The New 6Ps of Radical Innovation for Large Companies

How do large companies pursue radical innovation? You know, the kind of new product that changes or creates a market. There is a school of thought that says large companies just can’t do it, that any new market disruption comes from an upstart startup. There are, of course, exceptions to this generalization, for example Apple.

Mostly though, large companies have an inbuilt need to pursue innovation in markets and fields with which they are already familiar, and to protect their current positions rather than disrupt or cannibalize. They don’t have the same absolute focus, passion and decision-making speed that characterize small innovative companies.

As I’ve mentioned in previous posts I’ve been working with the innovative market research agency Brainjuicer on the challenge of creating radical innovation in large companies. Other commentators have written recently about why large companies struggle with it. Amongst them were Jorge Barba and Greg Satell. Tim Kastelle wrote about why startups have the advantage. Ralph Ohr discussed evolutionary and revolutionary innovation; large companies are set up to improve the world as it is (evolution) rather than how it could be (revolution). All of these complement John Kearon’s article on marketing science causing the death of innovation.

Maxwell Wessel explained that big companies are set up to deliver profit through operational efficiency. This is not necessarily a short term problem, as long as reality matches expectations, but is dangerous in the longer term. All may not be lost; Scott Anthony wrote an article in September’s HBR Magazine entitled “The New Corporate Garage”, laying out some cogent arguments in favour of large companies playing an even greater role in the development of innovation.

It’s in that context that I’d like to propose a template that I think will help, the “6Ps of Radical Innovation”. I’ll give a summary in this blog post, and then follow up with more description in future ones.

First of all, what does “Radical Innovation” mean? In my view it is “innovation that significantly alters the dynamics of a market by changing the behaviour of users and converting them to the new offering; or enables new behaviour”. An example is movie rental. The “job to be done” in Clayton Christensen’s terms, doesn’t change; a viewer wants to rent a movie. The change in behaviour is that they don’t walk down to Blockbusters to rent a physical copy; they subscribe to Netflix and download it. Another example is apps and mobile phones. Smartphones enable new behaviour with apps that just didn’t exist before.

So here are the 6Ps, with just some of the questions to ask:

1. PERSPECTIVE – do you make space in your portfolio for bets on radical innovation? Do you talk about big innovation but ignore the resource, competence and time needed to deliver it? Do you know where you want to compete, and over which time frame? Do you stretch possibilities with Open Innovation? Is your portfolio balanced on the dimensions of time, technology and market, and stretched in terms of ambition?

2. POTENTIAL – do you still demand all the facts before launch? Do you use evolutionary criteria to assess revolutionary innovation? Do you iterate and learn fast? And then get to market fast?
 
3. PROTOTYPE – do you demand “right first time” before exposing innovation to customers? Or do you rapidly experiment, iterate and learn? What criteria are used to design and evaluate prototype tests? Are you able to look for behaviour change?
 
4. PARTITION – do you separate radical innovation with a different route to market from “business as usual”? Do you protect it from the pressure of short-term delivery? Do you give it time and space to reach payback?
 
5. PERSISTENCE – do you adjust your targets as you progress and learn? Do passionate people get the sustained support they need? Does your portfolio approach help you make the right bets? How quickly do you give up? Do you have the right balance between conviction and stubbornness?

6. PEOPLE – is “failure” acceptable? What’s in it for somebody to move out of a standard career path? Do you identify and support intrapreneurs? Do you recruit for diversity?
None of these stands alone. For example, an iterative use of prototypes and test markets will give much better information on the potential of radical innovation. The 6Ps should be taken as a whole.
In summary, consideration of the 6Ps will widen the view of large companies and help them to have a greater chance of successfully implementing radical innovation. I’ll add more to this over the next few weeks.

[Kevin McFarthing runs the Innovation Fixer consultancy, helping companies to improve the output and efficiency of their innovation, and to implement Open Innovation. He spent 17 years with Reckitt Benckiser in innovation leadership positions, and also has experience in life sciences.]

How A Marketing Company Convinced Chinese Women They Were 'Too Hairy'

FROM staying slim to the quest for perfect skin; a woman's list of beauty concerns is endless. But for ladies in China - who typically have little body hair - remaining fuzz-free was not top of their list of priorities.

 

That is until a canny marketing campaign from the manufacturers of a hair removal cream successfully fostered a fuzz phobia among the country's women - and sent its Asian sales soaring as a result.

 

When Veet hair-removal cream first hit the shelves in China in 2005, sales were sluggish among local women blessed with relatively hair-free skin.

 

So the manufacturers launched a new marketing campaign aimed at city women linking smooth, fuzz-free skin to health, confidence, and 'shining glory'.

 

As a result, many well-groomed women in China are now as preoccupied by stray hairs as their western counterparts.

 

Asian sales of hair remover are rising by 20 per cent annually - almost double the rate of women's razors - according to research carried out by Euromonitor International. And Veet is now the fastest-growing brand in China for British manufacturers Reckitt Benckiser.

 

Aditya Sehgal, the firm's China chief, told Business Week: "It's not how much hair you have, it's how much you think you have. If your concern level is high enough, even one hair is too much."

 

The campaign is certainly not the first time a manufacturer has played on women's preoccupation with perceived flaws. Beauty giants Estee Lauder and L'Oreal both sell skin-whitening creams in China, where many women perceive lighter skin as preferable.

 

Mr Sehgal said the firm's role was not to remind Chinese women how much hair they have, and insisted its customers were too 'independent-minded' to be persuaded to buy a product they didn't really need.

But Benjamin Voyer, a social psychologist and assistant professor of marketing at ESCP Europe Business School, likened Veet's Chinese marketing to 'the apple in the Bible'.

 

"It creates an awareness, which subsequently creates a feeling of shame and need," he told Business Week.

 

PR consultant Maggie Li, 29, said had been using Veet since receiving a free sample in the summer, and added that the product's marketing 'makes Chinese women more aware of their body hair issue'.

The manufacturers targeted flooded university campuses with free samples and enlisted glamorous actress Yang Mi as a spokesmodel as part of its efforts to target female students and cosmopolitan city women.

 

While Chinese sales of the product have noticeably increased on the back of the new marketing approach, it is still not a familiar brand outside of cities and is yet to benefit from a national advertising campaign.

 

But if the strategy continues to work its magic there could be plenty of room for growth, as a study showed that just 0.6 per cent of Chinese women remove body hair.

 

3 Practical Secrets of Innovative Leaders

Innovation doesn't require genius, luck, or magic--but it does require talking to the right people, being able to clearly articulate a vision, and putting the right partnerships in place.

I first read Peter Senge’s book, The Fifth Discipline: the Art and Practice of the Learning Organization, in the mid 1990s. At the time I was working on the fledgling team behind a new initiative at the World Bank called "knowledge management," which would later help earn the organization recognition as one of the World’s Most Admired Knowledge Enterprises.

 

I had never heard of Senge and was impressed by his approach. I shared the book with my boss, who said to me, “Why read when we can talk to the author?” Within a couple of weeks we were in sitting in Senge’s office in Cambridge discussing our organization's plans in detail. This is the first secret of great innovation leaders: Talk to the right people. In addition, to get innovation right, leaders must clearly articulate the way forward and build informal partnerships that generate synergy.

 

Secret #1. Talk to the Right People

Your most important asset is your mind. Your experience, expertise, and know-how governs your understanding of what is possible, the options you see, the strategy you formulate, and your assessments of the environment around you. To expand your vision, meet with other minds! Make it a habit to identify and visit the people who will provide you with fresh ideas, key learning, new tactics, and strong strategies.

 

My World Bank group’s ability to quickly meet and learn from Senge greatly accelerated our success. We experienced significant gains in the year ahead and received international recognition for our program. Part of our triumph was due to finding and meeting with the people who could draw us into substantive conversations that expanded our thinking, provided valuable insights, and uncovered solutions to problems we were facing.

 

Secret #2. Articulate the Way Forward

People rely on their leaders to craft a vision of the future that makes sense and can guide their everyday decisions. Most of the leaders I have met improvise this activity and many do it badly. And yet articulating a rousing vision of the future isn’t difficult. It can be your secret super-power, if you just master three tactics:

• Be explicit about your conclusions and how you came to them. Speak in terms people can understand and relate to. Do more than share judgment--provide insight to your reasoning.
• Give people the opportunity to ask questions. Encourage diverse points of view and different backgrounds. Let people react, inquire, challenge, and extract the information they need to satisfy their understanding. Then you will be in the best position to move forward together.
• Customize your message to your audience. Include something useful in their day-to-day work--utility helps information stick.

Communication is a crucial step toward coherent action. By clearly and repeatedly taking the time to spell out what you are trying to do you will build a base of informed actors to help you innovate.
Secret #3. Build Informal Partnerships that Generate Synergy

Leadership today is largely about identifying the partnerships that will lead to broad, powerful impact and growth. Let me be clear--I’m talking about supportive and symbiotic relationships here, not contractual business partnerships. There is a tremendous amount that can be done on the basis of mutual interest alone.

Too many leaders shy away from informal partnerships, fearing the vulnerability that comes with relationships. If you overcome that fear, you get the benefits. Here are tips to help you master the third secret of innovation leaders:

• Be clear about what you hope to get out of the partnership. Take the time to articulate the value to both parties that makes it worth pursuing.
• Share the goals of the partnership with others who have a stake in its success. Initiate informal conversations, over the phone, via email, or over coffee, with the clients, vendors, industry experts, investors, and others who can share their perspectives how to get the most out of your partnership. Then share what you learn with your partners.
• Take the lead in coordinating partnership activities. Be the one who identifies and handles important issues as they arise. Take responsibility for planning and facilitating joint events. Foster joint development. Provide regular assessment of the partnership that prove its value.

Make it your job to keep everyone happy with the results of your informal partnerships. You’ll reap the rewards together.

Math: 1+1+1 = A Lot

These three tasks required of innovative leaders--talking to the right people, articulating the way forward, and building informal partnerships--work together. The interaction of these contributions produces a total effect that is greater than the sum of the individual components. Together they ensure your leadership is well informed, a source of unambiguous guidance, and reinforced by powerful allies.

That’s a healthy platform for continuous innovation.

[The above article is from Seth Kahan who is a change specialist and who has consulted with CEOs and senior managers at over 60 organizations including World Bank, Shell, Peace Corps, and 30+ associations. This is an excerpt from his forthcoming book, Getting Innovation Right: How Leaders Create Inflection Points that Drive Success in the Marketplace, to be published by Jossey-Bass in early 2013.]

 

Bill Gate says ....

 

 

Understanding warranties

Many a time, when a product is bought, the buyer is told that it is under warranty.  This is a selling point as it gives a sense of assurance and comfort to the buyer.  However, such a statement in general terms could be meaningless unless the scope and effect of the warranty is clearly stated.

There has been a complaint published in a local daily, about a handphone buyer expressing his disappointment with a cellphone company because even though his handphone purchase was accompanied by a one-year warranty, the company refused to repair it even though he had problems with it after two weeks.

Apart from the fact that his complaint was not attended to speedily, he was upset to receive a message, several days later, saying that his cellphone was beyond repair and that he should take it back.

The word "warranty" is used in different situations to mean different things, with different implications and consequences.  However, in the context of the above situation, it refers to a promise by a manufacturer to repair goods that are faulty when used.

While it may appear that the complainant has been unfairly treated, one needs to consider whether it is a case of a phone that was faulty and if that fault is the result of a short-coming in the manufacturing process.

According to the same report, the cellphone company says that when the housing of the cellphone was opened, the components were damp and damaged.  Sand was found inside the keypad and the housing, causing the company to believe that the phone had fallen into a body of water.

If what the company said was true, the problem would have arisen not because of a manufacturing defect or the inability of the product to function for a specified period, but was caused by an act of the complainant, for which he was responsible.

Based on the general principles of liability, it would neither be fair nor reasonable to make the manufacturer liable without any qualification.  But in any event, if the fine print of any warranty is examined, it is likely to state that the warranty is in respect of manufacturing defects or with regards to a specific representation made.

In some cases, the warranty may also state that it only covers the replacement of parts and not the workmanship or costs of collecting or delivering the product in connection with the repairs.  In other cases, the warranty could be for the cost of carrying out repairs, with the consumer having to bear the costs of purchase of any parts that have to be replaced.

It is therefore necessary for the consumer to familiarise himself with the terms and conditions as well as the scope and restrictions contained in the warranty.  One would be misguiding oneself if one merely took the word "warranty" to mean an unqualified assurance of all and any shortcomings or defects whenever or however these came about.

In the instant case, if the consumer has reason to disagree with the company, the onus will be on him to pursue the matter.  If he denies that the phone had ever fallen into any water, then the only inference that can be drawn is that either the company is not telling the truth or it must have fallen into the water when the phone was in the custody of and entrusted to the company.

The company is likely to deny any such contention.  However, if it be the former, i.e. that the problem is not due to a manufacturing defect, then the consumer can challenge this by taking it to an independent party which is in a position to say that the cause of the phone not functioning is not because of the water and the sand but within the scope of the warranty.

If the independent party can show that the reason given by the company is not supported by facts, then it will be possible for the buyer to sue the company to recover the expenses incurred in going through the entire exercise.

On the other hand, if the allegation is that the handphone fell into the water when it was in the custody of the company, then if the matter goes to court, there is likely to be conflicting testimony.  The outcome will depend on whyo the court believes, after having considered all the evidence.

In reality, a consumer will not have the resources to pursue the matter in court because of the cost in terms of money, time and effort involved.  The person can pursue the matter in the Consumer Claims Tribunal, but this will also require effort and time.

Five ‘no regrets’ moves for superior customer engagement

No organization can avoid coming to grips with the rapidly evolving behavior of consumers and business customers. They check prices at a keystroke and are increasingly selective about which brands share their lives. They form impressions from every encounter and post withering online reviews. As we noted in a McKinsey Quarterly article last year, these changes present significant organizational challenges, as well as opportunities. The biggest is that all of us have become marketers: the critical moments of interaction, or touch points, between companies and customers are increasingly spread across different parts of the organization, so customer engagement is now everyone’s responsibility.¹

In many companies, the marketing function is best placed to orchestrate customer engagement for the entire organization. To do so, the function must be pervasive—able to influence touch points it doesn’t directly control. Over the past year, we’ve seen a wide range of companies try to address customer engagement in more integrated ways, but many executives have told us they simply don’t know where to begin. The spectrum of organizational choices is broader than ever, and companies are struggling to determine the appropriate role of marketing for their business. What’s more, senior executives often view any internal effort by the marketing function as a “land grab.” Given the absence of solid return-on-investment data (see “Measuring marketing’s worth”), they may express skepticism about marketing’s place in the new environment.

Although these challenges are difficult to overcome, companies need not be frozen in place while they wait for a complete picture of the answer to emerge. The five “no regrets” moves described below help senior executives to move beyond their function-by-function view of customer engagement and to improve the coordination of activities across the broad range of touch points they must care about. By widening the lens companies use to view customer-engagement needs, enabling more rapid responses, and building internal lines of communication, these steps create nimbler organizations with more pervasive marketing.

1. Hold a customer-engagement summit

Almost all companies have annual or semi-annual business-planning processes that bring senior managers together from units and functions to discuss strategies and objectives. Yet few undertake a similar process to discuss how to engage with the lifeblood of all companies: customers. We recommend holding such a summit, with a participant list that starts right at the top and cuts across units and functions. At one US health insurer, for example, the CEO’s direct involvement sparked a company-wide dialogue about how dramatically customer behavior had changed and the breadth and speed of the tactics required to keep up.

The focus of such a summit is customer engagement, which should not be confused with the customer experience; engagement goes beyond managing the experience at touch points to include all the ways companies motivate customers to invest in an ongoing relationship with a product or brand. The summit must address three things. First, line and staff managers have to align on the vision for engagement: what relationship do you want with your customers? Examining their decision journey helps you to compare your level of engagement with what you believe it should be. After Starbucks investigated customer engagement in France and Italy, for example, it concluded that consumers in those countries preferred traditional local café formats. As a result, it invested in distinctive store layouts and furnishings and adjusted its beverages and service techniques.²

Second, the summit’s participants should coordinate the activities required to reach and engage customers across the full range of touch points. When one multichannel retailer held its summit, the company, like many others, discovered that recent trends had left it with an anachronism: a set of touch points that should be coordinated but were instead managed independently within functional silos. A customer-engagement summit allows the senior-management team to create a coordinated plan spanning them—so that, for example, the customer experience in a call center can be coordinated with the behavior of frontline employees, or the online-registration experience with product development.

Finally, a company ought to agree on the elements of the customer-engagement ecosystem that should be undertaken in-house and those that will involve outside partners. Internal resources probably won’t be able to deliver all of the requirements imposed by a world with many touch points: for instance, content and communications; data analytics and insights; product and service innovation; customer experience design and delivery; and managing brand, reputation, and corporate citizenship. Senior leaders need to decide how to carry out these activities and design the mix of in-house capabilities and external partners that will deliver them. These customer-engagement planning sessions, in addition to informing and motivating the organization as a whole around customer engagement, can help avoid spreading scarce resources too thinly.

2. Create a customer-engagement council

One of the first outcomes of a customer-engagement summit will probably be the realization that an ongoing forum for focusing management’s attention on engagement is needed. This doesn’t have to be yet another marketing committee. In fact, your customer-engagement council may already exist under another name, such as the strategic-planning or brand council. The purpose is to bring together all primary forms of engagement— marketing, communications, service, sales, product management, and so on—to coordinate tactics across touch points in a more timely manner.

This council, which should be an operational and decision-making body, must translate the findings of the customer-engagement summit into specific actions at individual touch points. To accomplish this goal, the council’s membership needs to be large enough to ensure that all key players are represented but small enough to make decisions efficiently. One high-technology company, for example, included 17 people on the engagement council. Because it is difficult to make it function efficiently with more than a dozen or so members, decision making in practice rested with a core group comprising the chief marketing officer and the heads of the company’s three primary divisions; subteams of the council coordinated its decisions with the company’s other entities when necessary. These councils are most effective when chaired by the same person who leads the customer-engagement summit, such as the CMO or the head of communications, strategy, sales, or service.

The second consideration is how regularly the council should meet. The customer-engagement council of one retail bank meets weekly, for example; a similar council at a social-services organization, monthly. The frequency of such meetings generally is based on what key engagement activities the group is driving and their cycle time. The third consideration involves inputs and support: the council must make fact-based decisions, so it needs information on everything from priority touch points to customer behavior and the moves of competitors.

Finally, such a council must have a customer-engagement charter. To reduce the risk of gaps, rework, and turf wars, everyone in the organization needs clarity about decision rights over touch points and the key processes that affect them. As we explained last year, it’s useful to allocate the design, build, operate, and renew rights for specific touch points explicitly to functional “owners.” Marketing, for example, might design and renew scripts for a call center, which sales or operations would build and operate. In addition, the process of developing a charter is useful to force a dialogue about who owns and does what. More specifically, what does marketing do in customer engagement? What does it not do?

When conceived, constructed, and operated correctly, these customer-engagement councils play a critical role in breaking the “silo” mind-set that diminishes the effectiveness of customer engagement in many organizations. Such a council often serves as a mediator and decision maker in conflicts between functions and business units and as a filter for what must be elevated to the level of the CEO or other senior leaders.

3. Appoint a ‘chief content officer’

A decade ago, when the extent of the digital revolution—the massive proliferation of media and devices and the empowerment of consumers via social networks and other channels—became clear, many companies quickly appointed “digital officers” to oversee these emerging touch points. It’s now evident that the challenge is not just understanding digital channels but also coping with the volume, nature, and velocity of the content needed to use them effectively. Companies need to create a supply chain of increasingly sophisticated and interactive content to feed consumer demand for information and engagement, not to mention a mechanism for managing the content consumers themselves generate. The emergence of companies-as-publishers demands the appointment of a chief content officer (CCO).

Companies across industries—from luxury goods to retailing, financial services, automotive, and even professional sports—are creating versions of this role. All are adopting a journalistic approach to recognize hot issues and shaping emerging sentiment by delivering compelling content that forges stronger emotional bonds with consumers. The CCO role is designed to provide the on-brand, topical, and provocative content needed to engage customers. The CCO must develop and manage all aspects of the supply chain for content, ranging from deciding where and how it’s sourced to overseeing the external agencies and in-house creative talent generating it.

Companies shouldn’t forget that even with a CCO in place, designing and executing a content strategy still requires coordination with several key business areas. The group responsible for gathering and analyzing customer insights, for example, may need a new mandate to support the CCO by providing research on what customers and segments require, as well as where, when, and how that content can most effectively be delivered. The CCO may need help from human resources to find, attract, manage, motivate, and develop the in-house creative talent often required to fulfill a content vision. The CCO will have to work closely with the team responsible for shaping brand perceptions to understand the company’s character deeply—its heritage, purpose, and values—and with areas such as corporate social responsibility, investor relations, and government affairs to gain a full perspective on how the company interacts with external stakeholders.

4. Create a ‘listening center’

Engagement is a conversation, yet companies are increasingly excluded from many of the most important discussions. More social and other media are available to mobilize your fans and opponents than ever before, and any interaction between a customer and your company could be the match that starts a viral fire. In this environment, companies should establish listening centers that monitor what is being said about their organizations, products, and services on social media, blogs, and other online forums.³

Such monitoring should be hardwired into the business to shorten response times during real and potential crises, complement internal metrics and traditional tracking research on brand performance, feed consumer feedback into the product-development process, and serve as a platform for testing customer reactions. We’re already seeing listening centers established across a broad swath of sectors from financial services to hospitality to consumer goods. A French telecommunications company not only monitors online activity but also has a tool kit of prepared responses. “I can’t predict what crisis will hit,” a senior executive at the company said. “But depending on the magnitude of it, I know the people I need to get in the room and what to discuss.”

5. Challenge your total customer-engagement budget

Many companies struggle to figure out how they can afford all the new tactics, vehicles, and content types required to engage with customers effectively. We propose a different mind-set: recognizing that there’s plenty of money, but in the wrong places. Companies can now communicate with customers much more productively: digital and social channels, for example, are radically cheaper (and sometimes more effective) than traditional media communications or face-to-face sales visits. When you make trade-offs across functions, you can free large amounts of money to invest elsewhere; if the experience of customers is so positive that they voluntarily serve as advocates for your brand, for example, can you reduce advertising expenditures? The moves your customer service center makes to resolve a crisis—say, a lost credit card on a honeymoon or a major machine failure on a critical production run—may build more lifetime loyalty than years of traditional loyalty campaigns.

What prevents many companies from realizing these productivity gains and cross-function trade-offs is a failure to look at total spending on customer engagement. They don’t see the opportunities to make trade-offs across functions and optimize the impact of investments across the entire set of touch points. Most budget on a function-by-function basis, and measure impact the same way. When you look at these expenditures and investments that way, there is almost never enough money, because each function seeks increased funding to improve the customer interactions for which it is accountable. That’s a losing game.

Instead, add up what you spend on customer engagement—in areas such as sales, service, operations, and product management, as well as in marketing. Then identify all the radically cheaper approaches you could take and ask, for example, how you would take them if your budget was 15 percent of its current size or how a competitor in an emerging market would approach this problem. Such exercises help to break the ingrained assumptions and conventional wisdom that creep into organizations and to highlight overlooked opportunities.

Finally, look at trade-offs across functions—for example, among investments in store renovations, revamped e-commerce sites, higher ad spending, changes in your model of sales force coverage, or improved operations in customer service centers. Which of these should be prioritized and in what order? Such decisions should be made not just on the projected financial returns but also on a strategic assessment of how customer expectations are evolving, how competitors are changing their methods of customer engagement, and where your company may have distinctive capabilities that could help it win through superior customer engagement.

One major Asian retailer did exactly this. Faced with ever-rising costs, it looked at its entire customer-engagement budget and identified where it was underperforming or missing out on new approaches to engagement. With that baseline, it cut 25 percent off its traditional marketing budget, invested in customer service, and reallocated other marketing expenditures to focus on digital, social, and mobile channels. By reducing in-store operations costs, the retailer financed new investments in a major loyalty program to improve its engagement with customers. As a result, 70 percent of the company’s sales now are to members of its loyalty program—about three times the rate of its competitors. Total costs are lower and margins higher, despite a challenging retail environment.

More customer interactions across more touch points are shaping the degree of engagement a customer feels with your company. The critical barrier to harnessing the potential value in this shift is organizational—companies that learn to design and execute effective customer-engagement strategies will have the advantage; the others will lose ground. We have no doubt that companies will one day evolve the full set of processes and structures needed to manage customer engagement across the whole organization. Until then, these five steps can get you moving in the right direction.

Transformational Leadership – Creating Leaders Able to Operate at the Cutting Edge Seminar

Join Roger Konopasek for this uniquely insightful seminar, connect with the latest insights and trends that will prepare you to plan cutting edge strategies, get hands on answers on how to re-position your organization to become a game changer in your market.

Roger is a cutting edge leadership thinker and transformational catalyst who have achieved measurable transformational shift in the leadership teams of major MNC's (like HP, Nestle, Exxon, Coca Cola ), especially in maturing management teams in a highly disruptive market situation in staying ahead of their competitors. More info on Roger , please visit : www.rogerkonopasek.com

 

Details of the exclusive seminar are as follows ;

Date : 30 October 2012 ( Tuesday )

Venue : Sunway Putra Hotel

Sunway Putra Place

100, Jalan Putra

Kuala Lumpur

Time : 9.00am to 5.00pm

Investment : RM1,500.00 per pax

Cheques to be made payable to “Corporate Learning Solutions Sdn Bhd”

Workshop outlines & registration form is attached for your action.

For Registration & Enquiries, please contact Anne @ 603-79554650.
Email : nesh@corp-learning-sol.com

Website : www.corp-learning-sol.com

 

 

Act like a local: How to sell in emerging markets

According to a possibly apocryphal story, the head of sales of a multinational apparel company dispatched two salespeople to open a new territory in a predominantly rural country. After scouting a few villages, the first salesman rang the head office. “I’m returning on the next flight,” he said. “We can’t sell shoes here. Everybody goes barefoot.” Meanwhile, the second salesman was busy e-mailing the head of sales: “The prospects are unlimited. Nobody wears shoes here!”

Emerging markets can be fertile ground for enormous sales growth but each market has its own unique hurdles. Without a deep understanding of the local customer you are likely to trip over those obstacles—or abandon the market prematurely like our apocryphal salesman above. To break into emerging markets and capture the potential, the best sales leaders have realized they have to think like a local.

Emerging-market infrastructure is often less developed, channels are fragmented, and cultural preferences often more complex and varied.

Multinational corporations often make the mistake of importing approaches that work at home without making any adjustments. Meanwhile, local players often underestimate both the resources and speed required to match market needs and compete with global players.

To accelerate growth in emerging markets, leading sellers understand three imperatives:

1. Get on the ground.
   Information on customers and the market is often hard to obtain. Successful companies invest in all the data sources and expert information available, but nothing beats getting a firsthand sense of how the market works by visiting local areas and resellers. This ground-level view also gives sales leaders a clear read of where the market is heading and lets them plan for it.

2. Overinvest in the right partners.
In developed markets, a company may have many capable potential partners. In emerging markets, finding a partner is a much more strategic endeavor. With limited choice, partnerships are for the long haul, which means finding the right capabilities and partners that share your values.

3. Build talent for the long term.
Annual growth in emerging markets can exceed 10 percent. That pace requires sales leaders to think creatively about how they will attract and retain the talent they will need to keep up.

Get on the ground
Emerging-market infrastructure is often less developed, channels are fragmented, and cultural preferences often more complex and varied. Demand can be unpredictable, making the near-term return on sales investment uncertain, even if the long-term growth is extremely attractive.

Complicating these challenges is a lack of data. Multinationals that enter developing markets often have to do their own research to develop insights—mixing whatever local market data they can buy, in-field experience, and on-the-ground research. This can’t be done back at headquarters.

A global resources company watched sales volumes rise dramatically across Asia on the back of surging economic growth, but was alarmed by its dependence on a single economy. The board demanded a granular perspective based on the microdrivers in the local market and combined locally available statistics with expert interviews and field observations. This allowed sales leaders to model product demand and adjust sales strategies. Ultimately, the analysis supported expansion and helped the business maintain market leadership. Over the subsequent 12 months, the forecasts proved accurate to within 5 percent of actual demand.

There is no substitute for intelligence gained firsthand on the ground. When a wireless-communications provider that was expanding in Africa prepared to launch new mobile-payment services, it assumed it should focus on countries with the highest GDP per capita. However, the company’s senior management team knew that official data would not provide a truly reliable picture of where actual purchasing power resided. So the team spent most of its time in the field to understand the dynamics in several priority markets.

The deeper it dug the less confident it became about its initial assumptions. In one West African country, for example, the company discovered that consumers in larger towns placed a premium on cell-phone use over other discretionary spending categories because they used those phones to stay in touch with friends and family members who had remained behind when they left home to look for work. This suggested that significant consumer spending power existed outside major cities.

The company also discovered that most people supplemented their salaries by bartering goods and services for items they could not afford to buy with cash. The team therefore probed the barter value of prepaid cell-phone minutes. Next came a game-changing insight. The researchers found a strong cultural bias toward cash: people would camp out near ATMs to withdraw their entire paychecks the moment they cleared at midnight. The company postponed launching mobile payments and focused instead on expanding its core wireless services to smaller cities. Other African countries had different dynamics, and the company tailored its strategies accordingly, helping it become one of the largest providers in the region.

In India, product sales involve layers of distributors and resellers, and channel recommendations play a critical role in driving purchasing decisions. This final point of sale is often a local mom-and-pop shop with a very limited inventory covering a range of products and brands. A domestic cement company realized that it was effectively blind to what was happening at this final, critical step so it handed out simple GPS devices to field reps so that they could log individual points of sale for all cement products in the market. Over six months, a database of more than 22,000 outlets came together. Analysts then matched this information with local census data on evolving population and spending patterns to identify areas of growth with low penetration. The fieldwork also provided an initial assessment of which resellers would be their best potential partners.

Overinvest in the right partners

The capabilities and infrastructure of channel partners vary enormously in emerging markets. Choosing channel partners is a make-or-break decision: sales leaders need to have long-term confidence in the partners they pick, and their organizations need the capabilities within their own teams to manage the channel.

Choosing channel partners is a make-or-break decision: sales leaders need to have long-term confidence in the partners they pick, and their organizations need the capabilities within their own teams to manage the channel.

Vodafone got creative when it sought channel partners in rural India. There are about 600,000 villages in the country, and 92 percent have fewer than 10,000 residents. It was not cost-effective for Vodafone to establish distributors everywhere, nor feasible to sift through the enormous number of retailers to determine which were most reputable. Instead, the company created a two-tier distribution model, under which some retailers doubled as distributors. The main distributors were responsible for a specific rural area and served shops in a central village directly.

For smaller or more remote villages, distributors selected local retailers to be associate distributors. These second-tier partners managed four to seven cell sites in their designated areas and were responsible for service. These small vendors required only modest markups, so the two-tier model was profitable for Vodafone, the distributor, and the associate distributor. Between 2008 and 2011, the number of associate distributors grew from 1,500 to almost 8,500. As a result, Vodafone has more than 23,000 channel salespeople covering 360,000 villages across India.

Distributors in emerging markets are likely to vary considerably in skill levels, and sellers need to understand those differences. Indeed, taking a segmented approach to channel partners was a recurring theme among the most successful emerging-market sales leaders. A Chinese components manufacturer boosted distributor sales 20 percent by dividing distributors into four groups based on readiness for growth and existing skill levels. The company worked most intensively with distributors that had good skills and were better placed for growth, and provided better point-of-sale support to them. Among low-skill distributors, the company focused on those with the most potential and provided only a simple set of product offerings that required little point-of-sale support or customization.

Build talent for the long term

Sales leaders who are used to focusing on farming a large client base generally strive to capture incremental market share and improve margins. Emerging markets are a jarring change: growth is rapid and unsettled, competitors appear quickly, and consumer classes emerge overnight. Companies that are too timid to make long-term commitments can soon find themselves marginalized.

The rapid growth opportunities in fast-moving emerging markets have been a boon for local workers, who have unprecedented employment choices. But that makes attracting and keeping qualified sales talent increasingly difficult. Educated young people often want opportunities in larger metropolitan cities, but this provides considerable challenges for selling into the vast rural areas that still represent a major source of growth.

Attracting salespeople is only half the battle. As a result of this frenzied hunt for talent, salaries have increased five- to sevenfold in the past decade in some markets. To add to the challenge, companies that offer training have become hunting grounds from which other businesses cherry-pick the best people.

“We’re reluctant to train our sales force because we know they are likely to leave and take that knowledge to a competitor,” admits the head of sales for an automotive supplier in the Asia-Pacific region. In this environment, the best sales organizations keep it simple when it comes to training programs. After a series of acquisitions, China’s state-owned chemicals company needed to build the sales capabilities of more than 500 people, a much larger sales force than it had in place before. Rather than investing heavily to give salespeople a background in sophisticated customer relationship management approaches, the company developed its own content with Chinese examples and pared-down explanations of key sales principles, such as step-by-step instructions for segmenting customers into basic categories.

Training is not always enough. Tailoring the organization to the local situation is often a critical complement to investing in the right sales team. A mining-equipment supplier found its product-oriented organization was not playing to the needs of China’s business environment, which is characterized by strong relationships built on many years of collaboration between sales reps and business leaders at the customer end. Yet the rapid turnover and shortage of key staff at the company meant these relationships were extremely scarce.

The mining-equipment company decided to restructure its China sales team along six subregions rather than adhering to its global product-based structure. It also doubled its sales force over two years. Each subregion was headed by a director covering multiple product lines who also served as the key account manager for the largest accounts in the region. This arrangement allowed the company to build economies of scale across business units and capture the great opportunity for growth. Sales doubled over the next three years.

The dynamic and unpredictable nature of emerging markets that makes employee management such a headache can also be dangerously distracting for sales managers. Yes, consumer sentiment can change quickly, and new competitors can arise overnight, but the best sales leaders don’t get swept up in frantic excitement or false urgency. Instead, they balance aggressiveness and speed with rigor to ensure sales investments will generate a return over time.

In India, there is a dual challenge of succeeding now while setting up for (and shaping) the market of tomorrow. An industrial water-treatment-equipment company was aware of the market potential five to six years down the line and invested in a sales force to help grow the market. However, it first needed to compete effectively in the existing, much smaller market. The company created a cross-functional team drawn from the sales force, marketing, and product development. The team identified short-term ideas to expand margins and maintain sales momentum but also planned long-term success by demonstrating to customers the benefits of its higher-priced products. The company established a growth plan with buy-in across the sales organization to grow threefold over three years. Through these initiatives to deliver both near-term growth and long-term goals through shaping the market, the company achieved its first-year goals and is well on its way to its year three target.

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FROM HEWLETT-PACKARD

How did they do it?

FROM LIBERTY MUTUAL INSURANCE

Service that will WOW you

"The only way to build a good company is one satisfied customer at a time. However, to build a great company, we must add one raving fan at a time. The difference is this...a satisfied customer will come back, but a raving fan not only comes back, but becomes part of your sales team. There's a big difference!"
The truth is world class service organizations know and apply certain practices that most companies do not. This is what differentiates them from the pack. This is what keeps them moving forward on the leading edge of innovation and change, forcing others to catch up. They do things that exceed customer expectations. They solve problems before customers even know there is a problem. They fill latent needs before customers know they have a need. They offer value propositions that seem impossible, yet they deliver on their word. They understand that the customer is not always right, that the customer often does not know what they want until they see it. As Lee Iacocca put it many years ago, no one ever came to Chrysler and asked for a mini-van to be designed.

Super positive experiences with most businesses may be rare indeed, but they are a way of life for the companies that have it right. Customer service is not a department. It is an attitude. It is a culture. It is a collective way of seeing the world. "Wowing" customers is not the exception. It is the rule. Exceeding expectations is not a surprise. It is planned and executed with diligence, ease and grace.

Take Disney, for example. Imagine you are standing in line waiting for a ride in one of the parks. You notice a sign that indicates you will be in line for 35 minutes. Is this a guess? Is this like listening to an airline attendant telling you the plane you are waiting for is scheduled to leave on time in ten minutes when there is no plane at the gate? Disney not only knows how long you will wait, but they pad it by a few minutes so you "think you made good time" when you get on the ride in 33 minutes. Instead of being disappointed or simply satisfied, you feel good.

If you are serious about "wowing" your customers and growing your business through genuine best practices, The How of Wow! is for you. Some of the secrets revealed in this book may surprise you. After all, if everyone knew these secrets and everyone applied them, they wouldn't be secrets.