Optimism rules!

Over the years, I have seen so many projects which are clearly bound for failure to any objective outsider, continue to be pushed by intelligent people. There are many reasons for this. People do not know what they do not know, and therefore do not examine the situation accurately. Furthermore, in the midst of a situation there seems to be a need to believe in a favorable outcome. So people twist all the evidence, if there is any, to convince themselves and others that they will succeed.

I have seen and continue to see, so many inevitable failures upon which so much time and money is being lavished. I suspect this will still be happening many years to come.

The business magazine unintended doom prediction

It is quite amazing how when a major business magazine features a topic or person on its front cover, soon after, there is a sudden crash. So when the three major magazines talk about the never-ending bull market, the stock market crashes. When Carly Fiorina, to pick just one person, is featured on many magazine covers, it presages problems in her tenure at H-P. Beware of magazine features! They not only are often out of date, but they do also encourage envy and create enemies and rivals where there may have been none. Equally, by the time a business magazine writes about economic disaster, or boom, the tide has usually turned. Yet, the magazines keep on doing so, while the readers not only lap it up, but pass it on and quote the stories in making decisions.

Logically, Top Executives should be getting older.

There have been forces at the bottom and top of the age issue forcing change. Through the second world war, few companies hired college graduates. The G.I. Bill was responsible for the huge expansion in college degrees, even when Ford Motor Company hired Robert McNamara in 1946, he was not only the first MBA there, but one of the first college graduates. College graduates went on to law, education, or medicine in those days. Most executives started after high school (and a high school diploma was rarer than a college degree is now), at 18. So in 1925, by the time they reached 50, they had 32 years experience, but in 1960, it was down to 28, and with the expansion in MBAs in the 70s and 80s, it is now down to 24. On the other end, in just a few generations, health has grown not only life-spans, but the age at which you are healthy. In 1900, 13 percent of people who were 65 could expect to see 85, now it is almost 50 percent. in 1900, 28 % of white men between 50 and 64 had a heart murmur, now it is under 2%. Even since 1950, life expectancy for 20 year olds (to eliminate infant mortality) has climbed from 70 to almost 80. In each generation, not only has longevity increased, but so has it's health. This means that while someone starting work in 1945, would be an old man by 65, anyone starting work in 1970, would not reach that same level until well over 70, and as to those starting on 1995 - who knows? So logically, the age of business executives should keep on rising, as the age at entry keeps on doing the same.

Since in 1925, 75% of all executives were over 48, then today, they should be over 58. Yet, they are in fact, not. This means that business is filling an expanding need for executives from a shrinking pool.

Wal-mart, as predicted, keeps on making mistakes

Today it was announced that Wal-Mart is pulling out of Germany, as it recently has in Korea. It loses money in Japan, is losing share in the Uk, and is half Carrefour's revenue in China, with much the same number of stores. Success in global retailing is very difficult, other than fast-food. Yet, Wal-Mart is simply floundering overseas in much the same way as it is in the USA. Moving upscale in clothing, adding organic food, building a huge Marketing department, where once there was none. These all address symptoms, and are a sign of the loss of the clear vision which built Wal-Mart. Perhaps it had become less relevant to new customers, but Wal-Mart is in danger of moving away from its old ones. Its UK rival, Tesco, went through much the same change, from a "pile it high, watch it fly," mentality to a new model of customer intimacy. It will be interesting to see how it succeeds in the US next year.

Successful companies carry the seed of their own destruction

As The Economist pointed out today, many of the successful high tech companies founded 25 years ago have hit a wall. From 3Com to Silicon Graphics, Novell to Borland, and perhaps even Microsoft or Dell, each faces huge problems. These are not only problems of reduced growth or profitability, but of survival. I find it interesting that of the eight companies I have worked for (not many these days over a long career), only two still exist as independent entities. Three ceased to exist while I was with them. Both of these are boring Consumer Packaged Goods companies, one a soap company founded over 175 years ago. Even among CPG companies, most of the well-regarded ones of a few years ago no longer exist - Quaker Oats, Pillsbury, General Foods, Hunt-Wesson, etc.

So why do so companies go through this cycle? Firstly, they are usually formed around a great idea. They boom and prosper. Management and employees start to think that they are smart, not just lucky. They believe that they have moved through the four stages all the way to "unconscious competence" without passing through "conscious incompetence " and "conscious competence." In fact, in many important respects, they may still be at "unconscious incompetence."

Global Branding

Global Branding is a complicated issue. Few people understand it. Few are qualified to. It is importan to live in a few countries to understand conceptually how brands can be seen differently. It is essential to have appropriate market research (and so much is culturally badly translated, even if it is linguistically).

There are a limited number of brands which have it right. Most are the result of unplanned and haphazard brand-building. To compound it, over time, the brand harmonization efforts have been ill-conceived or poorly executed.

Yet there are principles to follow, if the company has the will, the process, and the organization.