ISSUE 11 | CSO
CHIEF STRATEGY
OFFICER
“ DON’T THEY
DO DIAL-UP? ”
We talk to William Pence, CTO at AOL about their legendary reinvention
Also:
What is holding people back from adopting Open Innovation as a strategy? : We talk to Mary Putman, Director of Strategy at Hallmark, as they celebrate their 100th birthday
LETTER FROM THE EDITOR Welcome to this issue of Chief Strategy Officer Magazine. We are excited to bring you the brand new design that we have been working on since the previous issue. In addition to being busy working on the new layouts, we have been frantically creating new websites to bring you more strategy content. We have tried to make these as intuitive as possible and we believe that we have achieved this. If you want to have a look at what we have created you can see the new website at: channels.theinnovationenterprise. com/channels/strategy. We are interested in hearing your thoughts. These websites will also include all back issues of the magazine as well as all of the other titles that we run at Innovation Enterprise. In addition to the new websites and new layout, we are incredibly excited to include our interview with William Pence, Global CTO for AOL. AOL has undergone one of the most remarkable strategic regenerations of recent years,
going from a household name providing internet services, to an advertising and content giant. William talks us through the transition as well as what the future holds for the company. We are truly humbled to have been able to talk to somebody who is in charge of one of the most innovative companies in the world today. If you have any feedback on this issue or if you are interested in contributing, please contact me at ghill@theiegroup.com Also, if you like the magazine, please share it.
George Hill Managing Editor
Managing Editor: George Hill Assistant Editors Simon Barton Art Director: Joe Sanderson Cover Design: Chelsea Carpenter Advertising: Hannah Sturgess hsturgess@theiegroup.com
Contributors: Nathan Meyer Harriet Connolly Michaela Jeffery-Morrison General Enquiries: ghill@theiegroup.com
Are you are looking to put your products in front of key decision makers? For Advertising contact Hannah at hsturgess@theiegroup.com
2014
CONTENTS
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AOL? DON’T THEY DO DIAL-UP? We talk to William Pence, CTO at AOL about their ingenius tech strategy
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DIGITAL MARKETING TRENDS
IS IT TIME FOR RFID TO SHINE?
Nathan Meyer talks us through the top 5 digital marketing trends in
We look at how RFID is making a mark on strategies around the world and it’s use at the Ryder Cup
2015
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HOW MANY MISTAKES ARE YOU MAKING ON SOCIAL MEDIA?
HALLMARK’S 100 YEARS OF STRATEGY
It is easy to make mistakes on social media, which are you making?
As Hallmark celebrates its 100th birthday we talk to Mary Putman, their strategy director
13 WHAT IS HOLDING BACK OPEN INNOVATION? Open Innovation is a game changer, what is holding back its growth?
Chief Innovation Officer Summit
#CINONY
December 2—3 New York | 2014
For more information contact Emma Pawlowski +1 415 670 9814 epawlowski@theiegroup.com http://theinnovationenterprise.com/ summits/cino-summit-new-york-2014
ie.
TOP 5 DIGITAL MARKETING TRENDS FOR 2015 Nathan Meyer Digital Leader at Innovation Enterprise
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TOP 5 DIGITAL MARKETING TRENDS FOR 2015
2014 was arguably the year when digital marketing became mainstream for companies. Sure, many don’t do it well, but pretty much everyone is experimenting with it in some form. This marks a positive change, but as digital develops, so too will the methods used by digital marketers to reach and engage with their target markets. With 2015 not far away, we look at the digital marketing trends set to transform the space throughout next year. Below, and in no particular order, are the top 5 trends to look out for;
The Importance of Gamification Integrating game mechanics into marketing campaigns is a process that’s been picking up steam over the last couple of years. It’s still yet to cement its place as a mainstay within the toolbox of digital marketers – but 2015 is set to be the year where gamification takes off. If the ultimate goal of marketing is to stimulate participation, then there’s not a better avenue for marketers; as consumers collect stars, they’re buying your products.
The Rise of The Chief Digital Officer The Chief Digital Officer is not just another job title for us to question; it’s actually going to be one of the most essential roles for companies looking to be pro-active in the digital space. With the boundaries between marketing and technology narrowing all the time, it will be essential for there to be a Chief Digital Officer overseeing the digital endeavours of a company. This will guarantee that the digital marketing outputs of a company are aligned with that of the overall strategy.
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TOP 5 DIGITAL MARKETING TRENDS FOR 2015
The Cloud is Even More Important For some, the Cloud is still a bit of a daunting concept, but the general consensus is that ignoring it is tantamount to digital suicide. The demand that the consumer will be putting on digital marketers in 2015 is set to skyrocket even further so utilising the speed of accessibility that the cloud brings is a necessity. If you want to guarantee that your company is as manoeuvrable as possible, the cloud is a must.
The Measurement of Social Impact Analytics are going to remain an essential tool for marketers. The insights that can be leveraged from measuring metrics can paint a vivid picture about the way you’re interacting with and stimulating your audience. It can also show you how you need to improve and what channels should be looked at as a viable avenue for growth and development.
Marketers are Writers Content marketing was definitely one of the hottest trends in 2014 and with this increase in content, companies are realising that the most important attribute for a marketer is not their phone manner or their ability to make sense of numbers, it’s their ability to write. A marketer with sloppy writing skills won’t cut it in the current environment; it’s the key to creating quality, engaging content.
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IS IT FINALLY RFID’S TIME TO TAKE THE STRATEGIC SPOTLIGHT? Simon Barton, Assistant Editor
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The rise of Radio Frequency Identification (RFID) technology in the retail industry has been well documented - Burberry incorporated it into their flagship stores as early as September 2012, allowing finance controllers to see snapshots of their stock levels, whilst also enhancing customer experience through in-store targeted advertising. It’s now the turn of sport to become acquainted with RFID. Golf’s Ryder Cup took place over the weeked of the 26th of September and was soundly won by Europe. Golf is not a sport that everyone can get onboard with, especially from a spectator perspective, the Ryder Cup is however often fraught with tension and excitement, born out of the intense rivalry enjoyed by the American and European teams.
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IS IT RIFD’S TIME TO SHINE?
As mentioned before, RFID technology isn’t new; in fact, it’s been operating under our noses for sometime now. Targeted advertising is one of the biggest advantages of RFID technology. What it meant for the spectators around Gleneagles, the setting for the Ryder Cup, is that they could be fed adverts depending on where they are on the course. That’s not to say that RFID technology will act as a tracking device, but when you post a photo to Facebook, it’ll know where you are and will probably be able to hazard a guess as to what you’re interested in. Features like the virtual ‘High-Five’ will allow sponsors to immediately ascertain which team you’re following, allowing them to segment their adverts based on this. It’s all about
creating a more rounded profile on their consumers – we’ve all heard the story about Target managing to work out a girl was pregnant before her own father did and although this isn’t as intrusive, it is a starting point where it categorises you immediately. The wristband that was given to spectators at the Ryder Cup can also be used to make cashless payments. For advertisers, utilising this strategy can be the most important aspect when creating consumer profiles. Our purchases are often a reflection of our socio-economic group, and aggregating a consumer’s purchases over an entire day can make advertising strategies a lot easier to develop and deploy. Social Media is never far away
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IS IT RIFD’S TIME TO SHINE?
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from events like the Ryder Cup and because of this, the RFID wristband will allow users to post their experiences instantly to social media. There is no better way for advertisers to gauge how their consumers are feeling and interacting with their events and products. High engagement usually means that something has struck a chord, which is normally a good sign and this should be looked at vigilantly and acted upon so that next time, modifications can be made to better suit the consumer.
to be one of the biggest sporting events this year, it will be fascinating to see how RFID technology will allow sponsors to target and segment consumers based upon their interactions with the event. The technology was successfully incorporated into The Champions League festival in 2012, when Bayern Munich met Borussia Dortmund, with a great deal of success, so there’s no reason to suspect that the Ryder Cup’s attempt were not equally succesful.
We want to know the story in the picture and the story behind the video.
I think it’s only a matter of time before RFID technology is integrated into every experience we have as a consumer. I am sure that the sponsors will leverage a great deal from the event and use that information as a platform for further strategies. If you were one of the lucky few with tickets, we are sure that RFID made this year’s Ryder Cup more interactive than ever.
With the Ryder Cup set
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“content to bridge the gap in your enterprise knowledge�
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WHAT IS HOLDING BACK OPEN INNOVATION? George Hill, Editor
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Open Innovation is not a new practice. In fact, my favourite example of Open Innovation comes from 1959, where Volvo realised that they had created a truly life saving device with the three point seatbelt. Rather than keeping it in house and retaining the patent, they shared it with other car manufacturers. To date, this one shared innovation has been credited with saving over one million lives. At the time, Open Innovation was not a formal business practice, it wasn’t until 45 years later when Henry Chesbrough coined the phrase, that it was labelled as something that businesses could have an active policy for. The idea behind Open Innovation is simple, working with external groups,
WHAT IS HOLDING BACK OPEN INNOVATION?
individuals or companies in order to improve the innovation process and speed up time-to-market for products and services. There are a number of ways of utilising it: fully open, where a company has opened up the potential to work with anybody on any project; topic orientated, where a company works with a number of partners on a single topic; partner orientated, where a company will work across a wide range of projects with a select group of partners. Despite companies like Procter & Gamble seeing significant business results from adopting Open Innovation, the uptake is surprisingly slow. So why is this? Below are the top 5 reasons why some companies are reluctant to adopt Open Innovation:
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Cultural Change One of the main aspects of Open Innovation that organizations struggle with is the need for a cultural change within the organization for it to truly have the impact that it can. Essentially, it is a shift from an ‘I did it’ to a ‘they did it’ mindset. It is about seeing the overall impact that an innovation can have rather than simply the credit that a company gains. It is due to this that only the most mature companies (such as Procter & Gamble) have truly embraced Open Innovation in a fully open format. By building from a project oriented approach initially, it is important to have a clear strategy of implementation with objectives that include culture and operational pipelines.
The quality and taste of their fish is also impacted by their process innovation
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WHAT IS HOLDING BACK OPEN INNOVATION?
Money Saving In terms of money saved on innovation projects, open innovation is not going to drive cost savings and work may come in at roughly the same cost. It tends to be only in heavy development cost industries, such as telecommunications, where open innovation is used to save money in the innovation process. In the current climate of cost cutting after the financial crash, many are unwilling to spend the same amount to innovate and potentially give ideas to other companies in order to make money. Intellectual Property Theft Open Innovation has been shown to improve IP security through the necessity to protect it in this environment. Despite this, many are hesitant
to adopt Open Innovation because of the perceived threat from others stealing their intellectual assets or products. The concept that information and ideas that have been previously kept under strict security would be shared with outside parties worries many within organizations and senior executives often push back on the idea. It also requires a relatively lengthy process to establish the legal parameters of the relationship to keep IP rights established. This means that there may be additional expenses from legal fees and more time before the process can actually begin, creating obstacles for companies that can put potential adopters off. Necessity For Commitment Open Innovation is not something that a company
can experiment with and then decide on after a few weeks, it is something that requires at least a medium term commitment before the real benefits will be seen. This dependence on time means that quite often companies are not willing to take the risk and divert money and personnel to a project that they will not be able to see the benefit of straight away. The dependence on a cultural change also means that Open Innovation is sometimes viewed with trepidation due to both the time it takes to have this new culture ingrained and also the difficulty of change management. It is for this reason that many who work within Open Innovation often cite change management as being a vital component of their role.
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Difficulties With KPIs and Measurement The biggest obstacle in the spread of Open Innovation is that it is hard to establish KPIs and assess the impact that it is having on overall business success. As with traditional innovation departments, there is a significant challenge in the measurement of innovation. With this being the case, it is not always possible to establish what is creating profit or what could be considered to be a success in innovation departments. However, despite these key hurdles that need to be overcome, the truth is that Open Innovation is creating significant opportunities for companies across the world. Each of these hurdles represent small inconveniences compared to the overall impact that Open Innovation can have on a company’s fortunes.
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WHAT IS HOLDING BACK OPEN INNOVATION?
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Many organizations’ have a pool of ideas for innovation but more often than not they don’t have a process for it.
HOW MANY MISTAKES ARE YOU MAKING ON SOCIAL MEDIA? Michaela Jeffery-Morrison Strategy Leader, Innovation Enterprise
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THE 5 MOST COMMON SOCIAL MEDIA MISTAKES
Social media might not be the primary driver for your marketing, but it’s certainly a major facet of it. Although for some of us it’s been around forever, for others, it’s still a relatively new venture. Whenever you try something new, mistakes are bound to be made, but with social media most of them are avoidable and below I list a few of the most common ones.
Don’t Brain Dump
Not Listening
When you first dabble in Social media it can be very tempting to just brain dump every sinew of information you have at your disposal - not only does it make your channel look full, potentially tricking new customers into thinking that you’ve been doing social media since forever, but why wouldn’t they want to know your stance on every topic out there?
You know how people that talk too much and don’t listen to anything are pretty annoying? Well, if you don’t listen to your consumers and brain dump at the same time, you’re pretty much the digital version of them.
The truth is, however interesting your content is, it won’t be processed properly by your consumers unless it’s released steadily. In the words of Alyson Shontell, ‘it’s a marathon not a sprint’. Not only will this increase the chances of your content actually being read, it will also give you more time to research everything, meaning that your consumers will only read quality. Being prolific at the start will only increase the chances of you giving up early, not because you think social media is actually a fad, but because you simply don’t have the personnel to keep creating engaging content hour after hour. The key is, start as you mean to go on, make sure your content resonates with your consumers and don’t spam them with unnecessary information.
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If your consumers want to speak to you, talk back and engage with them - one of the biggest positives with Social media is that it gives you a platform to have two-way conversations, it should never be a monologue. Me, me, me Social media is a platform for PR, but that’s not all it’s for. Of course, the content has to be relevant, but it doesn’t need to revolve around just ‘BUY THIS’. Address the concerns of your customers and build a brand - they’ll be grateful for it in the long run and you’ll gain their trust much quicker.
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THE 5 MOST COMMON SOCIAL MEDIA MISTAKES
Underestimating the amount of work/ people needed to make it work
Treating every Social Media Channel in the Same Way
It’s simple right? Just take a couple of minutes out of your schedule each day to send out some tweets and soon enough you’ll have a channel bursting to the seams with content. Unfortunately, it’s not that simple - maintaining a social program, especially for large companies, often requires a dedicated team.
Facebook isn’t the same as Twitter and both are miles away from LinkedIn. This means that social media marketers have to be ready to create content that fits in with the demographic of each channel. If not, there’s a good chance you’ll be deemed lazy. Keep your audience in mind when you post anything, as it will not resonate will every channel in the same way.
As Social media is still a relatively new phenomenon, your staff may require training you should be ready to bring in external parties to help because as a long-term investment it will pay dividends. Be wary of third parities though, they shouldn’t actually produce your content that should be the job of the internal employees, because the stories and values behind the company will be best expressed through them.
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TECHNOLOGY STRATEGY AT AOL
AOL? DON’T THEY DO DIAL-UP? George Hill, Editor
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TECHNOLOGY STRATEGY AT AOL
I recently discovered a Washington Post article that ran through the history of one of America’s oldest and dearest technology brands, AOL. My first memory of AOL was definitely their instant messaging service, when their logo was that little orange, running man – that all started in 1989. I think it was another twelve years before I got onboard with that, but it shows just how far AOL had gone in such a short space of time, the Internet hadn’t really existed for long. AOL was one of the most successful dial-up Internet providers just over a decade ago. The emergence of broadband, however, put a pretty prompt halt to that and has seen AOL attempt to reinvent itself as a media company. AOL now owns the Huffington Post, a publication that has an Alexa rank of 69, with traffic levels near to that of the BBC and CNN,.
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The job of the CTO has never been more complicated – the pace is so fast, there’s no margin for error
With this reinvention in mind, we spoke to Will Pence, Chief Technology Officer (CTO) at AOL. He’s responsible for the global strategy of the company as well as overseeing technological developments, product developments, infrastructure and IT security. In the current environment, it’s clear that the role of the CTO is a challenging but exciting one – Will says, ‘The job of the CTO has never been more complicated – the pace is so fast, there’s no margin for error’. The technological landscape has shifted so much in the past 10 years. The processes that we once deemed original and exciting seem almost laughable now. The speed of change in technology is so relentlessly quick and Will backs this up by saying, ‘Any of the companies that have been around for a long while, I mean the internet is not that old, but you have certain companies that have a way of doing things, a certain sort of muscle memory and we need to break those habits’. For AOL itself, it’s now a publically traded company that has been through a period of extensive acquisitioning. It’s also now a three-line business – incorporating their traditional subscriber business, ad platform expertise and content
into its umbrella. Will states, ‘We’re the intersection between culture and code because we have the high-end brands and we’re also at the forefront of automating how the web works in terms of monetization’. The emphasis placed on content is something of a migration from AOL’s normal work, but it shows how they’re intending to evolve – people consume content on their brands and then in the words of Will, ‘then we plumb the whole thing with the piping underneath to develop the ads’. AOL is a major player in programmatic ad-tools, and subsequently, see this as an essential function for their future success. Will is still in the learning phase at AOL, having only been there for four months. It is however fair to say that he’s highly impressed with the level of talent he has been met with at AOL, he says, I was very, very impressed with the talent that I found when I got here, there are a lot of great engineers at the forefront of some of the underlining technology stacks and the scale of what we do is pretty staggering’. Going back 25 years, AOL clearly has developed a culture and a way of approaching technology, the problem is that the world we live in from both a social and
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technological standpoint is very different from 10 years ago. Consumers approach content in a contrasting manner and they expect more from technology brands. In line with this, Will says, ‘I think my proudest achievement so far is that when I came and found all this talent, I was able to get them engaged and energized. We are going through a reinvention as a company and we have an opportunity to leap frog into the way the world is now’
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AOL clearly has developed a culture and a way of approaching technology, problem is, the world we live in from both a social and technological standpoint is very different from 10 years ago
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TECHNOLOGY STRATEGY AT AOL
AOL’s approach to data involves a hybrid system where they make use of both the public cloud and data centers. Will states, ’we are coming up with frameworks where we operate a hybrid services where we build part of the stack in the public cloud part in the operated cloud which will allow us to flex our capacity, get to the market quicker and also realize some cost savings’. Will is very happy with the way that AOL is responding to his new data initiatives, it’s clear that he wants to take them in a different direction from the legacy of the
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TECHNOLOGY STRATEGY AT AOL
company with an emphasis on cloud based, open sources and mobile first systems.
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Will has been ever present in the Internet revolution and
Data acts as the thread between all three of AOL’s business lines and is fundamental in the reinvention process that they’ve been experiencing in recent times
it was really interesting to see what he thought was the biggest change between now and the first embers of the Internet. Will states, ‘There were barriers to entry - companies had to make big investments, I think now we live in a world where there are so many open source components, there are so many services that are available to you in the cloud, that you can have a company with 2 or 3 people and stand up a company’.
Data acts as the thread between all three of AOL’s business lines and is fundamental in the reinvention process that they’ve been experiencing in recent times. AOL’s need to reinvent itself shouldn’t be seen as a reflection of their inability to keep up with the times, but instead a different approach to content and data and as Will says, ‘Everybody sooner or later will go through a reinvention – even Google. Apple did 15 years ago, and Microsoft is now’.
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HALLMARK’S 100 YEARS OF STRATEGIES Harriet Connolly, Event Director Chief Innovation Officer Summit
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HALLMARK’S 100 YEARS OF STRATEGY
Hallmark had its 100th anniversary in 2010 - a time for celebration surely? Unfortunately not, Hallmark’s primary product, the greetings card was in rapid decline. USPS reported that the amount of cards being delivered through the mail had fallen by 24%, clearly a time of real concern for the card giant. It was at this point that Hallmark decided to dive head first into digital media. They now have a fully diversified brand across digital platforms. At the Strategic Planning Innovation Summit in New York, we heard from Mary Putman, Digital Strategy Director at Hallmark. The first thing that Mary points out is that she’s not part of the marketing team - Hallmark treat digital as a function in its own right as they feel it’s warranted due to the necessity of its success in the current climate. Mary says that at Hallmark they’re always thinking ‘what are the digital capabilities we need to enable the enterprise?’ and that after delving into digital for just a moment, it became clear that ‘in order to bring strategy to life we needed to do it as a separate group’. At the head of this separate department is the Chief Digital Officer whose job it is to translate the digital
strategy of Hallmark into an actionable plan that everyone can use. Mary says that, ‘Hallmark is a diverse company and that has to be at the heart of our digital strategy’. Although Hallmark is widely associated with gift cards, they do actually function in a number of different markets. They own Crayola, the world’s most famous crayon company and also their own TV channel, The Hallmark Channel, which is now available to 75% of American TV owners. It’s imperative that their digital outputs are reflective of the entire brand – as Mary says, ‘are you a branded house or a house of brands?’ Hallmark doesn’t want to be the latter. Mary recognizes the importance of having a separate digital department by saying, ‘We needed to have a separate section of the business that just concentrates on digital’. It’s important that this was made up of ‘digital experts’ and not ‘digital dabblers’. There were a lot of ‘digital dabblers’ in the organisation – in one year, there were over 90 proposed digital projects and as Mary says, ‘we can’t do them all’ – this is where they needed their digital experts to stand up and be counted, because in reality, there’s only
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Hallmark treat digital as a function in its own right as they feel it’s warranted due to the necessity of its success in the current climate
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really time to do a few at a time. Mary points to the importance of the CDO by saying, ‘We had a CDO that said which project we needed to drive the business’. Despite having a dedicated digital department, it’s also imperative that the rest of the organisation understands the digital endeavors of Hallmark. Digital transformation needs to be something that’s engrained within a company’s culture not just a single department. In relation to this, Mary states, ‘Making sure that the voice of the digital experts was understood in the organisation is really important but making sure people understand the vision and the strategy in order that that voice makes sense to the rest of the organisation is critical’.
Increasingly, once popular products like e-cards have become, in Mary’s words; ‘old school’ Despite wanting to be different, Hallmark is keen to not rebrand themselves – ‘At first we wanted digital to make us different, but at the end of the day it’s about value proposition’. Hallmark’s target consumer is millennial mum’s – they separate this group on three grounds – the first is, ‘the
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HALLMARK’S 100 YEARS OF STRATEGY
emotional creator’ – millennial mothers have customization at their heart. Increasingly, once popular products like e-cards have become, in Mary’s words, ‘old school’. However people are sending birthday wishes across Social Media and this is definitely something that Hallmark has been tapping into. Mary states that ‘we’re going to reach the millennial mother best through digital’ as young mothers often spend a good proportion of their time across digital platforms. With the core customer identified, global enablement is also something that has to be looked at. Hallmark’s recent digital outputs are designed for the North American market, but with many other countries engaging with Hallmark, if they want to be relevant to everyone, they will have to make regionalized adjustments so that everyone is happily interacting with the brand. There’s a lot of emphasis placed on leaning into ‘brand essence’ where Hallmark base there digital endeavors around 5 different strands, genuine, life affirming, emotionally relevant, creative and the very best. Mary states that, ‘digital is the best place to bring your brand essence to life’. But at the same time, Hallmark need to have a road map in order to guarantee that they know exactly where
they are going and where they want to be. As Mary says, ‘when you’re in doubt go back to your consumer’. Hallmark’s customer-centric approach has seen them evolve their digital space across all their subsidiaries. They have managed to quell much of the fear that surrounded them in 2010, and they remain one of the most prominent companies within the industry.
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HALLMARK’S 100 YEARS OF STRATEGY
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Are you a branded house or a house of brands?
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Email dwatts@theiegroup.com for more information