SPEAKER: The next the speaker
is our rebel with a cause.
James is -- it's going
to be James Murdoch.
His family and I are neighbors.
James was just telling me that
he's now carrying a Pommie
and a U.S. passport.
They'll be a lot of questions
on identity and all that
kind of stuff later.
But his family are
from Godzone, right?
From Australia.
Which seem to be the
World Cup winners in
everything they touch.
Which is extremely irritating
if you live in New Zealand.
Americans find it very
difficult to tell
New Zealanders and
Australians apart.
OK?
The fundamental difference
between the two nations is
that New Zealanders chose
to live in New Zealand.
[APPLAUSE AND LAUGHTER]
So James is Chairman and
CEO of Star Group limited.
He's on the board of trustees
at the National Lampoon
which is in Harvard.
He's the leadership council
at the climate group.
He's a crack cartoonists.
He's an entrepreneur, a
visionary and a risk taker.
James Murdoch.
JAMES MURDOCH: Hi.
Thanks very much Kevin.
And thank you, thank you
everyone for having me here.
I should say thank you
particularly [? Nicash ?]
for inviting me.
Kevin's asked us to talk
about a very big subject.
When we get into things like
branding today and tomorrow,
and it's very tempting to spout
lots and lots of marketing
gobbledygook and
platitudes about that.
You could go on for
a long, long time.
I'll try not to and just
be brief, if I can.
Because I think it's important
to really think about how
brands and customers are really
engaging with each other and
what Kevin talked
about earlier.
That movement from one
to many to many to one.
And many to many in most
cases is something that
is genuinely fascinating.
Particularly for us at
Sky, here in the U.K.
because we're both a national
brand that is really adapting
very, very quickly into new
sectors, from the television
sector and to broadband and
telecom services and
things like that.
But we're also a seller of
advertising as well, and a
seller of marketing services.
Being on both sides of that
question is something that
presents some unique
opportunities for us.
I think we all know in this
room that mass broadband
penetration, which we're seeing
happen globally, and really the
new consumer phenomena that it
spawns, and we've heard this
morning already and I'm sure a
lot more over the next few
days, about web 2.0
social networking, file
sharing, et cetera.
It's creating really a huge
host of new opportunities for
brands to engage with
customers, and I think very
importantly, for customers to
engage with brands and that's
something that I think
is most exciting.
It seems obvious to say that
the winners are going to be
brands that can actually
really embrace this.
But embracing it is
not without risk.
I think the key thing is that
the pace of change in all of
this is accelerating, and
constant re-evaluation and
really reinventing of how we
talk to customers, and listen
to customers is really a task
now for every single
day of the business.
That constant
appetite for change.
And really waking up in the
morning and say today we're
going to eat change for
breakfast, and we're going to
go and do it just for the
sake of it sometimes.
Staying behind or staying back,
defending your territory,
trying to erect barriers to
entry in your business.
Those things I think are places
that really can end in tears.
So change is something that's
become really crucial for
us at Sky, and how we
approach everything we do.
We do talk a lot, and we can
all talk a lot, about
important new fads, whatever
the newest thing is.
We saw people get very, very
excited and still very
excited as Kevin said,
viral videos out there.
When you have Nokia putting an
ad, I think it was Nokia, where
the cat was going
around the fan.
I should have had a video of it
this morning, and then leapt on
to a fan and crashed into
a wall and this and that.
It went out to the millions
and millions of people.
Or that anti-drug message
that Kevin said.
We also hear a lot,
particularly here in
the U.K., I don't know
why, about podcasting.
That seems to be something that
all the guardianistas out there
are very, very excited about.
But I think it's not about each
individual new piece, or each
individual new method or tool
that we see the connected
marketplace give a brand, or
give a media owner as well.
It's really much more about
making the whole come together.
And I think from a customer
perspective but also from
a brand perspective.
That's very, very rare that we
see brands and customers really
engaged across the piece of
media consumption, but also
media buying by advertisers
seeking those customers custom.
Now I think it's important to
say that traditionally, and I
say traditionally over the last
ten years, and I think still in
many cases Sir Martin was
talking about creating a set of
separate vertical, we do tend
to think of internet
advertising or internet brand
building as very much a
separate piece of
our businesses.
And we tend to set them aside.
But I think one of the most
interesting things Sir Martin
said was actually the growth in
his PR over the last couple of
years, because the way I see it
anyway, at Sky is very much
that communications from a
traditional advertising
perspective, from a core brand
values perspective, from a
public relations and
communications perspective is
all something that actually
fits together, and
needs to fit together.
So whether or not it's engaging
with the traditional press that
writes about an industry
or writes about your
products for customers.
To engaging with the web
forums that are out
there, blogs et cetera.
Customers coming together to
talk about your products
and yourself, to where you
place your advertising.
If we're buying air time on
ITV or outdoor advertising,
or in the press.
Putting all of those actually
together from a buying and a
communicating perspective on
our side at Sky, has actually
been one of the key things
that we've done over
the last few years.
Actually collapsing that
together to really try to have
one message to customers.
Because if you don't do that
I think it can really ignore
what the real opportunity is.
And I think it's about the
connectedness, and
understanding the
connectedness of all media.
Now it's driven by the
proliferation of networks that
we see all around us, in our
pockets, in our mobile phones
and Blackberries, in our
offices, in our homes be it in
our studies or if the
kids have a computer.
It's driven by that.
But it's also driven by the
fact that that ubiquitous
connectivity of people really
leads more things for the first
time into the orbit of media
then we've seen before.
More things are tools for
communication then really we've
ever experienced before.
And that multiplicity,
that multiplication
kind of keeps going.
Now of course it's not just
advertisers that have to change
the way they think or that are
now changing the way they're
thinking about this.
Television networks, newspaper
publishers, book publishers,
movie studios, we all have
heard a lot and read a
lot about old media
versus new media.
But I'd also argue that
internet companies, the new
media of barely a decade ago,
are also really struggling to
figure out how it all fits
together into a marketplace of
ideas and of communication.
That frankly feels a lot more
complicated than it did
just a few decades ago.
The connected marketplace, and
this is the important thing, is
really a collective
of disobedience.
It's self-determining by
customers that quote by A.G.
Lafley that Kevin had up
before about letting go and
understanding who's the boss.
This community of connectivity
is self-determining and it is
evolving very, very rapidly.
And I think for brands, great
brands if you want to use
Kevin's terminology,
love marks.
They really need to understand
this, and this bond that needs
to be built with communities of
customers and importantly
communities of future customers
in a much, much more deeper
and multifaceted way.
Most of you at Sky, most of you
out there, sorry, who think
about Sky, if you think about
us at all, which I wouldn't
suggest you should, might think
of us as a satellite
TV broadcaster.
18 years ago that's
where we started.
More recently we became
a phone company.
As I joked to [? Nacash ?]
earlier, I never thought we
would be in the business.
We always thought we would be
in the business of making great
television shows, an exciting
things and it was always
glitz and glamour
and stuff like that.
Now we've got people in hard
hats digging up roads and
talking about fiber armored
cable and things like that.
It's a lot more mundane.
But it's an interesting way to
think about our business, in
that traditionally all of our
commentators out there have
thought about us as a very
product-centric way.
They've said, you're a
television business.
Not just you're television
business or kind of as your
satellite television business.
You do it one way and that's
how we'll characterize you.
And they had whole different
people the would follow the
cable business, or the phone
business, or the production
business and all of
these other things.
Our view, actually, is that
this new business that we're
in, if we're in broadband or
telephony or other sorts of
things out there, is really not
to say that we're now
multi-product, but it speaks to
the fact that our most valuable
asset was never the particular
cleverness or lack of it of a
way that we broadcast
television, or a way that we
provide voice services.
It's actually the simple fact
of a direct and ongoing
relationship that we have with
8.5 million customers,
families across the United
Kingdom and Ireland.
That's one in three households
in the whole place.
Our ambition is really to try
to make a real difference to
those customers and their
families by providing yes world
class entertainment services,
which helps us in terms of
providing advertising services
and things like that.
But also communications
services, and giving them a
choice, and greater choices,
about how they communicate with
each other not just with the
world of information
and content.
Our brand is absolutely
central to how we do this.
It's obviously this glue that
binds together a lot of
these things that we do.
But a customer centric brand
led approach, which may seem
really obvious to those of you
in the audience working and in
the FMCG sector, or
retail businesses.
Or, in many cases, advertising.
But it's really surprising
how alien it has been in
the media marketplace.
And how alien it has been
in the content business,
particularly in television
broadcasting here
in this country.
Where too much attention has
been focused on satisfying the
demands of politicians, of
regulators, of constituencies
outside the most important
constituency, which ends
up being our viewers
and our customers.
One fundamental insight
underpinned the launch of
Sky 18 years ago in 1989.
That was simply that
British television viewers
deserved more choice
and better television.
And that they were
willing to pay for it.
If you gave them something
better and you gave them
choice, they would be
willing to pay for it.
David talked before about
empowering customers.
That "I can" generation.
It was a great speech.
I agree with many of those
sentiments David, but it's just
a shame that it's 2007 and
we're getting there now to say
people, maybe they want choice
and they want to be empowered
and do their own thing.
This is something that
absolutely every time you go to
a customer and you say, would
you rather choose for yourself?
Would you rather be empowered
to make choices between
services out there, be it
consumer services, media
services, government services,
they generally say, Yes, I
would like to make that choice.
I believe in myself
to make that choice.
In television broadcasting
that flew in the face of
conventional wisdom
at the time.
To say that people would want
to choose, that they could
benefit from having more choice
and information was something
that was really not something
that people wanted to believe.
But it's been central to
our business ever since.
As we've grown, and we've
expanded into new areas,
including broadband and
telephones and things like
that, consumer choice and
empowerment have had to remain,
and must remain really, the
guiding principles of all the
things we do in establishing
that brand connection, that
basic mission with
our customers.
And that community of customers
is then what gives us
license to go and offer
those new things.
that's?
Why we have things like
Sky plus, our personal
video recorder.
Why we have Sky
broadband and Sky talk.
Why we allow customers to take
all of the movies that they buy
from us on the television
service and download them over
the internet onto their laptop.
That would have been anathema
to a business like ours
just a few years ago.
None of these things are
without risk to our previous
business model if you will.
In fact, they all
represent risk.
Be it Sky plus, to our
advertising business.
As I said the movies broadband
to our core movies service
and the basic copyright
issues that are there.
But this is important.
Consistency for a brand today
is not the same as consistency
for a business model.
And consistency for a brand is
about understanding the core
mission, and the core values
and the basic bond that we have
with that community of
customers that we
have out there.
And moving through that even
if, and in some cases
especially if, it presents
risks to the rest of the
business model around it.
These brands and these
principles really embody what
we stand for as a business.
And they stand for more than
just the characteristics
of our services.
Our commitment to helping
customers, for example, tackle
climate change, which we try to
talk to customers about a lot.
Or if we work with local school
to encourage participation in
sport, which we do it over
500 schools now in the U.K.
They're just as much a part of
the Sky brand as innovative
technology, or high quality
television programming, sports
coverage, things like that.
Our business in the marketplace
we operate in has changed a lot
over the last 18 years
since we launched.
But there is this one thing
that remains constant about
connecting customers,
giving them choice.
It's important today to
consistently ask ourselves,
particularly in this connected
marketplace, to really, and I
think all of us need to ask
ourselves this every day,
really, truthfully, how close
are we to our customers?
I think it's important to not
confuse knowledge about our
customers, perceive knowledge
with real understanding.
We spend millions of pounds
a year on market research.
We built a comprehensive
database of pretty much
every household in the U.K.
Which is terribly interesting
how easy that is
to do nowadays.
But it's a big one.
We understand a lot of data
about our customers, and
our future customers.
We have tons of it.
But it doesn't equal insight.
Real understanding really comes
only through dialogue, I think.
By listening to and talking
to individual customers.
Our contact centers in
Scotland, we have a bunch of
contact centers up there,
they handle almost a
million telephone calls a
week from customers.
And we have a team of field
engineers that make over 3
million households visits
and go directly to talk
to customers over 3
million times a year.
It's a lot of interaction
with customers, and a huge
opportunity to engange with
them actually face to face.
But until very recently it was
a source of customer insight
that we essentially ignored.
We amassed a lot of statistics
about what people were calling
about, what the reason code,
so to speak, they were.
And they were filed on
big sheets of paper.
And we amassed lots of
statistics, important
performance indicators, about
how fast we can answer the
telephone, for example.
22 seconds, on average.
Which is very important.
It's one of the most
basic things you can do.
We talk a lot about
understanding customers.
They really want, just answer
the phone when I call.
The basics are crucial.
However, we never once
asked our frontline staff.
These thousands of people who
talk to our customers every
single day about the
conversations they were having,
about our products and
services, about what customers
were telling them, about how we
could make it easier
for them to sell.
But I'll give you an example
since we started doing that.
A key input, we just recently
organized our movies channels.
We had a big bunch of
movie channels, we had
nine movie channels.
And they were called Sky Movies
1, Sky Movies 2, Sky Movies 3,
Sky Movies 4, Sky Movies 5.
It was this big thing, and
we thought it was great.
We had all the
movies and whatnot.
And it wasn't working, We were
actually seeing a gradual
decline, in terms of percentage
of our customer base,
of the movie channels.
And we said why is this?
We blamed technology.
We said, it must
be about DVD's.
must be about people
downloading stuff.
It must be about the Free to
Air broadcasters, most of them
state owned, bidding up the
cost of Hollywood rights.
And we said, it was
really just terrible.
But we went and asked our
customer advisors and we just
said, what do you think?
And they said, well what
you should really do is
organize them by what
type of movie they are.
And then we can
sell them better.
So we want a Sky Movies channel
that's about sci-fi movies.
And we want a Sky Movie channel
that has the big blockbusters.
And we want modern classics.
And we want all these things.
We put together a series a
focus groups essentially with
these customer advisors.
And actually they designed the
products for us, directly
from input with customers.
And now we will
see how it goes.
We've just relaunched all the
products, the Sky movies
product over the last month.
But it's a crucial new way
for us to do business.
To directly listen to our
customers and feed it into the
product pipeline literally
within weeks of getting
the information.
And saying, let's try this out.
And that constant speed of
getting customer feedback right
into the product is something
that's new for us, and I think
new for a lot of so called
traditional businesses
to be able to do that.
It's more than ever though, I
think, important to realize
that it's not just about
talking on the telephone
with customers.
There's so many new ways with
technology to get much,
much closer to customers.
And to really change the
way we have this dialog.
I think the opportunities to
get closer are actually
expanding in very, very
rapid and interesting ways.
The volume of conversations,
for example, about a company
like Sky in internet chat
rooms, on forums, et
cetera is something that
surprised me frankly.
Because I don't think it's
that interesting what we do.
But there's these people
and they're customers and
they talk all the time
about our services.
Our customers and our
perspective customers and in
some cases are employees also
participate in all of these
forums and they talk about what
we're doing well, what they're
experience with the business
is, what it's like to
work at this business.
It's interesting.
When we look at these blogs,
it's very important to be seen
as a good place to work.
Customers care about that a lot
more than you would think,
in terms of our reputation.
It's not just about being able
to recruit good people, it's
just about recruiting
customers as well.
It's very unmediated,
it's raw, sometimes it's
inaccurate and unfair.
But it's also a
huge opportunity.
And it was unimagined, again
a decade ago, to be able to
listen to our customers, and
engage with the people who
actually pay our bills.
It's changing the way we do
business in a lot of ways that
are not easy to predict.
For years we used something
in the business we
called software offers.
Where a customer call up to
cancel a subscription and
they would say can you
just give me a deal?
Or I want to leave for
whatever reason et cetera
and we would say fine.
We used to call this
covert marketing.
Right?
And you would say, fine
I'll give you half
price on Sky sports.
I'll give you half price on
this other product, et cetera.
The problem is, we didn't
realize fast enough, that
you can't do anything
covertly anymore.
When you have millions of
customers, and many thousands
of them are talking online to
each other about what's going
on, there's no discrete
offer in the marketplace.
You can't put up deal in
Redding and expected people in
Glasgow not to hear about it
and say, why am I
not getting that?
I'm a good customer, I've been
paying you for 10 years, why
can't I have that, et cetera.
So we had to completely
change the way we did this.
We had customers now
teaching each other how
to game the system.
We had whole websites springing
up saying if you call at this
time on this day and you say it
like this don't let them turn
you down once, don't let them
turn you down twice, they'll
give you a deal like
this over here.
And it was this
discussion around that.
The number of people on
discounts rose very, very
sharply with these hard core
serial offer riders in
their teaching everyone
else how to do it.
But much more damaging, there
was a growing sense of
resentment amongst loyal
customers, and these people are
online, they're real advocates,
real amplifiers for the
brand, who felt like we were
being taken for granted.
It was a big decision
to stop doing that.
We just stopped.
We said we're just
going to cut it out.
And we went on all the forums
and engaged with all of these
customers out there, and
said no more offers.
We're just going to reward good
behavior from customers now.
And the response was immediate.
The gratitude from customers,
the gratitude from loyal
customers that suddenly a lot
of these other customers who
had been bluffing us saying,
OK, fine I'll pay, et cetera.
It was very, very interesting.
So listening to our customers,
though, is crucial in this.
Both in old ways, talking to
them on the telephone, and in
new ways, engaging with them in
this connected marketplace as
actively as we possibly can.
I would just say that I think
that every brand owner today
yes, has an internet strategy,
and yes, does all these things.
But it's more than just about
tweaking the mix between buying
online versus buying elsewhere.
It's really about mixing the
old and the new, so to speak.
Putting those things together
so a continuum of communication
can really exist there.
It's only the tip
of the ice berg.
I'll just finish with this one
point, because as the virtual
worlds and the real worlds,
this connected world out there
and the real world of our going
down to the corner shop, they
are intermingling and
overlapping in very
surprising ways.
We really only have
to look east.
Martin talked a lot about
looking east to China and
Korea, and places like that.
But we can see now the early
implications, very clearly in a
society in terms of how
customers behave, how they talk
to each other, of the overlap
of social networking, of always
on a personal connectivity out
there, persistent
universe gaming.
These frictionless communities
starting to really,
really take root.
These trends are emerging now
as a mainstream activity for
generations of customers.
And that really has to change
the way all of our brands
interact with them, and
allow them to interact us.
I'd urge you, when you think
about this, not to think of
us at Sky as a deliverer of
audiences in a traditional
television business, but
increasingly as really a
gateway and a communication
conduit with 8.5 million
British and Irish families.
Because that's the way we think
of ourselves and how we sell
our own products and services.
I would say that the proof
point of it, in terms of
pulling these things together,
and I think it's important as a
supposedly maturing business,
almost twenty years in, today
as a business we're growing and
adding customers faster than
we have for the last
six or seven years.
And I have to say I think it's
because we simply are able
today, with all of these new
things, to listen better
to our customers.
I'll leave you with that and
then I'm sure I'll get a
grilling in a few minutes.
Thank you.
[APPLAUSE]
SPEAKER: Thanks
very much, James.
Listening to the homily
to the customer there.
If you think about this whole
research game, the journey of
research, it starts with
information, you track through
knowledge, you go into insight,
and the end game is foresight.
OK.
We are mired in information
and knowledge.
They've become
commodities, right?
Everybody now has the
same information, we're
drowning in the stuff.
We are old knowledge
workers now.
All of us are knowledge
workers, whether you're in
India, Bangladesh, or even
Australia -- well
that's a stretch.
But Yorkshire maybe, no,
that's another stretch.
But most of us are
knowledge workers.
That's not where competitive
advantage is to be
gained, in my view.
The gain is insight.
You heard James talk
about insight.
Most insights we see from
clients have one thing in
common, an absolute
lack of insight.
They're an agglomeration
of facts.
They're just a summary written
by the market research
department designed in any way
to fit the brand that
they already have.
So what the client calls an
insight is really an insight.
An insight is an insight once.
It's something new,
it's something fresh.
Something you've never
seen before, aka anathema
to most clients.
Because if you haven't seen
before you can't measure it,
so it's a terrifying thing.
I urge all of you to
listen to James' story.
It's not about listening to
consumers, or talking to them.
It's about engaging them, and
doing something with that
that is insightful and
full of foresight.
Like changing the name of
your channels from one, two,
three, four, five, six,
seven, eight, nine.
To having something with
emotion empathy, that was
a brilliant move James.
