You Don't Want Strategy. You Want an Outcome.

[00:00:00] Luke: and for us, plus or minus 10% to forecast is the widest that that should look like on it. In any given month, your, your, the business is going to land within a really predictable margin of error. And then two. The outcome can't be declining business over time. It has to be growing business over time. And so those are the primary things that we would contend folks should be interested in, which is okay, the, in evaluating the people that we want to work with and the services that are being provided, and the team members that we're surrounded with, like.

[00:00:29] Luke: How predictable is the outcome that that is being generated, and is it leading to business growth or not?

[00:00:34] Richard: Hey folks. Welcome to the E-Commerce Playbook Podcast. I'm your host, Richard Gaffen, director of Digital Product Strategy here at Common Thread Collective. I'm joined today by Luke Austin, who's our VP of E-Commerce strategy here at Common Thread. And what we're gonna talk about today is the number one pain point that brands come to us with.

[00:00:52] Richard: When they jump on calls to ostensibly join profit engineer. And what I think is really interesting about is like, we've kind of talked about this pain point before because it comes up fairly often in our conversations with brands, but we wanted to talk a little bit about how we kind of take it to a different level and maybe a way that you ought to be thinking about how you are hiring for agencies as well.

[00:01:15] Richard: So, based on kind of like combing through having our Claude comb through all of our sort of sales calls, we were able to pull out a pretty clear common denominator amongst most of the calls that we have, which is this idea that their current agency is merely offering them execution and not strategy.

[00:01:32] Richard: So in essence, the agency is like, they've hired a bunch of, ba Basically, they're like hires that have to be told what to do rather than providing some level of expertise as if you had, say, brought your car into the shop to get fixed, and then you had to tell the mechanic exactly what to do. That's not what you want, but what we offer is something a little bit beyond that.

[00:01:52] Richard: Luke, why don't you tell us, talk to us a little bit about kind of your experience with this maybe, and then how we offer something different.

[00:02:00] Luke: Yeah, so it's, so, it's, it's fascinating and we we try to do pretty consistent reflection across the conversations that are happening across the organization and. Slack and the calls that we're having to under to really deeply understand like, what, what are the biggest challenges across our, our dataset?

[00:02:17] Luke: What are some of the objections from customers in, in the sales process even. Like, how, how do we, you know, how do we address these concerns and continue to shape our offering for, for it to be more impactful? And this, this line. And, and these initial in a lot of our sort of initial conversations has come up, which is my current agency isn't giving me strategy, just execution.

[00:02:36] Luke: And, and I, I would imagine for mo most folks that are, that are hanging around listening, there's some, some version of that that has been felt at many different times between agency internal team members outside vendors, contractors, et cetera, which is like, okay, the execution's tight. Maybe if there's clear direction, someone could do it, but there's not, there's not strategy, there's not proactivity related to it.

[00:02:58] Luke: Right? Like there's a, there's a lack of cohesiveness that, like, is something that I think gets at the, the, the sense of it is like if you were to view these things in a ladder, like on, you know, rungs or like a totem pole, like execution at the bottom. Like, okay, cool, that's, it's necessary. But strategy that's, that's higher level activity, right?

[00:03:16] Luke: So like, and then it's like, okay, who has the best strategy? Right? Then it's like instead of like, okay, who can. So you can build things the fastest or the executions tidy of a good QA process. Like strategy is like, okay, who has the best approach in the methodology? And this is, this is important to have, but what we would contend is that above strategy is outcome, right?

[00:03:38] Luke: Like that that is the thing that and whenever any of us feel. This sort of sentiment, which is like, I'm just getting execution, not enough strategy. What, what we really want a spec, a specific outcome to be accomplished. And if, and if we're not clear on that outcome, that's the starting point to, you know, take a step back and be like, okay, this is okay, this is what I'm actually after.

[00:03:57] Luke: So we can back into it. But. What we're wanting is someone to commit to an outcome and deliver that outcome and whatever's necessary to do that between the strategy and the execution and the combination of the two or whatever that means is like, is is the thing that's besides the point. And so.

[00:04:13] Luke: It. This is something that we've been thinking about thinking about a lot and orienting our whole, and we've oriented our whole system around, which is how can we deliver an outcome consistently to our customers and or, and build a whole system and our methodology and the tooling and the technology and the things we execute on, all in, all, in service of the outcome, which is delivering.

[00:04:34] Luke: Delivering actuals against a forecast within plus or minus 3% in either direction, aggregate across the dataset, and then 30% growth in revenue and a little over 40% growth in contribution margin year over year against our dataset like that. That is the north star. That is the, if that's not happening, it doesn't matter like how, how in interesting our methodology or approach is.

[00:04:56] Luke: Cost cap versus lowest. Like you just should not care about the strategy even. Right? And, and, and definitely not. The execution tell the outcomes there. And the other things the, the other things all are all in service of that outcome. So, if execution lives at the bottom, strategy is, you know, strategy is like the ascension from there.

[00:05:14] Luke: But the, but the end objective is the outcome that we're delivering. And that is the thing that. In evaluating any partner and bringing on any team member like that is the, that is the thing that I think we're all wanting and we would contend is the highest version of the thing. And so if you're, if you're looking for more strategy from, from folks like, yeah, I think it's, it's, it's, it's it's should be thoughtful there.

[00:05:37] Luke: It should be backed by a lot of data. But ultimately the outcome is the thing that we're, we're

[00:05:41] Richard: Yeah. Yeah. And ultimately I think like what we're responding to with profit engineer and kinda the way that we're rolling out the system is both like a way that the, the, the current framework for the agency client relationship is broken. And then also sort of addressing this, this weird gap in the market, which is that the thing ultimately that people want is.

[00:06:04] Richard: An expert that is responsible for the outcome, but that isn't really, there's not really a system to provide that right now. So if you think about okay. Obviously hiring an agency that will execute. We'll, like run your meta ads for you and maybe they have some tactical, like input to that, whatever.

[00:06:17] Richard: That's kind of the basic relationship that a lot of people have with their agency. Then the next tier, like with the strategy piece, oftentimes that takes the form or stereotypically takes the form of the consultant who rolls in. They sit in your conference room for like three days or whatever, give you this action plan and they piece out, and then there's no way you can't really hold them responsible to an outcome from that particular strategy because.

[00:06:39] Richard: I mean, maybe in some, if that's the relationship that they have with them, it doesn't make total sense. But what we're offering you is something different, which is that we are actually held to an outcome as opposed to providing, you're not hiring us just for the strategy. You're not hiring us just for the execution.

[00:06:54] Richard: You're hiring us for an outcome and we are promising to deliver that. So I think to go back to the metaphor of the mechanic, this is, I think, apt in the sense of like, if the mechanic doesn't fix your car. That's on him. And that's a huge problem. Right. And currently, like the, the situation is sort of like you're hiring a mechanic to tell you how to fix the car.

[00:07:15] Richard: That would be the strategy piece or somebody that you have to tell how to fix the car, which is the current sort of setup. And either way, it's sort of like your ass on the line, whether or not the car works, which is really sort of a backwards way to look at it. So that's maybe another way of, of kind of thinking about it.

[00:07:29] Richard: What

[00:07:29] Luke: Yeah, I, I, I think so. I, and. To, to build off. We're gonna, we're gonna go mechanic metaphors for another minute here. Is it? The, so my I've got a, I got a 20-year-old land Cruiser. That's my, my pride and joy and so this 2006 Toyota Land Cruiser has 230,000 miles on that right now. So she's just a baby still.

[00:07:50] Luke: But needs to be taken care of. And, and so there's, there's a number of things over the, over the recent weeks that that they've been handling. But what it, what it's led to is like. So, there was an issue. Light came on, take it in. They diagnose it. This is the problem, solve for that. Take it home, drive it for a few days.

[00:08:09] Luke: Another light comes on, bring it in. Oh, okay. This was the downstream effect of that thing. Now that, that thing's corrected, we have to fix this thing, right? Do that thing. And so after a couple, a couple reps of this and. Of course, I'm deep with Claude and trying to understand this and calling some of my, some of my friends who know these things way, way better than I do to try to understand what's happening.

[00:08:27] Luke: What, what I, what I ended up doing to them is like they, for the third sort of round of problem was my guy Charlie was like, all right, here's the issue. If this is what happened, this is what led to the downstream impacts. And so the next step is we're gonna do this. And then if. If another light comes on, then we'll know it's this other thing, but we're not gonna do both at one time to help save costs and like, is sort of be this downstream impact.

[00:08:49] Luke: And what I, what I, what I told him is like, okay, let's, let's go forward with it. Let's handle the things that are necessary. But if this thing that we change, if the light comes on in the coming weeks, like what I need from you is agreement that you guys are gonna handle and sort that thing out too, that's a downstream impact of it.

[00:09:04] Luke: And, and comp, the comp, the labor against that, because it's like, it's all connected. And so. Whatever you think is the right way to get there. Sequence the thing like do it all at once versus, I don't really care. It just needs to be handled. And so if you think these things are connected in that way, like that's, that's where I just need agreements.

[00:09:19] Luke: It's gonna be handled and like let's do it. So that's kinda what we're after here, right? Which is like that sort of sequence lives in it lives in the conversations and meetings that we're all having in some cadence, which is like. Oh, well we got those med ads live, but they're not performing that well for the new product launch.

[00:09:33] Luke: Okay. Why? Why aren't they performing that well? Well, we got the creative, but the problem was we didn't get the creator content stuff, so we just had to use our branded ads from our existing library. The creator content stuff is coming a couple weeks. Okay. So like what is necessary to get, get that? Well, the budget was held up because we, we over index on creator fees the month prior, so we had to push it over any, and it's just like.

[00:09:53] Luke: Here's what I need. I need to hit the forecast that we set, that we, that we are all going to achieve this month together. Right? And so what I need is someone to be accountable to saying, I'm going to handle that. And whatever way it goes, I'm gonna wear that on right? I'm gonna wear, I'm gonna wear the outcome on my back and.

[00:10:11] Luke: The, in terms of the financial upside or lock thereof, it's going to be directed at that, that person that's accountable and the levers that they have to be able to pull you, we need, we need that. So like, sort of like to the mechanic thing, it's like I told my guy Charlie, like, you know what, you guys do whatever you need.

[00:10:27] Luke: Like, I'll, I'll, I'll authorize this, this project and, and handling those things, but what I need is agreement that like. If that other thing comes up that might be connected to this thing, you're gonna handle that too. Within this, if that's the case, you're, you got, you have free reign. You don't need to come back to me and like, let's just, we'll solve the, we we have to solve the root, root issue.

[00:10:44] Luke: And whatever strategy and execution they used to get there. They were wearing the, like, if their approach didn't work and accomplish a thing, they were gonna have to do the free labor to do the other thing to fix it. So like, I didn't really care. Like, and, you know, and that's the, and that's the, that's the approach.

[00:11:00] Luke: So I think that like this. Owning the outcome is like tho the loops between strategy. No. How good the strategy is versus the execution. It, it can just feel so cyclical and helpless I think for a lot of, for a lot of folks, like, okay, what, how can I get someone to own this outcome that has accountability, that has expertise, that has the ability to actually execute against it and, and and be able to hand it off from there and trust that.

[00:11:28] Luke: It's gonna be the thing we agreed to is going to be actually accomplished,

[00:11:32] Richard: Yeah. Well, I think, well, first off I should say like if, if we get anything tactical out of this listeners, it's like that. That's a great way to interface with your mechanic, make, make sure that they fix the things that come downstream of the other things. Now, not everybody has a 20-year-old land cruiser, but something to think about.

[00:11:47] Luke: But you should.

[00:11:49] Richard: Yeah, but you should, no, I was a I drove like a 20-year-old VW golf for a long time because it was diesel, pre-scan, diesel, you know, it's hard to find. But no, so what I was gonna say is that the, the example that you brought up of where like, and we, we've been guilty of this in the past, but a lot of the times what'll happen is like the agency will sort of put.

[00:12:09] Richard: The reason that the outcome didn't happen the way that we expected it to on, on the client. In other words, like, Hey, we just like didn't have what we needed, X, Y, and Z. And part of what an effective agency approach would be is the ability to anticipate those needs ahead of time, which is again, why we approach this with the, the forecasting, and particularly like the creative demand model.

[00:12:31] Richard: See the idea there, like the ideal scenario, if we go back to the. Mechanic metaphor would be you tell Charlie this and Charlie says, okay, but you have, we have to upfront agree that you are not going to. I don't know, do donuts in the driveway or whatever it is, right? Like there has to be some agreement ahead of time at the beginning that you're not, the client also is bought into what they're going to have to do to make sure that everything kind of plays out the way it plays out.

[00:12:57] Richard: But that needs to be set up front so that it doesn't, it doesn't turn into the like, well, this thing happened and, you know, there's nothing we could do about it because we didn't have what we needed. Like, that needs to be anticipated as well.

[00:13:09] Luke: Yeah, it, it, yeah, it, it absolutely does. And that it, it requires agreement from both sides. But, but ultimately what, what, what people need is to be able to be able to plan on an outcome, to be able to make decisions. And I think the. It, it's important to understand like each of these buckets, so ex execution, strategy, outcome, serve a purpose and like are all interconnected, right?

[00:13:32] Luke: And so these aren't, these aren't disconnected things. But something that we've thought about is what, what, what? What is the goal or what you, what should you be expecting from each of these buckets, right? Like, so for execution as an example, as a starting point. What, what do you want execution to look like?

[00:13:49] Luke: Like what should that, what should that look like in, in its best, in its best form, right? And so, execution, what we're really focused on. Consistency in the output and speed and the, and the action, right? Like what, what we want is to once you're at the point of execution, you have clarity of direction and the thing that needs to happen, that what you need to do is have consistency in the action being taken and then be able to do that at a high level of, of speed, right?

[00:14:18] Luke: Like, you don't, you don't want it to take more time than it should to get a consistent you know, action from, from that thing. So the systems that we're, that we're building are, how can we consistently. How can we consistently do this across multiple channels and how can the output be as effective as possible?

[00:14:35] Luke: And and with the, with the most amount of speed so that we can spend more of our time in the like, strategy and outcome generating buckets. Right. And then for strategy, I think the things, the things to look for are. What is the data set that the strategy is based on, right? And the larger the data set, the, the more signal there's going to be to inform the methodology and strategy.

[00:14:58] Luke: So that, so that should be important for folks in, in evaluating any strategy or approach is what is the, what is the track record of that thing and what is the data set that it's, that it's based on? This is, that's why like. Case studies. Most folks, A as we should be, are really skeptical around like this one brand at this one point in time, did this one thing that did this achieve this percentage outcome?

[00:15:21] Luke: Okay. Should you base, should you base your strategy on, on that thing? Maybe, yeah, it might, might be worth holding loosely, but this, the strategy should be all about this is the data set that it's informed by, and this is the track record of that strategy. And so that's important for us. And sitting in the intersection of hundreds of brands data to be able to look across that data set.

[00:15:41] Luke: What's working well, what's not working well. And then birth our, our strategy and methodology out of that. And then on the outcome piece it's, it's all about what, what we talked about, which is predictability and, and growth and profitability as well, right? Which is what the things that we're focused on.

[00:15:57] Luke: So predictability. The outcome that's being generated needs to be something that has a margin of error that allows you to operate the business and make consistent decisions, right? And the outcome that's being generated has to lead to business growth. So those, those two things need to be true. At the same time, what's challenging is when you have a month where we grew 5% and you have a month where we grew 50% and your forecast was off 20, 30% in either direction for those months, right?

[00:16:23] Luke: Like, great, we'll take the 50% month, but that's actually really challenging to operate. A business under and and make decisions around your staffing and your inventory positions, et cetera. Against, so first, how predictable is the outcome? What is the, what are the error bars that we're willing to accept?

[00:16:40] Luke: And, and for us, plus or minus 10% to forecast is the widest that that should look like on it. In any given month, your, your, the business is going to land within a really predictable margin of error. And then two. The outcome can't be declining business over time. It has to be growing business over time. And so those are the primary things that we would contend folks should be interested in, which is okay, the, in evaluating the people that we want to work with and the services that are being provided, and the team members that we're surrounded with, like.

[00:17:10] Luke: How predictable is the outcome that that is being generated, and is it leading to business growth or not? And then the strategies that are available to us to be able to affect that outcome, what is the data set that that exists, exists upon? Is this, you know, couple brands, we got a couple reps on our belt.

[00:17:23] Luke: Is it, is it, is it 500 brands? So like what, what is the data set and how effectively are we able to parse into that dataset to to build a methodology and in the execution, that final piece, how consistently and effectively. And at what cadence and speed can that, can those actions be executed? Because we know that the higher value actions live in the, you know, strategy buckets, impacting, impacting the outcome in that, in that way.

[00:17:47] Luke: So those, those are like, from a high level, I think the things that we, we would contend folks should be most interested in as it relates to what they look for in each of the, the tiered buckets of outcome strategy to execution.

[00:18:00] Richard: And this, sorry. That makes me think of one other thing too, which is like, you sort of talked about, like the forecasting piece, the data set, and one number that we've been throwing around a bunch is that we've predicted within 3% to forecast across, you know, X billions in GMV, which obviously is a very good track record.

[00:18:16] Richard: Like if what we say we're going to accomplish, we tend to accomplish. That's what that means. Now what it also means is that in being the person that controls the outcome or the entity that controls the outcome, or rather I should say, is being held to the outcome, we also control it right to this extent that like.

[00:18:33] Richard: Oftentimes the outcome that we will achieve for clients is not necessarily the one that they came in wanting, and I think that's important to call out because a lot of the times they'll come in wanting something that is fundamentally unreasonable or unrealistic or frankly just sort of based on vibes.

[00:18:48] Richard: I mean, I think straightforwardly that is the case a lot of the time, and so what part of owning an outcome and being agreeing to be held to it is saying we need to use our tools to set the outcome. Obviously we need to agree on what that is, but we also need to be able to present the outcome that we're going to own and then what we'll are happy to agree to own it, right?

[00:19:12] Richard: Does that make sense?

[00:19:15] Luke: Yeah, I think that's, I think that's exactly right. Yes. But the, the ownership over the outcome, like, it, it has to be something, we've talked about this before, where the outcome, the outcome is being generated and defined and agreed to by the people that are responsible for the strategy and execution against the outcome.

[00:19:30] Luke: Right. And not, and it's not. Here's the thing, being handed to you that now make the strategy and the outcome and the execution around this outcome consistent, right? Like it, the outcome has to be something agreed to by the folks responsible for making it happen on a daily basis, and connected to those inputs as well.

[00:19:47] Richard: Sorry. All right. Well, I think that kind of covers our bases here. Anything else you wanna hit on this, Luke?

[00:19:52] Luke: No, I I think this the, I'm reflecting even more on my, on my mechanic saga. And I think it's a, I think it's a helpful, it's a helpful thing like here's you're preauthorized for this project to achieve this outcome, whatever's necessary to get there. The strategy and the decisions you make you, you can make those decisions if ends up being more labor and time and parts as a result of what you expected based on the decisions you you made of how you get there.

[00:20:19] Luke: And that's, and that's how we think about it, which is like, here's the forecast, here's our plan to get there. Okay. We're pacing behind our forecast. We are gonna send three additional email campaigns than we planned this month. And we are going, and that's on us. We're, and we're, we're, we're building those.

[00:20:32] Luke: This, it's not an additional charge. They're ad hoc emails that we have specifically for this reason. We are gonna go build out more meta campaigns and push more spend, and we're not gonna take a percentage of that media spend or per, or a, a fee of additional campaigns created. Right. It's a flat retainer against what the, the outcome is.

[00:20:47] Luke: And we are going to. Deploy the media, deploy the creative, deploy the emails to be able to get to that outcome. It's going to change from the initial plan. And yeah, that's that's how we've, that's how we built the system. That's how, that's how we do things. And, and I think that's, that's what leads to being able to align around an outcome and then have the decisions around the strategy and the execution that lead to that outcome be something that we can take ownership over.

[00:21:12] Luke: The thing that we're most all interested in.

[00:21:15] Richard: That's right. Well, I think I'll, I'll end it with this on the classic line from, from David Ogilvy on advertising is Don't, don't buy a dog and Bart. Yourself. But I think part of what we're saying is you need to make sure the dog is also able to bark before you buy it. And this is kind of how we're laying out how we approach that and how we do it.

[00:21:34] Richard: So if you're interested in an Outcomes first agency, you know who to call, common thread code.com. Hit the hire us button. We would love to chat more about putting this together for you. Alright, I think that's gonna do it for us. Until next time, take care and we'll see you.

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