Transcript

Speaker 1:
You’re listening to Rattle and Pedal, diversion thoughts on marketing and growing professional services firms. Your hosts are Jason Mliki and Jeff McKay.

Jason Mlicki:
So Jeff, today I want to do a debate style podcast. We’re going to pick a topic. Well, actually I’ve already picked the topic that I’ve forced you to do it. And I want you to explain it and then I’m going to do my very best to kill it.

Jeff McKay:
Well you just opened up like that was something different.

Jason Mlicki:
Good point. I didn’t think about that. That’s how we do every podcast. Okay.

Jeff McKay:
You know what we need to add to rattleandpedal.com? We need to add a scoreboard of who’s right, who’s wrong, who won, who lost.

Jason Mlicki:
Who lost. Yeah.

Jeff McKay:
Yeah.

Jason Mlicki:
That could be ugly. That could be very ugly. That could end up being a social media fight, who wins? Facebook [inaudible 00:01:03].

Jeff McKay:
Here’s the thing that’s really important about that and where we’re going to go, I think here, nobody ever knows when we jump on these calls together. The market has a lot of different perspectives on a given issue or topic. And when we started Rattle and Pedal, the whole point was to highlight those differences and beat it up, and to understand the upside and the downside of both approaches, yours from a more traditional agency type of view, versus my CMO view. And our views have evolved so much from those very narrow descriptors. But, that’s the whole point and I’m always smarter when I get done talking to you.

Jason Mlicki:
That’s a nice compliment. I think it’s funny because the whole tagline of the podcast is divergent thinking and there are times, I wonder if we’re trying to be divergent from the mean or divergent from each other. And I think it’s both, of course, and I think that’s what usually comes out. So the topic that we’re going to do this on is brand relevance, but before we jump in, I’m going to point our listeners to it episode in January 2019, talking about brand awareness. And that’s where we first introduced the topic of brand relevance, which is a frame of reference you use.
So to start us out, I actually want you just to re-explain the concept of brand relevance for us so that when I tear it down and destroy it and it goes on the scoreboard, that everybody can agree with me. So, that’s my goal.

Jeff McKay:
So brand relevance is, although I don’t know if I said this on our podcast before, brand relevance is one of the three legs of the Prudent Pedal consulting model.

Jason Mlicki:
Oh, good. I can actually destroy your model.

Jeff McKay:
Yes.

Jason Mlicki:
That’s even better. This is exciting.

Jeff McKay:
You can fridge it.

Jason Mlicki:
Now I’m really motivated.

Jeff McKay:
So brand relevance, along with core capabilities and market opportunity are the three legged stool of the Prudent Pedal stool. Or maybe, as I like to say, the three positions of the Pedal crank of the Prudent Pedal model. And brand relevance in its most simplest term, and I have a blog on this we’ll add to the show notes as well, is a measure of the firm’s marketplace credibility and established credibility on solving a particular issue or demonstrating a certain capability or expertise.
I always hold out McKinsey has very strong relevance in strategy, right? You would not think of them as having any relevance in accounting services because they’re a strategy firm. In its most simplest terms, that’s what brand relevance is, but I know we’re going someplace scary now.

Jason Mlicki:
That third leg is going to get whittled it a little bit. No, it probably won’t. Here’s my thought. Oddly, I told you this the day, this came to me one morning as I was just prepping for my day. Conceptually, I agree with the idea, and I’m not necessarily saying that brand relevance is a bad thing. And the reason, I think it’s interesting you said it’s a measure of, I think it was estimated credibility. And I think it’s important to highlight the term measure, but we’ll come back to that.
And my initial thought was that I feel like relevance has the potential to squash innovation, that some of the greatest, most innovative, most profitable, most successful business ventures we’ve seen in the last 20 years came from companies that entered spaces where they had zero relevance and really had no right to even be there.
And my fear is that when you use this lens of relevance and you say that, “Well, we’re not relevant there, we should not go there,” which I don’t think is what you’re ultimately saying, but it squashes the ability for a firm or a company to explore a whole new zone where there is opportunity and they could absolutely play better than anybody else, even though they have no relevance.
And I’ll give a couple of obviously broad consumer examples that are going to be fairly obvious. The first one would be Apple. And you think about Apple’s move from being a computer company to being the most successful mobile music company in the world, and that giant catapult and leap that that brought that whole organization. They had no relevance in the music industry, they had no relevance in the portable device industry. They had no prior success in the portable device industry at the moment the iPod was released, yet that massive leap is one of the greatest innovations that the company ever did, and it catapulted everything that followed. This is example number one.
Example number two is the one that, and there are layers of this, but you look at Amazon, you could draw 30 from both these companies, but you think about Amazon’s decision to start serving up a streamed video content, stream television and movies via Amazon Prime, and I’ve said before, the pairing of not free, but a hundred dollars a year free package delivery with streaming Mrs. Maisel makes absolutely no sense. Those two things have no relationship to each other whatsoever. There is no relevance at all that you could possibly conjure to explain why Amazon was relevant to make that play. Yet, the two things paired together are one of the most sticky consumer products I think I’ve ever seen, and they’re brilliant. And they make Prime an almost unassailable thing to reckon with for every streaming company in existence and every delivery company in existence.
And to me, if someone was sat in the room and said, “Well, we’d like to enter the streaming service, do we have relevance there?” I can’t imagine anybody saying, “You totally of relevance there,” because they had no relevance there. But of course, it’s worked remarkably well. So I guess I’m just pointing a criticism at the model in the sense of that it could force you to avoid decisions that are great decisions, where there is tremendous market opportunity, despite the fact that you have no relevance and you should go there anyway. And I’ll pause and let you criticized what I said.

Jeff McKay:
Well, you said you had several, do you have a third?

Jason Mlicki:
I can throw out my own. Well, I can throw more from those examples as well but I’ll throw out my own.

Jeff McKay:
Throw out one more because those are big type of examples. And I can speak to those, but do you have a third one that might be less visible or headliners?

Jason Mlicki:
Almost every small business, every professional services business, every business that goes through any pivotal moment of change probably is going into a space where they have limited relevancy.
And I could point to two examples for me. I think about like before I even entered the business back in the ’90s when my dad ran it, and it was a pure design firm doing mostly point of sale work for large consumer companies. And at some point, somebody in the firm said, “This thing, the web looks pretty important. We need to do something here.” And someone figured out how to build a website. They didn’t have much if any relevance in producing or designing web experiences, but they knew they needed to. So they entered a new space where they had no experience.
The niche strategy that I laid out back in 2011 or whatever, when we went from being what I would call a local generalist agency to a specialist professional services agency at the time, we had limited relevance there. We had a handful of clients, mostly within our local geography we could pull from, but nobody outside of that geography had any clue who we were, maybe they didn’t even know who the clients we were leveraging to open those relationships.
So again, very little relevance, but a decision had to be made and you had to move forward. And so to me, anytime you have those types of pivotal moments, you could even with the McKinsey example you give. Well, there was a moment when yeah, McKinsey was a pure strategy firm, that’s all they were known for, but they do tons of implementation work now. So at some point, they went downstream and did implementation work, no relevance there, but went anyway because they had to. No relevance in digital, but they went there anyway.
So those are all examples of going into a space where you have no relevance. You have no relevance either in expertise or capabilities, but you’re going there anyway, because you have no choice or you think it’s a big market opportunity anyway. And then of course, your relevance changes. All of a sudden your relevance looks totally different. Our relevance now looks nothing like our relevance of 1985 or 1999 or whatever. So you’ve now bent where you’re relevant and how you’re relevant.

Jeff McKay:
Those are great examples. Each one of those is excellent in its own way. So let me take a step back.

Jason Mlicki:
Uh oh.

Jeff McKay:
Hey, I haven’t said that for a while.

Jason Mlicki:
I’m going to trip on the table, the three legged table.

Jeff McKay:
And then come back to your examples. And I think the best way to address your argument if you will, is through the examples. So the first thing I would say is you are absolutely right.

Jason Mlicki:
Okay. We’re going to end the podcast right there. No, keep going.

Jeff McKay:
This concept can reduce innovation. It can threaten and often does, but it doesn’t have to. And I think this is why it’s one of our three legs in the stool. To me, relevance while it is a measure of established credibility around an issue or capability is a very simple definition for it, most firms, and I say most firms don’t understand brand relevance and how to define it. So I gave an example that to some degree ill-defined relevance. I said that McKinsey’s relevance is in strategy, not accounting. And most people would agree with me. When you think of McKinsey, you think strategy. But when I think of relevance and how it’s baked into our strategy work, I think of it more in terms of permission to play. Where do you have permission to play based on your past performance and your client relationships? Do you understand what I’m saying?

Jason Mlicki:
I totally understand, and I think the interesting question about permission to play is that in some of those examples, we just did an episode on research, you’d have been hard pressed to run a focus group and get someone to say, “Yeah, I totally think Amazon should be producing original movies and original shows.” You would have been hard pressed to find anybody anywhere that would have said, “Yeah, they totally should do that. Totally, they have permission to play there,” from their lens as a consumer, right?

Jeff McKay:
Mm-hmm (affirmative).

Jason Mlicki:
Yet, one of the most successful businesses combinations I’ve ever seen. So anyway, I think the answer is in your model, to be honest with you. And that’s why I said, as soon as you came out of the gate and said, it’s a measure of estimated credibility, that makes your model so critical. And I hate to say this, it actually pains me to say this. This hurts me in my soul, Jeff. You don’t understand. Prudent… God, spit it out.
Sorry. But I think what you’re saying, where I hear you playing it is saying, well, if you have no permission to play there or no perceived permission to play there, then going there, if the market opportunity is big enough anyway, and you choose to go there anyway, it’s probably going to be a little more difficult and costly venture for you than it would have been otherwise. And that’s why I think your three legged stool makes a ton of sense because all of a sudden, it factors into your Prudent decision making model, which is that if you don’t think about that notion of relevance, then you’re going to radically misunderstand the cost and the ability of your organization to go pursue that opportunity if you think it’s there. I guess you are right in that regard, that it’s a piece of the picture that needs to be factored in, in order to make good decisions.

Jeff McKay:
It is. But I think you’re spot on that if you get hung up, whether you use the term or not on your brand’s relevance and you have too narrowly defined it, or even worse, misdefined it, you run into problems. So if you look at a firm like Amazon, you might argue their brand relevance out of the gate was online book sales, would you agree?

Jason Mlicki:
Absolutely.

Jeff McKay:
Okay. They didn’t define themselves as books.com or books online, they defined themselves as Amazon, wide open, empty vessel to fill with all kinds of brand meaning, if you will. And the strategy, when Bezos set that up was, Hey, we’re not going to be profitable for decades.

Jason Mlicki:
If ever.

Jeff McKay:
Yeah. If ever. Remember the expectation? But you would say, all right, they’re relevant in books right now, you could expand out and say, “Hey, we’re going to sell magazines or we’re going to sell newspapers or some other types of written content or book related stuff.” Maybe you might argue they could move into publishing and have more of a vertically controlled distribution chain. Those would be all intuitive and make perfect sense. And that would be consistent with a book sellers’ relevant.
But when they set out, I don’t think they ever set out to be an online book sales company. It was always a much broader vision of that. And the brand’s relevance, while it may have started out around books was really about customer experience, inventory control and distribution network. And in that case, they had those core capabilities, but because the online experience was so good, the brand had a much wider brand relevance in adding additional products to that distribution. They didn’t go from books straight to dog food or toilet paper or something like that, there was something intuitive to it. But when they went to web services, you might’ve said, “Whoa, now that’s out of left field,” right?

Speaker 1:
You’re listening to Rattle and Pedal, divergent thoughts on growing your professional services firm. Your hosts are Jason Mlicki, principal of Rattleback, the marketing agency for professional services firms, and Jeff McKay, former CMO and founder of strategy consultancy, Prudent Pedal. If you find this podcast helpful, please help us by telling a friend and rating us on iTunes. Thank you. Now back to Jason and Jeff.

Jason Mlicki:
And that was going to be my next comment is I think that’s a really pivotal moment in the company’s evolution and it’s one, I’m not an Amazon expert, but that I think is really interesting to look at it in this lens, because when Bezos built that company from the beginning, like you said, he had a much broader vision. He just recognized that books were a very easy entry point for e-commerce. And he knew that, and he knew he was going to expand beyond that.
But Amazon web services came out of nowhere, for them. It did actually. If you read the history on this, it was like they woke up one day and realized that holy cow, we are really good at managing these broad web systems, and better than anybody. And holy cow, we could sell this B2B. And it was not at all. It literally just fell, they suddenly woke up one day and had this realization that holy cow… And by the way, I would argue they have no real relevancy there. If you were thinking of cloud computing companies at that point in time, it’s not going to be them, it’s going to be Microsoft and whoever else. And so then they went on that and then AWS became really one of their biggest, most profitable businesses.
It’s a really fascinating moment in that company’s history when that actually happened, when it was just again, huge marketplace opportunity. They saw it, probably knew they didn’t have any brand relevancy if they were using that frame of reference, but went anyway, because they knew that they could be successful there, regardless, because they were so good at it. They were just better at it than pretty much all the existing incumbent players. So it didn’t matter. Right?

Jeff McKay:
Mm-hmm (affirmative).

Jason Mlicki:
And so that’s a really fascinating piece of history of that company.

Jeff McKay:
So you hit the nail on the head and they clearly understood their core capabilities. They said, “Wow, because we do this for ourselves managing these servers and all this inventory, that’s a core capability for us.” And they decided there probably is an opportunity here. What’s the market opportunity?
So the question then becomes, how can we position the brand to be relevant in that space? So if you think about that, because the market would recognize their leadership and prowess around using the technology themselves, they would have permission relevance around a technology product. Now you would say, it’s not going to be the same as IBM or Oracle, or any other pure tech company, but they have enough to get started.
So now they have to think about, well, who specifically in this market makes sense for us to pursue, and what would it take to build our relevance around that? And I think at that point, when you start to bring the distribution network in, the types of people that would need to lease server space, how you can begin to segment the market and then create that offer for it becomes a lot, lot easier to build the relevance and go attack it.
So to me, it just makes perfect sense, even though, and you said this, and I think there’s a really good point, Jason, it was serendipitous. They stumbled into it.

Jason Mlicki:
That’s how I recall reading the history on that line of business. I could be wrong, but I’m pretty confident that that is an accurate statement.

Jeff McKay:
But some of the best ideas come from that way. The what ifs. And when you take a step back from a strategy perspective, and you say, “Well, we have these capabilities, where else can we take those capabilities?” It opens up an incredible opportunity. I remember when I was at Towers Perrin, they define themselves as actuaries of divine benefits programs. They were pension actuaries. That’s where they got their core. And then they pivoted, well, if we’re in these pensions, we can make a logical extension based on our relevance into other employee areas, which to me is incremental, but it makes sense.
I always thought Towers Perrin’s core capability was they were the numbers people. And when you have that much actuarial horsepower, why wouldn’t you pivot into other markets that require actuarial power? And if they had pivoted earlier, can you imagine what a Towers Perrin could have done in data analysis and data science? It’s a 180 degree difference, but it’s the same core capability.

Jason Mlicki:
It’s funny you say that. I’ll tell a quick personal story. But, I was a math major in college and I came out of undergrad with a math major. And the funny thing is mid ’90s math major, nobody wanted anything to do with you. There was no interest in hiring a math major. Most people I would talk to about for jobs were like, “You need to get some business classes or something.” They had no clue how to use that skillset in their business.
And isn’t that funny? You laugh, but nowadays, it’s like tripping over themselves to get anybody with analytical skills into their business, right?

Jeff McKay:
Mm-hmm (affirmative).

Jason Mlicki:
It’s just funny how much that has shifted in the last 25 years. So I know it’s a random story, but I just think it was just really fascinating. And that’s probably why they didn’t see that. The thing that in hindsight was an obvious, huge market opportunity, nobody was able to even see from a hiring perspective, let alone a market opportunity perspective.

Jeff McKay:
And you know why professional services have such a hard time with that? Because they define themselves in terms of practices, and they think short term about hitting their numbers.

Jason Mlicki:
Yeah. I would also lump on that that so much of the business is defined by the relationships they have and so a lot of the positioning decisions are extensions of who have we worked with before and what did we do for them before? So it’s always a backward looking view versus a forward looking view.
Like you said, the Amazon example, if Amazon dug through their database and looked at their historical revenue trends, they never would have entered the web services market in a million years because they had no revenue there. There was no past experience there whatsoever. But that wasn’t how they looked at it. There were, there’s a market opportunity here that we’re not capturing, let’s go go after it.
Maybe in closing, I endeavored to tear down the leg of your model. Go ahead, sorry.

Jeff McKay:
I want to add one more thing because I think it’s really relevant to our listeners. You just said it and I talk about this, we’ll put a link in the show notes to this on reinventing the firm, is that the relationships that they have are long term, trusting relationships, and it does blind them to the opportunities that exist, even though they may talk about cross selling and stuff like that, they do get hung up with a particular buyer. Well, all of those buyers, and we talked about this in the ideal client too, share your world perspective. So you’re not going to get some breakthrough thinking from an existing client who sees the world the way you see it.
And the key to taking advantage of the innovation as you just described, is being attentive to changes in those relationships. So for example, if the buyers who are buying your traditional products all of a sudden, or services, begin to change, that’s a telltale sign that you should be reexamining your core capabilities and your market focus in where you need to be pivoting into some other solutions and building relevance around that. And almost every prospect and client I’ve ever talked to comes to that point, and they’re looking backwards instead of forward.
So I love that you hit on that relationship because in professional services, the partners carry the weight, they carry the relationships. And you’ve said this brilliantly before too, they have a very small sample of the market that they put too much credence into.

Jason Mlicki:
Well, Yeah. I agree 100%. Well, I don’t think ended up, we didn’t break the stool. The three legged stool still stands. My attempt to destroy it was made in vain, but definitely I think it just reinforced the idea of using that as a piece of your decision making process. And then that’s why I’ll admit defeat today, but having lost the battle, I am not to lose the war. I don’t even know what that means. It was fun. I’ll talk to you next week.

Jeff McKay:
That’s funny.

Jason Mlicki:
See you.

Jeff McKay:
All right, buddy. Have a good one.

Speaker 1:
Thank you for listening to Rattle and Pedal, divergent thoughts on marketing and growing professional services firms. Find content related to this episode at rattleandpeddle.com. Rattle and Pedal is also available on iTunes and Stitcher.