investments. Absent this steady stream of IPO’s, the industry contracted. Today many VCs are more hands-on with their portfolio companies adding to the execution heat in the sandstorm economy of tech.
- Investment Bankers: The bankers were dependent on the individual ‘gambling addicts’, i.e. the retail investors and day traders looking for rapid run-up of stock value for various tech and internet stocks. Without the gambling addicts in large numbers, it’s hard to hold the web of entitlement together.
Remember what I said earlier about the desertification of the tech economy? At its roots this desertification was accelerated by the wholesale mass gambling addiction that over-cultivated any ‘New Economy’ business model that even appeared to be able to succeed.
Unfortunately, the tech industry has not come to terms with the idea that the bubble was a case of mass addiction and is in many respects still stuck in the blame game, rather than trying to draw the cultural lessons relevant to re-igniting tech entrepreneurism and technology sales and marketing momentum in a healthy way. Sure, people like indicted investment banker Frank Quattrone and others bear their full share of responsibility for their own actions. But how many CEOs and management teams said, ‘we are not going to cash out on those options’. Not many. How many VCs said, ‘No we are not ready to cash out on that IPO yet, that deal is not fully cooked’. Not many. And how many companies decided not to build a big cash war chest just in case their original business model and market opportunity were dead on arrival. Say it with me… Not many. It’s like the novel ‘Murder on the Orient Express’---everybody on the tech train conspired to over-cultivate the tech industry landscape, and everybody on the train, not just discredited analysts and bankers, shares the responsibility for the desertification that has followed.
The 3Ds: A Starting Point for Baseline Cultural Sobriety Assessment
Let me continue down this line of thinking about the culture of the bubble as an episode of addiction. When an individual has an addiction problem and ends up someplace like the Betty Ford Clinic, or contemplates attendance at some ‘12 step’ self-help recovery group, he or she usually is handed a list of Addiction Assessment Questions. For example:
- Do you find yourself becoming more and more dependent on the drinking, the drugging, the pint of Haagen Daaz, the gambling excursion to Vegas? Do you find yourself losing control, become intoxicated, or spending more time and money than you can afford pursuing your habit?
- Do you lie to yourself, rationalize or justify or in any way engage in denial of the impact of these behaviors by thinking, “I’m in control, I can stop whenever I choose to stop. My behavior is normal, everybody does it”.
- Have you engaged in acts of desperation to maintain the addictive habit, e.g. lying, cheating, stealing, covering up or worse?
There are a lot more questions on your average assessment list, but these are just a few examples that shine the spotlight on the basic ‘3D’s of addiction assessment—Dependence, Denial and Desperation. These 3Ds are the cultural legacy of the dominant tech culture of the bubble and marketing and sales organizations need to examine the impact of this dominant culture on their current marketing/sales culture as the first step in closing the marketing and sales culture gap.
The First ‘D’: Dependence: Strong Balance Sheet, Weak Marketing Culture?
If you needed a song parody to sum up the marketing mentality of capital dependence that characterized the tech bubble its title would be “Money for nothing and your ‘clicks’ for free”. What other song title would be appropriate for a company like WebVan, for example, that burned through over $1 Billion of invested capital selling bags of groceries for $1.00 that cost $2.00 to produce. What kind of marketing culture thinks that’s a sober idea? Lot’s of companies in the ‘new economy’ is the right answer.
In the beginning of all addictive processes there is the particular kind of ‘drug of choice’ on which the addict becomes completely dependent. So too with the tech companies of the bubble. The drug of choice was capital and the result was toxic dependence. Dependence on capital is the opposite of a culture of sobriety or ‘bootstrapped’ self-sufficiency that is one of the traditions of technology garage entrepreneurism in the U.S. Many companies born during the bubble never really equated success with business self-sufficiency and continuous momentum, but with this essentially dependent relationship to capital, validated for them by an army of analyst ‘enablers’. The now historic Barron’s article in 2000 exposing the timeline around which many public internet companies were running out of cash blew the whistle on the epidemic of capital dependence and triggered the first wave of the sell-off of tech and internet stocks, and the virtual end of new IPO’s. One major feature article in a major financial publication was all it took to blow the whistle on the web of wealth entitlement. But we’re past that now….right?
Financial markets professional Arne Alsin doesn’t think so. Arne Alsin is the founder and principal of Alsin Capital Management, portfolio manager of the Turnaround Fund, and a regular contributor to Real Money and TheStreet.com. In an article titled ‘Time for Tech’s Comeback? Not So Fast’ (June 6, 2003 RealMoney.com) he makes some powerful observations that go to the underlying financial basis of the point I want to make about a culture of marketing dependency. In explaining why he feels that certain technology stocks may be overvalued, he points out that “Balance sheets are too strong. Though this is counterintuitive, too many well-financed companies are a negative for investors. A torrent of capital during the bubble years created excess capacity and provided companies with exceptional staying power. In a normal cyclical decline, a natural winnowing process purges weak companies, such as those laden with debt, from the competitive landscape. Instead, excess capital still dominates the scene, even in the face of reduced demand.”
What these ‘strong balance sheets’ end up fostering is the kind of sales and marketing dependence on capital that runs counter to the basic business ‘sobriety’ of operating self-sufficiency. He goes on to write that “Free cash flow is low to nonexistent at most leading tech companies.” In other words, ‘self-sufficiency’ or ‘sobriety’ as a values component of marketing and sales culture is not very high on management agendas. What capital dependence does is weaken the initiative of marketing and sales organizations in selling and marketing their way out of their problems. In my experience, a professionally conducted culture gap analysis focused on capital dependence and self-sufficiency issues will reveal many things, including a potentially expensive overlap in marketing and sales functions, duplication of effort due to non-collaboration, and wasteful or poorly targeted spending. Let me move on the 2nd of our 3Ds.
Second D: Denial Justifies Dependence
On their own, addicts usually appear to be incapable of self-correcting their behaviors because of strong denial and rationalization systems that go hand in hand with dependence. The denial is often so pervasive and takes so many different forms that most addicts end up needing a recovery process grounded in simple reality-based values to get better. The pervasive marketing denial of the dominant culture of the bubble is still with us and continues to take 3 important forms that run counter to sober marketing and sales practices. These 3 forms of denial are as follows:
- Denial of Best Practices: Embrace of New Economy/New Rules Belief Systems: The dominant marketing culture of the bubble justified capital dependence, intoxicated overspending on marketing and sales, and outright losing of money by advocating that we are operating according to the ‘new rules of the new economy’. In retrospect we now know that many of the ‘new rules’ were actually created by a small army of now extinct e-strategy and media companies as self-serving theoretical justifications for spending millions with them on advertising, ‘analyst validation’, and marketing at ‘internet speed’. It was brilliantly self-serving ploy for a while, until reality set in. This so-called thought leadership is still active inside many tech companies where the systematic study of proven best practices of dominant, winner-take-all players (asymmetric marketing) has fallen by the wayside. For example, in many companies a co-dependent interpretation of the ‘customer economy’ concept has replaced the ‘new economy’ concept in justifying weak, politically correct, ‘relationship-first/customer later’ selling approaches that are teaching sales and marketing professionals how not to close new business, how not to practice customer dominance, a key attribute of an asymmetric marketer. These ‘build the relationship first’ sales approaches also delay exposing real market vulnerability, e.g. a weak product that would not succeed even if it was given away. Real best practices in high technology marketing revolve around the tactics of full spectrum market dominance, i.e. what needs to get executed to lock in the customer while locking out the competition at every phase of the category’s evolution.
- Denial of Competitive Dynamics: Non-Existent Competitive Intelligence: When you re-write economic history, why stop there. Why not re-write the rules of competition. This was the case with those that advocated that ‘brick and mortar’ and the ‘legacy tech’ businesses were not competitive with the ‘new economy’ companies. This led to sloppy or non-existent competitive analysis all along the line that is still with us in the sandstorm economy. You can see this in many ‘emerging categories’ that have 4 or 5 companies with around equal revenue and no clear ‘winner take all’. The culture of these companies prevents them from merging and creating a ‘winner take all’ scenario and instead opens the door to larger players to come in and cherry-pick the category to death. Asymmetric marketers are acutely aware of competitive dynamics and constantly infiltrate competitor ecosystems in order to detect opportunity, reduce vulnerability, and undertake consolidation activities that may lead to a winner-take-all ‘pre-emptive’ category leader. A-marketers understand that competitive dynamics also applies to today’s ‘partners’ who may be tomorrow’s competitors. In fact, this is the entire history of the tech industry.
- Denial of Actual Demand: Non-Existent ‘Market Opportunity’: If you didn’t see Wag the Dog with Robert Deniro and Dustin Hoffman you missed a 2 thumbs up flick. Funnyman Dennis Leary plays the role of the Fad King, a kind of folk marketing anti-hero who identifies emerging cultural trends that his clients can capitalize on. He then uses these cultural findings or fads to divert the nation’s attention away from a potential presidential sex scandal by creating a phony war in Albania complete with phony heroes. In the short-lived micro-era of the dysfunctional dotcoms the marketing departments of many companies tended to be run by this kind of fad king wannabe. For example, many bubble-era companies hijacked Professor Brian Arthur’s complexity-based concept of ‘increasing returns’ as a strategic fad to justify non-existent business models with no demand (‘money for nothing, clicks for free’). When the chronic absence of demand became self-evident, fad king tech marketers abandoned increasing returns and instead made ‘increasing u-turns’, abandoning the model-du-jour looking for an even newer fad. I still get calls like, ‘Enterprise software is out of style. Our investors want us to re-position ourselves (read re-spin) in order to gain new funding. We want to be an ASP, now…or maybe a ‘web services’ company’. Like the alcoholic who thinks his problem is whiskey, not vodka, many management teams switched poisons by ‘morphing’ and re-positioning, without getting to the root of the cultural problems of dependence and denial and the absence of demand for their offering. I laugh at the lengths to which the fad kings went to hide the fact that there was no actual demand for their products or services. Often times their denial of actual demand is disguised as ‘we’re in the chasm now’……..’once we get into the ‘bowling alley’ we will be OK.’ Am I saying that tech companies don’t end up in the ‘chasm’ or the ‘bowling alley’, two concepts created and popularized by technology marketing author and consultant Geoffrey Moore? Absolutely not. In fact what I’m saying is that chronic denial can even take the form of holding up legitimate tech industry marketing strategy (chasm theory) as a holy talisman, kind of like a frightened Transylvanian holds up a crucifix to a mythical vampire. It doesn’t work and they never get out of the chasm.
TheThird D: Desperation
Taken together, denial of best practices, denial of competitive dynamics, and denial of real demand are a ‘set up’ to practice desperation behaviors that widen the gap between strategy and execution that I call the sales and marketing culture gap. In extreme cases of capital dependence and denial, sales and marketing teams under pressure to perform will often do or say anything to deal with declining revenue, weak products, multiple competitors commoditizing the landscape and a host of other dysfunctional organizational behaviors. During and in the aftermath of the bubble, desperate behaviors have included:
- Questionable revenue recognition practices that inflate revenue;
- Bartering or non-standard exchanges of technology that companies book as revenue;
- Channel stuffing or the over-shipping product into your partner network while calling it revenue, knowing full well it may come back to you;
- Pre-paid subscriptions or commerce transaction fees for users and user transactions that might never materialize in a million years (this was a nightmare for some B2B infrastructure and software providers, and for the whole m-business ASP crowd).
The new ‘C’ level title of ‘Corporate Governance Officer’ is being introduced at many companies to deal with these problems as ethics or legal problems. They should first and foremost be seen as problems within the overall sales and marketing culture that need to be systematically addressed by embedding the core process value of ‘sobriety’, a state of marketing ‘non-intoxication’ created by the abstinence from various 3D behaviors described above.
Culture Management System Module 1: Culture Gap Assessment
In contrast to the 3Ds of dependence, denial and desperation, a marketing culture with ‘sobriety’ as an embedded process value is all about fostering the legacy tech industry practice of bootstrapped entrepreneurial self-sufficiency as a spontaneous behavior, and tying marketing spending to revenue uncertainty in a very real time way. A culture of marketing sobriety recoils from the kinds of desperation behaviors that characterized the bubble. Sobriety is also about detoxing from the various denial systems of the new economy thought leadership, the ‘new rules’ and ‘no rules’ in favor of a culture of best practices of market leaders. You say a culture of best practices is a no-brainer. Not so. For example, many companies that come up through the Silicon Valley VC scene seem to have a strong cultural bias against studying Microsoft’s best practices. Microsoft best practices in asymmetric marketing include a number of major category restructurings in which they moved against incumbent market share leaders from a position of relative weakness into a position of absolute strength. By resenting and politicizing Microsoft marketing practices, instead of learning from Redmond’s campaigns, high tech companies are leaving some of the industry’s most valuable marketing experience on the table.
I’ve only scratched the surface with the 3Ds above. That’s why it’s important to go into this in depth in the Culture Gap Assessment phase of the creation of your culture management system. Embedding sobriety is a ‘one day at a time’ process, not a mental exercise. To borrow a phrase from the addiction and recovery industry ‘You have to live yourself into a new way of thinking, you can’t think yourself into a new way of living.’ In other words, beginning anywhere is the way to tackle this subject. There is no wrong way to get started.
Here’s a comparable. Readers knowledgeable about IT security practices may be familiar with the concept of ‘vulnerability assessment’, i.e. a continuous and ongoing scan of the entire network to detect areas that are undefended in a hostile attack by a hacker or insider. Culture gap analysis is like an ongoing vulnerability assessment for your marketing and sales network focused on how values and beliefs impact strategy and execution.
You want to begin with a few simple questions, for example:
- What areas of our execution shortfall do we think are related to a sales and marketing culture gap?
- Are we a culture of execution focused on best practices and where do we look for those best practices?
- Are we a culture that is free to discuss our own vulnerability and the competitive dynamics of the category?
- Are we a culture that pays attention to the stage of actual demand for our products and services, or to borrow a phrase from the Gartner Group, are we ‘hype cycle’ marketers?
- Do we place value on candor, getting real, self-organizing and shared ownership as cultural imperatives, or are we dialog-averse, and stovepiped with compensation and reward values that reinforce our past not our future?
The time and resources you invest in your ongoing ‘culture gap assessment’ will pay for itself many times over by identifying the Big Hat No Cattle syndrome in your marketing and sales organization through which leads, resources and customers may be escaping, as documented in the Accenture study. The assessment will create a cultural baseline that tells your organization where you are now, what values are actually driving your current behavior, and where you probably need to focus in order to improve marketing and sales performance. A work in process, the first draft should immediately be published inside the organization as a first step in fostering the 2nd core process values component I will discuss next.
About the Author: Joseph E. Bentzel is President of Asymmetri Incorporated, a marketing consultancy providing ‘asymmetric marketing’ services to high technology companies in the U.S and around the world.
Copyright 2003, Joseph E. Bentzel. All Rights Reserved. Reproduction with Author’s Permission.
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