October 23, 2014

How social media muteness endangers your company: The crisis at McKinsey

McKinsey recently learned a difficult lesson about what happens when the world takes your thought leadership marketing seriously—and when you lack the ability to respond in the moment through social media.

The trouble started when the McKinsey Quarterly published an article in early June entitled How US health care reform will affect employee benefits,  based on a survey the firm did about what will happen to employer-sponsored health care insurance coverage when the President’s health care law goes into effect in 2014.

A textbook example of pragmatic thought leadership
The article itself is one of the best examples of thought leadership I have ever read. It is bold, clear, authoritative, and based on solid research. It is a textbook example of what we at ITSMA call pragmatic thought leadership: it takes a current issue of concern to the company’s target audience and evaluates what may happen in the near term without any mention of company methodologies or offerings. The piece settles right into the Florsheims of the average HR manager and paints a picture of what might happen to their benefits programs when the law takes effect.

That picture is stark and scary.

The survey predicts that 30% of employers will drop health care coverage for employees altogether, throwing them into the government-mandated health insurance pool of individuals without company coverage. Among employers with the higher level of knowledge about the law, the percentage that would drop coverage rises to 50%.

Such a bold and relevant piece of thought leadership was bound to capture mainstream media interest, and this one certainly did—another coup in McKinsey’s long string of thought leadership marketing successes.

The chattering classes intrude
However, something as politically charged as the healthcare debate is not the normal territory of buttoned-down consulting firms like McKinsey. It was like letting a dumb teenager into one of McKinsey’s glass conference rooms with a stack of fireworks and handing him a match. Something important was bound to get damaged.

And so it did.

Republicans cited the article chapter and verse, because it lent some credence to the idea that the world would fall into communistic chaos as soon as the evils of Obamacare were unleashed. Meanwhile, the White House attacked McKinsey’s survey as an “outlier,” saying that other studies from Rand, the Urban Institute, and Mercer all showed that the law would have little impact on the number of companies with coverage.

Journalists look for trouble and McKinsey stonewalls
The political stir encouraged journalists and bloggers to try digging deeper into the story and that’s when McKinsey got into trouble. When a blogger for Time asked for more details on the survey methodology, she says McKinsey stonewalled. That information vacuum led some bloggers to fill it with questions about the quality of McKinsey’s research and its motives. The biggest credibility blow was struck by a blogger at the New Republic, who pointed out that unlike reports from the firm’s own “semi-autonomous think tank” the McKinsey Global Institute, the healthcare survey did not undergo a formal peer review process. Ouch.

Too late, transparency—and defensiveness
Of course, you know what happened next. On June 20, long after the bloggers had already moved on, McKinsey finally made the survey and its methodology transparent and issued a cranky and defensive statement about the survey that helped things not at all. Here’s why: One of the most compelling things about the article is its boldness. In one passage, the authors take on all those who think healthcare reform will be an easy ride, including none other than the Congressional Budget Office Itself:

“The Congressional Budget Office has estimated that only about 7 percent of employees currently covered by employer-sponsored insurance (ESI) will have to switch to subsidized-exchange policies in 2014. However, our early-2011 survey of more than 1,300 employers across industries, geographies, and employer sizes, as well as other proprietary research, found that reform will provoke a much greater response.”

Wow. That’s pretty unequivocal. Hey CBO, you’re wrong!

All of which makes McKinsey’s too-late response to the criticism all the more mealy mouthed. Check this out:

“Comparing the McKinsey survey to economic estimates, such as the CBO’s, is comparing apples to oranges. While the McKinsey Quarterly article about the survey cited CBO estimates, any comparison is not apt. We understand how the language in the article could lead the reader to think the research was a prediction, but it is not.”

Oh, I get it. We readers are just too stupid to know a prediction when we see one. That wasn’t a prediction, it just looked like one to the uneducated. Maybe if we had all gone to the upper two percent of business grad schools like the folks at McKinsey we would have known better. That’s the height of arrogance.

Companies without a human face will suffer
But hey, I’m not here to say yet again that companies should be transparent in a crisis and respond quickly and in a non-defensive manner to criticism rather than letting it fester. You’ve heard all that before.

I’d like to posit another important piece missing from the McKinsey picture: people.

Despite its prowess in thought leadership—McKinsey is simply the best—the firm is falling dangerously behind in social media. This crisis unfolded online and in social media. All the company needed was to get some of its well-spoken hot shots out there blogging to clarify thinking behind the survey and things would have gone a lot better. Companies that lack a human face and hide behind their brands—no matter how good those brands are—will suffer in the era of social media. That static, institutional explanation of the healthcare survey on McKinsey’s website is like a billboard flashing “We don’t get social media!”

It’s ironic, but there is a person who could have responded to this controversy in a very interesting way. It turns out that a McKinsey internal expert on the healthcare industry, Bowen Garrett, was one of the authors of the Urban Institute paper that claims that healthcare reform will not cause a big disruption in employer insurance. Gee, how about a quick blog interview with Garrett, or a video, or podcast? But McKinsey doesn’t do blogs or anything else timely on its website. It’s a slave to that big (admittedly wonderful) publishing machine called the McKinsey Quarterly.

There are many things that social media can’t do, but one thing they can do is give you the opportunity to turn on a dime and inject thought leadership into the conversation when it is most needed. Companies that can’t do it will suffer the consequences.

What do you think?

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6 lessons on how NOT to market to customers

Here’s the kind of pressure that social media puts on us: After not posting anything to my blog in nearly six weeks, I feel compelled to offer an explanation. Isn’t that sad?

Hey, but that’s how it is. Social media are like a school of sharks; keep moving forward or sink lifelessly to the bottom.

Well, I have an explanation, or an excuse, and a damned good one at that. I broke my hip about four weeks ago (my bike slid from underneath me on a rainy morning on my way to work). More specifically, I broke my femur at the hip, which left me with a decision to make: pin together a 51-year-old femur (with its attendant wear and tear) or lop it off at the top and get a brand new, shiny fake hip. Since I can’t resist that new hip smell, I opted for the stainless upgrade.

Now, don’t think I’m looking for an outpouring of sympathy. I’m telling you this because:

  1. I don’t want to lose any more credibility and subscribers than I already have during this lull in activity (as any social media “expert” will tell you, six weeks may as well be six years—unforgivable, unimaginable, and definitely under caffeinated. As one “expert,” (who showed no evidence of ever having blogged herself) once sneered to me, blogging is as easy as “doing email.” Oh, I guess that’s why my inbox is so crammed all the time.)
  2. During my time on serious, hard drugs (narcotics, shh!) I realized that I really have become one of you marketing types. Any time anyone delivers a service to me now, I immediately start thinking about how the service is “being positioned,” and whether the “value proposition makes sense.” I’m a goner. A marketing geek. (I thought drugs were supposed to prevent that sort of thing.)

All of which is a lead-in to this week’s entry, which is what we as B2B marketers can learn from health-care marketing.

The answer is: nothing.

Healthcare marketing is awful, practically non-existent. Sure, healthcare knows how to sell drugs, but in terms of preparing the customer for the experience of service delivery, fuggedaboudit. Here are some examples:

  • Educate the customer—or don’t. Many of us in B2B can be proud of how we educate our customers and prospects on the business issues they face—from current regulatory changes to future “sea changes.” We help ease them into the idea that they need our services and solutions to solve these problems so that the experience of spending all that money feels a little less like stepping off a cliff. Here’s how a doctor introduced himself to me in the emergency room: “Hi, I’m Doctor X. We’ve looked at your x-rays and you’ve broken your hip. You’re going to be going to surgery. Somebody will be in to talk to you about it.” And then he excused himself and left the room and I never saw him again. I wanted to get right up and walk out of there. Oh wait, right…
  • Whatever you do, don’t let the customer meet the people who will actually be doing the work. Unfortunately, this one does often ring true in B2B, at least in my experience in consulting. Send your top dog, most empathetic, articulate, industry-savvy, alpha salesperson in to market the service, and then show up to do the work with the freshly-minted biz school grads and the interns.
    In the trauma ward of the hospital, perversely enough, it’s the opposite. Twenty-something interns come in and tell you how awesome the trauma surgeon is and how awesome your experience is going to be. Then the interns show up again together later on in a big group trailing behind an older, more confident surgeon (surgeons seem to have no shortage of confidence and gain more as they age), making it clear that the interns are still being educated by this person and/or institution, thereby calling into question any of their assessments of the awesomeness of the surgeon. But this guy still isn’t the surgeon. He’s a colleague. Then, as you are lying on a bed outside the O.R. waiting to be worked on, you meet the doctor who will be doing the work. (Thank goodness for Google—the day prior I found that he got five-stars on a health review site! Operated on a New England Patriot!)
  • Delight the customer with an upgrade—for awhile. In both B2B and B2C, we’re getting better about throwing unhappy customers a bone. A discount here, an upgrade there. The short-term costs are marginal compared with the longer-term goodwill they buy. When I finally made it out of the ER and was given my hospital room, I couldn’t believe my eyes. It was a huge room and I had it all to myself, in a newly constructed wing of the hospital. And the nurses were unbelievably attentive. One of them finally acknowledged that I was in the intensive care unit for heart patients (there wasn’t room for me in orthopedics) and that she was “used to giving constant attention to people with zippers in their chests.” Caring for me was “like a vacation,” one of them said. I was in heaven. All the ginger ale I could drink and nurses compulsively asking me what I needed or wanted whenever I opened my eyes.
    Then, the day after surgery, the nurse informed me that I was being moved to be “with my own kind” over in orthopedics. Now, the only time I got ginger ale was when it was delivered on a tray with green Jell-o and chicken broth at mealtimes. But the reduced attention did come with a benefit—I got a little “drug remote” with a red button I could push to administer my own morphine. Later that day, they took away the remote and gave me a roommate.
    Could you imagine after clawing your way to the suite upgrade at a hotel having the desk clerk say, “We’ve found a room like the one you were originally supposed to get—with cleaner carpets this time—and we’ve taken the liberty of moving all your stuff from the suite into that room. Enjoy the rest of your stay.”
  • Segment your audience. In B2B we pride ourselves on knowing our audience. We have marketing designed for the C-level executive, the buyer, the influencer, and the front-line types. Meanwhile, 51 is pretty young for hip replacement. I’ll probably need to have it done again if I hit the average life expectancy of an American white male and manage to hang onto some form of health insurance. Most people who have hip replacements are older. That must be why the exercise sheet they gave me pictured a balding man with white hair and extra lines drawn in his face, a floppy tank-top t-shirt covering a paunch, and spindle appendages meant to approximate arms and legs, wheezing his way through leg lifts. Motivational.
  • Market your strengths. The highest production-value material I received upon discharge was a two-color, 24-page glossy magazine entitled “A Guide to Taking Warfarin.” (They put me on blood thinners for a few weeks after surgery.) The guide to what I should do after having a hip replacement (including exercises) was five Xeroxed pages stapled together.
  • Above all, empathize with the customer. I think we do this pretty well in B2B. We hire marketers and salespeople with direct experience in the customer’s industry so that they can talk to and sympathize with the customer’s pain points. During one of my two two-minute conferences with the doctor in charge of the orthopedics wing (not my surgeon), I made the mistake of asking what sort of pain killers I could expect to receive upon release. He interrupted me with, “No one said hip replacements aren’t supposed to hurt.” Thanks, Doc.

Of course, I can’t complain. I have health insurance, I’m walking again, I’ll be able to ride a bike again, and the accident could have been a lot worse than it was. But healthcare sure could use some help on the marketing front. Anybody got any ideas?

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