“Should Marketing merge with Sales? Hot topic gets Marketers steamed up” 

The Chartered Institute of Marketing (CIM) has suggested that organisations should strongly consider merging their usually separate departments of Marketing and Sales. The idea is that there needs to be much closer alignment between these two functions as customer communications become more fragmented, social, and digital. However, this ‘merger’ will not be easy and may not be well received by either function.

This is a critical organisation design and culture change story ... and a classic customer-focus and teamworking story.

The CIM published a report entitled “Marketing and Sales Fusion” that advocated that Marketing should return to its roots as a Sales function. Over the years this devolved into separate disciplines and most organisations have completely separate departments, with different objectives and different cultures. The problem is that the activities of the two units can easily be out of alignment which can significantly reduce their effectiveness and efficiency.

As communications channels with and between customers get ever more fragmented, and Marketing units follow suit, it becomes increasingly difficult to ensure effective integration of marketing messages. For example, we frequently do customer tests by ringing the number or looking at the website given in an advertisement only to find that the ‘sales’ person who answers the ‘phone knows nothing about the ad, or that the web link has no connection with the ad.

The idea of merging Marketing and Sales functions would seem to be logical, and indeed this has already happened in some companies selling complex high-value products. However, for the majority of  businesses we can see huge barriers to this organisational change/design. These barriers, and potential solutions, are discussed in our Analysis below. We look at the key question: can Marketing and Sales become ONE TEAM?

Analysis and Lessons

Definition of a Team ... One Team or two? ... (Un)common Goals & Objectives ...
Who will be Leader? ... Different ways of Thinking ... Team Balance ...
Pull yourselves together ... What affects Team Performance?

The key to this merger issue may be found in examining the definition of a Team – a group of individuals that are mutually accountable for achieving the success of a common goal. Teams can be self-managed but they are more likely to be successful if they have a leader, ideally one leader.

Our ‘library’ of Thinking Errors contains examples from both Marketing and Sales teams which invariably operate as if they rarely talked to each other. We’ve asked sales people in banks about information on posters on walls, yet frequently they struggle to give clear explanations. “Oh, Marketing put that up” is a typical ‘complaint’ 

We ran a Marketing Strategy team-building workshop for a Marketing team but it was only in the last few minutes of the day-long event that one of the group said “Why weren’t Sales invited?” There was an embarrassed silence until the Marketing Director eventually replied that he wanted ideas from his own team first.

Marketing is about developing brand awareness, interest, demand, and loyalty. Sales is primarily concerned with converting that demand into actual sales. In most cases, Marketing and Sales will have completely different goals that require different objectives and performance measures.

Differences occur depending on whether a business is Marketing-led or Sales-led. Marketing-led companies, particularly those such as Coca-Cola, are heavily reliant on advertising and image to sell a product that might not come top in blind tests. However, Sales-led businesses rely more on product knowledge, personal contact, and cultivating sound relationships with customers. Rolls-Royce is a good example here, where personal Business Development contact is essential to sell aero-engines costing £millions.

Ideally, a team should have just one leader. So merging Marketing and Sales teams will create tremendous tension when deciding which of the two leaders will be King/Queen. Again, ideally, that one leader should have had education and experience in both disciplines. Unfortunately, whilst the Institute of Sales & Marketing Management has Marketing in its title, this organisation is primarily concerned with Sales education. And Marketing people tend to focus on education and job experience in Marketing.

There is little job switching between Marketing and Sales functions, primarily because they are seen as two entirely different disciplines.

Marketing and Sales people usually think in different ways. They have different Thinking Style Preferences. Marketing people tend to prefer Reasoning Thinking (Analytical, Facts, Logic). However, a job in selling demands good People Thinking skills (Emotions, Empathy, Relationships). These two core Thinking Styles (Reasoning and People), are virtually complete opposites. So it hardly surprising that the two professions have different teams.

However, this is not an argument for keeping Marketing separate from Sales, as we explain below.

The most effective teams contain a good balance of Thinking Styles – Reasoning, Task, People, and Visionary Thinking. We believe that Marketing and Sales teams should work more closely together, even if organised along functional lines. Their individual Thinking Styles would complement each other. Indeed, the overall Marketing & Sales team would also benefit immensely by recruiting more Creative Thinkers instead of relying on external agencies for ideas.

It can only benefit a business if Marketing and Sales share common goals and their objectives are aligned to achieve those goals. These would need to be very carefully developed and agreed by both functions. To the customer, there is only one process – the buying and using process. All the (separate) Marketing and Sales processes need to be carefully aligned with the customer’s buying and using process. Objectives will emerge from studying that process.

We believe there is huge scope for improved teamworking, or at least greater collaboration, between Marketing and Sales teams. However, fundamental to achieving this must be a sound understanding of “What affects Team Performance” – the title of research we conduct on a continuing basis.

Our research (and team-building experience) has identified up to 50 individual factors that affect most team’s performance. These can be classified under six main categories, for example Goals & Objectives, Roles (including Leadership), and  Environment. For Marketing and Sales, two Performance Factors stand out – the (lack of) feeling of being one team, and (poor) communication. But there are many others worth close examination that would significantly improve (both) team(s) performance – and business results.

One other key Teamwork Performance Factor is essential in order to ‘fuse’ (or integrate) Marketing and Sales teams – Change Readiness. This means that each team member understands ‘Change’ (including the Change Process) and is willing to adopt new ways of working (and thinking). We believe this is best achieved through expert input (for example, to explain The Change Process, barriers to Change, etc) and going through a ‘change experience’ (an opportunity to experience the required change in thinking).

See Organisation Development Projects, Teamwork, Change  

“What is Design? Who can explain this key, but vague, concept?” 

Design is a word that everybody uses, yet few people – even the design ‘experts’ - can define it or explain what it means. We believe that this vagueness of thinking is one of the key reasons why so many projects, plans, products, and communications go wrong. How else do you account for Prisoner vans being built too large to get through the gates of UK courts (just one of many farcical design errors reported in the media)?

Apple Computers has become the world’s second biggest company by capitalisation and, apart from Steve Job’s leadership, their success has been due to one word – DESIGN. Apple understands what Design means. But this clear thinking, and skill, does not come easy to manyUKcompanies. 

This Unclear Thinking about Design occurs, we believe, mainly because there is no accepted definition of the word (and concept) of Design in the EU. If you can’t define something, how can you expect to think clearly about it? This Story examines what has caused this vagueness, the negative business results of this unclarity, and what can be done to resolve the problem.

This Story began when we were analysing the range of specific Thinking Styles required in business, eg Strategic, Creative, Risk, Customer Thinking etc. We realised Design Thinking was one of the most important Thinking Styles (and skills). So when we saw a Design Council exhibition stand at a trade show we asked the people on the stand the ‘obvious’ question: “What is Design? Can you give me a definition please?” 

The response was an embarrassing silence, followed by flustered comments such as “Well it all depends … it is difficult to explain really … what application do you mean?” It seemed that they knew what Design could be applied to, but couldn’t explain what the word or concept meant.

That experience started our search for a definition of Design. We found that the official definition of Design given on the Design Council’s website was as follows: “Design is what links creativity and innovation. It shapes ideas to become practical and attractive propositions for users or customers. Design may be described as creativity deployed to a specific end.”  All clear?

We followed this by researching definitions of Design across Europe. An EU report on this subject stated “There is no universally accepted definition of Design”. Each country has produced its own version of vague explanations. The only exception is an agreed Intellectual Property system for protecting designs. It became clear to us that many projects, plans, products, and communications go wrong simply because they are badly designed. And this occurs because most people do not have a clear idea what Design actually means.

Analysis and Lessons

Design Thinking Errors … The Titanic … Millennium Dome and Bridge …
Concorde … Causes of Design Errors - even by experts …
A Solution - and request

Our ‘library’ of Thinking Errors contains hundreds of examples of Design Thinking Errors. Here are just a few to illustrate what can go wrong if you don’t think clearly about Design, ie getting your brain to deliberately engage the Design Thinking Style when required.

There were quite a number of design errors that contributed to that terrible disaster, but one stands out. The world’s finest ship at that time was sunk primarily because she wasn’t designed to withstand a side-ways glancing collision by an iceberg. Had she hit the iceberg front-on she would probably have survived. The iceberg tore a long gash in the side of the ship from the bow that allowed seawater to bypass too many bulkheads (with sealable doors) and the ingress could not be stopped. The hapless captain would have done better by steering straight for the berg rather than steering away and causing a glancing blow. It was designed to cope with a head-on hit.

The Dome’s planning was shown on TV. A TV programme actually showed the planning team discussing what things could be built inside the Dome. There were many wild ideas developed and discussed but we saw very little Design Thinking. As a result, the Dome internal ‘product’ was very badly designed. Examples included Zone doors that were smaller than exhibits, and big queues at zones near the entrance because that’s where they incorrectly positioned the most interesting items.

But perhaps the most crucial (and amazing) Design Error was having only one security checkpoint for the hundreds of VIP’s and media editors on the freezing cold opening night. This single Design Thinking Error caused the media and other important opinion-formers to be negative about the Dome right from day one. And that bad feeling continued throughout the (much extended) life of the project until its recent new managers found a commercial use for this ‘white elephant’.

This bridge is beautiful to look at. Clearly a lot of thought went into designing its looks – the Form aspect of Design. But it will always be remembered for its sad beginning when it had to be closed because it vibrated when walked over. It is unclear exactly why this Design Error occurred but it appears that the designers didn’t think clearly enough about the well-known problem of soldiers needing to break step when marching over bridges – the Function aspect.

Another classic example of half-baked Design Thinking. The Form element (how it looks) was brilliantly conceived - people visited airports just to see the plane. Unfortunately the Function aspect contained major Thinking Errors that ultimately caused its downfall. Quite apart from the noise and cost per passenger which limited its airports served and passenger numbers, there was one Design Error that greatly affected its safety. The fuel tanks were placed too near the wheels and were unprotected against debris from wheel damage. That Design Thinking Error was only discovered after the fatal accident in Paris.

We strongly believe that these Design Errors, and those we see virtually every day even by design experts, are due to people’s lack of understanding of Design and/or a failure to deliberately engage their brains in a Design Thinking Style. And the root causes of these problems are the lack of a clear definition of the concept of Design. The definition given by theUK’s Design Council (quoted above) is totally inadequate. Even their Design Process (Discover, Define, Develop, Deliver) is not easy to understand.

A major cause of the definition problem is common to many fields of expertise. The expert may not be the best person to explain his/her expertise to others. In design, we have seen a book about design published by two acknowledged experts in Design. Amazingly, it suffers two significant design errors that could affect its sales. Firstly, the Contents page is virtually meaningless (unless you’ve already read the book). But also, the size of the main text in the book is much smaller than normal and would be a strain to read for many people (a really basic Function error).

The same sort of Design Thinking Errors occur in another book on Design, written by ‘America’s Leading Design Firm’. Incredibly, the word Design is absent from the list of Contents (again meaningless) and even the Index!

We have spent some time analysing the Design Thinking Style but it would take a little more work to put together a definition, explanation, and applications of Design. We are possibly one of the few organisations in Europe with the experience and expertise to do this. We have experience of a range of design applications, from designing offshore oil & gas platforms to leadership training courses, even domestic kitchens. But, crucially, we have the Concept Thinking skills to work out what Design is, the Process Thinking skills to identify all the steps in the Design Thinking Process, and also the communications skills and tools to articulate the concept, thinking, and process of Design (both as a noun and a verb).

All we need is a client who wants his/her workforce to understand Design and how to apply that thinking effectively right across the organisation. Any interest? Try explaining what Design is to your colleagues – you’ll soon see a ‘need’.

“Hewlett Packard and Netflix get painful lesson in Customer-Focused Strategic Change Communications” 

Both HP and Netflix received similar bruising lessons in understanding how customers and investors could react to a sudden change in business strategy. In HP’s case the 25% collapse in share value was enough to cost the CEO his job. Netflix was a bit more alert and (fairly) quickly announced a u-turn. But not before the DVD rental giant had lost a million subscribers and its shares had plummeted almost 50%.

Both company’s Strategic Thinking had merits, but it was the way they communicated their change of strategy that caused them massive problems. Customer Thinking was clearly lacking.

In August Hewlett Packard announced strategic plans to buy UK technology company Autonomy for about $11 billion, exit its leading position in personal computers (probably via spin-off), and cancel its recently launched tablet product. CEO Leo Apotheker said that HP was going to transform into a software business using Autonomy as the basis. The news caused an instant 20% drop in the share price. Later, the board decided it needed to change its CEO and announced a new incumbent, Meg Whitman, who would have a strategic re-think to try to repair the damage.

Netflix had decided that as DVDs were a declining industry it would move more into online streaming videos which has good growth potential. It offers both these products currently but announced it would separate them into two businesses each having their own website, requiring customers to have two subscriptions, passwords, etc. The DVD rental business was to be rebranded as Quikster. Oh, and it also announced a 60% increase in the price of subscriptions.

Naturally it was deluged with customer complaints and defections. Its shares, already in decline, quickly fell nearly 50%. Luckily, founder Reed Hastings saw the writing on the wall and announced he had made a big mistake and would drop his plans for separate businesses. The pricing issue, however, is still in the air.

Both these cases reflect the problem of changing your company’s strategy (perhaps to include a new set of customers) whilst attempting to keep your existing customers happy. This is the basis of the famous book on the subject, “The Innovators Dilemma” by Prof Clayton Christensen. But they both highlight the importance of how you communicate that change in strategy, and the need to understand how people are likely to react to your plans. We will look at these issues in depth below and emphasise the Clear Thinking skills required to avoid disasters a la HP and Netflix.

Analysis and Lessons

Strategic Thinking … Customer Thinking … Customer Reaction …
Disruptive Innovation … Message explanation … How IBM did it

Most good innovation is welcomed by customers; everybody likes a beneficial new or improved product. However, in some cases it may be strategic to develop and market a new product that some of your existing customers may not like. The problem is how to keep sufficient numbers of current customers happy whilst finding new customers for the new innovation. The big risk and dilemma is that if you lose your current customers faster than recruiting new ones then you could destroy the business altogether.

Leo Apotheker had been CEO of SAP, the software business. So it is understandable that he would feel that software was a better strategic option than hardware. Presumably he managed to convince the board that HP could transform itself relatively seamlessly into a software focused business by buying Autonomy and ridding itself of the low margin pc business. Its newly launched touch tablet was not an instant success and it was suddenly felt (one week after launch) that it was not worth competing against Apple’s market lead. So the board decided to get out of the tablet market as well.

Netflix had been very successful in the DVD rental market and edged out rival Blockbuster by giving customers what they wanted. They had in 2007 also begun providing videos via online streaming, initially free, and realised that streaming was going to become the more profitable growth area whilst DVDs slowly declined. However, they also realised that competition was increasing and so were the prices they would have to pay the content providers.

The only strategic option, it was felt, was to increase prices and grow the streaming business by separating the two products into two separate websites. Each would function separately and require customers to have separate (increased) subscriptions and passwords, like two different businesses. 

Both these companies’ Strategic Thinking had some logic. But when it came to thinking “How could people react to the plan?” this critical thinking stage in the planning clearly failed. To think in this way requires a deliberate shift in mindset and get into Customer Thinking mode (Thinking Style). In this case, ‘Customer’ meant actual and potential customers, and investors and analysts.

We are HP customers. We use their pc’s. Generally we have been satisfied customers, although the company has always seemed rather distant. Customer Relationship Management (CRM) didn’t exist as far as we were aware. So it should be no surprise that when we heard that HP was going to get rid of its pc business our first reaction was to immediately think “That’s a pity. We’d better start looking for a new supplier.” And no doubt, many other customers would feel likewise.

As far as investors were concerned this change in strategy was just too great a leap. HP was primarily a hardware company. Software would only contribute a tiny portion of sales. Acquisitions are often fraught with difficulties, and so are spin-offs/disposals. Their market-leading pc business could plunge in value in the process, especially if many customers reacted as we did.

HP’s response to the negative reaction was to sack their CEO (the third time in seven years) and try to assure customers and the market that everything would be resolved. They would have a re-think. They also placed advertisements in the media to ‘explain’ how their pc customers would get the same “focus” when the pc business was spun off into a separate company as before. Time will tell whether or not customers believe this message. Certainly, Michael Dell was quick to announce that he saw an opportunity to win business from HP.

Both cases can be seen as ‘disruptive innovation’ and the reaction of customers and markets shows that careful handling is essential. To Reed Hastings’ credit he announced a reversal of his core plan to have two separate businesses and the name Quikster will be shelved (lampooned as Quakster). He admitted that he had “moved too fast” and customers would continue having just one account, one password, and one easy access to both products.

However, there was no apology for the price increase which looks set to stay. Until this issue is communicated and resolved Netflix could still be in trouble.

In Louis Gerstner’s days investment bankers had been urging IBM to break itself up to be able to transform the business into software and services. But Mr Gerstner refused and kept the company together whilst developing the software/services side. This was a longer process than logically necessary but it maintained customer loyalty during the transition – good Customer Thinking.

“The customer’s viewpoint on Marketing and Selling” 

We visited the Marketing Live trade exhibition and seminars at Olympia, and as usual at exhibitions, found numerous examples of the difficulty marketers and sales people have in seeing their communications from the customer’s perspective. We saw, and heard, a series of ‘obvious’ communications errors, even by the ‘experts’ in marketing. But none of the exhibitors were aware of these errors, until we pointed them out.

This Story runs through a few of these errors and delusions to highlight the need for (and value of) Communications Quality Assurance. Methodical, objective pre-testing of communications by someone who has no involvement with either the communication or the communicating organisation.

We visited the Marketing Live exhibition at Olympia that showcased services to the marketing industry. Our aim was to see if we had any competitors for one of our services, AdQA Communications Quality Assurance. However, the experience demonstrated yet again our theory that nobody can test the effectiveness of their own communications, even those directly involved in marketing and selling.

We found literally dozens of ‘obvious’ (to us) communications errors that could easily have been avoided by objective analysis from the customer’s perspective. From the visitor registration form, to stand designs, brochures, presentations, selling, business cards, even the messages on plastic bags. We saw and heard simple errors that would seriously affect the effectiveness of communications – even by marketing experts (ad agencies and the Chartered Institute of Marketing).

One seminar speaker asked delegates to raise their hands if they were concerned about their marketing. To our surprise, virtually everybody put their hands up, about 150 marketers. And this, despite legions of focus group test services on the market. This, we believe, lends much weight to our claim that conventional pre-testing is highly unreliable. See end of this Story.

Analysis and Lessons

Even experts make simple comms errors …
Three classic delusions by communicators …
Barrett’s Law of Subjectivity … Perceptions of Meaning … ‘Walk by’ Test

This is almost a standard form, yet somehow the organisers ‘forgot’ to include two key bits of data: the visitor’s company name and job title. An amazing ‘glaring’ error that nobody spotted. Except, of course, the ladies who enter the details and print out the badges. Too late to make changes.
Highly embarrassing. “Sorry, how do you spell that?”

One brochure particularly caught our attention (solely because we are communications analysts). Its front and back covers were totally black. Even the barely-visible text was black, a very slightly different shade of black. At an exhibition, very few normal customers would have bothered to pick this up and look at it.

We flicked through the pages and were struck by another ‘obvious’ error. On one set of pages the text was all white, reversed-out, on a highly textured photographic image background. The net effect was that anyone attempting to read the text would have suffered severe eye-strain in seconds.

To cap it all, we realised that this brochure was intended to showcase the work of designers in brand communications. Experts in design!!!

We attended two presentations. In one, one of the speakers shocked us by reading his speech from notes – a cardinal sin. Even if you are asked to make a presentation in a hurry it is preferable to improvise at least some of the time rather than just read out a script.

In the other, the slides shown by the Chartered Institute of Marketing had large sections of text that would be readable only by the front third of the audience. The speaker said “I hope everybody can see these slides” but of course nobody said anything. This is a classic communications error, by experts in communications.

Another simple error: in both presentations there were no signs indicating the title of the talks near the podiums. The result was that people came in late, sat near the front, then after a few minutes some realised they’d got the wrong room and got up and left. Very disturbing for all. Simply fixed.

One ad agency stand had the clever idea of offering free advice. Unfortunately this led to their sales staff being tied up too long with a small number of (possibly) potential customers, and missing others who found no sales staff available. We waited a while but gave up. There were no promotional materials available either.

This idea may sound good, and no doubt produced some new business, but in general the purpose of an exhibition is to attract as many new (qualified) leads as possible. The selling can be done later.

We looked for another ad agency listed but somehow its stand was missed off the ‘Floor Plan’. We were told roughly where the stand was located, but realised later that we had walked passed it without seeing it. When we did find the stand we realised why we’d missed it. The company name was in the same style as the other text – it didn’t stand out.

But, more importantly, the name was only noticeable to visitors walking in one direction. The name was only on one wall of a corner stand. This is another classic error – by communications experts. Again, no marketing material.

The messages on a stand for a market research company comprised the company name and very little else we recall. It had no meaningful marketing materials. We stopped to point out that new potential customers would see no ‘answers’ to their core customer questions such as “What’s being sold, by whom …?” The response was “Oh, if people don’t know who we are then they are of no interest to us.”

This is a classic delusion. One of the key reasons to have a stand at an exhibition is to attract new potential customers, and at least to develop awareness of your brand in the minds of future potential customers. This stand design did neither.

Yet another stand failed this basic customer question test. We stood in the aisle and examined all the numerous messages on the walls for about two minutes. We could not work out what was being sold. Plenty of obscure features and ‘benefits’, but without knowing what the product/service was these words had no context, and therefore no meaning for visitors. Most potential customers would have walked on by.

We asked one of their salesmen this simple, core question “What are you selling?” It took him a full 10 minutes before we grasped the basic answer. Nine minutes of peripheral explanation which had little ‘meaning’ until we found out the core product. We were able to encapsulate his ‘explanation’ into a few short phrases that would take less than a minute to say. They should also be the main message on his stand. 

On average, about 20% to 25% of stands we see fail these core customer questions. When we stop and tell sales staff that we can’t see what they are selling the most common responses we get are either: “But surely, it is obvious?” or “Well that’s why we are here, to tell you.”  

And most business people mistakenly believe that their business card says it all. These classic delusions are explored below. 

The first ‘delusion’ highlights a law we propounded, Barrett’s Law of Subjectivity: “Nobody can judge the effectiveness of their own communications; they’re too involved to be objective.” What seems perfectly clear to the communicator might be virtually meaningless to the target. The reason is simple: the communicator puts a specific meaning to his/her words and images, but the target may take a completely different meaning to that intended.

Gerald Ratner’s infamous speech to the IoD where he ‘joked’ about the ‘crap’ quality of his decanters is one of the most expensive outcomes of this Law. But we see examples every day of this delusion. And most people are convinced they are right about their meaning: “It means what I say it means …” 

 This delusion is the amazingly arrogant presumption that, even if potential customers are too stupid to understand ‘what’s being sold’, the stand design is so appealing or intriguing that customers will stop and ask this basic question. In reality, most potential customers have very little spare time. They will just walk on by any stand where they can’t see the ‘answers’ to their core questions in the time it takes to stroll by (about 5 -10 seconds).

‘Walk by’ is one of our key Effective Communication Tests for exhibitions. Unless you have ultra-active showman-salespeople this is a very risky strategy.

 How many times have you picked up a pile of business cards you’ve collected and realise you have forgotten why you had many of them? You’ll probably dump most. The reason is that most business cards are designed without any thought that they are key marketing communications. They should be very clear about “What’s being sold, by whom.” Most cards fail this basic test, and their owners never realise.

We believe that we have developed the world’s first rigorous Quality Assurance system for pre-testing, and improving, the effectiveness of communications. Several market research companies exhibited at the Insight section of Marketing Live. However, they all rely on focus groups, or groups of individual customers responding online, to a wide variety of questions posed by researchers in a formalised, non-realistic, environment.

We contend that these methods are useful but highly unreliable, and we have a veritable library of communications errors to prove it – even down to (mis)testing a two-word slogan for a major corporation. After launch, real customers took a ‘wrong’ meaning and the slogan had to be dropped at a cost of over £3million.

 Our system, called AdQA, is based on analysing what makes a communication effective (or not) as seen from the customer’s perspective. It follows the same basic principles of any Quality Assurance system, but applied to communications. It asks basic QA questions such as “What is the purpose of this communication?” and “How is this achieved?”, but in much more detail. It does this by applying a rigorous set of customer’s buying questions and effective-communication tests.
See "Create, Pre-Test, or Improve your Communications and Selling with AdQA"

“Britain’s schools get lessons in Concept Thinking
from Singapore” 

The UK comes a horrifying 28^th in the international league of pupil achievement in maths. Shanghai is top, Singapore second. But now something is being done to address the problem – we’re going to teach our children to THINK, which means learning about concepts in maths, science, and English. Concept Thinking. That’s what the Asian ‘tigers’ are good at, and why their economies are growing fast whilst Britain’s is flat. This Story looks at how our education system is (at last) beginning to think in the right way about education and learn from others about how to teach.

A government review of school national curriculum has established the need to teach core concepts in maths, science, and English at an earlier age, ie in primary school. The idea is that children will gain a better understanding of a subject by studying the key elements in greater depth. Pupils will also better understand how to apply their knowledge once they understand the underlying concepts. This is Concept Thinking, which we believe is fundamental to learning, innovation, problem solving, and clear thinking at any age.

Compared to the Asian ‘tiger’ economies, it seems that our children don’t really understand what they are being taught. So the government has invited experts from countries like Singapore and South Korea to advise our schools on how to teach children to think.

For example, in maths pupils with be taught the concepts of equations at a much earlier age, whilst tools (such as pie charts) will be moved to secondary school. In science, they will learn about the concept of Force (eg gravity) at age 6 or 7. And English teaching will focus more on reading, and across a broader range of books. This approach, it is hoped, will help us compete better in the future. In Singapore, pupils do calculations in primary schools that are currently learned at the highest standard of GCSE in England.

Analysis and Lessons

Concept Thinking ... Visualisation ... Meaning and Precision in Language ...
Flawed Concept

Concept Thinking is thinking about the concept, or fundamental idea, behind something. What it is. All nouns are concepts. You can think about the concept of something physical such as ‘a table’, or ‘a chair’ (try completing the sentence “A table is …”). Or something abstract, such as ‘hope’. It can be both, such as ‘art’.

Most people don’t think too much about the concept of a table. But if you are designing a new table your absolute start point should be to understand the concept of a table – what a table is. In fact Concept Thinking is the most important Thinking Style of all. If you can understand the concept of some ‘thing’, then you can define it and work out how to use it, or improve it.

This is especially important in business. Yet many managers struggle to even define key concepts like ‘Strategy’ and ‘Design’, words they use every day. Many find it difficult to define the word ‘concept’. If you can’t clearly define something, you will probably have problems understanding it and applying it.

In a test, many teachers got this ‘simple’ calculation wrong. We’ve tried it on several business professionals with the same result, even an accountant. The reason is because children are not taught the concept of ‘division’ properly in school and they take that vagueness into their adult life. When we rephrase the question to make the concept of division more obvious (“How many quarters are there in a half?”) people get the correct answer immediately.

Einstein once said “My skill does not lie in mathematical calculation, but rather in visualising effects.” The language we use, and visualisation, are tremendous aids to understanding and using concepts. In Singapore pupils are taught to think visually, to put a picture in their minds of a concept. They are also encouraged to look for patterns and number sense. Recognising patterns is another essential aspect of Concept Thinking. People get the fractions calculation (above) wrong because they were taught to remember facts (learning by rote) not to think and visualise concepts – the meaning.

Memory can play tricks and it gets less and less reliable as you get older. A picture, a visualisation, gives a more permanent and valuable understanding. In fact, we all have photographic memories. Tests have demonstrated that people can pick out up to 98% of pictures from over 1000 they were shown a short time before, and 70% three days later.

We believe that UK schools have failed badly in the most fundamental aspect of teaching English – learning the precise meaning/s of words. The result is that when people get a job they are stuck with their own personal perceptions of what words were intended to mean and will consequently struggle to give precise definitions, explanations, or descriptions.  A classic example is when people are asked to explain something. Many use vague language such as “Well, it is like …” or “It is about …” rather than what it actually is. This is exacerbated by the modern habit of using the word ‘like’ for virtually everything. We recently asked a firewood supplier what type of tree a piece of wood came from and he replied: “Oh, it is like oak.” It wasn’t like oak, it was oak.

David Cameron, Britain’s prime minister, has dreamt up a new concept called the Big Society. Unfortunately, this is a concept still in development – he hasn’t yet figured out what it means exactly and consequently is having immense difficulty explaining it and selling it. The basic idea of saving costs by asking the public to do much of the work currently done by paid public sector workers and managers is, we believe, a classic example of a ‘flawed concept’.

This idea may be attractive to the government but is highly unlikely to prove practical to any significant scale. Doing work for charity is one thing, taking responsibility for consequences is quite another.

“Bye Bye PPI? – another Financial Services mis-selling ‘scandal’ – Business versus Customer Thinking” 

PPI, Payment Protection Insurance, became the latest mis-selling ‘scandal’ to hit media headlines after Lloyds Banking Group broke ranks and agreed to compensate customers at a cost of £3.2billion. Major rivals Barclays, RBS, and HSBC are expected to follow with provisions ranging from £1bn down to £270m. This Story is about Business Thinking taken to excess, and it can affect any industry that has a commanding position over its customers. We also point out the opportunity for new entrants – Opportunity Thinking. And we wonder what happened with the bank’s Management Controls that allowed the situation to get this far – Controls Thinking

Business Thinking is about making profits and growing the business – it is the fundamental purpose. Customer Thinking (by business managers) is focusing on customers’ needs and satisfying those needs. These are two virtually opposite ways of thinking (Thinking Styles).

In industries where there is little real competition, such as Financial Services, or where products are ‘commodity’, such as Energy Provision, managers will tend to focus more on Business Thinking. PPI mis-selling is a typical outcome of this unbalanced thinking. Energy companies’ (dubious) claims of ‘savings’ if customers switch supplier is another. In most cases, because of customer lethargy, these practices continue. In the PPI case, however, the mis-selling got way out of control. The true cost, eg to reputation and trust, will only emerge with time – especially if new market entrants seize the opportunity.

About 16 million PPI policies have been taken out and there could be as many as 3 million cases of mis-selling, ie PPI’s being aggressively sold to borrowers who either did not know they were buying it or would not have been able to claim because they were ineligible, eg if self-employed.

Customers who were mis-sold these policies will be able to claim a full refund on their premiums plus interest at 8%. The number of complaints made against banking and insurance services are at the highest level for 10 years. PPI accounted for over half of new cases reported to the financial ombudsman, more than 100,000 claims logged. 

Analysis and Lessons

Buusiness Thinking ... Customer Thinking ... Opportunity Thinking ...
Controls Thinking … Contingency Thinking

In many industries competition and innovation is such that companies are forced to consider how customers will respond to their products and marketing. In the financial services industry however there is a huge level of customer lethargy, in large part caused by the perceived lack of ease in switching supplier. Banks are in a very fortunate position.

However, they are also in a slightly awkward position in that they feel obliged to offer so-called free banking on current accounts. This means that they need to constantly think of ways to make money from their customers in other ways. In the main, the banks are extremely good at this Business Thinking and are usually highly profitable.

The energy companies are simply selling gas and electricity – commodities, with little room for differentiation. So they are forced to constantly dream up increasingly cleverer ways of selling. It is no surprise that Ofgem, the energy regulator, has accused the energy companies of failing to “play it straight with consumers” and bamboozling them with complex tariffs. They have little choice. They are businesses, not public sector.

In most businesses, managers are forced to achieve a balance between Business Thinking and Customer Thinking, constantly having to switch between both Thinking Styles. Customer Thinking should result in satisfied customers whilst Business Thinking maintains profitability. Think Tesco. The balance is crucial. However, the competition situation allows the banks and energy companies to focus more on Business Thinking than Customer Thinking. But this situation could change if the UK coalition government encourages new entrants or gets tough on advertising claims and selling.

We once sat in on a ‘sales’ presentation given to a local chamber of commerce meeting by a High Street bank. But despite talking about his bank for over 40 minutes the manager made absolutely no attempt at differentiating his bank from rivals. It is of no surprise that most people think all banks are the same and there is little point in switching supplier.

However, with the advent of the credit crisis, and now the PPI ‘scandal’, the stage is wide open for new entrants, or even incumbent banks, if they grasp the OPPORTUNITY – Opportunity Thinking. The level of customer trust in the banks must be at an all-time low. Now is the moment; if the government can also do some Opportunity Thinking and assist new entrants.

Finally, we have to ask the question: did senior management in all these banks know what was going on? Did they know that a very large number of customers were being mis-sold PPI policies? Whatever the answer, the magnitude of the problem is such that all the banks would appear to have lacked the level of Controls Thinking that would have prevented this PR disaster.

It is also now clear that the banks fought tooth and nail to avoid accepting blame. But all it took was one of the banks to break ranks and ‘come clean’, pressurised by the media. This whole sorry situation was foreseeable, and could have been prevented by adequate Contingency Thinking – “What could go wrong?”

“The Continuous Creative Process
- Pixar's incredible run of success” 

Pixar Animation Studios has produced an amazing string of 11 blockbuster animation films such as Toy Story, A Bug’s Life, and Finding Nemo. This extraordinary success rate is not down to luck, it stems from an unusual culture and organisation design that fosters creativity – continuously. The news article described how they do it. We dug a little deeper and analysed why Pixar’s creative system works, and could work for any organisation.

Pixar’s success was down to Steve Job’s Visionary Thinking. The Apple co-founder bought the business for just $5 million in 1986. He sold it to Walt Disney in 2006 for $7.4 billion. The key to this success was allowing Pixar’s small (at that time) animation division to develop its skills, technology, and reputation by making short films and tv adverts.

But the driver for continuous creativity is Pixar’s culture of engaging employees. Everybody gets involved in giving feedback to the production teams, in some cases every single day. The film director has the final decision but even the newest animator has the chance to volunteer opinions and constructive ideas. Everybody is prepared to challenge, and be challenged.

This creative culture and feedback process raises the bar for all participants, stimulates group creativity, avoids mistakes, and prevents complacency. The business result is that Walt Disney has considerably out-performed the US stock market by about 45% since it bought Pixar.

Analysis and Lessons

Learning Culture … Creative Culture and Processes … Creative Thinking …
Controls Thinking … Creative Concept … Strategic Thinking

Pixar doesn’t need to buy-in ideas from outside the company (normally viewed as a sound policy); all its creative ideas come from its own staff. It gives writers, artists, and other ‘creatives’ leeway to make decisions. But they make it a safe environment for creating wild ideas, and for making mistakes, by sharing unfinished work with peers, who provide honest but constructive feedback.

They also run ‘post-mortems’ after a project is concluded to learn valuable lessons for what worked well and what didn’t. This is extremely useful for developing creative and project management skills, and Pixar’s unique sequence of successes is proof that its system works.

Pixar’s creativity isn’t just about one set of people thinking up individual ideas. It pervades the whole organisation and they apply Creative Thinking to every scene, every character, every sentence, and every aspect of a project. And everybody does it. It is in-built into the company’s culture. This is their system – a unique balance of Creative Thinking and Controls Thinking.

Empower Creativity. Give your people who have the idea, especially your creatives, control over every stage of development. Give them the time to explore and develop their ideas. At Pixar, when preparing a scene for Finding Nemo in which the fish characters Marlin and Dory become trapped in a whale, two of the team climbed inside a dead whale stranded on a beach in California. And Pixar’s film directors have a great deal of autonomy.

Develop a peer support culture. Encourage peers to support each other with ideas and feedback. At Pixar, work is shown to others daily, which minimises embarrassment and stimulates even greater creativity. In addition teams have a detailed overview every two months or so.

Tolerate mistakes. Creativity stretches boundaries. Mistakes are inevitable. At Pixar, if the review system decides that a film section isn’t working well enough the team is allowed to start again from scratch. Everybody feels they have a stake in getting it right. They share the mistakes and successes.

Make communication easy. At Pixar anyone can communicate with anybody else. Permissions are not necessary. There are no ‘proper channels’ to inhibit communication. Problem solving becomes faster and more productive.

Promote a Learning Culture. You need to change the way people Think, their mindset, in order to develop a learning behaviour (and therefore, culture). At Pixar, Pixar University has over 100 courses helping people to develop as they move through their careers. And they offer a range of creative courses open to all disciplines which allow yet another avenue for shared/stimulated ideas creation and development.

Pixar’s success is actually based on one broad creative idea. Most of their films are based around characters that appeal to children (eg toys, fish, monsters) but who have adult-like personalities that deal with adult-like problems. This ensures that the films appeal to children and parents, which creates tremendous selling power.

Pixar is not just an animation studio making its own films. It also licenses its technological innovations to special-effects houses producing other studios movies, for example Pirates of the Caribbean and the Harry Potter films. Good Business Thinking and Strategy Thinking.

“The Joy of Chess Problems
- great for developing your Thinking Skills” 

Research has established that playing chess, and especially solving chess problems, significantly improves thinking skills. As a result, trials are now being carried out in teaching chess in schools and the lessons have been eagerly received so far. But we have found that chess is highly effective for developing thinking ability at any age. We examine which thinking skills can be enhanced by playing chess, particularly those needed in solving chess problems. We also describe a chess problem-solving process we have devised which is equally valuable for resolving business problems.

Lessons in chess are being trialled by a charity at a number of schools in Britain and children have responded extremely well, much to the surprise of many people. It has been known for some years that chess can improve a rage of thinking skills but little has been done before to apply this learning aid in schools.

We have studied precisely which thinking skills can be improved by playing chess, especially those involved in solving chess problems. Many of these thinking skills are equally relevant to business management. We have also analysed the stage-wise Thinking Process we believe is best suited for solving chess problems. We work through this process every day in solving The Times chess puzzle – at near 100% success rate.

Memory; Concentration and Patience; Logical Thinking; Analytical Thinking; Strategic and Tactical Thinking; Imagination and Creative Thinking; Risk and Consequence Thinking; Problem Solving; Decision-Making; Spatial Awareness, Big Picture, and Detail Thinking.

Playing chess and solving chess problems have been shown to develop all these Thinking Skills of immense value in business management. As usual, they are easiest to develop in young brains but they can all be improved at any age. And solving chess problems can be fun and addictive for anyone who relishes a challenge.

Analysis and Lessons

Thinking Skills, eg Memory, Logic, Analysis, Strategy, Imagination, Risk,
Problem-Solving, Big Picture

A valuable stage-wise Business Thinking Process

Memory: chess masters are masters because they have developed phenomenal memory powers – for example: the vast range of opening moves and ‘best move sequences’ for certain situations.

Concentration and Patience: a high degree of focus for lengthy periods. In a world where instant gratification is sought, especially by the young, these Thinking Skills/Behaviours are even more important to develop.

Logical Thinking: working out a logical sequence of moves, for yourself and your opponent.

Analytical Thinking: for example in working out the best option in any situation, or working out why your opponent made a particular move.

Strategic and Tactical Thinking: devising an overall strategy for the game and also the ability to change your plan according to new situations (tactical); assessing your opponent’s strengths and weaknesses: spotting opportunities for attack that suddenly present themselves.

Imagination and Creative Thinking: chess encourages inventiveness and ‘what if’ thinking. For example, imagining a situation several moves ahead, or “What if that piece wasn’t there?”

Risk and Consequence Thinking: you won’t get far without developing a good ‘feel’ for the risks of certain chess situations (yours and opponents) and all the possible and probable consequences of particular moves.

Problem Solving: the ability to deal with problems when your strategy/tactics don’t go to plan or your opponent springs a surprise on you.

Decision-Making: develops the ability to make decisions, quickly – especially in clocked games. Being forced to make a speedy decision is highly developmental.

Spatial, Big Picture, and Detail Thinking: all these three, linked, Thinking Styles are needed. You need to see how the pieces are impacting on each other; what pieces are being attacked or capable of being attacked (or defended); the room for manoeuvre; and switch readily between seeing the whole board situation and the detail of each piece of action.

The following Thinking Process describes a method for solving chess problems but with a little imagination can be applied equally to many business problems, especially those involving a competitive situation, eg business strategy.

1. Look to see if you are being attacked or are in a vulnerable position anywhere on the board. Vulnerability includes being ‘boxed in’, with limited scope for manoeuvre of key pieces, especially your King.

2. Do likewise for your opponent’s situation. This often throws up ideas for attack opportunities.

3. Take an overview. Take in how the pieces are arranged. Look for pieces that are supporting each other or attacking the same square or areas, especially around your opponent’s King. Establish whether the puzzle is a checkmate objective or ‘winning material’.

The next stage begins the problem-solving process proper. You may have to simply go through a series of trial and error moves until you find one that works best. But our favoured approach - ‘Reverse Thinking’ - is to look for the ‘ideal solution’ first then work backwards to see what is preventing it.

4. Reverse Thinking approach: imagine the most likely ‘end point’, eg “This would be checkmate if my Queen could get to that square and those other pieces were in that situation.”

5. Now work out the barriers to getting to this end point, eg your opponent’s Rook is guarding the square you want to place your Queen on.

6. Work out how you could remove those barriers, eg by attacking the Rook or ‘persuading’ it to move away. This process will invariably bring out the solution, starting with the first move.

If this ‘Reverse Thinking’ approach doesn’t seem to fit then you will have to resort to the trial & error approach, but begin by looking at the obvious ‘weaknesses’ or lines of attack. But note that the Financial Times chess puzzle is usually tougher than The Times and is often designed so that the least obvious move is the right solution. All approaches will involve looking at how particular groups of pieces are interconnected, just as when solving any business problem.

Another major aspect to problem solving is to imagine that one piece could attack another if one or more pieces were ‘not there’, ie are blocking your path. If this ‘hidden’ attack could be beneficial, you can then start working out ways of getting those ‘blocking’ pieces to move away. Again, this is identical to solving business problems.

A major element of problem solving (and any other Business Thinking Process) is thinking in the ‘right way’ at each stage in the process. Chess is ideal for developing all the Thinking Styles needed for finding successful solutions.

“Caution - Women on Board. Diversity of Thinking?” 

Vince Cable, the Business Secretary, commissioned a review to investigate why there are so few women on boards of UK companies. He wanted to pre-empt the potential introduction of targets by the EU to include a certain proportion of female members on boards. Lord Davies of Abersoch, former head of Standard Chartered Bank, delivered his report at the end of February. His committee’s work, findings, and recommendations generated considerable media interest and re-ignited the long-running debate on why women are failing to smash ‘glass ceilings’ in theUK.

The report states that only 12.5% of the directors of FTSE-100 companies are women and only five of these companies are headed up by females. Only 7.8% of board places are filled by women in the FTSE-250. The report recommends that over the next four years these companies should overhaul their board composition to have 25% women board directors. If this does not happen, there is a threat of formal quotas being applied. In countries such as France and Australia, where quotas are either threatened or confirmed for the future, there has been a surge of appointments of women to boards (albeit often in non-executive director capacity).

It claims that large companies have failed to tap into the pool of able women who currently work outside the largest stock market-listed organisations, but are likely to be considered good enough for the FTSE-100.

Lord Davies is said to be ‘impatient’ with head-hunters and their ‘reluctance to take a lead’ in this matter. They have been taken to task for not making their shortlists for senior appointments sufficiently diverse, and are being asked to sign up to a voluntary code of conduct governing the gender diversity of the candidates they put forward.

Another suggestion is that head-hunters should offer training to able women candidates who come from non-corporate roles, such as charities and the public sector. However head-hunters argue that the ultimate responsibility for board appointments lies with companies’ nomination committees.

And a recent report on this problem by the CBI, “Room at the top”, points to the need for diversity in boards but makes no direct link between women and diversity. Also, whilst it asks the question “Why aren’t existing initiatives making sufficient progress?”  the report doesn’t provide satisfactory answers.

Analysis and Lessons

Analytical Thinking … Root-Cause Analysis … Balance of Thinking Styles …
Leadership Development … Diversity of what? … Reasoning v People Thinking

First is that, after all these years of discussion, it is clear that we are no nearer to understanding the root causes of the problem. And without knowing these there is little chance of finding lasting solutions.

Secondly, we wonder if the highly emotive issue of top team diversity is focusing on the right aims. We ask what sort of diversity is most needed and who can provide it to maintain a ‘balanced board’?

Various reasons have been offered over years of ‘study’ for the lack of women’s presence at senior level, including the usual ‘domestic responsibilities’ angle, along with perceived feminine personal traits such as modesty and caution. The ‘old boys’ network’ has also been cited.

But the suggestion that head-hunters should ‘train’ women for board vacancies indicates to us that ideas for solutions are being mooted without serious analysis of the underlying causes or even the practicality of the ideas. People can’t just be trained to be leaders. Leadership expertise develops from on-job experience and facing relevant real-life management challenges over a period of time. Also, it is not within the role or skills remit of head-hunters to ‘train’ their candidates.

The CBI report “Room at the top” poses some useful observations such as “Female representation starts to fall away at senior management as greater sacrifices are required for progression.” But there is no real analysis provided or concrete ideas put forward for solutions that deal with the root causes.

The answer, we feel, is to perform a detailed cause & effect analysis of the problem. We are convinced that there are many major causes that have not been properly identified, or addressed, or analysed. For example, we should be asking how each gender feels about working with the other. There can be no question that emotions and preconceptions have a major significance in teamwork at any level. It is no accident that many boards of UK companies have no females at all.

Without getting to the root causes of the problem there is very little hope of finding practical solutions. And we’re convinced that the numerous studies performed so far, over many years, have failed to carry out a proper cause analysis. Only a government body, with the CBI, can do this, assisted by research (for example) on women who feel they are being ‘overlooked’ for promotion to the board.

A Causal Analysis must include a review of how women develop the skills and behaviours required for board-level jobs. One key aspect of development that we have observed is some women’s reluctance to take risks when giving controversial opinions in meetings. At Harvard Business School, for example, we observed in a large Case Study class that most of the opinions and questions came from the males in the audience.

The focus on getting increased numbers of women onto boards may satisfy those seeking diversity for the sake of equal opportunities, but we believe that this is the wrong diversity issue.

The business objective of diversity in any decision-making team is to obtain a balanced perspective. Having more women on boards doesn’t guarantee this.  The most important measure of balance is in how team members THINK. People have preferred ways of thinking. We believe that the diversity that should be sought is in having a good balance of personal preferred ways of thinking (Thinking Styles) across the four quartiles of Whole Brain Thinking. By taking this approach you will naturally get boards containing a good representation of women.

Boards will be most successful across a range of business thinking processes (such as strategising, problem solving, and decision making) if they deliberately seek dissenting voices that present alternative viewpoints. That is, they avoid the dangerous situation where everyone thinks in the same way (‘Group-Think’), which our research shows is one of the key causes of business failures/underperformance.

Many people believe that men think in a different way to women. On average, men tend to prefer ‘Reasoning Thinking’ in their decision making, whereas women tend to prefer ‘People Thinking’. At the 7/7 London bombing inquest, the coroner Lady Justice Hallett was praised for her humanity, empathy, and 'off the scale' Emotional Quotient - comments rarely made about men.

We believe that complementary (balanced) thinking style preferences are a sounder rationale for striving for a male-female balance (or at least a female presence) on boards, than insisting upon arbitrary quotas.

A powerful illustration of the dangers of the lack of adequate People Thinking is BP’s ex-chief executive Tony Hayward. (See our Clear Thinking Case Story May-June 2010). He could not sufficiently engage People Thinking to respond effectively to US concerns – a missing element that ultimately cost him his job and severely dented BP’s image in America.

The recent SAS ‘visit’ to Libya debacle is another example. This was due to a failure by the planning team to appreciate how people might react/respond, which requires good People Thinking skills. In fact this is one of the key causes of strategy and planning errors – appreciating how people react.