Challenging times show an organisation’s ability on creating a high performance organisation through work culture and the employees attitude towards performance. One of the factors affecting the employees’ attitude is the depth of engagement that the employees have with their corporate brand.
The stronger and deeper the engagement between the employee and the brand, the more productive and effective the manifestation of the brand to its stakeholders.
The organisation or corporate brand is brought to life through the employees across all management levels. Senior management is the de-facto ‘role-model’ whose attitude and behaviour is replicated by mid and junior management in peer-to-peer interaction and in external business dealings. Thus being a key influencer in the overall brand experience that a stakeholder gets to feel.
In the current business environment, with product based differentiation extremely difficult, highly competitive market segments and low competitive advantages coupled with fragmented consumer segments with low loyalty towards brands, how can an organisation ensure a strong brand identity?
Continuous advertising of the brand communicating the same old key message is no longer an effective solution. Doing what one was doing in the past, prior to the global recession, no longer holds well in assuring brand profitability. Today an organisation’s BOD (board of directors) is only interested in “growth and profitability” simultaneously.
As a COO how do you deliver this?
By having a 100% consumer centric view that brings forth:
- Leadership through innovative practices,
- Creativity in growth planning and
- Ensures brand risk management
The key here is the 100% consumer-centric approach. This will lead the strategic planning process and provide a clear roadmap that would have to be communicated (to employees) and implemented.
Through the communication and clear instructions of process (i.e. what and how to do) there will come about a attitudinal shift amongst employees resulting in effectiveness. Through this shift the organisation would be able to move, albeit slowly but surely, towards a continuous growth path.
But, beware, the path to achieveing such attitudinal shift is not an easy one! In order to achieve the results planned for, it’s often necessary to make some very hard choices that include changing the way work has been done till date.
One of these hard choices is for senior management to change in their approach to work, in order to affect the results. I.E.:To bring about change in ‘preference for the brand’ the organisation’s senior management cannot keep doing what they have always done. Senior management in the key functions of HR, Production, IT, Marketing and Finance need to be innovative in their functional roles. They need to be ingenious and creative.
The lead for such an environment will come from the CEO/COO. As a COO you would need to lead by example and constantly demonstrate innovation and effectiveness.
No change means zero sum game! There’s an old saying– “You can’t do what you’ve always done and expect better results.”
It’s that simple!
To achieve effective results, an organisation must step up its game. After all, its consumers have. Given the times, their approach to a brand experience and their purchasing behaviour has radically altered. If an organisation doesn’t recognise this and take account of it in its business process, it’s driving its brand to the ground!
Bringing about such a change can be categorised as ‘adopting innovative practices’ — taking a totally new approach to the issue at hand keeping the key stakeholder’s benefit in mind.
Two critical resources would be needed to ensure success:
- High Performers are problem-solvers, not the excuse-makers. Rather than wallow in hardship or defeat, they take positive steps. They are motivated when others aren’t. They stay focused on the desired outcome and creatively work on figuring out a way even when everything’s stacked against them. What separates High Performers from the rest is how they respond to difficult challenges and the roadblocks in front of them.
- The engagement process for a high performer needs to be quite different from rest of the employees. The high performers are ultimately the organisation’s internal and external ‘brand champions’ ie. They represent the dynamism and effectiveness of the brand. Thus they need to be empowered first or brought on board to develop the strategic business direction and thus have ownership which will bring about engagement.
B. Clearly understanding the strategic insight from the stakeholder’s perspective in terms of what their need is—i.e. in simple marketing parlance this means knowing what’s the consumer’s subconscious need or want that the brand must fulfil:
- E.g.: for a financial service product such as credit card, it would be key to know why exactly the consumer needs a credit card. Is it regulatory requirements? Is it peer pressure? Is it an unsaid social status announcement? Delving into this would automatically bring out the consumer’s financial knowledge base covering spending and savings habit. This would provide for risk coverage as well as fixing of credit limit (and thereby aid in restricting bad debts for the financial institution). Additionally, identifying the specific need would open up a ‘direct’ avenue for brand communication, possibly using social media, to help the consumer and thereby aid in the relationship development between the brand and the consumer.
Such strategic marketing approach is considered ‘innovative’ as it uses cross-industry best practices coupled with core target audience research, socio-economic and cultural trend mapping. Without such new approachs an organisation would end up doing what it was doing in the past and not achieve any positive results.
The lead for such changes in the work culture has to come from the senior management. Recognising the change areas, identifying required skill sets and direction setting can only come about through leading by example and identifying the high performers who can put in place a changing work culture.
Without innovative leadership and a focussed brand growth and profitability approach at the senior management level, an organisation would lurch on in its day-to-day activity resembling a ‘headless chicken run’.
Net result—employees would become ‘captive’ brand stakeholders with absolutely no engagement with the brand and in it just for the salary! An extremely harmful and dangerous scenario for any corporate brand, as the brand experience, that would manifest externally from such employees would be disastrous.
Article By: Ashish Rajadhyaksha
Most small successful manufacturers of relatively inexpensive items come to a decision tree from time to time if they should maintain status quo or move up the value chain. While in the face of globalization, it’s becoming quite clear that continuing as before is no longer a completely viable option, but on the other hand, changing focus from making inexpensive items to more innovative products will cost money, require skilled labor and take time to develop.
The fact that it’s competitive out there is an understatement; all one has to do is walk the trade shows such as Heimtextil or check the Request for Quotes (RFQ’s) on MFG.com, TradeIndia.com, or Alibaba.com
to see how quickly those RFQ’s get flooded with responses of cheap prices. The choice then becomes binary “continue as is” and you lose existing customers to lower-cost rivals, or evaluate opportunities to innovate and become a more important vendor to customers, the way Samsung, LG, Infosys, and Lenovo moved up the value chain over time.
So unless one is owned by the Chinese government, there are very few instances where absolute cost leadership can provide sustainable long-term strategic advantages. Even Wal-Mart cannot achieve its cost leadership without its corresponding ability to pass on the cost increases to its vendors. Most existing businesses are currently influenced by factors highlighted in the model below, and are forced to consider pros and cons of innovation made inherent by each of these factors:
CONCLUSION: Whether to maintain status quo or embrace change has been a question for eternity. If the incumbent is an absolute cost leader in its product category with diversified client base, or inexpensive products as critical components of other products, then it mayn’t need to change anything. Otherwise product innovation becomes very important not only for continued profitability, but also for business survival. Innovation and change doesn’t have to be a bad thing however, with companies such as Li & Fung, H&M, Arcelor Mittal, Geely as successful role models of low cost manufacturing turning into world-class business models through their global networks and relationships, technology integration, and innovation leadership.
Post by Ashish Rajadhyaksha
Answer is “Yes We Can!” But with a big caveat. As the Indian Conglomerate Tata Group’s Chairman Mr. Ratan Tata recently described in an interview in London how “nobody is willing to go the extra mile” at Jaguar Land Rover or Corus, two British firms which he bought in 2008 and 2006, many managers and workers in the western world have developed a sense of complacency and also hopelessness caused by rounds of lay-offs and financial uncertainties.
As we all know back in the 1980’s, US automobile and other industries got whipped by the new Japanese system of making things efficiently through a process called “lean manufacturing” and using buzzwords like “Kaizen” or continuous improvement and techniques such as “Just In Time” inventory management system. Since then western companies adapted the Japanese techniques and achieved Six Sigma efficiencies and ISO certifications, and achieved global dominance in sectors such as Aerospace (Boeing), Construction & Engineering (General Electric, Caterpillar), and of course Technology (Apple, Google, Intel, Microsoft, etc.).
Now in the new millennium, those surviving western companies and also the Japanese in turn face challenges from Brazilian, Chinese, Indian companies that are hungrier and now becoming engines of business innovation. With new products and services that are dramatically cheaper than the western equivalents: $3,000 cars, $300 desktops, $35 i-pad equivalents, and $30 mobile phones that provide nationwide service for just 2 cents a minute, they are reinventing systems of production and distribution and creating new business models from supply-chain management to recruitment and retention.
In all the hype, we’ve to remember that many of these companies are government-subsidized or part of industrial conglomerates such as Tata Group of India, Samsung Group of South Korea, Orascom Conglomerate of Egypt, or Salim Group of Indonesia. These groups have long operational histories and their share of failures and restructurings over the years, and so we shouldn’t get too afraid of their recent successes. We need to first study their motivations and compulsions behind innovation, and then devise moves to counter that threat. Always Remember the motto “Glocal: Think Global, Act Local”!
Primary motivations behind this innovation surge in Emerging Markets:
▪ Need-based: Cost arbitrage lasts only for so long, so they need to move up the value chain to more value-added services and retain employees. For e.g. Indian companies started as simple call centers, and then moved up to BPO, KPO, and now evolving into consulting services.
▪ Historical Nostalgia: For much of history, China, India, Egypt, Greece, Iraq and Iran controlled majority of the world’s GDP. Whether its nuclear energy, trade, human rights issues, or social service benefits, citizens of these countries don’t respond well to threats of sanctions and criticism, and always carry a perpetual baggage of living up to its glorious past. This sense of history drives them to try to achieve bigger things.
▪ Fear: Compared to western world, leaders in emerging markets are always fearful of losing power or getting head cut off that may result in creating solutions to survive or get ahead such as alternative energy solutions due to frequent electricity cuts, horrible pollution, or making the world’s cheapest car, (Tata Nano) w/ the motive being creation of many jobs and safer alternative to a bike.
▪ Demanding domestic market: One of the key factors in Professor Michael Porter’s Diamond Model of the Competitive Advantage of Nations is Demand Conditions. The more demanding the customers in an economy, the greater the pressure on companies to innovate and improve competitiveness. (Source: Institute for Strategy and Competitiveness, Harvard Business School).
▪ Globalization: As the world gets inter-connected via frequent travel and online communication, people are exposed to better quality products, and they demand the same from their local corporations. They’ll even smuggle these in if they have to, such as people taking iPad overseas and selling them for 2X or 3X the US prices.
▪ Cocktail of challenges and opportunities translates into innovation: Many consumers in these countries are poor, the infrastructure highly inadequate, and product piracy ubiquitous. So selling in high volumes and constant innovation becomes more important than long-term value proposition and product differentiation strategy. Bharti Telecom in India, Grameen Bank in Bangladesh, Grupo Elektra in Mexico, Haier in China, and East African Breweries in Kenya have all developed unique and innovative products or services to reach as many customers as quickly as possible. (Source: The Economist Special Report, “The World Turned Upside Down”, April 17th, 2010, pages 2-3).
How do western entrepreneurs compete with these game changing innovations?
▪ Glocal: Most of the world’s biggest multinationals are doing their R&D in emerging markets. Instead of the top down research mentality of the past, research is more field-based by embracing “polycentric innovation” models, so the best practices are applied in all markets. Companies such as GE, Cisco, Accenture, etc. have large workforce in emerging markets, serving both local markets as well as developing product and service intelligence for the home market.
▪ Create Inverted Funnels: Conventional wisdom suggests that benefits from products and services geared for the rich would slowly trickle down to the poor at the bottom of the pyramid as wealth slowly spreads around. Now strategists are realizing that it isn’t enough to concentrate only on the rich. They need to cater to the billions of people at the bottom of the pyramid too, and have started “reverse innovation”. The innovation benefits could then funnel up by creating more efficiency, sparing use of raw materials, gentle on the environment, and simplicity of products and design. For e.g. to stay relevant, Nokia needs to make a product equivalent to an iPad, but also a phone for $50 or below with long battery life that can be used as a flashlight during long periods of power outages.
▪ Do incremental innovation: Most western people think of innovation as technological break-throughs, innovations that take time and money. But many of the innovations consist of incremental improvements to products and processes, thereby improving people’s lives and saving them money as well. Examples of incremental innovations are: vacuum garment bags that save space and money, especially now when airlines are charging hefty fees for check-in luggage ; also rather than carry heavy water on their head or shoulders, women and children can now fill the drum by up to 50 liters of water and roll it along in the Q-Drum.
▪ Be Hungry: In this hyper-competitive world, those who are hungry for success and prepared to pounce on opportunities will get ahead. Indian, Chinese and Brazilian corporates are taking advantage of the weak market conditions, and are buying companies all around the world, and we need to do the same to get access to other markets.
▪ Be Frugal and Appreciative of Immigrants: Western world is in a debt spiral and is staring at dramatically lower standard of living, unless we replicate frugal production and distribution strategy, not demonize hard-working immigrants to benefit from the new focus on austerity.
Take-Away: Entrepreneurship & Innovation is continuous, complex and global. Instead of ceding leadership, our local Chamber of Commerce members have to benchmark after some of the developing nations, understand their motivations for innovation, and see how we can adapt these techniques to become more efficient ourselves and out-run and out-innovate competition.
This article is an effort in depicting how it’s possible to take cross-industry learning and strategically, utilise the same, for growth.
In this author’s opinion if the Islamic Financial Institutions look at ‘investing’ in educating the people, then in a planned manner, retail customers (for a lifetime) can be developed. The question remains, would the industry be willing to look at new ways (for the Islamic Finance industry) of generating growth? Or will it remain where it’s at?
What does consumer marketing and retail Islamic Finance have in common? Well, for starters, retail Islamic finance can take a leaf (or rather the entire book!) out of consumer marketing and utilise that available body of knowledge to develop business strategies that are consumer centric in order to achieve organic growth. Or more specifically, utilise social media as a means of engaging with the consumer and achieving growth.
Comments, opinions, thoughts are welcome and can be posted here.
Business sustainability by providing community value
Following up my earlier post on sustainable business I was searching for some current examples and found the following on Harvard Business Review’s video blog. HBR carried this excellent (I found it to be very telling) interview of Matt Eyring, president of Innosight. Matt speaks of how multi-nationals organisations, moving into emerging markets (such as India) need to re-think their business models from ground-up instead of simply tweaking their existing model and hoping to be successful. In other words (or rather quoting Matt) the multi-nationals need to clearly identify the “value proposition” for the local market customer and develop a business model that’s effective in that market and delivers on long-term sustainability.
The examples demonstrated in this interview say it all and show how, by identifying the value (to the community), businesses can have sustainable and profitable enterprises.
A New Model for Emerging Markets (Please click on this link to view the interview. It will open on a new tab)
For more on developing sustainable business models in emerging markets please view
the “New Business Models in Emerging Markets“ article in HBR by Matthew J. Eyring, Mark W. Johnson, and Hari Nair.
- Tread carefully when investing in developing countries (theglobeandmail.com)