(This is so just my opinion.)
     The consequences of the subprime mortgage mess roll on and on.  America’s economy is sputtering, housing markets in Europe are stalling, and financial markets around the world are feeling poorly.  How did it all get so out of hand?
     I found myself thinking about this when I was out in the barn one evening, with a goat that wasn’t feeling so well.  My wife raises dairy goats, and I try to pitch in when I can.  Goats are not the biggest marketplace for veterinary medicine in the United States, so you don’t have that many treatments made specifically for goats.  So, when we have a goat that’s really ill, often enough the vet will suggests a treatment designed for sheep, or for horses, but which seems to work well on goats.
     Veterinarians, like medical doctors, have the privilege of “off-label prescribing.”  Once a medicine has been approved for one use, it can be used for other purposes, with caveats.  Sometimes these other purposes become a major part of the market for a medicine.
     That’s innovation, after all–discovering that a product designed for one need can also serve another.  Of course, you want your people to be on the lookout for those opportunities.  The ROI for this kind of innovation is usually very attractive.
     That’s pretty much what happened with sub-prime mortgages.  They’re great medicine for certain conditions.  (OK, many of these potions were taken on the false assumption of continuing real estate price increases.)  But then mortgage brokers found major new uses for these instruments.  The off-label prescribing of alternative loans gotw ay out of hand.
     So why doesn’t the same thing happen with veterinarians?  I think the key difference is that veterinarians are licensed professionals, with professional codes, continuing education requirements, and reputations to protect.  By contrast, too many loan originators take a “churn and burn” approach to their sales force.  Salespeople make their quota or they don’t get paid, and don’t stick around long.  Honestly, why worry about long-term consequences (even if I realize what might happen) if you likely won’t be around by that point?  By contrast, if loan originators viewed their salesforce as valuable sales professionals who were not only making sales but building relationships and expertise–and if there were the continuing investment to maintain the currency and integrity of these professionals–it is hard to imagine that we would have this mess today.
     Yes, there would be a certain percentage of loas gone sour–if you never regret a deal, then you’ve been too cautious–with more gone sour among borrowers with weaker finaces.  But a worldwide epidemic of bad loans?  I don;’t think a community of licensed financial doctors would let that happen.
–Ed Rigdon

I have been a judge for the MAX Awards for several years, but I am writing this for myself and do not represent the opinions of the Georgia State Marketing Roundtable.I can tell you that the Marketing Roundtable meeting in January when we judge the entries is one of the most interesting and liveliest meetings of the year.At some point in the discussion of an entry, it always happens that one of the Members will ask “Is this really innovation?”A very good question!

Wikipedia, the free online encyclopedia, identifies several types of innovation.mThe types that we most frequently encounter in evaluating the MAX award entries are:

Business model innovation - changing the way business is done in terms of capturing value.

Marketing innovation – developing new marketing methods with improvement in product design or packaging, product promotion or pricing.

Organizational innovation – creating or altering business structures, practices, and models, (may include process, marketing and business model innovation).

Process innovation - implementing new or significantly improved production or delivery method.

Product or service innovation - introducing a good or service that is new or substantially improved in functional characteristics, technical capabilities ease of use, or any other dimension.

Perhaps the innovation model we struggle with the most is the application of any type of innovation from one industry to a different industry or to a new market segment.  While this sort of “copying” may not seem to meet the criteria of pure innovation, we do include these situations as innovations.  Certainly the ability to see beyond one’s boundaries and to have the vision and foresight to apply the tools and techniques of one industry/market segment to another often leads to the delivery of increased value, improved business structures and efficiencies for the new application.  And if that’s not the purpose of innovation, what is?

 –Debra Semans

The Marketing Awards for Excellence—the MAX Awards—use a short but surprisingly stringent set of criteria. The innovation must be a new product, new service, or new way to market. It must be introduced by a Georgia company or be introduced in Georgia in the prior calendar year. The innovation must have demonstrated results. Excelling within these criteria is a challenge, which explains why so few MAX Awards are handed out. Judging whether an entry meets these criteria can be quite a challenge, too.

The first one doesn’t sound like much of a hurdle. We’re awash in new products and services. However, so many products are line extensions or “me too” offerings. You have to be careful, of course. Some brilliant innovations are perfectly obvious after the fact, just as so many unfortunate events seem so easily avoidable in retrospect. Online offerings are especially tricky, because innovation moves so quickly—yesterdays’ insight is tomorrow’s cliché.

And what about “new ways to market?” Is anything really new when it comes to marketing? Actually, I think there is lots of room for new approaches to marketing. We become so quickly accustomed to the constraints in our lives and jobs that we don’t recognize the pain of these constraints, and we stop looking for better answers. My wife used to work on a sheep ranch in Oklahoma. Those sheep were used to a gate being in a certain place, and they trooped over there with minimal encouragement. Well, seeing that it would save steps if the gate were somewhere else, one day my wife moved it. The sheep were completely lost. Once they were herded over to the new gate, they stood there, with the gate wide open, and wouldn’t go through for anything. They knew there was no gate there, and no point crashing into the fence, no matter what my wife and her herding dog were doing. Eventually, my wife half-picked up a terrified ewe and shoved her through the empty space of the open gate . . . and then another . . . Eventually the flock got the idea (sort of), and individual animals started to cross. (Even then, the animals jumped over the fence line, perhaps guessing that the fence had merely fallen.) It can be hard to imagine different ways of doing things, and most people get paid to do, not to think. We say, never stop thinking, because innovation is crucial.

The second criterion causes a certain amount of confusion. Innovations that are imported into Georgia from somewhere else don’t qualify. Their introduction in Georgia, or by a Georgia company, must be the first introduction. There are some fine concepts out there which have been implemented elsewhere and then line-extended into the Georgia marketplace. Heck, we’re Georgia State University, and while an international perspective is in our DNA (we are helping to launch the first Western-style business school in the Caucasus, and our Global Partners MBA program unites partners on four continents), the MAX Awards are about celebrating our “local” innovators (whether they are the global enterprises or small businesses).

Another challenge is the combination of “in the previous calendar year” and “with demonstrated results.” Our judges won’t give a MAX Award to an entry, no matter how spiffy, that can’t demonstrate marketing results. Yes, it takes a while for most innovations to demonstrate results. That probably means that we miss some great potential entries, and we’ve talked about tweaking the criteria in recognition of this difficulty. But we just can’t bring ourselves to do that. “We‘re for great ideas” (our theme last year), but we think that great ideas are those that generate results.

–Ed Rigdon (erigdon@gsu.edu)

This is me again, speaking only for myself.

More global, more accountable, more collaborative, more pervasive—those are the trends that I see driving change in Marketing, for the next 12-15 years. Why not longer?

Today in America, as has been true since the close of World War II, our cupboards are full. Our factories turn out more than we can consume. Farm yields have skyrocketed. Scarcity exists at a broad level only by design, as with diamonds, or through temporary disruption, as with a hurricane.

But I think a very different world is closing in on us. The signature trait of this new world is an unavoidable awareness, a clear certainty, that our supply of everything is finite, that every time anyone takes something out of that supply, there is less remaining for everyone else. I recall a memoir from someone who grew up poor. At dinnertime, there was only so much to put on the table. So each night the father would eat nothing until he was sure that there was enough for his children. I think that’s the world we are all going to be living in. Some people say that Americans are selfish and short-sighted—driving gas-guzzlers as oil prices soar and pollution increases, and, here in Atlanta, fretting about their lawns in the middle of an historic drought. I think that, by and large, people want to do their part, and not take more than their fair share. Most people don’t want to reach for the last pork chop.The realization that there is now only so much to go around will add a whole new dimension to the costs that consumers see attached to goods and services. The cost of a purchase goes well beyond the amount of money one must pay. If you must go to the store and get the product, the time and effort of visiting the store is part of the cost. If the product is going to be a pain to assemble, that’s a part. And if consuming the product means that you are going to be confronted with your own responsibility for further reducing a finite supply, that will be a part of the cost, too. All of these factors could become a big part of the cost.Maybe in the future, we’ll have consumers who, as a matter of course, need to be assured that they have permission to consume. They’ll need to be told that it’s OK to reach into the cookie jar—not just for luxuries (which are OK to consume because “you’re worth it,” or because “tonight is kinda special”), or for controversial products like fur, but for things we consider everyday products today. It won’t be just a matter of raw materials, but also the energy that goes into the product and the social costs of disposal. During World War II, many commodities were rationed, to control inflation amid the scarcity created by the war effort. In the future, by contrast, it will be consumers themselves who ration their own consumption from the world’s remaining supplies of raw materials, clean air and water, and the protective ozone layer. Potential customers who can’t convince themselves that their consumption is justified will pass up the opportunity. Some consumers are doing this now.

That’s why sustainability, climate change, and protecting our environment are issues for marketers. Marketers face a future where consumers see costs going up, in ways that don’t increase contribution margins for marketers. Marketers who can reduce these externality costs will allow consumers to perceive a lower total cost for their product, without reducing the dollar price which the marketer collects.

Unfortunately, while the full impact of this problem lies in the future, marketers need to begin addressing it now. We can’t solve the problem until we recognize it. We are a long way from solutions.

Some of these problems will certainly be too big for any one marketer. Maybe this is an area that calls for “coopetition”—competitors facing the same challenge may need to work together to minimize their offerings’ resource consumption and make it easier for their customers to grant themselves permission to consume. This is another kind of marketing innovation that I’d like to see, and there is no issue more important.

–Ed Rigdon (erigdon@gsu.edu)

As head of the Marketing Department at Georgia State, it’s part of my job to figure out where Marketing as a field is headed, and then to figure out how to deliver the kind of marketing education that will prepare our graduates for the world to come. The MAX Awards celebrate marketing innovation, and I truly value the opportunity to see what marketers are up to, and to listen in as the highly accomplished marketers who judge the MAX Awards weigh the entries. I learn a lot by listening to the people who are making it happen today.

What if we look a little farther into the future—say, to 2020 or 2025? (Not so far away now, though the dates sound like something from science fiction.) Or when those future observers look back toward today, what will be the main dimensions of change in Marketing? Sure, marketers will continue to apply technological changes and customer insights to gain a step on their competition. But I think that the main trends in marketing across those years will come down to four “mores”—more global, more accountable, more collaborative and more pervasive.

Marketers today have only scratched the surface of what the global marketplace has to offer. Besides goods and services, the world offers diverse ideas and perspectives. People are solving the same problems around the world, and it’s dumb not to take advantage of the best solutions. Small market segments, uneconomical to serve, become strong markets when viewed globally. It reminds me of a phone call I got one day from someone at a BellSouth unit, who was looking for a class on forecasting. My chair at the time (Ken Bernhardt) told me that a different BellSouth unit (yes, also based here in Atlanta) was organizing just such a course. So I got back on the phone and put the BellSouth people in touch with each other. That’s about where we are as a planet right now. For the most part, “more global” marketing means improving those channels of communication.

The move toward greater accountability—toward dollars and cents justifications for every marketing dollar spent—is also irreversible. The trend applies not only to sale promotions, advertisements and salespeople, but also to customers. Firms need to know what each customer, and each relationship, is worth, so that they can allocate resources in order to nurture the optimal customer portfolio. Maybe Sarbanes-Oxley is also to blame—in an age when the CEO must sign the company’s financial statements, no one wants to spend anything unless the payout is clear. Moreover, a firm can stretch its marketing budget by spending each dollar wisely. In the end, “more accountable” marketing means more effective marketing spending.

At the height of the Internet bubble, you could find people seriously talking about the end of personal selling as a career. Who needs a salesperson to talk with and listen to customers, when a firm can simply put all of its offerings and data on the Web and allow customers to choose the products best suited to their needs? Automation did mean that salespeople could spend less time “gofer”ing spec sheets and tracking order status. But it’s hard to build a website that is as helpful as a human being. As competition intensifies, marketers will need to get as close to their customers and channel partners as possible. “More collaborative” marketing means working with customers, channel partners, and third parties at every stage to be the first with the best solution for specific customer needs.

In the future, even more than today, marketing will be everywhere. For decades, pervasiveness was the signal trait of direct marketing, which reached customers through their mailbox and over the phone, as well as through direct response appeals in conventional media. Today, the Internet approaches true anytime / anywhere access, and Marketing continues to drive online innovation. But Marketing is breaking free of the commercial message, per se. Marketing messages are woven into popular culture, the news media, and even supposedly casual conversations. As customers’ lives grow continually more hectic, the advantage of immediate and effortless contact will only grow. “More pervasive” marketing means continually minimizing barriers between marketers and customers.

These changes won’t happen because they are “trendy,” or because of government subsidy programs. They’ll happen because this is where advantage lies, and because intensifying competition won’t allow any marketer to leave any potential advantage on the table.

It will also take new thinking, and the J. Mack Robinson College of Business is working to take a thought leadership position on these key dimensions of change. New programs and leading scholars are coming to Robinson, including true superstars in marketing analytics and international marketing (look for that announcement in the next month or two) and new certificate and degree programs in marketing analytics and sales / sales management—and maybe in international marketing, as well.

So, what about “pervasive marketing?” What about leading scholars and new degree programs there? I think dealing with the increasing pervasiveness of marketing will be the toughest challenge for us. This is the newest trend. Ultimately, it may challenge our fundamental definition of marketing. I have a few ideas about what pervasive marketing means for my discipline and for marketing practice, and I’d sure like to hear yours.

–Ed Rigdon (erigdon@gsu.edu)

This year’s MAX Awards entries are rolling in. As usual, there will be a flurry at the last minute. Ultimately the pool of entries will include some “Wow” entries and some “Why didn’t I think of that?” entries, and the senior marketing execs who judge the entries will make their choices.

Today I’d like to talk about some marketing innovations that I’d like to see, but that probably won’t be submitted to the MAX Awards. Some of these innovations won’t be entered because people haven’t done these things, and others won’t be entered because the people doing them won’t even think of these as possible entries. Now, these are just my opinions. I’m not speaking for the MAX Awards, or for the Marketing Department at Georgia State University (or for the American Dairy Goat Association, for that matter).

One crucial innovation that many firms need involves redefining the scope of marketing. In classes here at the Marketing Department, of course, we talk about the 4 P’s (Product [or offering], Place [distribution], Promotion and Price [Prices, really, with a nod to Jay Klompmaker]) and say that Marketing encompasses the efforts of the firm to identify and satisfy the wants and needs of targeted customers. How many chief marketing officers (CMOs) actually have such a broad portfolio? Product may be in the hands of a separate product development group. Both sales and public relations may be completely independent organizations, taking a large chunk of promotion out of Marketing’s hands. In the end, the CMO may be little more than chief media advertising officer, whose primary responsibility is to select and then interface with a lead advertising agency. No wonder CMOs average only 24 months on the job. That’s just long enough to establish (yet again) that advertising alone can’t work miracles.

Marketers also need to find new ways to manage risk. Managing risk is the heart of finance and a key function in any enterprise. Changes in external circumstances (like the weather or the larger economy) have implications for the firm. The firm can’t escape risk, but intelligent managers try to understand these risks and put the firm into a good position, accepting some risks and paying third parties to bear other risks. Financial markets, among their several functions, offer a good way to value and trade risk.

Contrast that with a typical brand manager, whose responsibilities cover a certain set of products which are sold in a certain region, primarily to members of a certain demographic group. The manager is surrounded by risk—variability in raw materials supplies, the regional economy, competitive intensity and the tastes and preferences of the demographic sector, as well as the risks entailed in any major marketing effort. How does the marketing manager deal with risk?

With a quip: “That’s why I get the big bucks,” or “That’s why CMOs only last about 24 months.” I think Marketing urgently needs new tools to manage risk. Ideally, marketers would use markets the same way that finance uses markets. Of course, free markets require transparency, and it’s hard to imagine a major firm publishing its marketing plans for the world to ponder. Maybe a large company could create an internal marketplace, allowing managers to “invest” funds in the firm’s products, customer segments or campaigns. The combined decisions of these managers might give the firm a much better picture of its marketing risk profile, and of the relative value of different opportunities. Maybe there is a role for a third party, like a consulting firm, to supervise a marketplace for marketing risk. The point is, Finance recognized the dangers of “just winging it” a while ago (see Peter Bernstein’s great books, like this year’s “Capital Ideas Evolving”). Marketing needs to catch up.

Finally, maybe the most powerful Marketing innovation for any firm is a vision—a sense of where your market is going, so that you can weigh potential innovations in terms of whether they are moving your firm in the right direction. I don’t think the MAX Awards has ever received a market vision as an entry. Then again, the criteria for the MAX Awards specify both that the entry must be an innovation introduced in the past year, and that there must be evidence of success. Vision doesn’t usually pay off in that time frame. And maybe that’s really why the average CMO only lasts about 24 months.

Ken Bernhardt and Ed Baker created the Marketing Awards for Excellence-the MAX Awards-because innovation is crucially important to marketing success, and because there isn’t enough of either one (innovation or marketing success). There were enough awards, of course, but too many were (and are) essentially awards for doing your job–for turning a clever phrase or creating an arresting visual. If marketing were football, these would be awards for “carrying the ball toward the opponent’s goal line,” or for “kicking the ball through the uprights.” These awards programs offer a lot of categories and a ton of trophies, because, frankly, there are a lot of marketing people out there doing their job, and doing a good job.

In today’s global economy, however, just doing the job-just playing the game-only takes a marketer so far. Opportunity, like a loose football, attracts a crowd. Margins shrink and response rates erode. Chief Marketing Officers (CMOs) rent rather than buy-it’s better to avoid the transaction costs, since you won’t be staying long.

Innovation isn’t about playing the game, it’s about changing the game, getting into the clear and creating not just one scoring opportunity but the chance for long-term success. Playing your own game catches the crowd of competitors off-guard. It’s been said that one of the fundamental paradoxes of strategic management is that, in building core competencies, firms invariably create core disabilities. Building strengths creates weaknesses. Changing the game-really innovating-means competing on terms that your competitors weren’t designed to match. While you exploit new opportunities, competitors struggle to catch up. And yes, they certainly will-a loose football is a loose football-which is why marketing leaders have to keep innovating. The MAX Awards were established to recognize the innovations-the great ideas-that keep marketing leaders ahead of the game.

The MAX Awards recognize new products and services and new ways to bring that offering to market. The first and the latest grand winners offer examples of both kinds of innovation. The MAX Awards’ first grand winner, in 1993, was (ironically) A.D.A.M., Inc., for their Human Anatomy Software, which was an innovative package that helped students learn about the body and gave health practitioners a new way to talk about an individual case. The 2007 grand winner, MillerZell, won for their reimagining of the eyewear section in Wal-Mart stores.

The MAX Awards are not about different for the sake of difference. From the beginning, commercial success has been a key criterion distinguishing winners from also-ran. A.D.A.M. continues to be a leader as a source for health information content. MillerZell’s innovation in retailing produced notable growth in sales and profits, enough to lead Wal-Mart stores to roll out the test concept to hundreds of stores. “Cute concepts” without evidence of success in practice don’t win MAX Awards.

So here we are again, for the 16^th year, celebrating the best of marketing innovations launched or introduced here in the state of Georgia. We know innovation is hard. So do the senior marketing executives who judge MAX Awards entries, and so do the C-level executives who pack the annual MAX Awards breakfast-the 2008 edition is on leap day, Feb. 29, at the Georgia Aquarium. Innovating is hard, but essential, and the people in Atlanta who are closest to this truth make time each year to recognize and celebrate the very best.