June 2009 Archives

Top Ten Obstacles to Execution

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Don Sull:

During the boom, many managers assumed their companies excelled at execution. In fact, much of their success arose from strong economic tailwinds. Now that the winds have shifted, executives discover to their chagrin that their company's execution engine is less powerful than they imagined. This post lists five of the top obstacles to execution in volatile markets.
  1. Worship false idols
  2. Managers talk about the wrong thing
  3. Vikings become farmers
  4. Chase too many rabbits
  5. Rely exclusively on process to execute.

Improving customer service in a downturn

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Consumer-facing businesses whose revenues are now under pressure may find themselves having to compromise on customer service--for example, by reducing their hours of operation or the number of service workers they employ. Not surprisingly, McKinsey research shows that customer satisfaction scores are falling in some industries. Yet most executives think that reducing service levels is a mistake. How can a business maintain them while reining in costs? Our review of the companies with the best customer service records in ten industries shows the wisdom of challenging long-held but seldom-reviewed beliefs about service and testing them analytically. Very often, they turn out to be wrong.

Tim Bradshaw:

A boy lies on his back on a boardroom table in a high-rise office block in Toyko. He pulls out his Nokia, takes a photo of the setting sun - upside down - and sends it to his girlfriend in New York, where dawn is breaking. "Now I know we share the same horizon," says the voiceover. "My sunset is your sunrise."

It's a brilliant Nokia ad - the sort of simple, well-executed idea that agencies charge six-figure sums for. Only this one wasn't made by an ad agency - it was made by Hiroki Ono, a 23-year-old film student from Yokohama, Japan, who'd never made an ad before. The film, "Feel the globe", took just two days to make.

Hiroki's 30-second video was the winner of a competition run by Mofilm - a group working with film schools and YouTube addicts to find the best in user-generated content. Mofilm convinced companies such as Visa, HP, Best Buy and AT&T to "put their brands in the hands of consumers", as Nokia's head of brand engagement, Fiona Bosman, put it at yesterday's press conference at the Cannes Lions advertising festival.

Judging this contest was Spike Lee, director of Malcolm X and Inside Man and an enthusiastic supporter of user-generated content and DIY filmmaking.

Knowledge & SMU:

The seven ways

So, what should companies do to "reinvent" themselves as they gear up to meet these new challenges?

First, companies need to freely challenge the industry dogma. To Sheth, an industry's legacy and heritage is more of a liability than an asset. The reluctance to change, the natural tendency to follow a "prevailing wisdom", is a behaviour not restricted to a narrow group of companies. "Companies are able to thrive under tough times by challenging existing dogma," he said. For example, banks were reluctant to take part in micro-banking - the lending of small, miniscule sums of money to the poor and disadvantaged. But with a net margin of at least 40%, micro-banking is proving to be even more profitable than even investment banking.

Second, business leaders need to make "ordinary people extraordinary". "The best talent lies not at the top of the organisation, but at the foundation level. How you nurture them, how you bring them up, actually becomes a requirement for businesses, and there are companies that have done it," said Sheth, citing India's Wipro Technologies, one of its largest technology services firm, as an example. "Think about the value-add of a grain of wheat: when you make it into bread, the value-add is about five times. But if you take a human being, which is the best resource you can ever get, and polish him, nurture him, educate him, the value-add is infinite," said Sheth, a member of Wipro's board of directors since 1999.

Next, companies should learn how to be "world class customers". Many large corporations are great marketers, with the skill and savvy to produce goods that people are all too willing to buy. Yet, these very same companies are also the "worst buyers", with corrupt procurement departments and not nurturing their own suppliers positively, said Sheth. In a typical large manufacturer, the company's own value-add is only 30% of the total costs, including labour and capital investments. The other 70% are the costs of materials procured from the company's suppliers. Thus, "if you treat them with respect, just as you treat your customers, you will get an enormous leverage out of your suppliers," said Sheth. "But, I've not seen that in most companies."

"Value Calculator"

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British Airways:

With British Airways, the price you see is the price you pay.

You can rest assured that there won't be any extra charges for selecting a seat within 24 hours of departure, checking your bag or having a drink from our on-board bar. And of course, you'll receive the quality of service you'd expect from our award-winning airline.

Compare us with those no-frills airlines such as Ryanair and Easyjet that add extra charges and we think you'll be surprised to see what great value our prices offer.

I suggested creating a one page document that compares your services, including internet applications to competitors during a recent talk. This document should be updated monthly. It will be very useful for managers, agents and your recruiters. British Airways can quickly update this page as market conditions and prices warrant.

New Toyota CEO's Speech on Their Recovery Plan

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Akio Toyoda:

was appointed president of Toyota Motor Corporation at the board of directors meeting held on June 23, following the Ordinary General Shareholders' Meeting on the same day. In addition to my comments here today, our executive vice presidents will provide remarks on their areas of business.

The global automobile industry has been facing extreme hardships since the latter half of last year. As for Toyota, we ended the last fiscal year with an operating loss of 461 billion yen. We expect our losses to deepen this fiscal year, and so all of us in the new management team at Toyota feel like we are setting sail during a storm.

Since the birth of Toyota, the company's philosophy has always been to "contribute to society." The first article of the Toyoda Precepts, our original statement of purpose as a company in 1935, states that we must contribute to the development and welfare of each country we operate in by working together - regardless of individual position - in faithfully fulfilling our duties. In other words, we must manufacture high-quality vehicles for the benefit of society.

"Contributing to society" at Toyota means two things. First, it means, "to manufacture automobiles that meet the needs of society and enrich people's lives." And second, "to take root in the communities we serve by creating jobs, earning profits and paying taxes, thereby enriching the local economies where we operate."

Unfortunately, we are currently losing money and that negatively affects the amount of revenue we pay the government in Japan and our host countries. Like everyone in the company, I am extremely frustrated about this.

So, we must start again from the very bottom up.

The 70-year history of Toyota has been filled with many challenges. Toyota stood close to the verge of bankruptcy in 1950 and suffered a labor dispute that reduced its workforce by a quarter. As a result, the president and other top executives chose to take responsibility for the situation by resigning. But this experience also marked the starting point of the strong labor-management relations that have supported Toyota to this day.


Rather than asking, "How many cars will we sell?" or, "How much money will we make by selling these cars?" we need to ask ourselves, "What kind of cars will make people happy?" as well as, "What pricing will attract them in each region?" Then we must make those cars.

LinkedIn vs. Freemasons

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The Economist:

Networking websites are booming, but they have not supplanted more traditional business networks.

RANÇOIS PÉROL, the adviser whom Nicolas Sarkozy, France's president, controversially appointed in February to head two merging mutual banks, is not known as a champion of transparency. But Mr Pérol has let it be known that he intends to reduce the influence of freemasons at Caisse d'Epargne and Banque Populaire. He has refused an invitation to a tenue blanche ouverte, a masonic meeting that non-freemasons may attend. And he does not want senior posts shared among the banks' various rival lodges.

French business may be particularly full of networks, but every country has its cliques, whether based on education, social background or spiritual beliefs. In Spain, Italy and Latin America as well as France, businesspeople speak of the influence of Opus Dei, a conservative Catholic lay order which supports a number of business schools. America has its Ivy League alumni groups and Rotary clubs. Chinese businesspeople often rely on guanxi, or personal connections.

Being First

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"Being the First": An Ageless State of Mind in the Multicultural Marketplace
Much has been written about young multicultural consumers being trendsetters in music and fashion, active users of digital devices and all-around early adopters. But opportunities are being lost by thinking about "trendsetters" in such a narrow way among such a narrow group of consumers. In fact, the idea of "being the first" is more than a mere pop-culture-related behavior, and it applies to older consumers as well as younger consumers within the multicultural markets. This week's MONITOR Minute takes a look at the early-adoption attitude of African-American and Hispanic consumers ages 50 and older and shows how marketers can leverage their need to "Be the First" to appeal to this influential consumer segment.

They're Still "Being the First"
Compared to Non-Hispanic White consumers ages 50+, older ethnic consumers are simply more interested in staying abreast of what's new and interesting in the marketplace and in the world:

The City of Your Dreams

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Tyler Brule:

"Could you live here?" and "would you live here?" are two of the most common questions colleagues ask each other at the end of a business trip. Responses rarely take the form of a shrugged "I don't know" or a half-hearted "I guess so". Rather, they typically come in vehement declarations suggesting that considerable thought has gone into the topic already. Here are a few I've heard over the years:

On the train to Chicago's O'Hare: "No way. It's neither one thing nor the other and just look at this sad excuse of a train to the airport."

In a cab to Vancouver International Airport: "Definitely not for me - seems a bit sleepy and limp."

In a big Mercedes en route to Hong Kong's Chek Lap Kok: "I could do it for a short stint but it wouldn't be for the quality of life."

Hitching a ride with an associate to Geneva's Cointrin: "If I could get a great flat close to the lake and move my five closest friends, then it would be amazing."

Being taxied to Fukuoka airport: "If I wanted the best of Japan but also great connections to the rest of Asia then it would be my first choice."

Assessing quality of life is a difficult business and, as a result, surveys on the subject throw up different results.

The Economist Intelligence Unit's liveability ranking, released this past Monday, put Vancouver, Canada, in the top spot out of 140 world cities, followed by Vienna.

Canada, Australia and Switzerland dominated the rest of the top 10, with Melbourne in third place, Toronto in fourth, Calgary and Perth tied for fifth/sixth, Geneva in eighth and Zürich and Sydney tied for ninth/10th. Helsinki was seventh, while London was 51st, behind Manchester at 46th. Asia's best city was Osaka, Japan, at 13th, while the top US spot was Pittsburgh, Pennsylvania at 29th.

Mercer's quality of living survey, released in April and covering 215 cities, was led by Vienna, followed by Zürich, Geneva, Vancouver and Auckland. Singapore was the most liveable Asian locale in 26th place, Honolulu was best in the US at 29th and London was the highest UK scorer at 38th.

There are similarities between these lists and Monocle's and the reason is simple. According to Jon Copestake, editor of the EIU report, cities that score best tend to be mid-sized, in developed countries, offering culture and recreation but without the crime or infrastructure problems seen in places with larger populations.

Most of us tend to play some version of the game every time we travel and, while some quickly conclude they wouldn't trade their current set-up for anywhere else in the world, I'd argue there are considerably more who are tempted to give up their current address for a place that promises better housing, worklife, transport, schools, restaurants, weather, shopping and weekend pursuits.

SEO Notes and Links

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I am periodically asked about Search Engine Optimization (SEO), the effort to improve a website's position on certain keyword search results. There is no shortage of smoke and mirrors in the SEO game, largely because search engine methods are private and subject to change at any time. It is difficult to prove success or failure of an initiative. If your results degrade, a consultant might argue that it would have been worse without them. If they improve, the consultant can of course, take full credit.

The pursuit of SEO is, in my view, a red herring. Brokers and agents should always seek to maximize the authority and traffic to your website, regardless of search placement. The 2008 WAV Group report on broker website effectiveness stated:

Very few new customers come from the Internet. New customer come from all of the places they traditionally have come from your brand referrals, yard signs, business cards, and advertising. Fifteen years ago the telephone was the primary source of contact between a consumer and a broker. Today, the Internet is replacing the telephone as the first point of contact. Web traffic on broker sites confirms this: 69% of visitors to broker websites type the website address into the browser. More astoundingly, if visitors do not remember your website address they are likely to go to a search engine and type in key words that include you or one of your agent's names. Although technically this would be included in search engine traffic, because they are looking for your company, you should be mindful that they are also visiting your site as a result of your brand. Of the 20% of your website traffic that comes from Search Engines, 78% of them are searching for you. Hence you can add an additional 16% to the number of visitors who type in the URL of your website to conclude that 85% of all traffic to your website already know you.

The combined efforts of website marketing, which include Search Engine Optimization, Pay‐Per‐Click, Online Advertising and Listing Syndication are all focused on 15% of your online exposure.
I've posted a one page pdf file here. that provides a starting point on growing traffic to your website.

Finally, a few links on the transitional nature of social network sites:

Your best bet: stay focused on your site and grow it, like a garden! If you do a good job on the website, content, blogs and enewsletters, SEO will take care of itself.

A Housing Market Bright Spot: The Quad Cities

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Cheryl Corley:

For months, the news about the country's housing market has been gloomy. But that's slowly starting to change. The latest figures show pending home sales are on the rise, and some real estate bright spots are popping up as the prices of homes for sale rebound.

One of those spots is the Quad Cities region of Illinois and Iowa.

The Quad Cities is somewhat of a misnomer: It's actually five main cities that make up the region -- Davenport and Bettendorf in Iowa and Rock Island, Moline and East Moline in Illinois. They hug the state line at the Mississippi River.

Like many other parts of the country, the Quad Cities region has weathered some tough patches in the housing market. But Realtor Caroline Ruhl says during March and April, her company sold nearly a third more homes than it did a year ago. She attributes the jump in part to pent-up demand after six months of inactivity.

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