Cosmopolitan slums, thriving markets, aging residents, most creative economies

“In the village, all there is for a woman is to obeyher husband and family elders, pound grain, and sing. If she moves to town, she can get a job, start a business, and get education for her children.” I heard this remark, made by a global community activist, in 2000 at a Fortune magazine conference in Aspen, Colo. It was enough to explode my Gandhi-esque romantic notions about the superiority of village life.

Data courtesy Marc Imhoff of NASA GSFC and Christopher Elvidge of NOAA NGDC.
Image by Craig Mayhew and Robert Simmon, NASA GSFC.

Ever since, I’ve been asking travelers back from remote places what they noticed out in the countryside. Their universal report: The world’s villages are emptying out, everywhere. People are moving to cities far more rapidly than most of us realize.

Increasing urbanization is accelerating the economic development of the world with remarkable speed. The consequences are going to be profound, particularly for the institutions that serve people — government agencies, corporations, and the creators of infrastructure. Although a growing number of people have noticed the change, few civic and corporate leaders are prepared to deal with it.

The growth of cities has led to demographic trends exactly the opposite of what many experts have predicted. Only 15 years ago, it was widely assumed that the human population would continue to increase exponentially, as it had since the Industrial Revolution. Few experts foresaw the dominant effect that urbanization would have.

But it was obvious by the beginning of the 21st century. “Some 59 countries, comprising roughly 44 percent of the world’s total population, are currently not producing enough children to avoid population decline,” wrote journalist Phillip Longman in Foreign Affairs in 2004. “The phenomenon continues to spread. By 2045, according to the latest U.N. projections, the world’s fertility rate as a whole will have fallen below replacement levels.” In the article (titled “The Global Baby Bust”) and in his subsequent book, The Empty Cradle, Mr. Longman went on to explain the cause: “As more and more of the world’s population moves to urban areas in which children offer little or no economic reward to their parents, and as women acquire economic opportunities and reproductive control, the social and financial costs of childbearing continue to rise.” After I absorbed these ideas, my lifelong worries about population growth, instead of disappearing, reversed. Now I worry about the disruptions of depopulation.

Demographically, the next 50 years may be the most wrenching in human history. Massive numbers of people are making massive changes. Having just experienced the first doubling of world population in a single lifetime (from 3.3 billion in 1962 to 6.5 billion now), we now are discovering it is the last doubling. Birthrates worldwide are dropping not only much faster than expected, but much further. It used to be assumed that birthrates would get down to the replacement rate of 2.1 children per woman and level off, but in most places the birthrates continue to decelerate with no bottom in sight. Meanwhile the “population momentum” of the already born and their children will carry world population to a peak of 7.5 to 9 billion around 2050 and then head downward.

Even those who note the trend correctly tend to think of it as a developed-world phenomenon: “aging Japan” and “senescent Europe.” Indeed, the long-urbanized developed nations have an average birthrate of 1.56 children per woman, and in some places the rate is as low as 1.3. Those are radical depopulation numbers. It is already in the cards that Russia, Japan, Italy, Spain, and Germany will have fewer people in 2050 than they do now. And by then the majority will be old, past childbearing. Just as the population exploded upward exponentially when the birthrate was above 2.1, it accelerates downward exponentially when it’s below 2.1. Compound interest cuts both ways. Fewer children make fewer children.

via strategy-business.com

 

Purchasing Power Is Social Impact Power: Will Byrne

We’re at a moment of crisis in the United States. Communities--especially low-income neighborhoods--are no longer being meaningfully engaged by the global economy, income inequality has never been higher, and our expulsion of finite fossil fuels into the atmosphere has us all on a crash course for disaster.

And, despite the conventional cynicism, people grasp these problems, and they’re trying to fix them like never before, taking action to improve their own lives and those of the people around them. Volunteerism is up, students now choose colleges based on social impact and service programs, individual charitable contributions have remained remarkably steady despite a global financial crisis.

By pooling their purchasing power, people and communities can do more than gain access to services they want at lower cost.

Yet civically minded citizens have limited options: call your congressman, join a one-off protest action, donate to our advocacy organization. Too often, the options posed don’t translate into tangible benefits for one’s own community.

I believe people and communities have a more powerful tool for creating social benefits they care about, one that requires no sacrifice but instead aligns with their own economic interest as consumers: collective purchasing power.
New startups like GroupOn and Living Social have made lots of money around this concept, aggregating consumer demand in order to secure daily deals for gleeful consumers. Yet these firms have missed a huge new opportunity. By pooling their purchasing power, people and communities can do more than gain access to services they want at lower cost; they can unlock the ability of business--and I believe, whole market sectors--to be drivers of social good.

Note

Keep an eye out for upcoming entries in this series on “civic consumption," written by leading practitioners and innovators of the idea.

Its time for the social sector to move beyond the us-versus-them, zero sum approach of shaking its fist at corporations whose drive to maximize profits has come at the expense of communities. With purchasing power, we can help business leaders to deliver social benefits while also meeting their bottom line, creating local markets that reward those who do. People, given a path that does not set them back economically, will make choices as consumers that do good for their world. And, just as important, business leaders will as well.

The social sector has focused for years on government as its mechanism for change, but it’s business that has the biggest potential impacts on the social and environmental crises of our time. Purchasing power is social impact power.

Purchasing power is social impact power.

We founded our organization, Groundswell, to answer one question: How can we jumpstart a new, clean economy that truly lifts up those who need it most? Before Groundswell, I, like others on our team, had just been transformed by the experience of working in communities across the country on President Obama’s 2008 campaign. As a part of the grassroots, peer-to-peer engagement effort that brought an estimated one million new people into the voting process across the United States, we saw the sweeping change that could be achieved through empowered community leadership. Our founding team was convinced that this same bottom-up approach, so effective in the political sphere, could be used to help grow the market power of communities as well.

Over our first year--working first out of a homeless shelter and then packing ourselves into the attic loft of another, very patient, organization--we honed our model for community driven economic transformation. We started with energy efficiency, tapping into community networks to grow demand for home efficiency projects, creating energy savings, growing local small businesses and creating accessible new jobs.

Soon we were working with membership groups on larger projects, not just in energy efficiency, but also in clean power, building our impact across the mid-Atlantic region. We’re now on route to scaling our impacts across the country, all by channeling the latent purchasing power of communities. Most recently, working with Metro-IAF, a community organizing group, and other grassroots partners, we brought together over 100 nonprofits across the mid-Atlantic around a $5 million clean electricity project. By helping these groups to collectively seek electricity, we created the leverage they needed to reduce their energy costs and shift to clean electricity, while also cycling new savings back into community programs.

A closer look at this project reveals how everyone gains from civic consumption: customers, the broader community, and business:

• Purchasing organizations reduce their energy costs, gain stronger consumer protections, and switch to cleaner power.
• The community benefits from more resilient social impact organizations, more sustainable energy consumption, and re-investment of savings in local programs.
• Energy providers gain access to a new community-level market for clean power, as well as recognition for delivery of community benefits through their business.

While new energy sectors have been at the center of Groundswell’s focus, civic consumption has the potential for transformative change across a wide range of market sectors. In fact, it’s already happening. Take Kyle Zimmer, an inspiration of mine.

Zimmer began her organization, First Book, around the mission of promoting literacy by improving access to books. After learning that many low-income school districts across the United States were simply unable to afford books for their libraries, she created a platform for them use collective purchasing to gain access to books at low, or even no cost. Soon, her impact went deeper than access to books. Her work began changing the product itself: with demand, publishers began prioritizing books that were more culturally relevant to the students of these schools. And why shouldn’t they? Doing the right thing had become good business.

It is time we turn the page on an approach to “the economy” under which communities are passive recipients, relegated to react to its ups and downs. We have the opportunity to restore communities into their rightful place as shapers of the economy they want to live in. By making every purchase a civic opportunity, we can put communities back behind the wheel of their own economic destiny. via fastcoexist.com

 

Yes! Far-Fetched Ideas Are Fun. But Innovation Usually Starts Small

A few weeks ago, The New York Times Magazine gave us “32 Innovations That Will Change Your Tomorrow.” I’ll admit that as I read about many of the ideas, I couldn’t help but think, “Wow. This is cool.” Having a phone that recognizes me by my personal gestures? Cool. Food packaging made out of food? Cool. Fabric that can boost battery life? Cool.

But innovation is about more than cool. Many of the ideas presented in the feature seem to ignore key elements of human behavior, motivation, and desire. Moreover, the coverage glamorizes innovation and presents it predominantly as those far-out-there ideas, while missing that sometimes innovations with the most impact are the smallest, most obvious ideas. Innovation is about solving people’s problems in a way that’s meaningful to them in the context of their lives. It’s about finding ways to design services, products, and experiences that help people achieve their goals. It’s about making life better for people, on people’s terms, however they define what “better” means.

Take, for example, Idea #23: The tooth sensor. This idea, which is being developed by scientists at Princeton and Tufts, is a small sensor placed on the tooth that can detect bacteria associated with plaque buildup, cavities, or infection and notify your dentist of problems. The sensors will be inexpensive enough that they can be replaced daily.

In theory, it’s a great innovation--it could improve people’s health through prevention and early detection while lowering both personal and national health care costs. But the idea doesn’t account for how people really behave, or what really matters to people. Ask any dentist, and they will tell you that they have enough trouble getting even the most health-conscious person to floss regularly, let alone replace a tooth sensor daily. What matters most to people is getting in and out of the bathroom as fast as possible. The tooth sensor also assumes that people will effectively volunteer to tattle on themselves: “PLAQUE ALERT! ATTENTION, DR. SMITH! Daniel has been eating candy!” While it may seem really cool, it doesn’t account for the context of how it needs to fit into people’s lives.

So beyond the Cool Factor, what else should we keep in mind when we develop innovative ideas? Here are some of our thoughts:

1. Powerful Ideas Can Be As Small As A Sack Of Beans

When we’re faced with a major problem, we often expect that we need a huge solution to solve it. But innovation doesn’t have to be some big new technology. A solution to a problem as large as global health, for example, may be as small as a sack of lentils. Esther Duflo, of the MIT Poverty Action Lab, has found that incenting Indian families with a kilo of lentils for immunizing their children significantly raises vaccination rates. Duflo’s idea is so effective because it’s based on an understanding of what’s meaningful to the families involved, on their terms. A bag of lentils may seem like a small idea, but it resulted in real, measurable impact.

2. Good Innovations Meet Consumers On Their Terms

It’s the late ’90s, and the diaper wars are on. Huggies and Pampers are caught up in full-fledged battle, trying to come out with the World’s Best Diaper. At the time, both companies thought that “best” translated to “most absorbent,” and they designed their diapers accordingly. But in doing so, they lost sight of what moms cared about: being good moms. Diapers became so thick that wet and soiled diapers could sometimes go undetected for hours.

Continuum partnered with Pampers and helped them redesign their diapers in ways that not only addressed key functional concerns--such as absorbency--but also aligned with what mattered most to moms: supporting the developmental growth of their babies. Something as simple as putting an Elmo graphic on the seat, so moms could easily know which side was front and back, a wetness indicator, and tabs on the front to line up the tape made it easier for moms to change the baby, especially in the middle of the night. We also rebranded the diapers as Pampers Stages to speak directly to moms’ desires to support their babies’ growth, from Swaddlers to Cruisers. Other diapers branded by age; we focused on developmental stages. These small changes made moms feel confident and reassured that they were effectively aiding their babies’ development and shot Pampers to the number-one spot on the market.

3. Start With Your Vision, Then Work Back To Today

There is value in thinking about pie-in-the-sky, seemingly unattainable ideas. But it’s a matter of how you use those ideas. Often, companies are looking for the strategic ideal to work toward but need some quick wins for right now. And even small changes can have major operational implications that take years to execute. So when we innovate, we first come up with that “lighthouse”--that ideal, almost unattainable experience that we ultimately want to deliver. And then we backcast. We ask ourselves: What are the steps that we can take today that will make an impact while moving the needle on the path toward our ideal? By using this backcasting model, we are able to ensure that each stage of innovation--no matter how incremental--can deliver something that makes an impact for people in the near, mid, and future terms. We always strive to arrive at our ideal, but often we’ve just gotta get there one step at a time.

Small innovations may not garner front-page attention the way big sexy innovations do, but they often make a larger impact in the long run. In fact, I think that some of the most compelling innovations in the Times Magazine's innovation issue actually came from the reader-generated "innovation whiteboard" section, tucked away behind the feature article. Most of these ideas are not splashy or particularly wild. But when you read about them, you think to yourself, “Wow, I could really use something like that,” or “Wow, that would really help me,” instead of “Wow, that seems cool.” Because at the end of the day, this is what innovation is really about: Meaningful ideas that solve our problems and make our lives better. No matter how small.

[Images: Kachen Eduard, nito and Ivelin Radkov via Shutterstock]

via fastcodesign.com

 

How Walmart--Yes, Walmart--Created A Cottage Industry Of Small-Town Retail Innovators

Think Again. Northern Arkansas isn't just the home of the world's largest retailer. It's the home of an array of cutting-edge retail and tech companies that got their start in part because Walmart is here.

Image courtesy of WalMart

UNITED STATES
OF INNOVATION

New Ideas, New Markets, New Insights

All around the country, Americans are dreaming big. Their boldest ideas are changing their communities--and having a ripple effect throughout the world.

A few years ago, Abby Kiefer and her husband Kurt Kober started nursing the idea for a company that would crowdsource the design of home décor items, like vases and pillowcases. It was a night-and-weekend kind of daydream. Both had full-time jobs, Kiefer as a city planner in San Francisco and Kober as an account manager for the Oakland-based Clorox Company. Their idea grew until that inevitable moment when it got too big for part-time tinkering. “At that point, one of us was going to quit our jobs in the Bay Area,” Kiefer says. “And it was like, uh shoot, we’re not 24 and wanting to live on ramen any more and out of a studio apartment.”

Clorox happened to offer Kober a sales rotation at that very moment, and the couple (he’s 34, she’s 31) could have moved anywhere to launch the new business. They could have gone to Portland, or Seattle, or Tampa (Clorox products are sold, well, everywhere).

“And then there’s always Arkansas,” Kiefer recalls discussing over dinner one night. That might sound a little strange if you know nothing about retail. But Northwest Arkansas is America’s undisputed epicenter of selling stuff. Walmart, the world’s largest retailer, is based there, as is Tyson Foods and J.B. Hunt, the trucking giant that moves everyone’s merchandise. Over the last decade, as Walmart has encouraged its suppliers to huddle close to its Bentonville hive, hundreds of other companies have set up offices in Arkansas, too.

Northern Arkansas is the modern-day Mecca for retail.

“Where better to go than this kind of retail bubble of the universe?” says Kiefer, who now runs her startup, Red Clay, out of Bentonville (as for Kober, he’s now Clorox’s national account manager for Walmart). “Everybody who sells something knows of this place, and a lot of them have an office here, and lot of them have connections here. It was like holy crap, it would be perfect.”

Outside of Arkansas, this corner of the state is best known for its most famous adopted son, Walmart’s Sam Walton. But the burgeoning startup scene Red Clay has joined is turning this place into something else: not just the home of Walmart, but the home of an array of innovative retail/tech companies that got their start in part because Walmart is here.

“We sort of see it as the modern-day Mecca for retail,” says Jeannette Balleza, the director of a new startup accelerator in Northwest Arkansas, the ARK Challenge. It will select its first class of entrepreneurs this summer focusing on the three areas in which Walmart, Tyson’s, and J.B. Hunt give the region outsized expertise: retail, food services, and logistics. The University of Arkansas in Fayetteville has also cultivated a specialty in this space, with both a Center for Retailing Excellence and an RFID Research Center. “What I hear from venture capitalists,” Balleza says, “is that ‘unless you can tell us you’re best in world at this, or you have some unfair competitive advantage, we’re not going to look at you.’ And for these three areas, we feel like yes we’re the best in the world.”

It’s easy to envision what innovation looks like in more tech-heavy industries. It’s a hybrid car, or a flying drone, or a new iPhone. But in retail?

“The issues that we’re solving are decades old,” says Henry Ho, a former and long-time Procter & Gamble employee in Arkansas who is now behind some of the area’s other retail startups (he, too, moved here because of Walmart). Modern technology, however--and crowdsourcing in particular--have unleashed new tactics for answering those old retail questions: How do you keep accurate tabs on consumer demand? How do you make sure your inventory matches it? How do you more efficiently develop, distribute and display products? And how do you know if people just don’t like them (or would like them better if they came in blue)?

One of Ho’s projects, a company called Field Agent, turns smart-phone-wielding shoppers into retail intelligence-gatherers. As they move through stores, these “Agents” (shoppers who get paid for their efforts) can photograph displays, scan bar codes and offer opinions on everything from how clean a store is to whether its products are displayed right. In aggregate, this information can tell a company like Walmart how its stores are performing, without having to sending an auditor to all 3,700 of them.

This is a big business for retailers and suppliers who are invested in every detail of your shopping experience, right down to the “planogram compliance” (yes, there is an industry term to describe how products are displayed on a shelf, with certain items at eye level and others lined up just so).

Whether you agree with them or not, Walmart, Tyson’s, and J.B. Hunt managed to change their industry.

Kiefer’s crowdsourcing concept with Red Clay similarly touched a nerve with home-décor retailers. Red Clay produced a textile and ceramic line by crowdsourcing the proposals of numerous designers for the most popular ideas. When Kiefer took the end products to trade shows in New York and Atlanta earlier this year, several large retailers loved Red Clay’s designs. But they loved the concept even more. Nobody was crowdsourcing product designs before producing them (and Red Clay proved that doing so could turn out items that actually look good).

Kiefer realized that the process was her best product. And now, starting in August, instead of producing its own products, Red Clay will manage the crowdsourced design of a line of table-top items for a national department store. Designers will get a chance to display their portfolios before major brands, and large retailers will for the first time be able to invite their customers to pick their favorite designs before they go into production.

In nearby Fayetteville, another company called TTAGG is also mining the knowledge of crowds for information coveted by retailers. TTAGG trolls social data for marketing research and insight--for clues into what people are saying about Target on Twitter, or what they’re writing on product review sites. The company has created a kind of real-time focus group, one that costs a lot less and covers much more ground than the old-school, sit-down variety. A typical 10-person, one-week focus group can run a company anywhere from $50,000 to $150,000. And it only gives feedback from those few people (in response to the questions retailers thought they needed to ask).

“[Our] data isn’t limited by what you hypothesize the problems or the answers might be,” says Ryan Frazier, one of TTAGG’s founders. “There’s a whole discovery piece to it.” And as services like this bring down the cost of market research (and improve the efficiency of retailers), they may bring down the price of products you buy as well.

The stories of all of these startups seem to interlock. They’ve connected through the same angel investors--the Fund for Arkansas’ Future,  or Gravity Ventures--they’ve come to know the same people around town or to trace their roots back to the same companies. Joey Nelson and Matt Hudson met at Rockfish Interactive, while working on mobile development projects for Walmart and Sam’s Club. Six months ago, they created their own mobile gaming company, MobileFWD, which launched its first app this month. Their partner in the endeavor is John James, the CEO of an e-commerce empire in the area. In talking about their own ideas, Nelson and Hudson rave about Field Agent’s, and Henry Ho does the same.

“I really feel like it’s all seeded by a community that was inspired by Sam Walton,” Hudson says.

All of these entrepreneurs also share nearly identical stories about what it’s like to tell someone from outside of Arkansas that you’ve launched a business there. Investors expect them to relocate to Silicon Valley. Potential clients do a double-take by phone: “You’re calling from where?” And then there are the coastal types startled to hear they even have access to an airport in Arkansas.

But none of this sounds like it bothers any of them.

“There are some pretty big companies that have come out of here that have completely changed the face of the industry they’re in,” Kiefer says. “Whether you agree with them or not, Walmart, Tyson’s, J.B. Hunt, these are big companies that all started out totally tiny. Over the course of a couple of decades, they managed to change their industry.”

[Top Image: Walmart] via Emily Badger and fastcompany.com

 

Open Innovation: A Not-So-Secret Recipe

This article originally ran in the June 2012 issue of Food Manufacturing.

Product development projects are often kept quiet by processors looking to protect their “secret recipes.” However, some companies such as General Mills are using open innovation to share their R&D projects with suppliers and others who may be able to help make the final product a larger success. Food Manufacturing spoke with Michael Antinone of the General Mills Worldwide Innovation Network (G-WIN) about the benefits of putting development projects out in the open.

Q: What is the X3 Process, and how does it work?

A: The X3 Process is a new approach that we developed at General Mills to provide a step-by-step roadmap for our open innovation projects. It encompasses three core principals of innovation — eXamine, eXpand, and eXplore — and facilitates the process of innovation by helping make connections between unmet technical needs and actionable solutions.

Unlike some other innovation processes, the X3 Process provides a non-linear path to success, which means you use only the steps you need to effectively identify appropriate solutions. This is important to us because we realize that people approach innovation from various camps. For example, there are those who excel at defining needs or problems, but struggle to identify solutions. On the other hand, some people are great at generating solution paths but are less comfortable with problem definition. It is critical that the X3 Process accommodate various approaches, so that anyone can use it to achieve success.

This non-linear approach is also important because not all projects are the same, and therefore, not every project will require every step of the process. Instead, the X3 Process allows you to right-size the solution for the task at hand, only doing what is necessary to get to the best solution spaces.

The X3 Process includes the following steps:

• Ask the right question(s) – gather knowledge internally to gain alignment on your “true” knowledge gaps and technical needs
• Get smart – build and develop new knowledge, including key insights and innovation opportunities
• Ask better questions – immerse your team in new knowledge to generate insights and new hypotheses
• Communicate needs – write, refine and finalize well-crafted briefs that clearly explain your needs
• Find smart people – use available tools and networking opportunities to identify potential solution providers
• Make connections – initiate relationships and kick off projects

Q: How was this process developed?

A: Since formally launching G-WIN five years ago, we learned that our scientists were excited about the open innovation tools available to them, but they didn’t necessarily know how and when to use them most effectively. There was a need for a facilitator or roadmap for the entire open innovation process — something that would let our scientists be scientists.
Beginning in March of last year, the G-WIN team worked with a group of General Mills’ strategists and innovators to develop the approach, bringing together a number of best practices to balance the art and science of open innovation.

Q: How have General Mills’ innovation projects been impacted by this new process?

A: The X3 Process has been instrumental in our recent innovation projects, which is why we decided to share our insights externally in hopes that other businesses, organizations and individuals will find the approach valuable to their projects as well.

We first implemented the X3 Process at General Mills to guide a sugar-reduction project that kicked off in June 2011, and we intend to use the process for similar large platform projects in the future.

Q: How has open innovation worked for General Mills? Have there been any unforeseen benefits or consequences?

A: Innovation is an important growth strategy for General Mills. We’re always looking for ways to bring even higher levels of taste, health and convenience to consumers. We can use open innovation as a lever to deliver these benefits to the consumer through introducing new products, improving our existing products and packaging or finding new ways to manufacture or market our products.

One recent example of how open innovation has driven performance is our new Fiber One 90-Calorie Brownies. General Mills’ Snacks division, which includes brands such as Nature Valley, Fiber One and Chex Mix, has embraced open innovation to advance several areas of its business, including new product innovation. While the Fiber One team created the idea and concept for a tasty, wholesome brownie, and our R&D department had the expertise to make the perfect dough, they recognized they didn’t have the existing internal expertise and baking manufacturing capabilities to bake it. In order to quickly bring the product to market, we decided to enlist an open innovation partner, which we found in a company with which General Mills had worked years earlier. That partner had the baking experience and pilot plant facilities needed to test and perfect the baking process to the Fiber One team’s exact specifications.

The Snacks division estimates that the partnership saved nine to 12 months in terms of taking the product from concept to launch, and Fiber One 90-Calorie Brownies have already proven a terrific success, on track to reach $120 million in year-one retail sales.

One unforeseen benefit of open innovation that our experiences have shown us is the huge opportunity we have to better connect with suppliers with which we are already working. Prior to launching G-WIN, we used to be close to the vest about our future plans and projects, even with suppliers. We now see the value existing suppliers can have at the front end of innovation, as seen with the Fiber One 90-Calorie Brownies project.

Q: Is open innovation a fluid process? Have there been any changes with the process as it has moved forward? Do you anticipate further changes?

A: Since launching our program, we’ve continuously refined and evolved our practices to become more effective and efficient in bringing the right outside technologies, processes and products to General Mills, which has accelerated the pace of our innovation and saved money, time and risk.

A few of the notable evolutions of our program include the following:

• In 2008, we expanded the G-WIN team to include more than a dozen Innovation Entrepreneurs who work with each of General Mills’ businesses to identify and prioritize the solutions and capabilities that are the most important to each business.
• We realized that we needed to be more specific and transparent about the challenges we were looking to solve in order to get higher-quality submissions. For example, it’s one thing to say that we’re seeking “packaging solutions” as we may have done early on in our efforts, and another to say that we’re looking for ways “to use renewable content in flexible packaging films and rigid containers.” In the fall of 2009, we launched the G-WIN innovation portal, through which we publish technical challenges and invite visitors to create and submit non-confidential proposals. During the first year of launching this more robust and clearly articulated site, we connected with more than 1,000 inventors from around the world and received more than 500 proposals.
• In 2010, we introduced a town hall meeting strategy to help efficiently make meaningful connections with potential partners around the globe. We hold these town hall events at times and locations that coincide with food industry or technology events to ensure we’re able to meet, greet and learn more about a large number of potential partners that are relevant to our business. Attendees are encouraged to familiarize themselves with our current technical challenges by visiting our online portal prior to the town hall event. The meeting itself provides the opportunity for them to get to know us, network with each other, and share their core competencies and capabilities with us. After the town hall meeting, we then follow up individually with the attendees who were a best fit in terms of their abilities to solve our challenges.
• Last but not least, we’ve held two Supplier Summits to bring together our top suppliers to network, hear about the company’s business strategies and learn about specific partnership opportunities. In response to the Supplier Summit we held last summer, we’ve already received more than 120 proposals, more than 100 of which are continuing forward for further evaluation.

Interview by Lindsey Coblentz, Associate Editor, Food Manufacturing

via manufacturing.net

How Success Killed Eastman Kodak

Image via Wikipedia

It’s amazing to me that Eastman Kodak (EK) has lasted as long as it has. In the 1980s, I did consulting work for the maker of the Brownie and saw it heading unstoppably for its end decades ago — but it took longer than I had anticipated.

When Kodak was founded in 1888, quality was its “fighting argument.” It gladly gave away cameras in exchange for getting people hooked on paying to have their photos developed  — yielding Kodak a nice annuity in the form of 80% of the market for the chemicals and paper used to develop and print those photos.

Inside Kodak, this was known as the “silver halide” strategy — named after the chemical compounds in its film. Kodak had a fantastic success formula that keyed off of international distribution, mass production to lower unit costs, R&D investment to introduce better products, and extensive advertising to make sure consumers knew about Kodak’s superior quality.

Unfortunately, competition came along and introduced ugly splotches all over this beautiful picture. Here are three examples:

• Instant photography. A few days prior to Thanksgiving in 1948, a Massachusetts-based inventor, Edwin Land, offered consumers an instant camera that developed photos in 60 seconds. Instant photography threatened Kodak’s profits from chemicals and film. Kodak responded by introducing its own instant photography products. Polaroid sued — alleging that between 1976 and 1986 Kodak stole its technology – asking for $12 billion in damages. In 1990, Polaroid won a mere $909 million and ultimately filed for bankruptcy in October 2001.
• Cut rate film from Japan. In the 1980s, Japan’s Fuji started to sell rolls of film at a price way below the one that Kodak had been accustomed to charging. Fuji’s willingness to cut prices was quite popular with the rapidly growing mass merchandisers like Wal-Mart (WMT) that preferred to deal with suppliers who were willing to sell high volumes at ever-lower prices. And Fuji helped make consumers aware of its value by sponsoring big events — such as the 1984 Los Angeles Olympics. By 1999, Fuji’s market share gains were so great that Kodak took a $1.2 billion charge along with 19,900 layoffs. Such layoffs persisted, for example in January 2009, Kodak took a $350 million charge to nuke 3,500 people on a 24% revenue plunge.
• Digital photography. Digital photography offered consumers a better value but one that wiped out a decent way for Kodak to make money. After all, digital film — flash memory — was a low margin proposition even if you had the huge fabs needed to produce it. And even though Kodak was number two in digital cameras by 1999, it lost $60 on each one it sold. In one of many bids to replicate its Silver Halide business model in digital photography, Kodak offered a Photo CD film-based digital imaging product – but since it was priced at $500 per player and $20 per disc it did not attract many customers.

Photos: The Tech Companies Hiring The Most

Photos: America's Most Inspiring Companies

I had a personal encounter with another one of Kodak’s strategic blunders. In January 1988, I was standing next to a fax machine on the executive floor of Kodak’s Rochester, New York headquarters. I watched in astonishment at a scrolling fax of a contract for Kodak to acquire Sterling Drug for $5.1 billion.

Kodak thought this was a wise investment for two reasons: drugs had high margins and Kodak made chemicals. Unfortunately, those two facts were not sufficient to make this deal pay off for Kodak shareholders.

To do that, Kodak would have needed capabilities that it lacked — such as the ability to come up with new, valuable, patented drugs or to make generic drugs at a rock-bottom cost. It only took six years for Kodak to realize that Sterling Drug was not a good fit for Kodak and sell it off in pieces.

One hope for returning to a decent business model might have been producing high quality personal printers for those digital images. Selling inkjet cartridges and papers might have yielded a nice profit stream for Kodak. But regrettably for Kodak, many other competitors — most notably Hewlett Packard (HPQ), had gotten there first.

Since peaking in February 1999 at about $80 a share, Kodak shares have suffered a steady tumble that wiped out 99% of their value — to 78 cents a share as of Sept. 30.  At the end of June, Kodak’s liabilities exceeded its assets by $1.4 billion. It then owed $1.4 billion and had $957 million in cash, down $847 million from the end of 2010.

Its latest CEO (since 2005), former HP printer exec, Tony Perez, has been unable to revive Kodak. Last week, it pulled $160 million from its credit line and hired restructuring advisor, Jones Day on Friday even as Kodak denied that it was on the verge of filing for bankruptcy.

It’s taken decades for Kodak’s final picture to develop — but the corporate skull and crossbones it depicts is the result of too much success leading to a slow and painful inability to adapt to a changing competitive landscape.

via forbes.com

4 leadership messages your talent needs to hear

Worried about a leadership shortage? Gazing at a thin management pipeline? Wondering how to get the most out of the talent you have?

It’s time to expand and amplify your organization’s leadership by looking beyond your proven superstars and management-track talent.

Young professionals and experienced individual contributors need to be part of the leadership equation, too. These overlooked leaders are the people who are working on project teams, influencing others and taking on ever-larger and more complex assignments.

Consider the role of highly experienced professionals. As individual contributors, they play critical roles as engineers, designers, medical professionals, marketing or logistics experts, and so on. They are expected to take on project-management roles and be key players on cross-functional teams. As their role expands and they increasingly work with others, subject-matter expertise is no longer a guarantee of their success or effectiveness.

Meanwhile, early-career professionals are looking for ways to engage, interact and gain skills. As they navigate their work and your organization, they have many opportunities to lead, even before they step into formal management roles.

Both groups are in the right place to leverage leadership skills, but they need the nod from you. So, here are four messages that you – and your fellow leaders – can send to the skilled experts, up-and-coming professionals and, in fact, the entire organization.

1. Think “process,” not “position”
Leadership is a process, not a title. It’s about leading with others in ways that establish direction, create alignment and build commitment. Rather than looking for someone else to be a leader, individual contributors need to ask themselves: “What am I bringing to the leadership process?” “How can I better facilitate the process of effective leadership in my group or in my project team?”

2. Understand your leadership brand
Your leadership brand is created by the ways you behave, react and interact. It affects your network, and it is linked to your effectiveness.

Like it or not, you already have a leadership brand. You have a reputation based on how you get things done and how you interact with others. To leverage your leadership brand or to steer it in a different direction, you need to get a clear picture of how others perceive you today.

Start paying attention to how you work — not just what you know or what you accomplish. How do you learn? How do you share information, make decisions and influence others? How do you build and nurture both day-to-day and strategic relationships? Just by paying attention to these questions, you’ll gain some insight. You’ll also want to check in with peers, a mentor and your boss — or seek out opportunities for formal feedback or a leadership development program — to gain a better picture of your leadership brand.

3. Take control

You are in charge of your leadership brand, so invest in your learning and development as a leader. Your boss or your organization may not always tell you exactly what is needed or hand you the tools and experiences that will boost your effectiveness.

Take time to think about your current job and future career. Begin by focusing on your No. 1 workplace challenge. How does your leadership brand support your work today? What would happen if you could be more effective? How could improving your own leadership ability help get you there? What do you need to learn or change to improve your leadership skills and hone your leadership brand?

4. You are seen, heard and valued
The company needs you to be as effective as you can be. Your co-workers do, too. Even though you don’t have “manager” in your job title … or don’t have direct reports … or are new to your career, your leadership abilities are critical both to your own success as well as your company’s.

When you send these messages — clearly and consistently — the people in your organization will see that they can contribute to something bigger than themselves: the process of leadership.

Stephanie Lischke and Joel Wright work with young professionals and experienced individual contributors in the Leadership Fundamentals program at the Center for Creative Leadership. Courtesy of Forbes via msnbc.msn.com

 

10 Essential Steps to Manifesting Healing and Forgiveness

How many times have we talked about all the things we believe or want, but deep down we were unwilling to integrate the qualities that would attract them? Words mean very little if our lives don’t reflect what we say. St. Francis of Assisi once said: “Preach the Gospel always, and if necessary, use words.” That is, the words we use are secondary to the way we live our lives.

Have you ever met people who said all the right things, but when you were with them, something didn’t feel right? It’s as is there’s a radar detector within us that feels what our mind alone can’t sense. On the other hand, have you ever been with those who said very little, but you find yourself inexplicably happy when you’re in their presence? These are the ones who have perfected the art of being, the essential ingredient to attracting everything you could ever desire.

The following ten keys are guidelines. Read them and find ways to integrate them into your own life. You’ll notice that each one starts with the word be—for example, Be clear. That’s because they’re focused less on what you need to do and more on what you need to be.

1. Be Clear. Clarity is one of the most important keys to manifesting what you want. If your thoughts aren’t clear, then the Universe—that is, God—doesn’t know how or what to give you. If there’s something you’ve already determined for yourself, write a list of every detail you can think of, every attribute and characteristic that defines the goal. Look at this list often and add to it. Focus on the details as clearly as you can and imagine them in your mind.
2. Be Open. Being clear and open may initially seem like opposing concepts. In the first case, you were asked to clearly define exactly what you’re determined to manifest. Now you’re being asked to be open to anything the Universe may send in your direction that either amplifies or clarifies the desired goal. In reality, they are supportive. Once you’ve clearly defined the desired experience, you then open yourself to every possible variation. It’s as if you declare to the Universe: “This or more.”
3. Be Willing. Your willingness to observe, absorb, and then release everything that comes into your consciousness will help determine how easily it flows into your life. Begin by observing what you desire and asking the following questions: Is it something that will serve more than your own self-interests? Does it genuinely inspire your heart? Are you able to release or surrender the goal, then trust that it will flow to you naturally and easily?
4. Be Happy. God’s will for you is perfect joy. This means there’s a degree of happiness that neither the world nor the ego can understand but your heart is constantly striving to achieve. This is what you truly desire, for it’s the joy that bridges Heaven and Earth. The more you realize that you deserve perfect joy and accept it, the more you become the kind of teacher the world needs most.
5. Be Focused. Stay focused on what’s behind the goal rather than on the goal itself. Ask yourself, Why am I seeking this gift in the first place? We usually think of focus as something that’s fixed and straight. I suggest thinking of it as fluid and flowing. Your mind doesn’t always know what’s best for you and a strict, unyielding mind-set might attract something that doesn’t serve your highest good, so opening to a flowing focus makes sense.
6. Be Expectant. Always expect the best! Affirm that everything you desire will come to you easily and naturally. Energy flows where attention goes. If you’re focused on creating something but your inner thoughts are fixed on failure, that’s what you’ll attract. We’ve all heard the saying “Expect a miracle.” This is very good advice, because what you truly expect will always be yours.
7. Be Energetic. The higher the impulse, the more energetic the response. In other words, your energy usually increases when you ask for what your soul really wants. Asking for an around-the-world cruise would create more positive energy than asking for a car. Let your passion be your guide, and the energy required will follow. Follow your heart, not your mind. Your heart is always a better barometer of what Heaven is choosing to add to your life.
8. Be Positive. If you’re negative about what you’re trying to attract, the Universe will interpret your negativity as not wanting. Negative energy can sometimes hide in your consciousness and evade the obvious movements of your rational mind. That’s because the blocks to your positivity are often non-rational. Sometimes these negative beliefs just need you to acknowledge them, and then they can move on their way.
9. Be True. Being true is the same as being honest—something that’s required if you want to successfully manifest your heart’s desire. You have to be honest with yourself. The question to ask is: How do I succeed in attracting what my soul wants? The answer is always do the work that’s required to sweep away the limiting beliefs that have been blocking you.
10. Be Grateful. Gratitude is perhaps the most important key to attracting everything you deserve. It’s the activating force that God can’t deny, and the Universe bows to a heart filled with Divine appreciation. When someone is grateful for a gift you’ve offered or a small act of kindness you’ve shown, it makes you want to give even more. The Universe works in a similar way, so be grateful for every gift from God, no matter how small.

 

James F. Twyman is the best-selling author of ten books, including Emissary of Light andThe Art of Spiritual Peacemaking. He’s also an internationally renowned “Peace Troubadour” who has the reputation for drawing millions of people together in prayer to positively influence crises throughout the world. via healyourlife.com

Have Faith. The Moment You Believe It, It Will Becomes Yours

I want you to have your most extraordinary year ever. If your year has been great you can catapult that success into next year to be even greater. If it has been less than great this is your chance to press the reset button with more resolve to make this the year and start fresh.

You don’t have to wait until the New Year to recreate yourself. This can be the new start to have your best life ever. No matter where you are in life you can start now. Right now. This moment can be your time. This can be the year you get healthy. No longer will you sit on the sidelines watching others.  

This can be your time. This can be the year you set out to live the life you were meant to live.

Many of us have grown up believing we are suppose to be broke, poor and defeated. We fear so much that is justified in our stories. “I am not smart enough, not attractive enough, and not good enough.”

Our thoughts have the power to enslave us or free us. Our own thoughts determine our path more than the economy, a job loss or ended relationship. We behave as though we are undeserving of happiness, of a healthy relationship and we will do what ever possible to reinforce that belief. We convince ourselves to expect defeat. I am not going to have anything to offer in the meeting. I can’t think on my feet. No one wants me.”

“I am born this way. I can never change. I can never lose weight. I don’t have any self control.”

If you say from the inside, even a whisper, your mind creates it from the outside into your reality.

When we set goals with an unbelieving identity we will remain right where we are. In fact you can see this in people who achieve success only to self sabotage only to search out failure and mediocrity. What can you do? 

Get your mind to signal you are a deserving loving person created by The Divine. You are meant to be happy. You are meant to be healthy, loving, debt free, paying your bills. You weren’t meant by your Creator to have to worry about an electric bill. You are capable of living well so your bills are paid on time. 

When you are convinced, “Why do success and happiness always find someone but not me” shake yourself up. Offer gratitude. Pray as if you have it. That demonstrates real faith. Affirmations and prayer are activated by faith. When you act as if you have the thing, you will wake up earlier, walk faster, sit up straighter and speak up with confidence.  Affirm continually that you will act in every way that you have it. 

Escaping The Commoditization of Innovation: Why I Like IKEA The Un-Company

To call IKEA a furniture store is insulting. 

I happen to be one of the few men who actually enjoy shopping. That I adore IKEA above all other stores as a haven for all things innovation should come as no surprise. IKEA doesn't imitate. Where even innovation, believe it not, has become commoditized IKEA elevates the game continually. 

IKEA doesn't mind re-imagining because it is in their DNA to do so. How can a school, government, non profit or business make innovation work by attracting hordes of rabid customers and employees insanely driven to their product and service? Expect to stand decidedly apart through innovating and competitive advantage. IKEA understands that the world of business is hyper competitive. 

Not great companies, but insanely great companies in turbulent times implicitly decide to act as rebels of their industries by pushing the bar of excellence. Even the word excellence has been used to ad nuaseam. A rebellious, stand on edge of excitement, doing something big is expected attitude pervades companies who want to be and remain phenomenal companies. They behave not as victims of geo-politics, regulations and the economy, but eager participants in their own present and future. 

Cities uncomfortable in being a great city for example, will continually raise the bar until innovation excellence becomes the action not the process that attracts high paying customers anxious for your next big idea. They want to be involved in the discovery.  

 Processes aren't the answer. Nor is innovating. There is an experience of rediscovery where every activity implores, "Why do we do this? Does it exceed unmet needs? Does it raise the bar? Does this product or service give our competition cause to moan on Monday morning?" Jim  

 

 

Imagine an UnTV: Ikea's new TV comes disguised as furniture

IKEA announced in early April of this year that they’re soon releasing a new kind of television. It’s not engineered with any new technology—at least, not in the way most people would think. IKEA’s TV, called Uppleva, is more than a TV: it’s also its own entertainment center, Blu-ray player, and audio system.

Francis Cayouette, one of the designers behind Uppleva, said during the Milan showing of the TV: “People actually consider the TV as a piece of furniture, but it is always something that looked very technical, has a lot of cables, is complicated, and just doesn’t fit in the home environment.” Whether you agree with this implied credo of a home environment or not, the man does have a point. He goes on to explain that the idea behind Uppleva was to merge the worlds of home furnishing and electronics.

The Uppleva center combines the modern LED LCD television with a cabinet-style table and a built-in Blu-ray player. In a way, it’s only one-third television, but the display panel that perches above the table is definitely the main attraction. Almost everything about Uppleva, and its accessories, serve at least two purposes—right in line with Ikea’s design philosophy.

Uppleva, and its wireless sub-woofer. (Photo courtesy of IKEA)

 

The TV is attached and poised at the rear of the cabinet. This not only causes the TV to appear to be wall-mounted, it also allows the cabinet to serve as a table. The stand that holds the display in place is hollow, meaning it houses, and more importantly, hides any cables running to the back of the TV. This leaves your whole entertainment center free of cables—be they power cables, HDMI cables, or anything in between. The TV’s built-in Blu-ray player means that your cabinet is free to hold video game consoles, remotes, or any other TV accessories; the Blu-ray player also plays DVDs and CDs. And speakers? They’re built right into the cabinet, which allows infrared signals from the remote to pass freely through it to the TV. Included is a wireless sub-woofer that can be positioned at your disposal (within reason), allowing for almost completely hidden audio systems that continue the wireless trend.

Where specs are concerned, IKEA is not boasting anything space age. In fact, many news sites, such as Digital Trends, are arguing that consumers who feel attracted to the clean, minimalist stylings of the Uppleva TV will also be the kind who are turned off by spec speculation. Molly McHugh states, “Plenty of consumers are bored to tears by these lists of what is and isn’t packaged into their electronics, and spec lists are losing their luster with them. So while the Uppleva doesn’t boast any award-winning, ground-breaking, or exceptionally competitive technology, it does offer plenty of tangible features that will translate more easily for users.”

IKEA has partnered with China’s TCL-Multimedia and Germany’s Connept to make Uppleva an interactive, smart (internet) TV that both televises and advertises. The included remote will allegedly allow consumers to simply click and buy when they see an advertized product that they want—sounds a little dangerous to us.

Uppleva blends seamlessly into your living room. (Photo courtesy of IKEA)

 

Like many modern smart TVs, the Uppleva TV comes with pre-installed apps—around 20, Gigaom.com says—including YouTube, Vimeo, and Dailymotion. We’d bet heavily that there will be plenty of social networking outlets, as well.

There was a lot of good and bad hype when Nintendo announced their family-friendly, motion-based Wii console meant to consolidate the difference between hardcore and casual gamers—and that system has, over time, proved rather unprofitable. We at TelevisionInfo.com are curious to see the result of this “casual” focused TV that does so much of the work—panel placement, audio systems, cable integration, input device management—for you, and instead gives you choice only within the realms of screen size, bezel color, and cabinet shape.

Uppleva will be available in multiple colors, screen sizes, and cabinet styles. (Photo courtesy of IKEA)

 

Speaking of bezel color, did we mention that the TV’s bezel is a clear plastic rim that changes colors to suit the preference of the user watching? Some might yell “gimmick,” but we think that’s really neat.

 

 

Expect the IKEA TV to be available in Europe this month, but only in select stores in Italy, France, Germany, Poland, and Sweden. Uppleva will come in screen sizes between 24 and 46 inches, and has sparked a touch of controversy over the rumor that its 24-inch iteration will cost almost $1000 (but really, it’s got nothing on the as-yet-unannounced Apple iTV).

Though it won’t be available in the states until April 2013, you can bet TelevisionInfo.com will be reviewing and testing IKEA’s first foray into the consumer electronics market faster than you can say Upplevision.

via televisioninfo.com

 

Why are Chinese consumers crazy for Apple?

 Chinese consumers are hungry for foreign brands but for Apple products, in particular, the demand is insatiable. What explains China’s love affair with Apple?

On January 13, Apple launched its latest smartphone—the iPhone 4S—in China. Hundreds of customers had queued overnight outside Apple's flagship store in Sanlitun in Beijing. That morning, the store failed to open on schedule, and soon after, Apple officially announced that the company would suspend all iPhone 4S sales at its Beijing and Shanghai retail stores. The crowd exploded. Some even threw eggs at the store’s exterior.

Apple defended its actions saying they wanted to protect the safety of consumers and employees. Among the hundreds gathered outside were gangs of scalpers (resellers of products at a price higher than the established value) that had hired a large number of workers and students to stand in line for them. For scalpers, the immense popularity of the iPhone in China means profits of around 500 yuan [approx. US$80] for each resold new phone. They were well-organised: One gang had red ribbon wrapped around their arms; another wore yellow hats. Conflict between different gangs of scalpers erupted and the police were forced to intervene. To ensure safety and to control the situation, Apple decided to suspend all sales of the new iPhone.

What explains this Chinese craze for Apple? Some go so far as to describe Chinese consumers as disciples of an “Apple Cult” and the late Steve Jobs as its leader. While this analogy is not very appropriate, it does figuratively highlight the irrationality of Chinese consumer attitudes towards Apple products. Apple has consistently managed to create a frenzy in China each time it launches a new product, unmatched elsewhere in the world. In fact, many buyers lining up at Apple stores around the world are from China itself—they just couldn’t wait for the new product to be launched later at home.

Some of the extreme demand may be attributed to Apple’s successful marketing strategy that intentionally caps supply thereby creating a thirst for the product. But this isn’t unlike Apple’s marketing strategy in other parts of the world. So what really differentiates the Chinese consumer? The fact that there is a large group of scalpers specialising in and profiting from Apple products, and that Chinese consumers are more than willing to pay a premium, begs the question.

What I see in China is a large group of consumers increasingly indulging in their thirst for and worship of luxury goods. It’s as if they’ve been brainwashed. Chinese consumers have become the world’s most ardent worshipers of luxury brands such as Louis Vuitton, Bentley, Cartier and Hermès. They are willing to queue up around the world not only for Apple products but also for these other luxury products. In 2009, for instance, Chinese customers snapped up nearly a third of the luxury goods sold in the United Kingdom and 60 percent of luxury products sold in France.

As for Apple, a large number of ordinary Chinese consumers obviously consider the iPhone a luxury item although whether a price tag of about 5000 yuan [approx. US$800] is steep enough to be considered a luxury item is debatable. This mindset among the average Chinese consumer is understandable when you consider that an iPhone is the least expensive purchase that can bring them closer to experiencing high society, and is also most cost-effective in terms of satisfying vanity.

There will always be young people that advocate vanity and that are obsessed with fashion in every society, in every country, and across every generation. It’s not that big of a deal that China has the largest group of Apple fans or “fetishists” in the world. In any case, an Apple fetish is no less holy than the worship of God or other idols if we ignore concepts such as hedonism or distorted social values. The “fetishism” could be merely reflecting a reality: people are collectively turning themselves into Apple believers in a society where faith has been largely absent. The article was first published at Harvard Business Review China in January 2012 and translated from Chinese by Aileen Huang. 

via knowledge.insead.edu

 

Using your sales force to jump-start growth: Innovation

There’s a reason it’s called a sales force. Here are four innovative ways companies can use their sales reps to drive growth.

 

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There’s no escaping the impact of the sales force on your company’s growth trajectory. This is the frontline group best placed to gain an intimate understanding of existing customers, to observe the forces at work in an industry, and to identify potential new business. During the past year, we interviewed about 100 sales executives around the world, across a range of industries, to identify the critical elements that distinguish true sales leaders from also-rans. This article highlights four intriguing ideas the executives described for leveraging the sales force to jump-start growth. Together, these suggestions offer practical insights for sales groups, as well as a starting point for discussions among CEOs and other senior managers hoping to get more from sales and marketing investments.

Look over the horizon

The sudden arrival of a truly disruptive technology—one that upends markets in ways few anticipate—presents obvious challenges to industry incumbents. Yet it’s also a huge growth opportunity. One supplier of parts to high-tech manufacturers has created a team of “speculative market analysts” to better identify the emergence of disruptive technologies and to predict their business implications. The team helps the company to position itself as a supplier that’s ahead of the curve and to enjoy superior sales growth while competitors scramble to catch up.

The full-time team cuts across all business units and draws on a variety of internal and external sources: the sales force provides insights into the technology initiatives of the company’s customers while continually pressing them for feedback about its shortcomings and the efforts of competitors. In addition, the team closely scrutinizes all reports from competitors and customers—easier said than done, given the sheer volume of market information emanating from countries such as China. It even fosters close ties with venture capital firms and provides up-and-coming companies with funding and “sweat equity” to convert innovative concepts into realities. Together, these efforts have helped the company’s sales force to get ahead of recent major disruptive trends, including the boom in tablet devices and e-readers, as well as the growing fields of LED lighting and solar technology. What’s more, the team’s efforts are generating an estimated annual return on investment that exceeds 12 percent.

Hunt and farm

It’s easy for organizations to fall into the habit of seeking sales growth only through existing customers. Even though the sales force is typically best placed to find and approach potential clients, individual reps may shun the uncomfortable task of cold-calling in favor of selling to customers they know well. Yet there’s only so much each customer can buy, so finding new business is critical for growth.

One large distributor of auto parts tried tackling this problem by separating these activities. Its sales leader designated some reps as “hunters,” who focused exclusively on finding new prospects, while “farmer” reps concentrated on existing customers. The model succeeded initially but later foundered as hunters became discouraged by the time and effort required for their relatively scant wins, as well as the perception that they were second-class citizens compared with farmers.

As attrition rates among hunter reps grew, the sales leader changed tack. To demonstrate the importance of finding new customers, he designated one day a month as a “hunting day,” whenall reps would exclusively chase new prospects. The rest of the time, they could focus largely on existing customers. The result was astounding: in a single day, the company signed up as many new customers as it normally did in two months. Setting aside one day a month for hunting new business is now an ingrained part of the company’s sales practices.

Motivate with more than money

The basic remuneration model for sales reps is simple: a base salary offers security; commissions and bonuses provide incentives to perform. Most companies work endlessly to optimize the balance. Yet what if money isn’t the thing that actually matters most? One financial-services company tried all manner of compensation plans before determining that while carrots and sticks did influence the sales performance of its financial advisers and sales managers, the results were short-lived.

As the company explored alternatives, its sales leader observed something important: the most successful advisers often spoke passionately about the sense of fulfillment that came from helping clients realize their dreams. Fundamentally, that was why these men and women had become financial advisers. The realization that money was just one of the factors driving performance prompted the sales leader to work with managers and individual advisers to develop specific goals that would help the advisers feel they had genuinely helped customers. Maybe it was prioritizing quality over quantity by working more intensely with fewer clients. Perhaps advisers needed a wider range of financial products to ensure that they had all possible options to meet their clients’ investment goals. At the same time, the company identified and laid out steps for overcoming potential bottlenecks, such as a lack of coaching, training, financial-management tools, or appropriate products.

The company knows that money remains critical to its sales team but now recognizes the benefits of identifying other, deeper motivations. The attrition rate among financial advisers has fallen sharply, and they not only have become more successful at winning business but also have found that clients are entrusting more of their wealth with the company. These goals have been met with no increase in the compensation of advisers.

Boost sales without slashing prices

Companies experiencing flat or declining sales often elect to cut prices to spur demand. Yet sometimes, averages lie: a decline across a market doesn’t mean that all market segments are weakening. A North American logistics company learned this lesson the hard way when it empowered sales reps to lower prices to meet management’s goal of boosting volumes. Because the price guidelines were set without taking into account the competitive dynamics of each specific market segment, only some reps recouped the cost of the price cuts with higher volumes. The company’s overall competitive position deteriorated.

Top management decided to recalibrate its approach. The characteristics of each of the company’s various market segments varied wildly. Some were growing fast in the wake of continuing property construction, population influxes, and investment; others were flat-lining. The sales reps got new price and volume targets based on each segment’s characteristics. These targets incorporated metrics such as the economic growth rate in geographies where particular industries were heavy users of the company’s services, the strength of the company’s operational assets relative to those of its competitors, and whether the company was losing or gaining customers at accelerating or decelerating rates.

This granular view of each sales territory led to new sales approaches. In higher-growth markets with limited competition, sales reps aggressively sought new business and raised prices where possible. In declining markets with stiffer competition, reps were authorized to cut prices to prevent customers from defecting. This market-by-market roadmap allowed the company not only to reverse several years of declining market share but also to secure an overall average price increase of 3 percent. via Mckinsey Quarterly

About the Authors

Maryanne Hancock is a principal in McKinsey’s Atlanta office, Homayoun Hatami is a principal in the Paris office, and Sunil Rayan is an associate principal in the New York office.

 

 

CEOs’ Balancing Act: Avoid Falling Into Business As Usual

We have watched many once great companies morph into corporate memories as a result of becoming complacent, and whose CEOs abdicated their responsibilities to conflicting risk averse bureaucratic management committees whose indecisions strangled the life out of the firm.

Amazon’s Jeff Bezos captured this scenario best: “small companies are good at taking risks, they have nothing to lose. Big companies lose their way when they stop taking risks.”

Everyone knows that innovation and keeping up with customers’ changing requirements are the cardinal rules for success in any business. Then how can some CEOs lose track of these strategic imperatives and let the flame of creativity get snuffed out in their firms?

Is it that they tire of the challenge? Or, as many have described, take on a feeling of entitlement? Size, left unchecked, is also a breeding ground for bureaucracy.

However, some large firms like 3M, P&G, and now Ford, who temporarily stumbled, have resurrected themselves with a fresh focus on creative strategic thinking and the controlled execution of a well formulated plan. In these well known firms, the CEO currently in charge has reorganized their teams and operations, and runs the business under a results oriented, tightly controlled, reporting system.

Mulally at Ford says: “Communicate, communicate, communicate…everyone has to know the plan, its status and the areas that need special attention.” His emphasis on the plan for Ford has reached every employee who has received a small plastic card with four goals of expected behavior on one side and “One Ford,” the company’s revised definition, on the other.

He has instituted weekly meetings with senior managers to ensure that everyone is executing the plan to identify small problems and take corrective measures before they intensify and is functioning as a team that is focused and accountable for clearly defined objectives. This allows for management to share results, problems and information.

Mulally believes for the company to succeed everyone has to know what is expected, what the objectives are, what is working and what is being revised to work better. His technique obviously doesn’t allow for bureaucracy in any form to exist in the new Ford that he is building by a constant weekly review of results against plan.

This relentless implementation at Ford is a far cry from the typical corporate quarterly reviews that take place at many other large firms. Often these quarterly review events are staged presentations of aggregated results that frequently camouflage and overlook any real problems. Any noticeable variations from plan are explained away in a variety of “corporate speak” terminologies, like “a temporary aberration,” “a seasonal anomaly” or “a temporary economic hiccup.”

To avoid falling into the “business as usual” trap, CEOs have to be the catalyst for the perpetual search for innovations like 3M’s well known innovation mantra that rewards creativity and sets a strategic goal to have 25% of the company’s volume generated by new products. At P&G, Bob McDonald has set a strategic goal to raise the value of P&G products consumed by their customers on a global basis by a certain percentage. At $79 billion, a few percentage points can raise the annual volume to $80 billion plus, with incremental profits.

Probably the best example of how to keep creativity alive is what Steve Ballmer is presiding over at Microsoft where they have identified 70 technologies that they are exploring under several broad umbrellas: enterprise management, online and now consumer electronics. At Microsoft, the dynamics of creativity have become a natural part of the culture that is constantly nurtured by a gregarious CEO.

Another good example is Jeff Bezos at Amazon, who is perpetually searching for opportunities to expand his online business model. Last year’s acquisition of Zappos is now about to be supplemented by the acquisition of Quidsi, Inc., the parent of Diapers.com and Soap.com. Amazon is constantly researching trends for opportunities to add more SKUs to their online megastore. Last year, sales of household products over the internet reached nearly $10 billion as estimated by Nielsen Research.

The Amazon innovative strategy is to have more and more consumers buying frequently used everyday staples as repeat customers that can also easily become consumers of other higher-margin products.

The message is clear for CEOs. They have to be the motivators and regenerators of the entrepreneurial spirit that was the foundation of the firm in the first place. Once they lose the desire to be at the forefront of change the rest is history. via Bob Bob Donnelly & chiefexecutive.net