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How to Enfranchise Customers in the E-commerce Era

Putting customers back in the equation

How to Enfranchise Customers in the E-commerce Era The internet has dramatically advanced the ways business can deliver products and services, and meet customer needs. However, while e-business has succeeded at leveraging technology to enhance business productivity, it has done little to enfranchise customers. Countless web sites that aim to provide a seamless shopping experience simply are not designed for the needs of the user. Customers needing support often have to abandon their shopping carts to get their questions answered. Many end up turning to the phone to get the information they need, or they just give up. Most e-businesses lack the human touch.

Customer needs will continue to change as technology plays a greater role in our lives. To be successful in the future, businesses will have to add the customer viewpoint into the equation, and seek to satisfy unmet customer needs. Rather than concentrating on e-business, companies will need to reorganize as c-businesses, orienting their operations around customer need sets across all channels and touch points, from the perspective of all products and services, and for each customer group, whether on the consumer level, small businesses, or large enterprises.

Six Drivers of Change in eCommerce

Let’s examine these emerging customer need sets, the drivers of change, and how certain businesses are prospering in the new c-business age.

  1. Information overload. The Web has unleashed a plethora of information. The result of this easy access to information is that people are seeking knowledge in context. Presenting data in the context of the customer’s needs transforms it and makes it far more valuable. The financial services company USAA doesn’t inundate its clients with sales pitches and junk mail. It takes a highly targeted marketing approach based on major events in them customers’ lives. When you’re about to buy a house, have a baby, or send a child off to college, USAA will contact you with information about products and services tailored for these needs.
  2. Six Drivers of Change in eCommerce More choices. Today, there is a wider variety of goods and services than ever before. This surfeit of choices is leading people to demand more personalized service and customized goods. Look at cars. Henry Ford told his customers they could get a Model T “in any color you want, as long as it’s black.” The computer industry long took the same approach-only this time with beige. Apple changed the landscape with its iMac, providing consumers with true choice. But Mac enthusiasts still have a hard time getting options they want built right into their systems. Dell, on the other hand, customizes virtually every PC it sells to its customers’ specifications. As advances in technology and manufacturing make it easier for firms to tailor their offerings, customers will increasingly expect personalized service.
  3. Automation. It has become possible for businesses to automate nearly every aspect of the customer interaction. This increase in automation leaves most of us with a yen for the human touch. But for corporations to deliver quality, human scale service, customers will need to make concessions in terms of privacy. Smart e-businesses will prove to their customers that these sacrifices will be worth it. Already, enterprises with good “corporate memory” are succeeding. Consider FedEx, which provides a reassuring presence by putting kiosks in the offices of their best customers. FedEx also provides real value through its Web site by letting customers track deliveries.
  4. 'Ecommerce Evolved' by Tanner Larsson (ISBN 1534619348) Pervasiveness. The pervasiveness of information and services is another driver of change. Having the capability to get whatever you want, whenever you want it is driving a need for control and integration. For example, we can get email on wireless handhelds, and order groceries online. However, is anybody helping people remember what’s supposed to be on their grocery shopping list? Webvan has made inroads in this area, but they still must overcome entrenched shopping habits. As these platforms develop, they provide resources essential for national growth and reduce the market inefficiencies that slow the pace of development.
  5. New pricing models. A heightened awareness of value is the direct result of new pricing models and pressures. Customers don’t necessarily look for the best prices, but they do look for value. In the airline industry declines in service and fluid pricing models have made it difficult for people to determine what is and what isn’t a good deal. Companies that can clearly define their value proposition are having more success in meeting customer expectations and needs.
  6. New entrants in the marketplace. New entrants can now establish themselves in the marketplace with relative ease. Barriers to entry are so much lower now that business can expand into new sectors virtually overnight. For customers, this leads to increased choices, but it also raises questions of trust. Customers look for clues that they can rely on their provider, which is why companies need to build trust through their online and offline presences.

Determine How You Can Deliver Better Attention, Choice, and Value in E-commerce

E-business may have radically changed the ways companies and people buy goods and services, but the essential elements of the buyer/seller equation are timeless. Customers want personal attention, they want choice, and they want good value. Solving the marketer’s dilemma will not be easy.

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Posted in Business and Strategy

FedEx’s ZapMail Service: Failure to Foresee

Innovation is Not Without Risk

How Federal Express's Zapmail System Works

One of the defining characteristics of great leaders is their knack for seeing into the future.

Innovation is not without risk. There are plenty examples of failures at companies. However, on the other side of the coin, if you’re too cautious and too late—all you have is a dinosaur business. Navigating that fine line between risk and innovation is very important.

FedEx's Zapmail System Case in Point: ZapMail Service was a system that used fax machines at FedEx offices to transmit documents for clients in different cities. After being introduced in 1983, when FedEx was known as Federal Express, the service was soon eclipsed by the rise of fax machines priced cheaply enough that most offices could purchase their own. In addition, ZapMail was based on satellite technology, which needed the space shuttle to work effectively. However, the space shuttle blew up, dealing a body blow to FedEx’s plans. FedEx folded ZapMail in 1986, taking a costly write-off.

No Innovation Without Experimentation

Commenting about FedEx’s ability to integrating new acquisitions into its fold after its purchase of Paul Orfalea’s Kinko’s franchise, journalist Michael Copeland commented in the Autumn-2006 issue of Booz & Company’s Strategy & Leadership magazine:

As with other acquisitions, Fred Smith saw something in Flying Tigers and American Freightways that others didn’t because his point of focus lay far beyond theirs. Mr. Smith doesn’t always get it right when he looks into the future. His expensive and ultimately failed experiment in ZapMail, a dedicated fax network that couldn’t compete in the early 1980s with the new, inexpensive consumer fax machines, is proof. “A guy like Fred Smith doesn’t build a company like FedEx without taking some risks and making some mistakes,” says Mr. Hatfield, the Morgan Keegan analyst, “but clearly the successes far outweigh the failures.”

Federal Express's Zapmail System There can be no innovation without experimentation, and there can be no experimentation without the risk failure. In addition, taking risk goes against the grain of many companies’ cultures. In the corporate world, there are powerful incentives for people to play it safe. However, leaders must work particularly hard to offset these forces and give their teams the consent to fail and the assurance to make their case and go out on a limb. Leaders must not only promote experimentation, but also encourage people to terminate faster on projects that are not working without fear of reprisal. That is to repeat the cliche “fail, but fail as fast as possible” and take the lessons learned to the next experiment.

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Marketing Demographics by Age

Marketing Demographics by Age

Companies seeking long-term business growth can find it by emphasizing the earning power of young workers, near-retirees, and women.

We all want to be treated equally and fairly during the buying and service process, regardless of our age. Let’s examine how you, as a service provider, can give exceptional service by understanding the needs and values of each age group.

Marketing to The Veterans

Marketing to The Veterans These people were born before 1943. Their beliefs and values include: Everyone should adhere and conform to the same rules, regulations, and policies. Those who are older or in positions of authority automatically deserve respect. Patience is an important virtue. The bigger the better. Personal pleasure is secondary to job responsibilities and tasks.

To win them over as a lifetime customers, make them feel special by remembering their name. Honor them by calling them Mr. or Mrs. or Sir and Ma’am. Thank them for their patronage with a personal note. Add a personal touch, and show genuine interest in them as a person.

Marketing to The Boomers

Marketing to The Boomers These people were born between 1943 and 1960. Their beliefs include: If it’s not working, either fix it or move on and find something better. They value personal growth, health, and wellness. They are optimistic. They believe they are the star and deserve center stage.

To keep them as lifetime customers, provide service that treats them as individuals, not just clients. Be personable. They value personal relationships that grow with time. Be solution oriented. If you can’t fix something, be honest; and then offer alternatives. Boomers value their time and want solutions now. Don’t tell Boomers what they can do.

Marketing to Generation X

Marketing to Generation X Baby Busters or 20-somethings were born between 1960 and 1980. They have a need to be self-reliant. They value family and friends. They tend to be informal and look for fun in every situation. They treat everyone as an equal regardless of “rank” but tend to be skeptical. They have respect for knowledge and technology.

If you want them to do business with your company, show interest in their family and friends, and admire their children if they are tagging along, or their pictures are prominently displayed on their desk. Treat them as equals. Approach situations in a relaxed and informal manner. Let them ask questions and seek information. Show that you have nothing to hide. Use technology to demonstrate your product and services.

Marketing to The Nexters

Marketing to The Nexters Generation Y or the Internet Generation were born between 1980 and 2000. They tend to be optimistic, street smart and very computer and technology literate. Achievement oriented, they are also strong believers in civic duty. They learn flexibility early since many come from divorced families.

If you want these customers to do business with your company, appeal to their strengths. These young people like to spend money, and they are more likely to purchase your product if your business donates to non-profit organizations. Also, appeal to their technical shrewdness. If it makes life more convenient, easier or is the latest in technology, they will probably want it.

Conclusion: For successful marketing by age-demographics, consider each age group and customize your service

Service providers can give exceptional service by understanding the needs and values of each age group. I give these guidelines to assist you in providing the best possible customer care, but nothing will ever surpass kind and equal treatment to each and every customer you serve.

Learn to present information in a different manner to appeal to core values, which are different for each generation.

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Posted in Business and Strategy Management and Leadership

Starbucks CEO Howard Schultz Calls It a Day

Starbucks COO Kevin Johnson is the right replacement for CEO Howard Schultz

Starbucks CEO Howard Schultz has called it a day, and that’s causing some investors a bit of worry, primarily because the coffee giant struggled the last time Schultz left in 2000.

Starbucks COO Kevin Johnson Replaces CEO Howard Schultz

Kevin Johnson, the current president and chief operating officer of Starbucks, will take over as CEO. Johnson is a 30-year veteran of the tech industry held senior leadership roles for 16 years at Microsoft and a five-year stint CEO of Juniper Networks.

Johnson’s consumer technology background is impressive and is a key asset for Starbucks in expanding the company’s already-leading digital platform across channels and geographies in the years to come.

Former Starbucks COO Troy Alstead Quit in January 2015

When Starbucks’ longtime COO Troy Alstead quit, Schultz wrote, “Looking back on the 23 years we spent together side-by-side as Starbucks colleagues, I can recall so many memorable moments and accomplishments in which Troy can take pride in a job well done. Troy is a beloved Starbucks partner and has played an invaluable role in our growth as an enterprise and in the development of our culture as a performance-driven company balanced with humanity, which is unique for our industry. Troy’s humanity and humility will be missed and we wish him the best.”

Starbucks' Premium Roastery and Reserve Stores

Schultz Focused on Sustaining Revenue

For the last several years, Schultz focused on sustaining revenue growth by moving beyond his coffee house roots. In 2012, he purchased Teavana as another brick in the road, which has encompassed instant coffee, energy drinks, juice, a single-serve brewer and food to sell in its shops and in grocery stores. In 2013, Starbucks and yogurt-maker Danone, declared a plan to cooperatively create an assortment of specialty yogurt products in contributing Starbucks stores in 2014 and in grocery channels in 2015 as part of the coffee chain’s growing Evolution Fresh brand. With cafe-like atmospheres and a brand that evokes a high-quality customer experience, Starbucks appreciates pricing power benefits over nearly all specialty coffee peers. This will be expanded by the development of the Starbucks Reserve sub-brand to deliver exclusive, higher-end coffee blends.

While Schultz’s forethought and attention to customer experience have been significant motives that Starbucks has established one of the widest-moat and most consistent growth stories in the global consumer coverage universe, Starbucks has one of the deepest benches in the consumer sector. While most of the focus is technically on new CEO Johnson and his wide-ranging consumer technology background, Schultz will still be immersed with the development of Starbucks’ Premium Roastery and Reserve stores.

'Onward How Starbucks Fought for Its Life' by Howard Schultz (ISBN 1609613821) Don’t liken Schultz’s switch to that of 2000, when he undertook the chairman role and assigned Jim Donald as CEO. Schultz ultimately returned as CEO in 2008 in the wake of disappointing sales figures and a “watering down of the Starbucks experience”. In his turnaround memoir Onward: How Starbucks Fought for Its Life without Losing Its Soul, Schultz wrote “The merchant’s success depends on his or her ability to tell a story. What people see or hear or smell or do when they enter a space guides their feelings, enticing them to celebrate whatever the seller has to offer. Intuitively I have always understood this. So when, in 2006 and 2007, I walked into more and more Starbucks stores and sensed that we were no longer celebrating coffee, my heart sank. Our customers deserved better.”

How Starbucks Became Successful

How Starbucks Became Successful

Brand, channel, and technology advantages have positioned Starbucks for a long runway for growth:

  • Starbucks coffee is robust, and people get used to the taste, making it difficult for them to be content somewhere else, either to coffee chains such as Dunkin’ Brands, Tim Hortons, or McDonald’s. Joh. A. Benckiser’s amalgamation of Mondelez’s coffee properties (D.E Master Blenders, Peet’s, Caribou, Einstein Noah, and Keurig) are emerging as Starbucks’s noteworthy competitors. Despite the tenacity of the legend, Starbucks doesn’t really burn its beans. Nonetheless it uses two tablespoons of coffee per 6 ounces of water, which is beyond a lot of other places.
  • Decades ago, in many markets, the only place a customer could get a cappuccino was a restaurant, and there indeed weren’t any flavored or distinguished coffees anywhere. Starbucks was the pioneer in bringing those to the masses. There’s countless brand loyalty they’ve built up over the years. As good the coffee beans are a good amount of training goes in the way they make specialized drinks. Wet, dry cappucino, lattes in perfect ratios of coffee, milk and foam.
  • Starbucks has been known for being pretty generous to its employees, together with presenting full benefits to those working as a minimum 20 hours per week. That made customers feel good about buying coffee there.
  • Customers appreciate the consistency of Starbucks products. A customer can go to a Starbucks pretty much anyplace in the world, and know what they’re getting. A grande vanilla latte will be on the menu and taste the same whether in Seattle, New York, London, Istanbul, or Moscow.

The Recipe to Starbucks Success

The Recipe to Starbucks’ Success

Yet same-store sales have been decelerating, however from very high levels, and the company ran into difficulty the last time Schultz stepped back from the CEO role. Regardless of impressive growth plans, and commodity cost and foreign currency volatility, Starbucks can endure a 40%-45% dividend payout ratio over the next decade.

Some analysts and investors aren’t worried about the management change. Wells Fargo’s Bonnie Herzog acknowledged that while Schultz’s departure is “a loss, in our view the show must (and will) go on” and added, “While we acknowledge that Schultz is without question one of the strongest and most visionary leaders in the consumer/retail world, we believe the succession planning put in place several years ago assures the recent exceptional performance will likely continue.”

Starbucks Future Strategy for Invigorated Growth

Starbucks Future Strategy for Invigorated Growth

Speaking of how Starbucks’ invigorated food and beverage menu and store reformats have uplifted the Starbucks customer experience, pierced new markets and times, and enhanced unit-level productivity metrics, Herzog also wrote,

The leadership change announced today has been a long-time in the making, starting nearly 3 years ago with the shuffling of the senior leadership team, and subsequent promotion of Johnson in early 2015 to the role of President/COO. We believe that Johnson is a very capable leader, with strong experience working side-by-side Schultz for the past two years. Importantly Johnson has an exceptionally good relationship with Schultz, which should keep Schultz sufficiently removed to allow Johnson to lead effectively given his trust in Johnson, while also remaining sufficiently nearby to ensure the ship remains on course… We believe Johnson’s technology background positions him well to ensure SBUX’s mobile and digital initiatives—key to SBUX’s long-term success, in our view—will remain a primary focus of the company. Importantly, Schultz will remain focused on his ongoing efforts to premiumize the SBUX brand and experience through Roastery and Reserve stores, which should support accelerated innovation and allow the broader store network led by Johnson to continue to thrive.

Investors are also cheerful about Starbucks’ mobile, digital, and loyalty program collaborations across the various business lines, affiliations with Spotify, New York Times, and Lyft, and new payment technologies. Starbucks’ worldwide opportunities are undisputable–particularly in China, India, Japan, Brazil, and Eastern Europe–and Starbucks will apply its best practices from the U.S. to accelerate its growth aspirations.

Starbucks has organized an investor meeting next week, during which its leaders are expected to release news on current and future initiatives.

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Posted in Business and Strategy

Costco’s Winning Business Model Strategy

Costco Logo: Costco's Winning Business Model Strategy

Costco has built a devoted foundation of customers with low prices and workers with high wages. The discount warehouse services industry is highly competitive. There are several warehouse operators across the United States and Canada that offer similar merchandise quality, selection, and price.

At the end of financial year 2015, Costco managed 480 membership warehouse clubs in the United States, 89 in Canada, 36 in Mexico, 27 in the United Kingdom, 23 in Japan, 11 in Taiwan, 12 in Korea, 7 in Australia, and one in Spain. Base and executive memberships cost $55 and $110 per year, respectively. The company operates 557 warehouse stores, 406 of which are situated in 40 U.S. States and Puerto Rico. The rest are in Canada, Mexico, Japan, Taiwan, Korea, and the United Kingdom.

The internet has made it immeasurably easier for shoppers to chase for the latest deal—and a lot more demanding for brick-and- mortar retailers to command customer loyalty. However, Costco has managed to resist the tendency—with only 3% of its retail sales occurring from e-commerce. In reality, it outclasses other retailers when it comes to dependably increasing sales from its millions of loyal shoppers.

At the warehouse stores, forklifts relocate pallets into racks such that the first time an item is actually touched is when the consumer contacts into the shelf to collect the item and places it into their shopping cart.

Costco's Sustainable Competitive Advantage

Costco’s Sustainable Competitive Advantage

Costco’s objective has been to increase sales while cutting long-term costs (by trimming freight expenses, scaling its merchandise, negotiating prices with vendors, and reducing packaging) with the intention that it can pass those savings down to members. Costco has said that its “rule of thumb is to give 80% to 90% back to the customer.” Those efforts have paid off, with memberships reaching an all-time peak of 81 million members in 2015.

Shiny steel caskets exhibited amongst the stacks of snow tires and pallets of heavy applesauce, rose-scented toilet tissue, mentholated shaving cream, and mild-flavored salsa. However, in time, people may grow familiarized to the sight. By including these special deal items to the cart, the total spend at the cash register expands. This behavior diverges severely with the type of consumer who has the self-control to fill up on everyday consumables at everyday low prices. The latter type of consumer does win in the end even if the cost of the membership is factored into the equation. As one (rather demonstrative) instance, when reviewing the 1999 Kroger-Fred Meyer merger, the FTC vindicated this definition by asserting,

Supermarkets compete primarily with other supermarkets that provide one-stop shopping for food and grocery products. Supermarkets primarily base their food and grocery prices on the prices of food and grocery products sold at nearby supermarkets. Supermarkets do not regularly price-check food and grocery products sold at other types of stores and do not significantly change their food and grocery prices in response to prices at other types of stores. Most consumers shopping for food and grocery products at supermarkets are not likely to shop elsewhere in response to a small price increase by supermarkets.

What Makes Costco Successful

What Makes Costco Successful

Renewals of Costco’s $55 annual memberships stand at a remarkable 91%—a record high. On the word of financial analysts, the low price of memberships and a stable return of loyal members is what sets Costco apart from big box and department store retailers which persist to fight for market-share gains in a altering landscape of increased competition from online retailers led by Amazon. Costco’s ability to dependably drive increases in traffic is a key differentiator.

Everything at Costco is continually being evaluated for productivity. Costco manages a mix of distribution facilities to accomplish the overall objective of operating with an efficient supply chain. The company lately substituted the form of their milk cartons to get rid of the empty space at the top. They can fill thinner jugs all the way to the top, so they can get more gallons onto the same amount of space on a freight truck. The loss-leader abilities of Costco’s business model ought to endure to drive market share advances over the long term. However, it is possible that incumbent grocers could react to Costco, Sam’s Club, or Walmart Supercenter entry along one or more of these non-price dimensions, in which case their prices could continue unaffected or rise.

Costco’s philosophy is to provide its members with quality goods at the most competitive prices. It does not concentrate its efforts on maximizing prices in the short term, but instead focuses to maintain a perception among its members of “pricing authority,” or constantly providing the most competitive prices. This question is actually quite complex in that it has multiple answers that boil down to individual consumer behavior. The reality is that Costco has perfected a purchasing strategy known as the “treasure hunt” which means that there are always new items and tempting deals that extemporaneously come and go. The consumer who walks every aisle knows what I mean by this because they are subconsciously on the treasure hunt.

During the next 10 years, warehouse openings should move the number of primary cardholders to 65 million–75 million, up from 45 million in the most current fiscal year. In spite of having warehouses that spanned three acres, and piles of merchandise stacked to the ceiling, Costco carried only 4,000 carefully chosen products at a time. Three-quarters of the items were such “basic” products as batteries, laundry detergent, and instant noodles. Then there were the “high-end” name-brand products, which might be stocked at Costco one day and then gone the next.

Costco Employees Happier with Wages and Benefits

Costco Employees Happier with Wages and Benefits

While Walmart and Target just recently began increasing take-home pay for their employees, Costco has been an industry trendsetter for years. With starting hourly pay at about $11.50 and a company average of $22 per hour, Costco’s compensation costs beat the competition. Costco has asserted that paying employees well can be more advantageous eventually by keeping turnover low and capitalizing on employee efficiency. Actually, turnover stands at about 10% compared with the industry average of 55%. For employees who have been there more than one year turnover drops to just 6%. Employees rarely leave: The company turnover rate is 5% among employees who have been there over a year, and less than 1% among the executive ranks. Costco management has asserted that loyal employees bring about better customer service.

Costco purchases the majority of their merchandise promptly from manufacturers and routes it through a network of cross-docking facilities, which act as merchant consolidation points to move goods in full truckload volumes to the stores. Sam’s Club carries about 4900 items and Costco around 4000; by comparison, the normal grocery store carries approximately 50,000 and the average Walmart about 100,000. Furthermore, the shopping experience at warehouse clubs is unusual—members pay a fee for access to goods stacked high and sold in wholesale quantities in low-amenity environments. Warehouse clubs are very spartan in their accommodations. They do not bag consumers’ purchases, and a club employee checks all shoppers’ carts and receipts on exit.

Secret to Costco's Success Lies in Supply Chain Efficiency

The Secret to Costco’s Success Lies in Supply Chain Efficiency

Big-box retailers Costco, Sam’s Club, BJ’s Wholesale, and Walmart, along with full-service and fast food restaurants, are significant contributors to the nation’s obesity outbreak. Costco continues to productively increase its businesses, on account of its low prices and robust customer loyalty. Its ability to provide quality products, at a reasonable price, should appeal to most consumers in North America and around the world. While competition in the market remains ferocious, Costco’s leadership is taking the right steps to guide the company into the future. Over the years, Costco added departments, growing further than the traditional discount warehouse offerings. A large majority of the stores featured a drugstore, an optical-dispensing center, one-hour photo services, a food court, and the ever admired and low-priced hot-dog stands. More than half-offered hearing-aid centers and a handful were equipped with print shops and copy centers. More generally, not all big-box chains are created equal. The big-box retail literature has fixated almost exclusively on Walmart, examining its effects on a wide range of outcomes, including prices, labor market consequences, small business activity, time use, obesity, and social and cultural pointers.

Using city-level panel grocery price data matched with an exclusive data set on Walmart and warehouse club locations, customers find that Costco entry is associated with higher grocery prices at obligatory retailers and that the effect is sturdiest in cities with small populations and high grocery store densities. The competitive response need not be to reduce prices; conversely, as segmented-market models with a mix of brand-loyal and price-sensitive consumers have shown that in some cases incumbents can increase prices in response to a low-cost entrant.

The lesson to be learned from Costco for every manufacturer, distributor, or retailer, regardless of industry, is to figure out how to eliminate the fingerprints within the respective supply chain and within internal processes.

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Four Strategic Shifts to Streamline Your Work Flow

Four Strategic Shifts to Streamline Your Work Flow

Behind every business strategy is a belief. What we believe about how the world works determines the policies we enact, the plans we devise, the processes we use, and the way we behave. Often, when we want to alter an outcome and improve results, we need to change the underlying belief. Then the processes and activities can be changed.

New product development is one area where erroneous beliefs keep us from getting the results we desire. The drive is always to achieve faster time-to-market and more predictable product development cycles, since finishing second in a winner-takes-all competition means, at worst, giving up millions in revenues, and, at best, delays in translating spending to revenue.

Here are four shifts in belief and behavior that make a profitable difference:

  1. Increasing throughput. The widely held belief is that keeping everyone going full bore-working long hours will speed things up. But most projects take longer than planned, and keeping everyone working longer does not necessarily improve speed. It’s more important to know what is limiting how much work can get through the system, and focusing resources there. Apply the most precious skills to tasks only those people can perform, offloading lesser tasks and ensuring the work arrives fully prepared.
  2. Exposing capacity. The entrenched belief is that idle system capacity is wasteful and should be eliminated. In reality, not having some extra capacity is sure way to miss deadlines and due dates. Too often, business capacity is pared to the bone, and projects fall behind. With no cushion, the system can’t handle even minor mishaps, let alone major problems. A reasonable extra capacity is not excessive but protective, helping to guard against sudden deviations. Flexible protective capacity can reduce project cost and time.
  3. Coherent work behaviors. Multitasking—working on several things at once—does not speed projects along. In fact, multitasking is one way to lengthen project time. Shifting attention among several different tasks inevitably wastes time. It’s almost always possible to speed up work by 10 to 30 percent just by eliminating multitasking. In truth, people cannot do more than one task at a time; they simply switch back and forth and lose time in between. The alternative is to get it, work it, and move it-working on a task until it is finished or you can’t do any more without more input.
  4. Acting globally. The common belief is that any improvement helps the organization, that local excellence always benefits the larger entity. However, local improvements may have no effect, or a negative one, on the bottom line. Becoming faster as a company simply can’t be achieved by optimizing areas. Since organizations are interdependent systems, it’s not always obvious how a change in one part will affect others. Changes toward “faster and better” may shift the balance of power, and people may resist or subvert change that hurts the ego or wallet. So, shifting to a global mindset may also mean adjusting rewards and incentives.

Speeding up product development requires knowing what makes work flow in a smooth and streamlined way. It’s not about keeping everyone busy all the time, eliminating all “waste,” juggling tasks, or making isolated improvements. The way to speed and quality is through stronger alignment—of behavior and belief, of practices and purpose—that frees us to strategically apply resources where real opportunities for improvement lie.

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The Social Responsibility of Business: Define and Live Your High Purpose

'Managing Corporate Social Responsibility' by Timothy Coombs (ISBN 1444336452) High-purpose companies survive to serve basic human needs, advance society, and nurture an advanced form of capitalism. They address serious problems and make more money as an outcome. For example, in 1997 British Petroleum took a stand on global warming. By 2003, the company had reduced its greenhouse gas emissions by over 10 percent, and become the foremost provider of cleaner-burning fuels and the second-largest manufacturer of solar panels. BP generated $650 million worth of value on a $20 million investment in ecologically friendly products and policies.

Examples of Corporate Social Responsibility

Examples of Corporate Social Responsibility

Comparable examples abound.

  • Interface Corporation, the largest commercial carpet and textile manufacturer, saved $230 million in overhead costs and increased market share because of its pledge to environmental sustainability.
  • Green Mountain Coffee Roasters grew fast because of its commitment to fair trade.
  • Stonyfield Farm Yogurt Company became the biggest organic brand in the U.S. though practices that helped struggling dairy farmers to survive.
  • Hewlett-Packard has positioned itself for long-term by helping close the digital divide.

Each of these companies is dedicated to a wider concept of social responsibility— no longer an postscript, a compliance issue, PR gimmick, or ugly stepchild to profit and strategy. It can help your business prosper. Rosabeth Moss Kanter of the Harvard Business School characterizes the approach of the new givers, “We fixed American business; now we need to fix charity.”

Five Keys to Purpose First, Profits Second

The ability of successful entrepreneurs to generate considerable wealth is obvious. As such, their capacity to contribute from their resources to projects and organizations with a specific social enhancement agenda is also apparent. This potential for successful entrepreneurs to improve the quality of the society or societies in which they live and to become role models of philanthropic attempt is exemplified by the recent commitments of two of the most high profile and successful entrepreneurs in the United States, Bill Gates and Warren Buffet. There has nevertheless been little scholarly investigation into the comparative tendency for entrepreneurs to participate in philanthropic endeavor, and whether entrepreneurs are inclined to adopt specific forms or tactics to their philanthropy.

Here are five keys to cultivating your performance via social responsibility and a high-purpose strategy:

  • 'People Over Profit' by Dale Partridge (ISBN 0718021746) Face the truth. To take up a higher purpose, you need to “own up” to your past. Carefully evaluate your company’s impact on society and the environment. Often, this review can divulge opportunities and can serve as a powerful catalyst to stimulate your organization and enable it to move in unison towards the best solutions. Today’s new rich have the opportunity to shape America-and the world-just as intensely as Andrew Carnegie and John D. Rockefeller did. However, so far most have declined to take it.
  • Choose a relevant crusade. Your company can create more social and financial value by supporting a cause that directly relates to your business. What problems are unique to your company or category? What issues are most pressing to your customers, employees, suppliers, or shareholders? Discover financially self-sustaining charitable models that are relevant to your business. Effective charitable programs pay for themselves. The purpose of the crusade is to provide communities with practical experience in philanthropy and the opportunity to think consciously about giving back to society.
  • Do something that no one else can. What does your company do better than anyone else does? How can you use the company’s fortes, resources, and expertise to help solve the chosen problem? Develop an line of attack that cannot be easily mimicked. This way your core assets become recognized as being of service to humanity, thus rising the company’s value.
  • Put the problem first. Although every company should aim to secure rewards from their high-purpose initiatives, the character of the chosen social or environmental problem should point the direction. Take a needs-based approach. Study the problem, the circumstances surrounding it, and the people most affected by it. Then, engineer business-building solutions.
  • Expand definitions of success. Rather than define success solely in terms of short-term cost-effectiveness, build value and sustainability in all forms. Define and monitor your performance. The firm set up the foundation by means of its growing role in society. Managers faced operational and strategic quandaries concerning the host-countries’ poor public healthcare provision and in coming up with operative solutions.

Importance of Corporate Social Responsibility

Importance of Corporate Social Responsibility

The paybacks that you gain through high-purpose strategies range from competitive edge and growth opportunities to better stakeholder relationships, higher innovation, quality, efficiency, and lower overhead costs. This approach to philanthropy increases dependency and reduces initiative and enterprise. It doesn’t create the necessary human capacity to make communities self-sustaining and independent.

Today you must deliver social value. Companies that compete unfairly or function without regard to the collective interests will fail in the long term. High-purpose strategies do not disrupt companies from achieving the highest financial returns for shareholders. On the contrary, they build business, making them one of the best investments a company can make. Globalization is weakening the ties that bound companies to the communities that gave them birth.

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Innovate Around Your Brand

Innovation

The world is filled with brands and products competing for our attention and our dollars. It can be mind-boggling. That makes breaking through the clutter a never-ending battle. So, how can we stand out and own a share of the consumer’s mind?

The answer is through innovation the constant challenge to the status quo, the relentless, restless search for something new and better. Companies grab market share and reinforce positions with fresh ideas that create fresh profits.

Innovation is the life-blood of any industry. And yet, as the economy cooled off, so did funding for innovation. The focus turned from the “next new thing” to the quarter’s earnings. But we have not turned our back on innovation. In fact, innovation is happening at a fast and furious pace.

Our consumers have always wanted choices, and we have always responded. Today, as consumers’ tastes change and their desire for variety, wellness and convenience grows, we continue to respond. Just look at some of the great examples of innovation in our industry. Whether you’re taking about Red Fusion, Mr. Green, Pepsi Blue, Simply Orange, or Vanilla Coke, we’re giving consumers a rainbow of new choices in colas, flavors, juices, nutritional beverages, waters and sports drinks.

When you add 25,000 other product introductions a year from other industries, you know how many consumers feel bombarded.

This brings me to the question we must ask about innovation, about any new product, package, or service we introduce: What is its value? And is it meaningful? To me, that’s an easy litmus test. Meaningful innovation is sustaining. It stands the test of time because it continues to add value.

The problem with the dot-com companies wasn’t a lack of good ideas. Webvan and pets.com were great ideas. But they didn’t have the right business models to support the innovation and sustain long-term value.

Innovation isn’t all about flash and sizzle. Innovation is very much about substance. And that’s the foundation for our vision for innovation: Innovation must be a “difference engine.” It must make a real difference and drive real growth. And for innovation to be worthy of our investment, it must add value to our brands and create long-term value for everyone touched by our business. When there isn’t meaningful innovation, we lose momentum. When we innovate around trademark Coca-Cola, our growth accelerates.

Through our emphasis on innovation, we’ve learned five key lessons:

Innovation comes from listening and from understanding consumers.

Consumer relevance drives everything. To be relevant, we must be observant and understand what’s important in our consumers’ lives.

That’s how Red Bull did it, starting in the early ’80s, when its founder noticed the popularity of a new beverage while on business in Asia. He brought a few samples back to Austria and created not only a brand, but also a new beverage category—energy drinks.

At Coca-Cola, we used to think about painting the world red. Now, we think about painting the world relevant. Vanilla Coke is turning out to be very relevant. It reminds older consumers of simpler times, when they stopped by the soda fountain after school for a soft drink and some fries. And for younger consumers, it’s giving them a distinctive new taste and new look with its Coca-Cola trademark packaging.

Connection with consumers in relevant ways got us off to a great start with Vanilla Coke. We attracted more than 7 million new drinkers and sold more than 60 million cases; and when we learned that many consumers wanted a diet version, we created Diet Vanilla Coke. If you’re listening, your consumers will tell you where to look for innovation.

Brands, not products, create sustaining value.

And innovation builds brands. Brands are made in hearts and minds because brands provide two things that products can’t—time and trust. Brands deliver both by making choices easier and more reassuring. Great companies create and sustaining great brands through innovation.

  • Harley-Davidson, one of America’s great brands, stirs passion in it riders, dealers, and employees. And it translates that passion into profits. Since going public in 1986, its shares have risen 15,000 percent. Forbes named Harley-Davidson “Company of the Year” last year because in its 100th year of industry leadership, Harley Davidson flexed its innovative muscle—a motorcycle with a liquid-cooled engine that revs the bike higher and hotter in each gear and makes you go faster. It was a giant step for a company that made only air-cooled engines for 100 years. It also helped Harley appeal to the audience it was after—young, urban, hip Americans and Europeans.
  • Another innovation-driving brand is PowerAde. After living in the shadow of a formidable competitor, we gave it a complete makeover—new formula, graphics, advertising, and flavors. Now, it’s a serious contender, driven by an innovative consumer proposition—real power.

You really aren’t committed to innovation unless you’re willing to fail.

Thomas Watson, IBM’s legendary chairman, once said, “The fastest way to succeed is to double your failure rate.” Inventors know that failure is a prerequisite to “eureka” moments, but in business we have a hard time with that.

Does anyone remember New Coke? We sure do. New Coke was a lesson. When consumers turned their backs on New Coke, we were reminded of the deep emotional relationship consumers have with great brands. Brands should cherish those relationships. It’s a lesson we value, and one we’ll never forget.

Our former CEO, Roberto Goizueta, used to say: “You can only stumble if you’re moving.” Innovation is about moving, hopefully forward, but occasionally, a few steps to the rear. Often innovation takes us into uncharted territory, where risk goes up. And that’s good. The key is to keep moving.

Innovation is more than products and packaging

Innovation is more than products and packaging—it’s everything and everyone.

Innovation permeates everything—operating strategies, tactics, systems, supply chains, information technology, distribution, and marketing.

When it comes to marketing, there’s always room for innovation. We found a new opportunity with the series “American Idol.” The innovation was in how we integrated the consumer messaging. In addition to customized advertising, Coca-Cola played a role within the framework of the show—in the Red Room, with the Red Couch, and with product placement. The show became a blockbuster hit, leading to an innovative marketing strategy.

If innovation is all-encompassing, it should be done systematically. In other words, define the problem and solve it. What are the objectives? Who will do the work? How will we measure success? Innovation is everyone’s business. At Delta Air Lines, a menu planner noticed that most people never touched the lettuce leaf under their salads. Her suggestion to eliminate the lettuce leaf saved Delta $1 million. A good idea is a good idea—no matter how small it seems.

In Coca-Cola North America, we’re trying to build a culture that encourages innovation through the same sort of observation and curiosity. Our goal is that every employee starts to think about ways they can do their job better—more efficiently, more productively with greater innovation. In such a culture, companies leverage their people and assets to their fullest. One example is our “good answer” program, created to help our Fountain customers handle their customer calls. Our “good answer” team now receives phone calls, emails and regular mail from consumers on behalf of a growing number of our restaurant customers. In addition to responding to the consumer’s issue, they also provide an analysis of the calls to help the operator make better decisions about their menus, facilities and service.

Coca Cola Brand

We must apply innovation to our social contract with communities.

This lesson is bigger than brands, packages, and marketing campaigns. It’s about our reputation and our image. We’re all under constant scrutiny these days regarding the ways we affect our communities. And the focus is intense in two places—the environment and obesity.

Soft drink packages are already the most environmentally friendly recycled consumer packages. We find creative ways to increase the recycled content we use in packages. During the Salt Lake Olympics, for example, our people created a recyclable, biodegradable cold drink cup from renewable resources.

The obesity issue is complex because it’s not just about what you consume—it includes a healthy and active lifestyle. We recently launched an innovative program called “Step with It” in cooperation with the National Association for Sport and Physical Education to increase physical activity in schools.

Pepsi formed an alliance with respected health, nutrition and exercise experts to educate and encourage Americans to reduce health risks through informed choices and an active lifestyle.

Conclusions

We need to be just as innovative in the ways we protect and sustain our business as we are in the way we market and sell our products. These five lessons are our guiding principles—an imperative to continue to delight our consumers with innovative brands, packages, and business systems that create value. When we’re creating the next great innovations, we’re creating sustainable value, and we’re leaving our businesses, communities, and industry a little better.

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10 Commandments for Implementing Lean Business System

10 Commandments for Implementing Lean Business System

Regardless of the approach adopted, the role of the boss always turns out to be of paramount importance during the implementation of both technical and sociological aspects of lean business philosophy.

Having analyzed experience gained from cooperation with different enterprises, conversations with company bosses, the studies of subject matter literature and Internet sources, here’s are some thoughts on this role in ten points, dare we call them commandments:

  1. Have a clear vision and improvement goals for the whole organization. The process of gaining acceptance and preapproval for a proposal by evaluating first the idea and then the plan with management and stakeholders to get input, anticipate resistance, and align the proposed change with other perspectives and priorities in the organization.
  2. Be an engaged boss initiating changes. The boss’s involvement in training his immediate subordinates is also helpful in implementing Lean philosophy. Firstly, it gives an opportunity to get feedback on how the subordinates understand the subject matter and what their attitude to the announced changes is.
  3. Improve processes and the results will come consequently. Process improvement is not a one-day activity but it means continuous improvement. It is also important that the boss makes it clear to his employees Process improvement is not a one-day activity but it means continuous improvement. It is also important that the boss makes it clear to his employees.
  4. Create Obeya-like management centre. What actions have been planned to eliminate these reasons in order to improve the process? How these actions being implemented and what are the effects? How does it affect other processes and results?
  5. Determine indicators and bonuses that show one direction to the managers. The boss needs to be a coordinator of any actions undertaken in the company. He should efficiently lead his subordinates towards one common goal, since only in this way will he be able to ensure optimization of the company operations. Bosses, who evaluate their subordinates on the basis of various, often conflicting departmental objectives, make individual departments oriented on partial optimizations, which are seldom translated into optimization of the whole company operations.
  6. Motivate your people. Going to production floor in order to directly watch the process, talk to employees, confirm data and understand the situation (instead of relying exclusively on computerized data and information from other people). This practice shall be applied by both top management and lower-level management.
  7. Delegate the ownership of processes and places to your employees. Employees performing work, dealing with part of the process have a considerable knowledge of what is going on in this process in reality. Many of them are experienced workers, involved in the process for many years. It must be noticed that job rotation among management members is much higher than among lower level employees. Greater frequency of management members’ replacement accounts for the fact that lower-level employees, not managers, possess significant part of internal knowledge in the company.
  8. Engage everyone in problem solving and continuous improvement. Employees’ engagement in problem solving and continuous improvement results in many refinements which, at company level, bring about a speed of changes greater than that achieved by investment in new machines alone. In Toyota’s plants each employee makes on average from a dozen to several dozen improvement suggestions a year and in some plants over 90% of such suggestions are implemented. This results in productivity increment, fewer mistakes and greater safety at work stations.
  9. Teach your employees to achieve “the impossible.” The thing is to set a goal for people in the organization and make them move towards its achievement by showing proper behavior patterns. It will be a great success if the whole organization starts to think this way, not just a small group of enthusiasts who constantly want to change something (unfortunately, they are scarce in numbers). It can be reached by building good relations with employees. Feeling good in their work environment and having a sense of responsibility for their workstations, they are much eager and willing to use their creativity.
  10. Practice the routine of Gemba Walks every day. Going to production floor in order to directly watch the process, talk to employees, confirm data and understand the situation (instead of relying exclusively on computerized data and information from other people). This practice shall be applied by both top management and lower level management.
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Process of Building a Personal Brand

You already have a personal brand. What do people feel when you walk into the room? And what do you want them to feel? With successful branding, your key audiences think about you the way you want them to think.

The branding process has four steps.

Consider the corporate brand

The more senior the executive, the closer the fit needs to be between corporate brand and personal brand. CEOs should consider themselves an extension or an embodiment of the corporate brand. What does your corporate brand stand for? How does your CEO’s brand fit within it? If the branding does not fit, the CEO’s tenure will likely be short. Successful branding does not mean that the CEO needs to layer another persona over his or her own. Nor does it mean that the CEO needs to be conventionally charismatic. The branding of many CEOs is modest, low key, and but their personal brand stands for something that key constituents relate to.

Some CEOs have star power and are extremely media-genie. In this case, the challenge is to ensure that the CEO’s personal brand contributes to the corporate brand rather than distracts from it. The spotlight is put on the mission of the company, rather than on the personality of the CEO.

Articulate your personal brand

How do you identify and articulate your personal brand? Consider using archetypes-themes that tell a story. All business communication involves the telling of stories. An annual report is a story. A press release is a story. Archetypes tell the maximum story with minimum effort. We have all certain archetypes within us. In personal branding, focus on one or two major archetypes that explain your core motivation and strategies. For example, President George W. Bush is most effective when he takes on the Regular Guy persona. Al Gore is a Sage brand. The ability to make each person feel heard is the hallmark of a Lover brand and Bill Clinton personifies this. Hillary Clinton, on the other hand, is a true Ruler brand-fully in control.

In business, Apple Computer is an Outlaw brand (” Think Different“), and its CEO Steve Jobs is a Creator/Outlaw brand. The close alignment between the company and its leader works well. Another Outlaw brand with a flavor of Warrior is Hong Kong entrepreneur Richard Li, whose career was built on taking risks and turning away from convention. Oracle Software is a Warrior brand, as is its CEO, Larry Ellison. Executives who work in healthcare often exemplify the Caregiver brand.

What archetype is dominant for you and your company? When coaching executives, we use assessments and questions to uncover an executive’s dominant archetype, the basis of his or her personal brand. To discover your archetype, ask yourself: What do I value above all else? What do I represent? What is unique about me? What is my call to action? What is my greatest fear? What story am I living?

Adjust your brand

Once you have articulated your brand, check for congruence. Ask others, “Does this brand evoke me?” You should get agreement from your audiences. Is your brand aligned with your actions and words? Are your actions aligned with your desired branding? Are there conflicts within your archetypes? For example, if you have a strong Regular Guy streak, you probably fear standing out. Does this prevent you from stepping into a Ruler role when your leadership calls for it? Or does the Lover aspect of your personality conflict with the Wnniors need to achieve? Finally, ask yourself: Is this really who I want to be? How can I aim even higher? What quirks of mine can I incorporate into my branding? Most of us spend our lives trying to conform. This is a chance to celebrate our uniqueness.

Live your brand

As you implement your brand, you will find that you have some clear strengths and liabilities. Your brand will alienate some people, and that’s okay. Strong brands don’t try to be all things to all people. Each archetype presents both opportunities and traps. A Warrior leader can be powerful, but may not create a nurturing work environment.

A Creator leader can be invigorating to follow, but may not be a structured thinker. Your strategy should be to mitigate your liabilities by flexing your behavior to meet the needs of the people and groups who are important to your business. For example, if you deal frequently with Ruler archetypes but are not a Ruler brand yourself, you will need to learn certain strategies and skills. By noticing your impact on your key audiences, and by stretching your skill set, you become a stronger, more flexible brand. Successful leaders who live their personal branding exercise a paradox. They are both deeply steeped in their own personal identities and deeply flexible toward their key audiences. Leaders who are good at both elements are authentic (true to themselves) and influential (powerful with others).

A Brand is A Promise

Remember: a brand is a promise, one that you make and fulfill, over and over. What promises are you and your company fulfilling? Fulfilling the business promise through effective communication yields a high Return on Communication.

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