Culture shock

L’Oreal, Mondelez and FGL sports are trying to infuse new thinking with a jolt of hands-on learning.

 

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This article appears in the June 2016 issue of strategy.

Change is hard.

Marketers who’ve had any experience trying to woo new customers to the fold, or convince die-hard fans of competitor brands to switch, know this.

If trying to persuade a person to change is hard, imagine what it’s like convincing an entire organization that it’s time to move in a different direction? For big organizations, cultural change is especially monumental. One 2008 study by IBM, which polled 1,500 execs from 15 countries, found 60% of “major” cultural shifts failed entirely. Another study from Gallup found more than 70% of organizational movements, like a culture change, fail.

And there really isn’t an easy answer when it comes to implementing these cultural shifts effectively. Do you try for slow, incremental tweaks? A huge disruption all at once? How do you fight entropy? Does change come from the top or the bottom?

Even marketing-driven organizations – companies often hailed as being on the leading, if not bleeding, edge of consumer demand – struggle. Only 5% of CMOs felt their companies were doing an “extremely good job” engaging consumers in mobile and digital channels, according to another recent global CMO survey by IBM. A third (32%) said they were doing a “moderately good” job, while 11% admitted they weren’t doing well at all – despite the fact that 56% believe great digital executions offer higher response and engagement rates.

And it’s not just succeeding with customers on digital that’s causing consternation. In a roundtable discussion last year with strategy, top marketers from across Canada lamented the difficulty in keeping bright young staff engaged. Companies aren’t competing against other CPG organizations for top talent, participants said: they’re up against the Googles, the Ubers, the Facebooks. It’s difficult to get top digital talent to stay if an organization is perceived as behind the times. So is getting a company to be ahead of the curve if the top talent won’t stick around. It’s a catch-22.

So what’s a wholly-entrenched-in-its-ways brand to do? How do big, robust organizations, like the multi-national CPG companies or national retailers get all their employees on the same page when it comes to thinking differently about the way business should be done?

It’s not easy, but increasingly big companies like FGL Sports, L’Oréal and Mondelez are looking at digital innovation – once a silo of marketing – to help influence the entire organization to think and do things differently.

For L’Oréal, a lot of positive press has been given to its recently unveiled Content Factory, the in-house content production studio in Montreal.

While still in its early days, the studio is maxed to capacity, with staff fully booked on projects and the model being copied by L’Oréal offices around the world.

vince racanelliIt also marked a shift in thinking for the brand, which was used to creating a handful of big campaigns every year through its agency partners. Now it’s creating more constant content through the studio, using the in-house team to populate social channels.

What’s more, the new approach at the studio is having a trickle-out effect on the way the company operates as a whole, says Stéphane Bérubé, CMO at L’Oréal Canada. It’s a clear sign of the transition he’s been working on.

Bérubé wants digital at the centre of everything the brand does. “The consumer is changing and if we want to ensure we stay customer-focused and relevant, we need to culturally change the way we approach everything,” he says.

“Digital is not a marketing, HR or sales responsibility. It’s the responsibility of the whole organization, because digital impacts all aspects of the corporation. It’s impacting the way we approach things from logistics, supply – everything.”

But it isn’t easy to transform a company’s culture.

Bérubé echoes many experts who say leadership needs to come from the top – the C-suite needs to be engaged in the process – but in reality, much of the changes happening at L’Oréal are a result of a ground-swell of new digital talent at the organization who are transforming the way it functions.

Which brings things back to the Content Factory, a microcosm of how the brand is embracing its digital future. Bérubé says the organization wouldn’t have been able to launch a studio two years ago. “If people aren’t educated on the importance of content, the way of distributing content, the different channels, the requirement of the channels – you won’t be successful.”

As such, the first step was to bring in community managers to handle the brand’s social channels and develop content expertise internally. It was their job to disseminate that expertise to the broader organization through what Bérubé calls “reverse mentoring.”

L’Oréal took a similar approach with its programmatic media-buying desk and e-commerce managers.

“You cannot go through a transformation like this through consultants. It can’t be outsourced,” he says. “You need talent in house.”

This wasn’t an overnight process. Getting the right team took years – and it was always a struggle to keep them engaged. (The top digital talent will often want to work for pure-play digital firms, he says.) To keep them on board, the organization encouraged thinking that took it further into the digital sphere, with innovations such as the digital series Canada’s Best Beauty Talent, and funky AR/Google Glass executions. “Digital experts can’t be on the sidelines anymore,” he says. “They need to be at the heart of everything we do.”

Through its digitally-led initiatives, like the Content Factory, staff are picking up new skills, such as learning how to quickly create and post content and how to look for different success metrics to help determine whether a post engaged properly. “The KPIs we’re looking for have changed,” he says.

Lights_official_FA_printWhile the organization used to rely heavily on sales, trial and awareness measurement, it’s now looking at engagement to sale (were people who engaged with brands online the ones who went to stores?) and share of heart.

And it’s working: the retention rate of digital employees is higher than the industry average, and L’Oréal’s fastest growing brands, including Nyx and Kiehl’s, have atypical, digitally-led marketing approaches. Nyx relies heavily on consumer-generated content: based solely on one UGC/influencer campaign, more than 1,000 people showed up at the grand opening for the Square One store in Mississauga, Bérubé says.

Going forward, he says the organization is planning to roll out a test, which he calls a digital GMAT, to gauge employees’ knowledge of all things digital. Training modules on topics like mobile and programmatic will also help bridge the knowledge gap, while third-party experts and pure-play digital firms have been invited in to teach. Everyone in the company is at a different level, so while the first task was getting top-talent in house, now the goal is to make sure everyone is on the same page, he says.

Recognizing that players come to the table with uneven skill sets was also a key component of Mondelez’s entrepreneur-focused training strategy.

Kristi Karens, North America lead of media and content, says Mondelez is the world’s largest start-up. The 2012 split from former parent company Kraft offered the CPG a unique opportunity, she says.

The core principle of the split was to allow each organization to focus on areas of strength and expertise: for Mondelez, that meant a focus on fast-moving product categories, such as snacks and confectionary. But, drilling down, Karens says it also meant the organization was able to build its focus on certain key skill sets internally.

“We’re in a new world today, and if you think about the kinds of people we need to hire and the skills we need to have, it’s different [from] marketing five or 10 years ago,” she says. “So that’s why we need new types of learning programs.”

Embracing the start-up identity, Mondelez launched a pilot called the Futures program across North America. It pairs marketers in house with start-ups as well as with a marketer from a partner retailer, and the goal is to create a unique execution in a short time frame. The latest iteration was the Shopper Futures program last September, which added shopper marketers into the mix.

The goal, Karens says, is to encourage staff to work outside their comfort zones and learn skills such as fast decision-making, collaboration, and even how to be fearless and embrace failure.

Each team has about three months to come up with a way of integrating the start-up’s technology into a marketing campaign for a specific retailer.

Like many other CPG companies, training had been handled “within the four walls of the building,” adds Corey Sherwood, senior associate manager of North American media and content development at Mondelez, who spearheaded the Shopper Futures program here in Canada.

“It’s important we bring the external world inside,” says Stephanie Minna Cass, corporate and government affairs lead at Mondelez Canada. “Big companies have a tendency to be very insular sometimes. Everyone comes to the table with a different level of understanding of digital and technology. Some retailers [we] worked with had no capacity to handle some of the digital executions we were looking to do. [So], everyone has to come with a level of patience and open-mindedness.”

Going outside the walls is having positive business results. While not all the pilots have been successful, Sherwood points to one program that paired Cadbury with Toronto-based Turnstyle and Mac’s convenience stores, leading to unexpected learnings.

Turnstyle provided the retailer with free WiFi at 20 locations. To encourage patrons to sign on, in-store signage called out the opportunity to log on to the free WiFi and get a prize based on how many times a person participated.

The biggest benefit was the data the brand and retailer were able to glean from the execution, Sherwood says, such as demographics, geo-locations, dwell time and prize redemption rate. Hypothetically, for example, the program could allow Cadbury to see that women were a big redeemer of the prize, despite the fact that the brand in question never really appealed to that demo before.

While he says that doesn’t mean the brand would throw its entire marketing plan out the window, the Shopper Futures program gives it an opportunity to do smaller, targeted test campaigns against different types of groups at a later date, which could ladder up to bigger brand shifts in the future.

More importantly, the program’s impact and learnings are disseminated throughout Mondelez.

In all, 10 Shopper Futures or Mobile Futures programs have been hosted, Sherwood says. That means only a handful of Mondelez’s marketers have participated in the hands-on experience. There are formal learning sessions where participants share the knowledge they’ve gleaned through traditional case studies, but Sherwood says the greater effect is through employees’ informal sharing sessions.

“[This program] creates a fearlessness in terms of leaning in to new opportunities that might have made people feel uncomfortable in the past,” Karens says. “[Employees are also] seeing a broader external mindset, asking different questions during the briefing process. It’s changed the ability of marketers to work internally, [which in turn helps them] collaborate better with external companies.”

Yoga WallCollaboration is also a key theme over at Canadian Tire subsidiary FGL Sports. But that wasn’t always the case. When Frederick Lecoq joined the brand four years ago, he says it was like preaching to a digital desert.

The SVP marketing and ecommerce at the Canadian retailer says the team was on “flyer crack,” addicted to the weekly newspaper inserts despite the fact that its core target of young adults simply wasn’t reading them. All the departments were siloed, and the concept of creating quick-hit content that only lived on digital channels was completely foreign.

What’s worse, many departments were stuck in their ways and didn’t want to change, he says.

This was a problem, considering the retailer was facing online competitors. So it set out to create an in-store and online digitization strategy.

The goal for the company was simple: bridge the digital and linear worlds with the roll-out of a teched-out Sport Chek.

But the simple goals, like making the entire in-store inventory available online, were met with resistance from different departments (in-store purchasing, for example, believed that if the entire product catalogue were made available online, it would compete with in-store traffic).

For Lecoq, it became clear the culture of the company needed to be tweaked.

First, he says, they tried to put the consumer at the heart of the entire digital journey: FGL brought in its insights and analytics partner Sklar Wilton and Associates to educate employees on how and why consumer behaviour was changing.

This kicked off the digital academy, in which all departments – not just marketing – were indoctrinated in the ways of digital. Marketers led much of the training, but Lecoq says he refused to assign ownership out of fear that it would become a siloed structure. Instead, while marketers helped educate other staff across the company, third-party representatives, such as Facebook and Google, were invited in to “evangelize” their platforms to the whole organization.

On the flip side, marketers also learned plenty: “When you throw several hundred screens in store, digital content production changes,” he says. “You stop thinking about creative-driven TV campaigns [from agencies], to simply keeping up with demand.”

This forced marketers to explore new forms of content creation for all its outlets. Suddenly, different departments, from marketing to operations to HR, got involved. Content came from all walks, including store employees and directly from the manufacturers Sport Chek carried. “That’s why we call it a content factory – not a studio,” LeCoq says.

It was a minor mindset shift: the department has to pump out lots of content, but it can’t afford to create everything in-house. “[Staff needed to] recognize that some of the content will come from external sources.” That being said, approximately 95% of the content is still created internally.

“Once you raise awareness about the need [to put digital at the heart of everything], people start to panic,” he says. “They think, ‘This is what we need, but I’m just not ready for it.’” So, much like L’Oréal’s strategy, in-house experts were tasked with training other employees in their fields. It was supported by formal training modules on areas such as e-commerce, mobile and search. (Voice search and new mobile topics will also be introduced, Lecoq says.)

The digital transformation has been a success, he says, with the retailer experiencing three consecutive years’ sales growth. The hive-like structure has helped the organization shift from the house of sporting goods in Canada, to the home of sports, he adds.

And while none of these changes has been easy, everyone agrees they’ve been necessary.

“We’re not digital organizations or marketing organizations anymore,” says L’Oréal’s Bérubé. “We’re doing marketing in the digital age. The lines are blurring, and education is key.”

Agencies can learn, too

Icon Shirt HiresBrands aren’t the only organizations struggling with change. Agencies are also finding new ways of bringing different skills in house.

“I think we’re at the precipice of the most dramatic shift in advertising – ever,” says Matt Litzinger, president and CCO of Toronto-based Red Lion. Some of the fastest growing, most innovative companies in the world don’t even advertise, he says. “We’re in a world where you don’t fill space, you make stuff. People talk and share and push out your stuff.”

So Red Lion is now focused on hiring the next generation of thinkers: those who are interested in making things.

This fits nicely with its strategy to partner with Toronto-based retailer the Drake General Store (a mecca of hipster cool), as well as a yet-to-be-named clothing retailer. Rather than take on a traditional AOR status, the agency partnered with the brands to manufacture goods, such as T-shirts, to be sold at retail.

“Working on manufacturing helps grow people’s [skill sets] immensely,” he says. “A lot of times in the old format [of advertising], we were not emotionally invested in the product we’re trying to sell. We get emotionally invested in the message – it’s part of the creative process. But not in the end product.”

To that end, having his staff (which features everyone from folks in traditional agency backgrounds to industrial designers) involved in the creation process gives them a deeper sense of what clients go through when creating products. “Even if these people working at Red Lion move onto other agencies or disciplines, they will have an innate understanding of what went into the product they’re trying to sell,” he says.