Saturday, May 31, 2008

The latest resolution over Michigan and Florida illustrate the "Law of Unintented Consequences"

Today the DNC showed that its directions mean nothing. When it told Florida and Michigan that by holding their primaries early, their delegates would not be seated it laid down a rule which was impossible to keep. When the "superdelegate" system was set up, it was in response to one problem, but set up another. So often when business, government or any institution seeks to resolve a problem it initiates another. This is, in every case, because few have really thought it through - a very common human trait. We tend to jump to conclusions and make poorly thought through decisions. Much which goes wrong, from a failed new product to a lost war, is foreseeable, yet we do not think enough to realize that this is predictable.

Thursday, May 29, 2008

So Anheiser-Busch may go Belgian. Any problems with that?

Whether it happens or not, it is inevitable that more US icons of business will fall into foreign hands. This is inevitable and desirable if we believe that large companies can do things smaller ones cannot. If we do believe this (and remember that large companies die or are broken up every day), then inevitably, the majority of these will not be US ones. The US may have the largest in some industries, but in other businesses, other countries will house the largest - and house is the operative word. Increasingly, these companies are becoming genuinely multi-national. The new CEO of Vodaphone, a British company, is Italian, and he replaces an Indian-born US citizen. Even faster than seeing US companies being acquired by non-US ones, we will see CEOs of US companies who come from overseas. a reasonable move if we want them to pick the best available, and many Americans have shown that they can be a strong managers in non-US companies.

Monday, May 26, 2008

Ethnocentricism - barrier to understanding and business growth

So many organizations fail to grow outside their heartlands because they do not realize that many of the things they take for granted are just not valid elsewhere. This goes beyond such obvious issues as language or religion, but down to attitudes towards work, whether one wants to fit in or stand out, attitudes towards patriotism, social class, education, what kinds of foods are acceptable, or how you behave to loved ones. I have found whenever I have moved to a new country, that I need to re-discover where to shop for obvious items. How to socialize with people. Visiting a country, however often, is not enough. Even living in a country may not be adequate, particularly for people who live among expats. The most important ability is the one to recognize that cherished assumptions about anything may not be true.

Sunday, May 25, 2008

In a globalizing world why are foreign languages not stressed?

In a globalizing world, we have to be able to communicate better with people in other countries. I have seen that Europeans since the Second World War have improved to the extent that many younger people have the ability to talk to millions of their peers. Yet in the US we talk and write much about doing business with China, India, Russia, and Brazil even though very few young Americans can speak their languages. It is difficult to to persuade so many to work hard at learning a language, but we have to do it. First, we must start by believing that it is important though.

Friday, May 23, 2008

Older is wiser. So why do we reject wisdom?

Current research shows that while younger people can retrieve items from their memories faster than older people and concentrate better, this is largely because they have fewer memories to access. So while young people often do have great flexibility and can focus better, older people genuinely do have more wisdom. Yet, American business continues to provide fewer opportunities for older people. It is clear that doing so is as harmful to the business as eliminating people because of race or sex - yet it is routine. I suspect that a company which went out of its way to hire more experienced people (who are probably older) would outperform a company which concentrates on recruiting young people and encouraging older ones to move on.

It's so easy, just look at Southwest and a few others.

There is no secret to running a business well. Many managers, academics and thinkers have identified them. It is well known that delivering an excellent product to consumers is one of the keys. Procter and Gamble realized this well over a century ago. In the case of a service industry, Jan Carlzon defined the "moment of truth" as that time when an employee has contact with a customer. Southwest Airlines has always believed that if you treat employees well, they will treat customers well. Fred Reichheld proved that customer loyalty is directly correlated to employee loyalty.

Since all of this is known and proven, why would the management of any company treat its employees badly? Employee theft, or "shrinkage," at Wal-Mart is higher than at Costco. Again and again we see that companies which treat employees well prosper as a result. While this is only one of many issues, it shows that management continues to make predictable and known mistakes.

Incidentally, Southwest is one of the only airlines which has consistently hedged against rising fuel costs even though increases in fuel prices have long been predicted.

Thursday, May 22, 2008

The business model of Government - we set it up, and then we complain about it!

We have established a system in both Federal and State government that pays people little or nothing (interns), but in a world where money is needed, leaves them with only their connections to sell. Then we complain when politicians grow too close to lobbyists. There is so little difference between the two as so many move backwards and forwards between the worlds. The Law of Unintended consequences typically strikes again, and we created a system about which we now complain.

Wednesday, May 21, 2008

It's the story which made Frank Perdue, Body Shop and Barack Obama so successful

For so many, it is not the rational benefits, but the emotional story which makes for success. The story of John McCain is a critical part of his appeal, Stories about businesses, brands and products make them different and appealing. The Hewlett-Packard garden shed is part of the mythology of H-P, just as the personality of Howard Hughes contributed to much of his early success. Whether it is Starbucks or FedEx, there is an imagery and perception which drives success. When the story is lost, even if awareness remains, the business faces problems.

Now these stories can be intensely personal as much as general. The Ford Mustang holds different memories for different people, but they are usually strong. An effective management will nurture and farm them, much as Harley Davidson has. That is part of the magic of the James Dyson brand, whereas "hired gun" CEOs rarely work, unless your name is Lee Iacocca!

The cost of entrepreneurialism is allowing lots of failure

While we praise and laud entrepreneurs, they exist because so many fail. Most entrepreneurs approach their businesses with no real rationale or effective management. Yet some succeed anyway. We should be grateful that so many are prepared to take such risks, but over the years, I have seen that many successful entrepreneurs were in the right place at the right time. Many of them go on to think that instead of being lucky, they were smart - smart in a way which does not allow of analysis. Large corporations can also suffer from this, but individuals are more likely to. Yet there is an inexhaustible supply of new entrants to the race, and a very few do make it.

Tuesday, May 20, 2008

When everyone has a blog will a blog mean anything?

Almost 40 Million adult Americans have a blog and still climbing. When that number exceeds 100 Million, will almost all blogs be anything other than the rants and raves of someone with an opinion to share? Already, "letters to the editor" mean a lot less, when the number of people who comment on an article may run into the hundreds. The impact of one letter is far less than it used to be. On the other hand, by allowing greater expression of different perspectives, we have the opportunity to surface more ideas than ever before. But there are so many that we may need specialized search engines to find, sort and analyze all the ideas which are out there. Of course, how we can adapt the human brain will be the big question as electronic prostheses will not be enough for the new world in which we will be living.

Saturday, May 17, 2008

What did AdAge say about the future in 1980?

It talked about how different the world of advertising would be in twenty years, but missed almost all the changes. All the articles, even one by Isaac Asimov, only talked about technology and viewing habits that already existed in 1980 - videodiscs, cable TV, ad specialties, and the new science of "advertology." It completely missed all the real changes which have taken place in society and technology - the Internet, fragmentation of the family, energy crises continuing, cell phones, and email. It even did a poor job of prediction ten years out.

We can assume that any predictions we make now will be equally wrong. Even the few who do get it right are viewed as crazy. People are innately conservative.

Thursday, May 15, 2008

The handling of the Chinese earthquake has made China more popular in the world

China has moved from a secretive, closed treatment of disasters to an open and human handling of the latest earthquake. This has contrasted to the Myannmar treatment which has viewed foreign aid workers with acute xenophobia. China has been open about showing what has happened and how it has tried hard to save lives. The human face this shows along with the suffering of the people has made China seem so much less foreign and so much more like all other people. It has gone a long way to defuse the harm which China's treatment of Tibet did earlier this year. This lesson also applies to companies. If there is a mistake or other disaster, be open about how you handle it. J&J showed this with Tylenol years ago, yet companies as well as countries continue to hide bad things even when they do not reflect blame on the leaders.

Is P&G the only risk-taking major corporation?

Procter & Gamble has changed its culture to encourage and reward risk taking. This is rare. Even though it is clear that unless a company takes reasoned risk, it will eventually fail. The average life of a Fortune 500 company is 18 years and dropping. Yet, in most companies risk taking is not rational as the punishment for failure far exceeds the rewards for success. This has to change if we are to remain competitive in the long run.

Wednesday, May 14, 2008

The Chief Marketing Officer - a flawed concept?

Chief Marketing Officers turn over with accelerating frequency. Spencer Stuart tells us that longevity is on average down to 22 months, and I have known many who lasted fewer than 3 months. It is rarely their fault. Is the CMO job an impossible job? Is it one with responsibility but no authority? All too often the CMO has little power other than charisma and force of personality, and is even set up as a target for the other C-level executives.

Is Marketing even a function on the same level as Finance or Operations? Is Marketing at Senior levels not really General Management? Is the CEO not really the CMO? In that case who takes care of the purely executional aspects of Marketing? Is it is C-level position? I suspect that Marketing cannot be completely separated from General Management without setting up the CMO for a big fall.

Tuesday, May 13, 2008

Myanmar vs. Katrina - rejection of foreign aid

Much has been made of the reprehensible behavior from the junta which rules Burma for refusing all foreign aid. Yes, it is selfish and callous. Sometimes we may have also forgotten that after Hurricane Katrina struck, all foreign aid was refused by the US government. Of course, it was not as badly intentioned, but the results hurt the recovery effort.

Is traditional Market Research valid?

Response rates are going down. The idea of a statistically random sample is more and more difficult to achieve. When we moved from door to door, to telephone and mall intercept we lost much. Moving to the Internet has compounded the problem.

New ways to understand consumers have to address a new paradigm. People want to express themselves - but not by completing questionnaires. They want to be able to talk in ways which are not constrained by forms. Yet companies are reluctant to listen. Improved techniques allow business to really listen to consumers and customers. Our Wise Window tool is one of these.

Saturday, May 10, 2008

Are Corporations too scared to succeed?

Many corporations are getting slower and slower and trying new things. To many managers it is clear that taking any risk is not the way to advance, or even achieve job security. Ideas from outside or challenges are threatening. Yet P&G has transformed itself and created a culture in which there is a thirst for ideas from outside. The key - it comes from the top with great force and consistency.

Thursday, May 08, 2008

A Window into the mind of the consumer

The Internet allows us to move beyond traditional research. Traditionally, research asked consumers to answer questions about hypothetical actions - "would you?" Later anthropological techniques were used to study observed behavior. Now we can watch people's minds at work in a stream of consciousness way. Powerful new tools allow us to understand consumers in new ways.
Technological tools such as Wise Window TM allow marketers to look into the "inner dialog."