The thermodynamics of marketing

The Thermodynamics of Marketing

Thought-leader Peter Hinssen wrote an inspiring opinion article about the thermodynamics of organisations, based on his new book The Network Always Wins. Though it’s a high level piece, the approach it describes is very down to earth. Basically, Hinssen writes that most companies go through 3 stages in their life cycle (or 4 if they stop evolving). They move from being super fluid to fluid and frozen and are permanently at risk of becoming rigid.

A short synthesis, first, for those who have not read it. Only start-ups are superfluid according to Hinssen: they are fast, furious and fearless like networks. They have hardly any corporate structure or bureaucracy. They experiment and continuously reposition themselves with the market. When they mature and grow, they slow down, start focussing and pass into the fluid stage. Yet they can still innovate faster than the market. The frozen stage is one in which many large organisations sojourn: they find models and structures that work and then freeze them. Their main concern is efficiency and optimisation and they are addicted to margins. Companies that are unable to fluctuate between the fluid and frozen stage are in danger of isolating themselves from the market and becoming rigid, which is where it all ends.

What I love about his hybrid thermodynamics model, is that Hinssen does not expect nor does he urge large(r) companies to be ONLY agile and fast (the fluid stage), features that a lot of them seem to be missing. He understands that organisations of a certain size cannot function without the structures and planning of the frozen condition. But he does warn about the danger of being JUST frozen. I believe that those very same dynamics apply very well to subdomains like marketing, communications and branding.

Superfluid
I have had the privilege of assisting freshly budding tech start-ups with their marketing and communications efforts. The exciting part is that they are literally starting from scratch. They need a slogan, a logo, a coherent brand identity, a vision, … well almost everything really. They might have a DYI website and PPT made by “that guy who’s not big on talking but knows the product and can write a decent sentence”, but that’s about it. That’s because start-ups have two main concerns: developing a product offering and finding customers. They know they need to work on their marketing – to find and reach that precious customer – but they have little time and no budget. All the budget flows to their product development. On top of that, their brand is still so fluid that when they create content – a white paper or a leaflet – the direction they are taking might have changed by the time it is finished. This can be as frustrating as it is exciting, but it is how start-ups work.

Fluid
I worked with rapidly growing tech companies as well. I’ve experienced the transition from superfluid to fluid. It is very subtle and happens step by step. In the start-up stage, marketing professionals still get to talk to the General Manager, the CEO or whatever the `Top Dog’ decides to call him- or herself. (S)He has a vision. (S)He knows the product. (S)He is 100% committed. Marketing still has direct access to the company roots. True, the brand itself is still shifting, as well as the organisation, but you can tap right into the company DNA if you do it right.

And then the company grows and marketing is left to ‘the new guy’: a fresh Marketing Director, a dedicated Commercial Officer, a marcom assistant or even a Country Manager. The marketing department itself expands. There’s a director and an assistant. Or instead of one marketing and sales responsible, there are a marketing AND a sales manager. More people are hired. And as time ticks along, marketing efforts (external AND internal) are located further and further away from the source. Decisions start to slow down. If you are lucky, as a marketing supplier, you’re working with an empowered employer of your customer. One who can and likes to pick his own options. Sometimes their choices can still be rectified along the way by someone ‘higher up’, but at least things are still moving. Marketing is still duly integrated into the network of the company, firmly connected to Management, to its vision as well as to the ever-changing outside market. The brand, for its part, is still an ongoing negotiation between the company, its workforce and the customers. It’s a conversation, not a dogma.

Frozen
In multinationals, marketing is one of those disciplines that need to be able to work at two different speeds. First, there is brand coherence and, second, there is responsiveness to an ever-changing market. The best can balance these both worlds.

Brand coherence, first. This is all about slow speed, and reiteration. You need consistency if you want to be recognized. If you keep changing, keep addressing different customers, keep ‘rebranding’, no one will remember who you are. It’s psychology 101. Repetition is all about patterns, which grab the attention of our brains, and breed familiarity. The message becomes engraved in our memories. Customers need to see or hear a marketing messages nine times before they really start recognizing it. The danger is that brands become `nags’ when they try to stay coherent. Just think of L’Oréal’s age-old, uninspiring (Yes, I know: that’s subjective, but I’m sure I’m not the only one thinking that) “Because You’re Worth It”.

I liked Marc Shillum’s view in his piece “Branding Is About Creating Patterns, Not Repeating Messages”. According to him “adherence to a big idea and endless repetition of centralized, fixed rules can make a brand seem unresponsive and out of step with its audience”. So, rather than repeating a “single, monolithic message”, he advises brands to create patterns (which induce the same brand recognition) and coherence around multiple, smaller ideas. Like Japanese clothing company Uniqlo does, by creating small, unique projects – like Mix Play, Uniqlock, Grid, Jump, Color Tweet and Sport Tweet – that become tools for the customer.

Second, marketing needs to be fast and shift continually. This is the fluid part as discussed above. Customers change, trends switch, the market shifts, competition transforms, etc. You know the drill. It’s pure madness to keep hammering on about brand recognition and consistency amidst all this change. This is the part where digital gets to play a huge role. Social media listening tools and cool algorithms that recognize customers and adapt your website to mirror their preferences, Big Data analysis to catch trends before your competitors do, etc. They can all help. A lot. But if your marketing department itself is frozen – only frozen, and not able to shift gears between fluid and frozen – and built like a siloed hierarchy that is not empowered to make its own decisions, you can be certain that these fast digitals tools won’t yield the results they promise. It’s not that they don’t work. It’s that your marketing department doesn’t.

The strongest large brands are those that are able to continuously fluctuate between fluid and frozen branding, using fluid and frozen marketing organisation structures. Obviously, when you are big, you need structure, and longer term marketing plans or consistency between subsidiaries. And yes, communicating between Brussels and San Francisco does slow things down. But being able to recognize shifts up front and move along with them, and being fast about it is just as important. It is possible. I’ve worked for large hybrid organisations that were frozen as well as fluid. There are tricks, of course. Some marketing departments at EMC, for instance, paradoxically go about it in a very processed manner (which one would rather associate with the frozen part of organisational thermodynamics) to connect all of their marcom sub-departments into a fluid network and thus fire up the speed of decision and results. You can read their innovative take on `agile marketing’ here.

Rigid
Organisations that are unable to shift between frozen and fluid, and just stick to the frozen condition, will eventually become rigid, according to Hinssen. And from then on, death awaits. We all know those organisations which are strictly governed by `Corporate’, situated in a town (or galaxy more like) far far away. I am not talking about flexible organisations with a corporate marketing core to hold the divisions together. I’m talking about those companies with a corporate marcom department that is so controlling that they literally create every piece of content. And they do exist, these companies where there is almost no room for local input and where decisions needs to go through 5 different hierarchical stages before they are approved (or not). Yes, they might translate something in the local language, but that’s about it. Everything that goes out is carefully planned and created ages ago. It’s a top down monologue with no market match or personalisation whatsoever. It’s the “Because I Said So” approach that truly cannot work in such a large and diverse market as ours that moves at the speed of light.

Rigid is a one-way street. Never lose touch with the fluid part of your branding and marketing organisation, even if some parts have to be frozen if you’re a large company. And, of course, read Peter Hinssen’s riveting Forbes piece well as his new book ‘The Network Always Wins’ which explains exactly how the thermodynamics of organisations work and how you can stay fluid in this era of disruption if you manage your company like a network.

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