Periscopic media tour

Citation

Henry, C. (2006), "Periscopic media tour", Strategy & Leadership, Vol. 34 No. 3. https://doi.org/10.1108/sl.2006.26134caf.003

Periscopic media tour

Periscopic media tour

Leader to laggard

In a July, 2005, article from Kodak’s web site:

As part of the effort to accelerate its digital transformation and to respond to a faster-than-expected decline in consumer film sales, Kodak will extend the restructuring activity originally announced in January, 2004, in which the company set plans to reduce employment worldwide by as many as 15,000 positions. The company now plans to increase the total employment reduction to a range of 22,500 to 25,000 positions, and to reduce its traditional manufacturing infrastructure to approximately $1 billion, compared with $2.9 billion in January, 2004.

When largely completed by the middle of 2007, these activities will result in a business model consistent with what is necessary to compete profitably in digital markets.

Their film producing factories were going the way of the milkman. Kodak was faced with declining consumer film sales, high costs, and an outdated manufacturing infrastructure. How did this market leader become a market laggard? Like a lot of companies, it paid too much attention to what they knew, rather than what they needed to know next. To stay in the picture, leaders today should consider the following:

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  Look to create the future, not just follow the emerging trends.

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  Stretch yourself, imagine what is impossible and make it possible. Note: Strategic planning is great, but not if it only focuses on what you are certain of.

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  Remember that today’s cash cow may be tomorrow’s steak dinner.

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  Know who the potential new leaders are in your organization and develop them now.

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  Get everyone involved in “trend analysis.” Cut out headlines, pass them out, ask people how that headline might impact the business. Be open to the “off beat” ideas.

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  Embed innovation into the culture – your next great product may already be hidden in your company.

Kodak used these innovative ideas towards their own reinvention. For example, using new Internet voice technology by Skype(TM) and Kodak’s technology, they have taken the world of storytelling to a new level. Not only can you store and share your pictures online, you can now share your photo album and tell the story behind the pictures live, using Skype. As the headline from their website recently shared, “Kodak launches the first Skype certified online photo sharing experience, helping people talk live to friends, family and colleagues around the world while viewing a shared photo album.” Kodak has become a leader in digital imaging technology with inroads in health care technology, and they are the leaders in consumer digital images, printing, and sharing. At a recent Las Vegas International Consumer Electronic Show, Kodak stole the show by winning “Best of Innovation” awards for digital photography. That was a “new” Kodak moment!

There is a “Kodak Moment” for every organization. What’s yours?

“It’s a Kodak Moment – Leadership and Innovation”, Valarie D. Willis, The Point Newsletter, January, 2006, www.bluepointleadership.com

Evolution of the auto industry

The turmoil and uncertainty among auto manufacturers and their suppliers have left people wondering when a shakeout can be expected. Two experts who follow the auto sector say consolidation will take place among suppliers to a much greater extent than among carmakers, which may not experience mergers and acquisitions at all in the near term but will be engaged in ever-shifting strategic alliances and joint ventures.

In particular, some private-equity firms are hungrily eyeing auto supply companies for investment opportunities, according to Wharton management professor John Paul MacDuffie and Christopher Benko, director of the PricewaterhouseCoopers Automotive Institute in Detroit.

“There are a number of issues weighing this industry down, but the fundamental point is that the drivers of change are less connected to cyclical factors, and are more a function of structurally embedded problems that this industry has been avoiding for some time,” says Benko. The industry, he adds, is not going to grow its way out of its problems. North America and Europe are mature markets, and while there are opportunities for growth in emerging markets, those opportunities are still in their nascent stages.

“We have business models that no longer work,” Benko adds. “This is putting the viability of many companies into question. Plus, you have a changing of the guard taking place, as new leaders are emerging … The industry needs to be restructured, and we are on the cusp of an era which will have more clearly defined winners and losers.”

Benko suggests that while there may be some automaker restructurings leading to changes in relative positioning, the major automaker lineup will remain largely intact over the next decade. Today’s “Global 10” automakers – Toyota, GM, Ford, DaimlerChrysler, Honda, Hyundai, BMW, Volkswagen, PSA and Renault-Nissan – will probably still be around in 2016. But what is likely to happen is that some automakers will be forced to rethink their global market positioning and engage in more targeted alliances and joint ventures as they take steps to adjust to market challenges. Any number of such combinations has already occurred since the 1990s.

The weaker automakers are more likely to shrink than disappear, according to MacDuffie, who is also co-director of the International Motor Vehicle Program, a network of researchers at universities worldwide that receives funding from major automakers and suppliers. “Most of what we’re talking about – even with the troubles at GM and Ford – are very big companies potentially shrinking to become smaller companies,” MacDuffie says. “Regardless of where people stand on the issue of whether GM will go into bankruptcy, they all expect GM to come out of bankruptcy and continue to function. In that sense, there are no companies that look so weak that they would disappear.”

“Auto Industry Consolidation: Is There a New Model on the Horizon?”, Knowledge@Wharton, http://knowledge.wharton.upenn.edu/article/1365.cfm

Steps to better strategic decision making

Organizations don’t all suffer equally from distortions and deceptions; some are better at using tools and techniques to limit their impact and at creating a culture of constructive debate and healthy decision making. Corporate leaders can improve an organization’s decision-making ability by identifying the prevalent biases and using the relevant tools to shape a productive decision-making culture.

Identifying the problems. Corporate leaders should first consider which decisions are truly strategic, as well as when and where they are made. Applying process safeguards to key meetings in formal strategic-planning exercises is tempting but not necessarily appropriate. Often the real strategic decision making takes place in other forums, such as R&D committees or brand reviews.

After targeting the crucial decision-making processes, executives should examine them with two goals in mind: determining the company’s exposure to human error and pinpointing the real problems … .

Tools against distortions and deceptions. Once companies undertake this diagnostic process, they can introduce tools that limit the risk of distortions and deceptions. One way of tempering optimism is to track the expectations of individuals against actual outcomes in order to examine the processes (such as sales forecasts) that underlie strategic decisions. Companies should review these processes if forecasts and results differ significantly. They can also provide feedback where necessary and show clearly that they remember forecasts, reward realism, and frown on over optimism.

An objective analysis of past decisions can be a first step: for example, does the company make many overoptimistic projections?

Loss aversion, magnified by career-motivated self-censorship of “risky” proposals, has its roots in explicit and implicit organizational incentives. Lower-level managers typically encounter more but smaller risks, so organizations can embed a higher tolerance for them in certain systems – for instance, by using different criteria for the financial analysis of larger and smaller projects.

Another technique is to request that managers show more of their cards: some companies, for instance, demand that investment recommendations include alternatives, or “next-best” ideas. This approach is useful not only to calibrate the level of a manager’s risk aversion but also to spot opportunities that a manager might otherwise consider insufficiently safe to present to senior management.

Finally, the radical way of counteracting the loss aversion of managers is to take risk out of their hands by creating internal venture funds for risky but worthwhile projects or by sheltering such projects in separate organizations, such as those IBM sets up to pursue “emerging business opportunities.” The advantage is that norms can change much more easily in small groups than in companies.

Fostering a culture of open debate. It is essential to realize that these tools are just tools. Their effectiveness ultimately depends on the quality of the resulting discussions, which can’t be effective unless the organization has a culture of reasonably open and objective debate.

“Distortions and Deceptions in Strategic Decisions”, Dan Lovalio and Oliver Sibony, McKinsey Quarterly, January 2006

Does tech matter?

Ever since tech pundit Nicholas Carr published a provocative Harvard Business Review article titled “IT Doesn’t Matter,” business leaders have been debating Carr’s thesis that information technology is becoming a commodity input like water or electricity … . For two very different takes … we checked in with Carr, a sought-after writer and speaker on technology issues, and Kevin Rollins, CEO of Del.

Can technology give a small business a strategic edge?

CARR: Over the years, modern computing has become more accessible, more standardized, more homogenized. It is getting cheaper and cheaper all the time. And that just means that it’s harder for companies to sustain an advantage by being a technology leader. As these trends play out, it becomes easier and easier for other companies to catch up. So as we move to this next stage, we’re going to see even smaller companies being able to catch up. This, I think, will further neutralize any advantage that IT provides.

ROLLINS: That’s absolutely wrong. If that’s true, then why don’t all companies perform the same way? They’ve all got access to this standard technology! When you take those standard components, which are now low cost, the question becomes, Which technology do you implement? and then, What you do with it? So IT does matter. But now what counts most is the execution and implementation of all the standard pieces. And you can do that poorly. You can buy the wrong pieces, or you can buy the right pieces and do it well.

You could make a similar argument for your telephone system. Clearly, telephones matter – you can’t run a business without them...

ROLLINS: No, you can’t, but telephones are all exactly the same, essentially.

And what matters is whom you call and what you say to them?

ROLLINS: I think that’s probably true. But IT is a little different still, because you can take the components and put them together a little differently. You can use a website or not. You can use standard servers, or you can use proprietary technologies, which is very expensive … .

CARR: Companies can outperform their rivals for all sorts of reasons. So variations in performance among firms with access to the same technology can probably be traced to factors other than technology, such as superior products or better customer service or an outstanding reputation. It’s a fallacy to assume that IT is the only source of differentiation. But I agree with Mr. Rollins that companies can gain an advantage by managing information technology better than others. It’s important to remember, though, that that’s a management advantage, not a technology advantage.

“‘Tech Doesn’t Matter...’ ‘Want to Bet?’”, Richard McGill Murphy, Fortune Small Business, January 31, 2006 http://money.cnn.com/magazines/fsb/fsbarchive/2006/02/01/ 8368205/index.htm

Beyond marketing panaceas

Various “panaceas” have been introduced into marketing and sales departments in recent years. Unfortunately, most have had the curative power of 19th-century patent medicines. Take customer relationship management (CRM), once heralded as marketing’s “smart weapon.” Huge amounts of money have been invested in CRM systems and loyalty programs. In 2000, for example, the top 16 European retailers alone spent in excess of $1 billion on loyalty programs. Yet the correlation between customer loyalty and profitability is often weak or nonexistent. Recent Harvard Business School research into loyalty programs, for example, found that long-term customers were as expensive to serve as non-loyal customers, or even more expensive.

There is a growing recognition, even in sectors where marketing has traditionally taken a backseat, that a more rigorous approach to marketing is now required. In industry after industry, marketers are being asked to transform their practices.

At the $152 billion industrial and finance company General Electric, for example, CEO Jeff Immelt has stated that “sophisticated marketing” is now one of the company’s three imperatives, along with risk taking and innovation. “Jeff has launched us on a journey to become one of the best sales and marketing companies in the world,” David R. Nissen, CEO of GE Consumer Finance, recently told Business Week … .

We are not the first to suggest that marketing needs to become more scientific, nor will we be the last. The debate about whether creativity or analysis is more important in marketing has been around for years. But the idea that there has to be a trade-off between the two, we believe, is flawed. It is not the case that by doing more analysis, marketers need to be less creative; in fact, the reverse is true. By being more scientific, they can focus their creative efforts on the activities that will yield the best return on the investment.

At Procter & Gamble, for example, Chief Executive A.G. Lafley has brought new rigor and creativity to the company since 2000. In the past two years alone, P&G has raised its new product hit rate – the percentage of new products that deliver a return above the cost of capital – from 70 to 90 percent. And that’s in an industry where half of all new products fail within 12 months of launch.

“Results-Driven Marketing: A Guide to Growth and Profits” by Johannes Bussmann, Gregor Harter, and Evan Hirsh, Strategy+ Business enews, January 2006 www.strategy-business.com/press/ enewsarticle/enews013106?pg=0

Sales-driven marketing

To call Jocelyne Attal worldly would be an understatement. The chief marketing officer for Avaya Inc., a Fortune 500 communications systems and applications firm, is of French descent but was born and raised in Morocco. She speaks four languages and has worked on two continents for the likes of IBM, Novell, and Gateway. And on a day in early December in the Basking Ridge, New Jersey, headquarters, a packed suitcase sits by her office door, ready to accompany her to Europe and Thailand …

As an IBM vice president of marketing she helped Big Blue’s successful middleware division, WebSphere, grow from 7 percent to 41 percent market share in less than three years.

S&MM: After that you held many more high-tech sales, marketing, and management positions. How does having a strong sales background help shape your outlook on marketing?

JA: I see marketing a little differently from a classic CMO who has gone through advertising school. At Novell I was in charge of revenue and profit [as the general manager for Europe, the Middle East, and Africa], so I saw marketing as a way of increasing demand for my products and shortening the sales cycle for my people … .

S&MM: How do you apply this very results-driven approach to marketing at Avaya?

JA: If marketing is what the company promises as a customer experience, branding, for me, is [committing to that] customer experience … .So the way you measure your success in branding is through awareness, consideration, and preference, specifically with your target audience … .

Another measurement is the demand you are creating. We have a target. The cost of a lead is measured, and then we work very closely with sales to nurture the leads, and to make sure we have activities and tactics that take those leads from awareness to closing. We manage the leads from all sources, and we have also a target number of leads that marketing needs to generate that are coming directly from our campaigns. So that’s how we measure our contribution to demand creation. I consider my job to be demand creation.

The third target that we have is making sure we create the environment for our sales force, internal or external – which means our business partners are included – to sell effectively and shorten the sales cycle … .

S&MM: What’s an example of a tool that was improved based on sales force feedback?

JA: One of the very successful tools that the sales force told us they like to use is our executive briefing centers, where they put a customer in front of a briefer, and the briefer talks about and shows different Avaya solutions. We have briefing centers all over the world, but of course physical locations are limited. Our number-one priority was how to take that from reaching several thousand people to several hundred thousand people. We created the idea of the virtual briefing center, so a salesperson can go on the Web and choose a topic like mobility, or a customer can go on the Web and choose a topic or case study they want to learn about, and it would be as if they were in a briefing center. And we went from addressing thousands of people in different locations in the world to several hundred thousand people that can connect on the Web. It’s on demand, and you can go and see someone speaking, see the demo, and understand what other customers did. That’s an example of a tool that has allowed us really to broadcast our skills in a big way.

[Using the Web] gives customers the opportunity to get information whenever they want, and that shortens the sales cycle. The customers that we have are completely comfortable with the Web; they go on the Web when they need information, they go in chat rooms, they go in forums. If they need something, they expect to find it on the Web. It’s why I worked very hard on our Web presence, and we increased our visitors in a year by 33 percent. It’s very important to give information anytime, anywhere, and in any method, and we are always working on ways to give information to our customers the way they live. What you will see on our Web site are a lot of testimonials, a lot of case studies, demonstrations – a lot of education is on the Web site. It’s creating demand in the business-to-business environment.

“On Top of the World,” Julia Chang, Sales and Marketing Management January 2006

Can listening to customers hurt innovation?

You can never know too much about your customers. But we’ve heard some concerns in meetings and in our presentations lately that raise an interesting dilemma: How much decision making should be based on customer feedback? Can there be too much?

Take, for example, The Gap’s gaffe, as told in a recent BusinessWeek article. Customer data analysis revealed aging baby boomers to be a growable customer group, so the Gap stocked its shelves with dialed down designs, easy fit clothes, and the ad tagline “For Every Generation.” But it didn’t work. In reality, boomers felt The Gap was still too young for them.

Earlier this month we heard the topic discussed at a Conference Board event focusing on the CMO as Chief Growth Officer. We were surprised to hear several participants warn about too much customer knowledge and letting the customer run your business right out of innovative ideas.

“Let’s say that too much customer centricity can be a dangerous thing,” said Diane Gulyas, CMO for DuPont. She was concerned that too much focus on the customer could lead to the customer dictating innovation and new services, but their feedback is based on what they already know. In fact, she detailed a failed experiment three years ago with Oakley. Oakley wanted to use a DuPont chemical called Kevlar as a differentiation point to enter the athletic shoe business. Oakley wrote a big check. Customers were supposedly anticipating the shoe, but it turned out that only a few shelled out dollars.

However, a wrong prediction shouldn’t be an excuse to go back to using gut level or anecdotal knowledge of customers to override what you’ve already learned, and more importantly, what you know about customers that your competitors don’t. The best way to increase the value of that customer base is by making decisions based on value and needs. However, if your customer insight initiatives don’t yield the information that enables your company to improve the value of your customer base, we suggest asking yourself these four questions:

How Do You Define a Customer?

…By including prospects and contacts in their processes, companies can learn more about what the customers they don’t currently do business with need and value about their cars. Define who your customer is as well as who you would like your customer to be. Learn all you can about that second group.

How Close Are Your Product People to the Customer Experience?

…If you get out among your customers and your competitors’ customers, there’s a lot to learn. At Pitney Bowes CMO Arun Sinha oversees an “Onsite/Insight” program. It requires senior management to spend days at their biggest customer headquarters with all levels of employees. “We force people to go in depth about our products and the customer experience with them,” he says. “A lot of things change when you start asking ‘how does this action affect the customer experience?’”

Are You in Control of Innovation?

…The point is not to get the customer to design the products they want (you’re the product expert, not them), but rather to anticipate and develop what actual customers WILL need. Presumably you know as much as your competitors about the products and services in your industry. You very likely know a lot MORE than the customers about those products and services. The advantage that you can have is to know a customer, and another, and another, better than your competitor, and to be able to predict, better than your competitor, and maybe even better than the customer – what that customer will need next from you, when, and for how much.

“Can You Have Too Much Customer Feedback?” by Don Peppers and Martha Rogers Inside 1to1, November 21, 2005, http://www.1to1media.com

Hiring and culture

I’d rather interview 50 people and not hire anyone than hire the wrong person. Cultures aren’t so much planned as they evolve from that early set of people. New employees either dislike the culture and leave, or feel comfortable and stay, so the culture becomes self-reinforcing and very stable (Jeff Bezos, CEO, Amazon.com).

Fast Company Blog, 3 February 2006 http://blog.fastcompany.com/archives/ 2006/02/03/hireright.html

Architecture, productivity, and knowledge workers

I’ve worked in offices, and I’ve worked in cubicles…And I’m here to tell you: Collaboration is great, but sometimes I’d kill for a door.

… Once, I … got into a loud bar fight with an architect on the topic of cubicles. Fittingly, this outburst took place just down the road from the University of Colorado, where in 1968, a fine-arts professor named Robert Propst came up with the “Action Office.” Propst’s vision was to give white-collar workers, then toiling amid rows of desks in huge open spaces, both more privacy and a way to individualize their space. By that measure, cubicles were an improvement. But in the hands of space-mad facilities planners, the idea was perverted to justify an officescape that resembled the Chicago stockyards …

The vogue for one-size-fits-all offices reached its apotheosis in the dotcom years, when Intel CEO Andy Grove famously foreswore his suite for an 8-foot-by-9-foot cubicle. …The savings that accrue from jamming employees into cubes rather than offices, particularly in high-rent markets, can be huge. The productivity gains that come from giving workers a space where they can do uninterrupted, heads-down work – those are harder to quantify.

Shockingly, there has been no defining Frederick Taylor-esque research on knowledge-worker productivity. But Tom Davenport, professor of management and information technology at Babson College, has tried to crack the code with a year-long survey of workers, academics, and executives in HR, IT, and facilities planning. He found that three factors determined white-collar performance: management and organization, information technology, and workplace design. The last, he says, has a measurable effect – for good and ill. “Open offices do lead to more unstructured communication,” he says. But “those same offices can lead to problems of concentration. If you value reflection or deep thought, it gets tough.” Call it the attention-deficit office.

“Death to the Cubicle”, Linda Tischler Fast Company, June 2005

An overlooked global market niche

The distribution of wealth and the capacity to generate incomes in the world can be captured in the form of an economic pyramid. At the top of the pyramid are the wealthy, with numerous opportunities for generating high levels of income. More than 4 billion people live at the bottom of the pyramid (BOP) on less than $2 per day…There are organizations helping the handicapped walk and helping subsistence farmers check commodity prices and connect with the rest of the world. There are banks adapting to the financial needs of the poor, power companies reaching out to meet energy needs, and construction companies doing what they can to house the poor in affordable ways that allow for pride. There are chains of stores tailored to understand the needs of the poor and to make products available to them.

The strength of these innovative approaches… is that they tend to create opportunities for the poor by offering them choices and encouraging self-esteem.

To begin to understand how all of this is remotely possible, we need to start with some basic assumptions:

…The poor cannot participate in the benefits of globalization without an active engagement and without access to products and services that represent global quality standards. They need to be exposed to the range and variety of opportunities that inclusive globalization can provide.

…BOP markets must become an integral part of the work of the private sector. They must become part of the firms’ core businesses; they cannot merely be relegated to the realm of corporate social responsibility (CSR) initiatives. Successfully creating BOP markets involves change in the functioning of MNCs as much as it changes the functioning of developing countries. BOP markets must become integral to the success of the firm in order to command senior management attention and sustained resource allocation.

There is significant untapped opportunity for value creation (for BOP consumers, shareholders, and employees) that is latent in the BOP market. These markets have remained “invisible” for too long.

The Market at the Bottom of the Pyramid, C.K. Prahalad, Wharton School Publishing, 2005.

Craig HenryStrategy & Leadership’s intrepid media adventurer collected these sightings of strategic management in action around the world. Craig Henry is a marketing and strategy consultant based in Carlisle, Pennsylvania (Craighenry@aol.com). He welcomes your contributions and suggestions.