BLAIR ENNS: David, it's been a while.
DAVID C. BAKER: It has. Have you missed me?
BLAIR: I've missed you tremendously, but ask me that in two weeks.
DAVID: Yeah, I know. We do our two single weeks things, it just helps remind us why we really could never work together for long. It's just a good reminder of that.
BLAIR: We're recording this on a Sunday. By the time this goes to air the thing that you're doing next week will have passed. And that is you're holding a two-day event and I'm coming out to Nashville to speak on the second day and then you and I and our spouses are going on vacation for a week. And then we won't talk to each other for a few months just to reset things.
DAVID: Blessed peace.
BLAIR: But we haven't recorded in a while, have we?
DAVID: No, we haven't. We've both been busy. I've been moving. My wife and I are moving from Nashville to a farm just outside the city. And so we're buried in boxes and looking for microphones and finally we're ready to do this again.
BLAIR: All right, let's do this. So we're going to talk about positioning and it seems to me why does it always come back to positioning? Why are we always talking about … This event you're doing next week, it's on positioning. Right?
BLAIR: No matter what we start talking about, it always comes back to positioning. Why is that?
DAVID: Well, if we don't get that right, then we don't know who our clients are and what they care about and where to find them and what to say to them when we find them and then it just goes … there's 20 other steps, including what services should we provide and by the way in the last question is who do we need to hire to fulfill these promises that we're making to clients?
DAVID: And we have talked about positioning so much, but I think it's useful to have it all in one place where we can just point somebody to this and it's also a good reminder and I love just summarizing this sort of of thing. But you know the bigger context for this before people click here, it's not about staying busy because most folks are not exceptionally well-positioned and they certainly don't have the kind of lead generation plans spooled up that they would like.
DAVID: So they would step back and it would be easy to do this and say, “Well, why do we really need this?” And one of the things that you talk about a lot, and I talk about it picking up on that theme, is it's about generating some sort of a price premium. If we don't care about that, if we just care about being busy, then this stuff isn't nearly as important, especially in a decent economy. But if we're trying to move to that next level then all of a sudden we shine a spotlight on these issues and they become more important to us, at least they could.
BLAIR: So we're going to talk about seven common mistakes that you see when firms are positioning themselves and as you are talking I was thinking this event that you're about to do that will be in the past once this goes to air it's on positioning and lead generation. Correct?
DAVID: Right. Yeah, exactly. And lead generation is so easy and fun if you've got the positioning right. But oh, it's one of the most painful, difficult things even just to talk about doing lead generation if we don't have the positioning right. So yeah, we talk about both of those things, but start with positioning for sure.
BLAIR: Yeah, and the reason that I bring that up is I'm sure you experience this, too. You talk to an agency principle who says, “Yeah, I just need more conversation.” We're just not getting what you and I would call leads and what they might call a conversation. But how often is that a function of a poor positioning?
DAVID: Right. Yeah, or once you do get in those conversations, how do they go so differently if they're based on the right things? But I do agree and I think if we understand this well, then I think people will run away from some of the false solutions that they might pursue. Like in some cases finding somebody to set appointments for you to have those conversations, might make sense, but other times it's really not so much about that. Right?
BLAIR: Yeah. Okay, well you've got a list of seven things. I think you've written about this a little bit. But let's get into them at the top of your list you've got the big mistake is to democratize positioning. What do you mean by democratize it?
DAVID: So I think what we don't want is to develop a positioning in secret and then announce it to everybody to applause. It's not that. The other side of that spectrum would be to bring everybody along very, very carefully, make the arguments and then have a vote and decide what we want to do. And you see this creeping into these conversations in little subtle ways like just asking folks what do they want to do? What are some of the kind of clients that they'd like to work on. And that approaches democratizing it. So it's very useful to socialize it, to get feedback, not just to convince them but to actually listen to that feedback.
DAVID: But in the end, you as the principle, or as the group of principles, or principles plus leaders, will need to make a decision. If you don't do that, then you will knock the rough edges off of the decision and it will be a safer one. It will also be a more inclusive one, and it will be driven by the people that are working for you and not necessarily driven by what the market place is screaming at you. So don't democratize even though socializing the decision is a really good choice.
BLAIR: What's likely to happen if you include others in the positioning of the firm? And I've heard you talk about this before, and it may have come up in a previous podcast where we're saying the principles shouldn't abdicate his or her responsibility for the future direction of the firm, which is essentially what we mean by positioning the fundamental business strategy of the firm. But what's the mistake to be made in including others in that decision?
DAVID: Well, if you ask them and by asking give them the impression that it will impact a decision, then they are bound to be disappointed. But I think you're asking something bigger than that. And the answer to that question has a lot to do with the makeup of the people that work for you. So folks earlier on their career paths are wanting to explore, they're wanting to learn, they're wanting opportunities where they can hone their own craft. And if they're asked that question, they're likely to answer it in a way that will be more inclusive and won't necessarily be driven by competence, but driven by the desire for variety and learning more expertise on the client's dime. And so that's what we're trying to avoid.
BLAIR: I'm fond of saying that if we all ask our five-year old sons for career advice we would all be paleontologists. And if we all asked our employees for positioning advice, in the creative professions anyways, we would all be CPG branding firms. And that's what you're saying, too. Would you draw the line at leadership or even higher still at ownership? Whose decision is this really?
DAVID: I think it has to be the decision exclusively of the ownership. But folks who are core leaders, who've demonstrated sharp thinking should have a lot to do with it and should be a part of the discussion, but in the end anybody who's going to starve if this doesn't work, those are the people that should be making the decision. The risk-takers, the ones who are thinking the most longterm, five, 10, 15 years out.
BLAIR: Yeah, okay, great. So mistake number one when it comes to the positioning your firm is to democratize it and include too many non-owners, non-leaders in the decision, which is the decision is the future direction of the firm essentially. What's mistake number two on your list of seven positioning mistakes?
DAVID: Positioning is obviously going to emerge from some established expertise that you have. So at some point in this process you're going to write down typically on a white board all the clients that you've worked with. You'll probably focus more on the well-known ones because there's more of a story to tell there. The ones that were larger, the ones where you actually made money, and probably you'll include the ones where you had fun, you enjoyed it. The client was great, there was some notoriety back to your earlier comment that something you could, you're at Thanksgiving dinner with grandma and an ad comes on the TV and you say, “Grandma, we did that one.” You kind of include those sorts of things.
DAVID: So as you are crafting this new expertise, you write all these things on the board, and then whether you actually do it or not, you are trying to draw a circle that includes as many of these things as possible. You don't want to waste opportunity. So these were hard won opportunities for you. How much work did it take to close each of these relationships? Maybe there was some difficult spots during the relationship with the client and you navigated that, you actually got paid, you won an award. You want to somehow craft a positioning that doesn't waste all of these things.
DAVID: And this is the second biggest mistake. It's trying to draw a circle that's too inclusive. It's painful. It seems wasteful. And entrepreneurs are by definition not wasteful. They try to incorporate everything that they do in their lives into their job and this notion of walking away from something that you did, strikes you as really, really odd. Even though we don't have that trouble when it's a career decision, when we're putting together a resume for a new job or updating our LinkedIn profile, we'll either fudge or we'll leave things off that don't really fit what we're trying to do next, but we don't tend to do that when it comes to these kind of positioning decisions.
DAVID: So second big mistake, drawing a circle that includes too many things from the past and then you step back from it and it looks like this strange concoction that looks very accidental. It doesn't look intentional and it doesn't look like deep expertise to the prospect.
BLAIR: Now I see that challenge all the time where the too much kind of looking to the past at what we've done to decide on the direction in the future. And it's not that you shouldn't look to the past, but I've never thought it in this way before that entrepreneurs are not wasteful and it seems wasteful to them to build a future direction that does not include this particular piece of business or account that we've worked on the past. That's what you're saying, right?
DAVID: Yes. And the reason we can see a clue to that is because we seldom take work that is fully vested, that's probably not the right word, but we talk ourselves into situations with clients because of some future benefit. We don't charge quite as much as we know we should because it's going to lead to something else. Or we say yes to something for which we don't really have a deep capability yet, but it's going to allow us to open this other door. Or we say to this prospect, “Yes, we'll do your work,” even though we know that we really don't like the product, but we think that this opportunity …
DAVID: So in other words we're always saying yes because of what will happen in the future. And so we have all of these bank accounts that are owed money. These are all these clients and to write them off is almost to say, “Ah, I made a bad decision. I am not going to recover all of that investment.” It's a strange little entrepreneurial thing. I need to find somebody whose researched this and named it because it's an interesting phenomenon.
BLAIR: Well, I'm getting it now because it reminds me of bad mistakes in hiring or investing. The right thing to do is correct your mistakes early. But it's often difficult to do that so we hold on too long. And you're saying we're holding on to some of these decisions that we've made in the past, even maybe they were compromised decisions and we think, “Oh, no. But it will lead somewhere in the future.” So when we're trying to define our future, we're trying to include those things that might possibly lead to this greater future. So that makes a lot of sense to me. And I just never really thought of it that way before.
DAVID: You talk a lot about investing in the sale, right. And I think it's the same sort of a notion. We've done all this. We can't walk away now. We might as well just keep going. Yeah.
BLAIR: Yeah, we're over-invested. Okay. So mistake number one is to democratize the decision, include too many people in it. Mistake number two when it comes to your positioning is to draw too big a circle around successful work from the past. And mistake number three is selection bias. Explain that one.
DAVID: Yeah, this one's fascinating to me. I talked with somebody else again on Friday and I pointed this out to her and her eyes kind of lit up and she realized, “Oh, yeah.” So you'll read a statement on a website for a firm that you don't really know much about and you immediately are seeing the things that they believe set them apart in the market place. Things like we listen to our clients. And I can't even say that-
BLAIR: We get it.
DAVID: We get it, yeah. Or we look at the entire picture. Or we do strategy before we start solving the problem. And these things, it's not like they're not true, of course they're true. But what they are hooking onto are these statements that are self-selection issues because new clients that are coming to them, they're coming to them because something wasn't working with the prior firm. And what wasn't working was they felt like, “Oh, my god. They're just not listening to us. They're not responsive. They're not thinking about the big picture. They're just diving down these rabbit holes and all of these things.”
DAVID: So we hear why the prospect is coming to us as if somehow we are so different than the other firm. What we don't do is the flip side of that. The other side of that coin and listen to why clients leave us, because those same people that came to us, they came to us primarily and this is a big one because your work is fresh and we were not getting fresh work from client. Well, three years from now they're going to leave you because your work is not fresh anymore, but you're not listening to those second subsequent messages.
DAVID: You're listening to the first ones without realizing that you're serving one/one millionth of the possible clients out there. What about all the people that are not interested in working with you, what would they say about you? So it's just a silly selection bias issue. I've heard you talk about this as well, the danger in asking your clients too many questions about why they're using you. It's useful to know that information, but you can't necessarily nail it on the wall and then hang everything from it. So that's what I'm talking about here in this third mistake.
BLAIR: Yeah, and what I've heard you point out previously too is that the reasons clients hire you are different from the reasons why they will fire you.
DAVID: Right, right.
BLAIR: They'll hire you for your expertise and they'll fire you for your lack of service essentially when the relationship changes and you're in a bit more of a vendor position where service becomes important and then sometimes we extrapolate when we hear the last firm was hired because of poor service, we extrapolate that to think oh, maybe this isn't even on point here. It just reminded me of the point we think the way to win the business is to demonstrate service. But that's really why you get fired, not why you get hired.
DAVID: I was really reminded of this about myself this week. I got a note from somebody who just wanted me to change her email address so that she could keep getting my weekly emails. So I took a look at her website 'cause I'd never worked with her and I saw that she was positioned in a space where I had done a lot of work and said to her, just kind of casually, how is it that we haven't worked together yet. That's odd. And then I listed all the other firms I've worked with that she would know. And she said, “Well frankly it's because you scare me a little bit.”
BLAIR: That would have been my answer.
DAVID: Exactly. That most of the world would say that. So I immediately thought about this subject because I would say that one of my strengths is that I am courageous, but a very small segment of my possible client base values my courage in that setting. The rest of them I would scare them. So I'm listening, this is a selection bias, people tell me that love me and that work with me that I'm courageous. And I'm thinking, “Oh, everybody must think I'm courageous.” No, the truth is most people are afraid of me. Anyway that just illustrates this whole selection bias thing.
BLAIR: Yeah, and as you're saying I can think of so many people over the years who have told me in one form or another about how they're afraid of you or you scare them and I keep saying, “Be afraid. Be very afraid.”
DAVID: Thank you for really reinforcing this.
BLAIR: All right, we're talking about the seven common mistakes firms make in positioning. The first is to democratize the positioning. The second is to draw too big a circle around successful work from the past. The third is to fall prey to selection bias. What is number four on your list, David?
DAVID: That's to not separate the first room and second room stuff, I refer to this a lot in my most recent book on the business of expertise. The first room stuff is strategy thinking and the second room stuff is the implementation. It's the doing, it's the execution. And what's interesting is people step back from this decision, the decision they make for themselves around these topics is that the implementation, the second room, the execution stuff, should have virtually nothing to do with your positioning because the work in that room, whether it's copyrighting or design or programming, whatever it is there is easily substitutable. It doesn't need to be tied to the positioning. The value of your firm in terms of a price premium is what's done in that first room, there is some residual value for what you do in the second room because it is attached to the first room but not on its own.
DAVID: And so when you're thinking about crafting a positioning you want to develop that positioning in a way that's tied almost exclusively to that first room, not the second room stuff. The second room stuff you do that's more the doing, the implementation, the execution, that's handy for clients and you can make some money and there is value because of the scale you bring to the table, but there isn't a price premium in that room. So if positioning is about somehow drafting an excuse for the price premium, then positioning needs to be tied to your thinking, your strategy, not your doing.
BLAIR: Gotcha. And for those who haven't read the book, the metaphor is there's two rooms. The first room is the strategy room, the second room is the implementation room. And as you point out in the book, in most firms allow clients to come in via either room. And you make the point that no, no. Everybody enters through the strategy room and some will only use the strategy room, but those for whom you do implementation, you let into the implementation room. That comes through the strategy room only. Is that correct?
DAVID: Right. Exactly. Yep.
BLAIR: Okay, what's number five on your list of positioning mistakes?
DAVID: That's to overvalue variety and we touched on this earlier in this podcast. It's this notion that tightly defined expertise is going to bore me and so I need to broaden this out so that I stay engaged. I don't see this as much of an issue as it used to be, but it's still out there and it's still worth talking about because it's a fairly common mistake. If you aren't democratizing this, then it's not quite as big an issue. And if your firm has been around a number of years, it's not as big an issue either because people begin to devalue the variety and as they want to make more money they realize the only way to do that as employees is to carve out a particular niche of expertise.
DAVID: But accepting the premise that everything I do must be really, really interesting takes you down some strange paths. Having said that, I think we should be voracious explorers driven by almost a consuming curiosity and our lives from a top-down view should look really strange. And the way we spend our time and the way we spend our money and the kinds of things we read, the people we listen to, should be all over the place. But when it comes to what we charge our clients for, we need to be very, very focused. And so unless agree with that, then you might tend to widen your positioning.
DAVID: This devolves into a discussion very quickly about how important it is to love our work and you'll see a lot of different opinions on that. I think there's tremendous value in enjoying your work and I happen to enjoy mine a lot. But it's not a right, I don't think it's a human right to enjoy your work. It's just a fantastic benefit. And if you can structure your world in a way that allows you to be a really deep expert with clients and it's also something that you enjoy, then that's probably going to come in part because you have a fascinating personal life outside of your work life. And the notion of getting bored just strikes you as odd that it would even come up.
BLAIR: Yeah, and I would also point out that there's all kinds of science that shows human beings are horrible of predictors of what they will like. And creative people are drawn to variety and one of the reasons they resist a narrow focus is they want to craft their business in a way that lets them solve the problem they haven't previously solved. And it's been my experience, and I expect it's been yours as well, that when I'm counseling a creative principle to narrow the focus of his or her firm, if I can get them over the initial fear, they're worried that they're going to be bored going into this niche, after just a little while, they realize the niche is massive. I like to say you think you're crawling into this closet but it opens up into Narnia beyond there. So there's this fear of boredom from letting go of variety by narrowing the focus of your firm. But that fear almost never pans out. Has that been your experience, too?
DAVID: Yes, for sure. If the business is run well, you're making money, you have an interesting personal life, and you really care about expertise, exactly right. I can't think of a person who's been bored in that setting.
BLAIR: Yeah, at the top of this episode when I asked you about why does it always come back to positioning, I think this fifth mistake of overvaluing variety speaks to why we're always talking about positioning because as I've said, creative people just, they value variety. Creativity is the ability to see, the ability to bring perspective to our problems, therefore we have this personal need for variety, but it's directly at odds with our business need to focus and to benefit from the pattern matching that you're always talking about. And I think that's the crux of why we're always talking about positioning because in a world full of creative entrepreneurs, people want to structure things so that they can do things that are cool and new and different and they don't realize that even narrowing your focus, you get to do things that are cool and new and different, but as you would say you build down, down into that niche rather than out across other niches.
DAVID: Right. Exactly. That would be interesting to talk about. One of the things you've discovered as you've thought about time-keeping and value billing and all of that is how there is an inherent wastefulness in leading a client well. So all these things are just pulling us in other directions, that'd be another example of one that'd be interesting to do a whole episode about all of those things pulling us apart.
BLAIR: Yeah. Okay, number six on your list of common positioning mistakes is to combine really odd things together and confuse the prospect. And I laugh at this because I've seen some really Frankensteinian attempts at positioning where we do pet segment and insurance. Or two really obscure things.
DAVID: At one point a client of mine was experimenting with combining high-end luxury tourism and credit unions. It's because they had great examples of work for both of those, and so they just wanted to have one website. And you see this happen as people take the appropriate steps toward being well-positioned and so they want one website, but there's no way they can come up with say a paid digital campaign that could rightfully be used for both of those segments.
DAVID: So they might initiate a campaign and drive them back to a particular page on the website and so on. And then as the prospect starts to work upwards on that tree and see what this firm is about and then they see the other side of it and they're kind of confused. I want to assume that any prospect will have free rein over your whole website so I'm not going to have a marketing plan that drives them back to one place and not assume that they're probably going to explore the whole thing.
DAVID: There is a justification though, for having multiple basically avenues that you're pursuing. One of those legitimate reason to do it is because you're still exploring. You don't really know where you're going to land. And so you might do two or three of these. But in the back of your mind, you should assume that you are going to make a choice here and you're going to eliminate one of them or split it off to a sub-brand for yourself. It wouldn't have to be a new corporation but at least a sub-brand.
DAVID: So all of your exploration is designed to surface more information so that you can make that more final decision. If you're intending to be standing firmly on both sides of the fence forever, it's going to get really uncomfortable. Listen, most folks struggle to get one great marketing plan up and running. The notion of spinning two up all the time is ludicrous. So let's probably skip this if we're going to really do a good job.
BLAIR: Yeah, so you're saying if you've got your positioning thesis down to two different possibilities, the mistake is to try to combine those two possibilities, especially if they're not related at all. But you're also saying that it's okay to proceed with two different areas of specialization. And correct me if I'm wrong here, but where you're effectively doubling your marketing efforts. But you're kind of making the promise to yourself that you're going to validate one over the other. At some point you're going to put one aside and put all of your chips on one of those specialisms. Is that correct?
DAVID: Yeah, exactly. Yeah, it's pretty dangerous to date two different people or to have two different families. I think a lot of people have discovered that, right.
BLAIR: Secret families are a big topic of discussion in my house. I'm not sure why other than one day I realized that, “You know what, I bet you social media has killed the secret family.” The traveling salesman who had a family in another town … Should we even be going down this road?
DAVID: I have a client who had that, who discovered it, so that's why it's kind of fresh in my mind.
BLAIR: Before we leave this mistake number six of combining really odd things, have you ever seen attempts to combine two disparate categories or something and have the agency come up with a new category name. We work with X brands and it's a label you've never heard of and you go explain this to me. And they say, “Oh, well that allows us to put credit unions together with high-end luxury.”
DAVID: Yeah, I have seen it. And if the next question is have you seen it work, the answer is no on that front. But I can give you an example of that. So I was working with a firm and their biggest clients, one of them was an ISP another was a federal reserve bank and the other was a local utility. And so we were scratching our heads trying to figure out some circle we could draw that included all of those and we thought, “Oh, regulated industries.” So would it work to say that they focus on regulated industries, which of course would include then pharmaceuticals. It's one of those examples where intellectually it kind of sounds okay, but in the real world that's not how people self-identify. So it usually falls flat.
BLAIR: All right, we've got one more left on the list of seven common mistakes of positioning and it is land on a positioning that's not meaningful. Okay, seems self-explanatory. Do you want to unpack that a bit?
DAVID: So by not meaningful, it means that it doesn't resonate with prospects. And the easiest to think of this, when I was doing research for the most recent book, I landed on a typical spectrum. So as you're walking down this path and the light is red because there's still way too much opportunity, you're too interchangeable, at some point that light turns green. And when you cross that line there are about 200 competitors and you keep walking and when there are fewer than 10 the light turns red again. So there's a range that we're walking through. We want 10 to 200 competitors. We want 2,000 to 10,000 prospects.
DAVID: What if those don't align. And manufacturing is the best example of that. So market for manufacturing firms or dev work for manufacturing firms or whatever. Because there are hundreds of thousands of prospects, so you would think there's plenty of opportunity. And then you look at the number of competitors out there that are really thriving and serving that manufacturing space and there are not very many. Very, very few are really thriving there. So what's the message? The message is that that positioning, while it looks good on paper, intellectually it works, it's not a meaningful one.
DAVID: And we know it's not because these hundreds of thousands of manufacturers obviously don't care enough about working with the firm that specializes in that because most of them are using firms that don't specialize in it. That's an example of a positioning that's not meaningful. So it has to be tested in the market place. If you look in, there are many, many examples of this, and sometimes you can't discover it until you walk down this path and then you find out, “Oh, this is why there are only three of us out there.”
DAVID: So the difference between a positioning and a meaningful positioning is that the meaningful one is the positioning where people will in fact pay a price premium. So you want to be careful about this. Another way to look at it is could you market to this space? And if you can't, then it probably isn't meaningful either because apparently the shared problems of this market place aren't so great that people are dying to solve those problems, create conferences to bring them together, write blogs. So it's just a little distinction but it can make quite a difference.
BLAIR: I want to get your opinion on some specific kind of markets on whether or not you think they fit this category of they look like this land of opportunity because it's such a big market, but there's no real there there because saying that you market to this group isn't all that meaningful. So would you put marketing to women in that category?
DAVID: Yes, absolutely. There are more women buyers than there are male and very few firms that are effectively marketing to women. The answer then is that it's not a meaningful distinction. And anybody that's not selling something that's designed exclusively for males is going to have to figure out the female problem and so it's a difference without a distinction.
BLAIR: Okay, what about marketing to baby boomers?
DAVID: Same thing. It's too big a group, and they're too disparate. They don't share enough common characteristics.
BLAIR: What about other demographic groups like millennials?
DAVID: Same thing with millennials. Sometimes if you have racial focus, that can work, like marketing to Hispanics for instance. That definitely can work. Those are a little bit more shared, but the distinctions like just being a millennial doesn't really tell us anything except somebody's age. It doesn't tell us anything else about them. So it's sort of a meaningless distinction.
BLAIR: Okay, last one I want to test here is social causes. Marketing for social good.
DAVID: I think that can be valid. Yes. Unfortunately that particular one traces its roots back to some really shoddy research, we need to do another article on that one, another podcast episode on that one. But yes, on it's face it can be valuable for sure.
BLAIR: All right, we've been talking about seven common mistakes when it comes to positioning your firm. First is to democratize it and include too many in the decision-making. The second is to draw too big a circle around the successful work from the past and try to include that in the future direction or use it as a basis for the future direction. The third is to fall prey to selection bias and then extrapolate that to all perspective clients. The fourth is to include the implementation in the equation of your positioning rather than just the thinking or the strategy. The fifth is to overvalue variety. The sixth is to combine two or more really odd things together and put a new label on it and confuse a prospect about what it is you do or propose to do. And the seventh is to land on a positioning that looks really big, rich, and valuable, but just isn't meaningful to the client.
BLAIR: This has been really interesting, David. We've talked about positioning before. It's nice to put these seven mistakes together in one episode. What's your wager that we'll be speaking about positioning in the future?
DAVID: Probably the very next episode, right?
BLAIR: All right, this has been great. Thanks. We're looking forward to seeing you next week and then the vacation that follows. And hopefully we're still friends after that.
DAVID: Okay, thank you Blair.