CHAPTER ONE: PUT THE PAIN IN THE PAST

by Frank Cowell | Updated Mar 31, 2024

15:34

This is a chapter from the best-selling book
Building Your Digital Utopia by Frank Cowell.

I understand your pain. I’m one of the founders of a marketing agency that has been in business for more than fifteen years, and in that time, we’ve had to make many adjustments in our approach, particularly in regard to digital marketing. We’ve seen the amazing amount of change brought about by the Internet and technology.

People have greater access than ever, and there’s a low barrier of entry. Consequently, the number of new players is staggering. Practically anyone can start a marketing agency—all they need is a laptop and an Internet connection. They don’t need an office because they can build their team virtually. All necessary software is extremely affordable, and all relevant information is freely available thanks to forums and online communities that freely share their knowledge.

As a result, the industry has become extremely noisy, which can be confusing for buyers. There are so many marketing agencies saying virtually the same thing that people don’t know whom to trust. They can’t tell who has real talent on their teams and who has simply created a slick website and has outsourced everything overseas. It’s not enough for marketers to say, “We’re very good at SEO. Trust us. Look at our great results.” Everyone makes that claim.

Though I started my company fifteen years ago, I’ve been in sales and marketing for more than twenty-five years, and I’ve seen it all. I’ve watched as companies have adopted a short-term mindset, chasing every new tactic. They embrace the latest marketing trick, and when it doesn’t pay off in thirty, sixty, or ninety days, they dump it and move on to something else. I’ve also experienced it firsthand—years of hopping from marketing tactic to marketing tactic with very little to show for it.

HubSpot, a leader in marketing, sales, and service enablement software, publishes an annual report on digital marketing, surveying marketing companies on a range of topics. They ask questions like: What are your plans for next year What are you investing in? What are your concerns? What is your biggest challenge? To that last question, the most common answer year after year is, “Finding clients.”

Think about that. Here are companies selling marketing services to help their customers find customers, and they can’t even market themselves well enough to find their own. To me, that is the smoking gun that proves this industry is oversaturated. If you want to become a dentist, you can’t just rent some office space and hang a sign out front declaring yourself a dentist. The deception would soon be uncovered, either by a government agency or word of mouth from customers who learned the truth. But in the digital marketing industry, that’s exactly what’s happening. The barrier of entry is so low that just about anyone can hang a sign declaring themselves to be a skilled marketer. It’s happening everywhere.

THE PACE OF CHANGE

We live in a world where you could wake up one morning and discover that some major aspect of your industry has been automated with software, or you might find that some upstart company has developed a process that is far more efficient and affordable than yours. You can become obsolete at a moment’s notice. That’s the reality of technology today.

So often I find that companies fool themselves about how much better they are than their competition. They are convinced that they offer something truly special, yet to the marketplace, they don’t look, act, or sound any different. There’s so much noise from so many competitors that it’s harder than ever to generate awareness, no matter how amazing a company might think it is. To differentiate, we all have to see past our own egos, step out of our own brands, and look at ourselves from the point of view of the marketplace.

At the same time, companies lack focus because there are so many options for engaging or reengaging target audiences. Awareness is difficult, differentiation is difficult, and focus is difficult.

Technology has been the great equalizer. Over time, it gets better, cheaper, and iterations come faster. The pace continues to accelerate. Until roughly the year 2000, the pace of technological change was happening on a scale that people could still wrap their heads around. Things were changing, technology was getting better, cheaper, and faster, but most people could deal with the changes.

Now, with the speed and availability of the Internet, acceleration is happening at a pace that humanity has never seen. A small team of people sitting in a one-bedroom apartment with nothing more than laptops and an Internet connection could build the next platform to rival Facebook.

If someone had wanted to unseat a major company fifty years ago, the amount of money, the number of people, and the logistics it would have required made it impossible for most people. Now, someone can come out of left field and, with very few resources, become a fierce competitor for an entire industry.

Our world has become incredibly small, and almost everyone has access. Ironically, with so much access, sameness abounds.

The first commercially available VCR was Ampex’s VRX-1000, which came out in 1956 and was roughly the size of a washing machine. Though the VRX-1000 was an impressive technical achievement, it took years for VCR technology to gain widespread adoption or sell a million units. In fact, the technology didn’t gain mass market traction until 1975, but the real boom didn’t happen until the 1980s. These days, however, a new technology can reach a million users within a matter of days.

Thirty years ago, if you wanted world-class software to power your business, it would cost a huge amount of money, no matter your industry. In 2000, I had a job with a web development company that had created a content management system. The cost for installation of the software, once you factored in plug-ins and modules, ran as high as $50,000. On top of that, clients had to pay a hefty
annual license.

While there are still expensive, enterprise-quality content management systems, most of those clients could do everything they were doing in 2000 using just WordPress today, which is absolutely free. Think about that. In just a handful of years, we went from companies paying $50,000 for content management software to using WordPress for free to do the same thing.

In 2000, if you wanted to run powerful web analytics, you had to pay a company like Urchin, who would use their own software to analyze your traffic. They were a real company making real revenue to analyze website traffic. Then Google came along and turned web analytics into a free service, and suddenly paid services like Urchin were obsolete.

While you can still pay for advanced or highly specialized analytics, most of what Urchin provided is now available for free. What used to be a resource limited to companies with significant financial resources in 2000 is now available to absolutely everyone. Not only is Google free, but it is extremely powerful, and it’s constantly being improved.

In 2000, high quality accounting software could cost thousands of dollars. Today, businesses have access to QuickBooks Online for prices ranging from $20 to $60
a month.3 That’s very cheap for powerful professional accounting software.

For internal communications, twenty years ago, large companies would often pay to develop their own proprietary systems. Today, there’s Slack, which offers a free version that is suitable for many companies. You can host your own corporate domain for emails with Google Apps for Work, and Google also offers a full office productivity suite called G Suite that takes the place of Microsoft Word, Excel, and PowerPoint. Then there’s Google Cloud, which offers online storage for an amazing price that starts at $5 per user per month.

All of these affordable online tools and resources would have been unthinkable twenty years ago. The average user has access to so much power at such reasonable prices that it has completely changed the landscape in every industry.

IDEAS SPREAD FAST

Because of the empowerment brought on by technological changes, ideas spread faster than ever. Through LinkedIn, Facebook, Instagram, and other platforms, as well as industry-specific forums, anyone can disseminate ideas around the world. There’s no more “secret sauce.” In fact, there are very few industries in which companies can contain information. Some have given up trying, as when Elon Musk removed the patents for much of Tesla’s technology and made the information open source.

Despite this, when I meet with company leaders, they tend to get nervous as soon as we start delving into their business processes. They don’t want to speak openly about their “secret sauce” because they’re afraid of competitors finding out. I have to remind them, “Your competitors probably already know your secrets. After all, you already know all about your competitors, and you
mock their big secrets.”

Legendary marketer Al Reis, co-author of the book Positioning, has pointed out that differentiating yourself based on product advantages doesn’t get you far anymore. Marketing people tend to aggressively advertise their differences.

As Reis puts it, “But what happens when the competition catches up? At that point, many companies go back to the drawing board and see if they can find another difference they can promote. And guess what: All they do is confuse consumers who can’t differentiate yesterday’s slogan from today’s slogan. Exclusivity is not a long-term advantage. If competitors don’t copy your point of difference, consumers assume it’s not that important.”

Even the godfather of brand positioning says you can no longer rely on trying to outdo your competitors on product features.

Growth has become a liability, because the bigger you get, the more likely it is you’ve built an infrastructure based on today’s model, today’s technology, and today’s client mood. When all of those things change tomorrow, it’s not going to be easy to adapt. This is why big companies have more trouble evolving with the pace of change.

It’s the reason why Hilton didn’t invent Airbnb. Instead, it was invented by a couple of roommates in San Francisco who were looking for a way to make a few extra bucks after their landlord raised the rent. It’s the reason why the Taxicab Association didn’t invent Uber. Instead, it was invented by an entrepreneur who was appalled at paying a private driver $800 and wanted to find a cheaper way to get around.

Big companies tend to build an elaborate infrastructure to support the way they do business, which makes it almost impossible to change. They’re in the business of doing business, when they should be in the business of serving their customers.

YOUR MENTAL MODEL

There’s a mental model exercise I like to walk companies through. It’s very simple. I ask them to complete the following sentence with two or three words:

We are in the business of...

Your answer should be built around your audience. What outcome are you trying to deliver to your target customer? That desired outcome is your mental model, and if you’re not obsessed with it, you run the risk of becoming too static. If your focus drifts to what you’re doing instead of who you’re serving, you will be slower to adapt. This risk increases the bigger your company becomes.

The net result is sameness. In almost any industry, buyers can get roughly the same thing for roughly the same price, whether they’re buying a hamburger or enterprise marketing software.

Without the right mindset, established companies are at a disadvantage. Unless they change their approach, they run the risk of being blindsided by a new start-up that invents the next thing the marketplace falls in love with. Consider the famous example of Kodak, which was an iconic brand in America for generations. How did such a famous brand find itself in deep financial trouble to the point of bankruptcy?

In my opinion, it’s because they weren’t committed to the right mental model. Their focus was on doing business using established procedures, processes, and people. Had they focused instead on delivering what their target customers wanted, they might have navigated the profound changes in the market.

Had their mental model been, “We’re in the business of life’s memories,” they never would have held on so long, or so tightly, to photographic film as it became obsolete. Instead, they would have been looking for better ways to meet their customers’ need. They had enough intelligent, creative people working for them that they could have remained on the cutting edge, ushering in the digital revolution. Maybe they would have invented the next big social media platform as another way to fulfill their mental model.

How does a big, established company like Kodak get blindsided? By being obsessed with the things of their business rather than the concept of their business. When they focus on the concept, then they are more likely to explore new ways to achieve it. Can you see the difference in approach between saying, “We’re in the business of film,” versus, “We’re in the business of life’s memories”?

Remember, you are never in the business of the medium, you are in the business of the concept. Most business leaders fail to understand this.

It is imperative that you begin thinking this way, making decisions and taking actions accordingly, because if you don’t, someone else will.

TACTICAL ADDICTS

If you don’t understand the concept of your business, if you don’t have a clear mental model, then every new “tactic of the day” is going to seem attractive to you. Since you don’t really understand what your business is all about, it will be easy to chase the latest marketing trick. When that tactic doesn’t work out right away, you will be tempted to dump it and move on to the next thing. Soon, you start to look like an addict, constantly chasing another short-term fix.

There are three things you have to acknowledge:

First, you are one of many in your industry. Don’t underestimate your competition.

Second, no matter how great you think your product is, it’s not enough to separate you from the noise, because your competitors can and will quickly match any advantages you currently possess. Buyers have plenty of options, so your product alone won’t cut it, no matter how great it is.

Third, chasing the latest sales or marketing trick isn’t a solution. Clever campaigns, cute ads, great brand identity, expensive commercials, Super Bowl ads, crafty sales tactics, and clever contracting terms don’t cut it anymore. The effectiveness of these kinds of tactics is at an all-time low, and there’s no possibility of returning to the glory days.

What’s the solution?

As I said earlier, it’s about building brand. Brand is our only way forward. However, I don’t mean brand in the traditional sense of the word. What do I mean? Let’s find out.