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Posts tagged with Corporate Myopia

How do companies lose customers?

Posted on July 23, 2015 by 2 Comments

There are many reasons companies lose customers but, in the end, they all come down to a lack of customer engagement or advocacy. When engagement drops to a point where customers begin saying this company makes their lives difficult rather than easy, it’s only a matter of time until they go elsewhere. The difficult part for managers hoping to stop the flow is that customer loss is usually a trickle and rarely a cascade. It can be difficult to detect and harder to understand the problem or how to fix it. This is particularly true for consumer facing B2C businesses.  B2B companies usually have client managers whose job is to stay on top of things, but the same rules apply and results can take place.

It’s true that general inertia can keep dissatisfied customers patronizing companies they dislike for a long time. It can often seem too difficult or time-consuming to change your service supplier. The hurdles presented in front of change require time to find a new supplier and leave your old one. But inertia only forestalls the loss. It never prevents it because neglect feeds upon itself to a point where customers can feel forced to look elsewhere.

Here are a couple of personal examples: one large one preceded our inertiasupplier change and one small that validated it. In this case, the industry is banking and companies, such as banks, that are pressured by both small margins and ample regulation are particularly vulnerable.

For many years, my wife and I banked at HSBC. When we made the decision to go to HSBC, we were somewhat concerned about whether we would get lost in such a large company. It’s the 25th largest bank in the world. But they had a branch only a few blocks away from our home and offices around the world, which could accommodate much of my work, which is outside the U.S.

The bank immediately provided financing for our home in New York and a vacation home in Maine. The branch personnel were always accommodating and all was good for a period of several years. Then, HSBC began to make changes and from an outside view, it seemed they were outsourcing many of their in-house services to cut costs. Service bureaus began to answer phone calls or deal with problems, many of which were not connected to each other. There was no single view of the customer. Decisions moved further away from the branch to be centralized by policy makers who were guided by lawyers. The bank would probably blame government regulation but part of succeeding in business is maintaining excellent customer relations regardless of what is thrown at you from the outside. The old saying, “Don’t make your problems into your customer’s problems” always holds true.

One day about five years ago, the local mortgage officer, always accommodating, called to say that we could refinance our mortgages at lower rates and reduce our monthly payments – a good example of trying to make things easier for the customer. There was some documentation, he said, but that it would be easy because he would shepherd it through. So we filled out the application, paid the documentation fees, authorized appraisals, credit reports and income checks. Then, came the bad news. We had been declined. It made no sense to our local mortgage officer. We had never missed a payment, had near perfect credit scores and growing businesses. Additionally, the bank had all our personal and business accounts, personal and business loans and investments. They owned us.

problemsBut then he said, “Let me see if I can get my managers to overrule the underwriter.” That sounded odd to me and it turned out that the bank had farmed out its underwriting to a third-party firm that specializes in credit analysis, or more correctly, they had computers that specialized in credit analysis. He called his boss and I called his bosses boss, all to no avail. I spoke to the underwriter who told me that we didn’t fit their formulas because we owned small businesses that couldn’t be counted on to continue to grow. I reminded her that the bank already had our loans so it wasn’t as if turning us down was going to do anything. She said, “I wouldn’t have approved you last time either.”

To make a long story short, we finally got the refinanced loans approved but only because we refused to let it die and kept pushing the decision up to the highest levels we could find in New York. It was painful and not only took much of our time to make our case but also that of our local loan officer, so in the end the bank’s cost to make the loan was higher and it also took time away from us to devote to other areas, maybe like making more money to satisfy the underwriter.

(Now, I should add that we’re not financial slouches and I’m not looking for sympathy. Remember, customer alienation is the point and there are millions of small business people just like us all across the country.)

For us, the experience was the coup de grace in our relationship with HSBC. We decided that we would leave them at the first opportune time. Several years later, we did after rearranging some of our finances. The irony was that as soon as we did, HSBC desperately wanted us to stay. But all of the equity that their local branch personnel had built by being so accommodating had melted away and we had crossed the line from engagement to alienation.

That’s the big example that caused them to lose us as customers and while I’m using my own examples, I’ve heard similar stories among many of our friends who also are small business people. (Years earlier when I had that conversation with the underwriter, I asked her if she would have been happier if I was a manager at Chrysler corporation making several hundred thousand dollars a year. “Of course,” she replied. And I then said, “But Chrysler went bankrupt and I might have lost my job.” The conversation simply went downhill from there.)

So, we’re now at a point where we’ve changed banks but still are unwinding things with HSBC. They still have the mortgage on our home in Maine and a checking account from which they are automatically receiving the monthly payment. However, we noticed that they’re continuing to send the monthly bill to our old address, so we called to have them change the address. Simple enough.

They wouldn’t do it unless I wrote them a letter to inform them. “But you’ve verified that I am who I say I am with six questions I answered correctly. Why won’t you take the information over the phone, or online? Why are you forcing me to sit down and write you a letter?”

The reply came from a supervisor as the first customer service person agreed with me and gave up in frustration. “I’m sorry,” he said. “We can only do what HSBC management tells us to do.”

I thought about his wording for a moment. (It pays to have had a mother who was an English teacher.) “Excuse me, you said “HSBC management”. Aren’t you HSBC management?”

consequences2“Technically, no. I’m with a third-party service bureau that has to follow the procedures given to us by HSBC. I agree with you but there is nothing I can do. You have to write a letter,” he said with an air of resignation and defeat.

So, I thanked him and ended the call and thought again about the axiom, “Don’t make your problems into your customer’s problems.” It was validation for our decision to leave and find a new bank.

How bad can things get when you alienate customers? I’m not advocating that any bank’s customers leave. That was the right decision for us. It may not be for others. However, I am advocating that companies use every opportunity to determine whether their customers are engaged or alienated and why, and if so, what can they do about it. In our CRM (customer relationship management) system world, customers have become a series of transactions that we evaluate with formulas and predict with algorithms. I would argue that the transactions are consequences of their relationships with the companies and brands they use. This makes it essential for companies to devote more resources to both monitoring and measuring those relationships, and doing what they can to improve them.

The same is true internally. Employees are the brand personified. Months into our banking change, I called to speak to an executive at our old bank who had been helpful. I got her assistant who was working on the problem and said what we wanted to do could be done, but wasn’t easy. “Why isn’t anything at that bank easy?” I asked.

“Tell me about it, “ she replied.  As the lobsterman, who lives down the road from me in Maine likes to comment, “Nuff said.”

I’d love to hear your comments or stories  about successful customer engagement or, conversely,  alienation.

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The rich get richer and poor get poorer. What, if anything, are we going to do about it?

Posted on September 28, 2014 by Leave a comment

With each passing day, it seems as if the rich get richer, the poor get poorer and while our economy expands, the divide between rich and poor gets wider and wider. Sound like an exaggeration? Perhaps not. Read Neil Irwin’s article in this past weekend’s NY Times, “The Benefits of Economic Expansions Are Increasingly Going to the Richest Americans”. Irwin cites data compiled by Pavlina R. Tcherneva, an economist at Bard College to prove this disturbing trend, although none of this should be a surprise.

Two charts in the article tell the story well. The first (below) shows the share of income growth received by the top 10 percent and bottom 90 percent of earners during periods of economic expansion.

InequalityI grew up in the 1950’s and 1960’s, began my work career in the 1970’s and reached a modicum of business success in the 1980’s and 1990’s. My father was a doctor. We went on family vacations when I was little. I went to good schools and ultimately raised a family and owned my own business. I wanted for nothing. Life was and still is good. As a child and teen growing up in inner city Detroit, it always seemed like the auto factories were humming, the shops were full and growth in prosperity, while not perfect, was being shared.

According to I.R.S. data, I’ve been among the 10% who’ve benefited from expansions for many years. Yet, it doesn’t take much other than a look at the daily papers or a walk around any American city to see that something doesn’t seem quite right. Shoppers seem well-heeled, coiffed and comfortable among my top tier peers. But why, I wonder, when I walk into Home Depot, Walmart or the local supermarket, I rarely see exuberant shoppers from lower and middle classes? You may think it’s the stores I shop in only cater to my types but I travel and like to walk around and check in on the retail scene to get a flavor of the local zeitgeist.

The second chart from the article (below) shows the share of income gains during expansionary periods that went to the top 1 percent versus bottom 99 percent. The trend in wealth gains becomes even more striking.

IncomeGains Before I saw these charts. I always thought things seemed to change for the worse in the 1980’s. That was when the idea of “trickle down economics” came into vogue and was put into practice. The idea was that if we cut taxes for the well-off, the additional amount they gain will “trickle down” to the middle and lower classes. But I always wondered how that could be. After all, I could only buy one car every few years, one boat, one house, etc., nothing like what hundreds, thousands or millions of people making less than me could do if they had the money. So how could the benefits that I and my fellow 10 percenters (alas, I’ve never made it into the top 1%) really make a difference in the prosperity of all. The answer as we can see from the data is that they couldn’t and haven’t.

Political forces on the right are quick to criticize programs that provide targeted job training, assistance to inner city residents and businesses, raising the minimum wage or any program that puts more money toward raising the lower class and taking away from the wealthy. Their answer is always to just lower taxes as the benefits will trick down for all. It’s been nearly 35 years since we’ve been practicing “trickle down” and we haven’t seen it trickle anywhere yet except to the top. In case you’ve forgotten Einstein’s oft quoted definition of insanity, it seems to fit here: “Insanity is doing something over and over again and expecting a different result.”

 Our Congress can’t seem to do anything constructive to pass sensible solutions and our President can’t persuade them to because one party thinks it’s its job is to undermine his term. And we go to the polls and re-elect the same clowns who can’t interpret the data, read the charts or come up with any compromise that might try something different to help. In 1811, a smart guy named Joseph de Maistre, wrote “Every country has the government it deserves.” We often think that quote was intended for our “exceptional” America. It was actually directed toward Russia, a country, then and now, of rich oligarchs separated from the lower classes by their profligate wealth. Sound familiar?

 

 

 

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The way slogans should be

Posted on May 15, 2014 by 2 Comments

WayLifeThere’s a great article today by Gail Collins in the NY Times (My State’s Prettier Than Yours) in which she tries to understand the promotional slogans of our 50 states.  Give up Gail.  It’s incomprehensible.  State and country slogans have always been a pet peeve of mine because they usually don’t relate to anything distinct or different about the state.  Collins gives plenty of examples.  They’re usually a result of the excesses of bad advertising agencies or over zealous economic development and tourism teams.

There’s a list of state slogans at Wikipedia (List of U.S. state slogans) and 105 country tourism slogans at a blog called Tourist vs. Traveller (105 tourism slogans from around the world) along with a nice little video to show them all with their logos (which a lot of tourism development folks think is a brand, but that’s another topic entirely).  Collins covers the states pretty well so I’ll focus on some of my favorite country slogans.

Did you know Albania is “A new Mediterranean love”?  And all this time, I thought it was a mysterious country that supplies pizza parlor chefs to New York restaurants.  Austria is “Arrive and revive”.  I’m sorry. I don’t know what that means, particularly since I’ll have jet lag for a day or two once I arrive.  Here’s one I like:  Belarus is “Hospitality beyond borders.”  Does that mean I have to leave the country for hospitality?  One of my favorites is Romania because I’ve been there twice:  “Explore the Carpathian garden.”  Now, I never saw the Carpathians on either of my trips (hint:  it’s a mountain range), but I suspect that slogan will mean a lot to the winner of any national geography bee.

You have to read the list yourself.  It’s full of surprises.  (Actually, I think that’s Connecticut’s slogan.)  You can travel from Pure Russia to 100% Pure New Zealand in a few lines.  (Maybe Russia only got to 90% so they didn’t want to tell us how pure they are.)  “Bolivia awaits you”, which is nice to know since I probably won’t make it there for a few years.  The “Dominican Republic has it all” so don’t confuse that with “Honduras, todo esta aqui.”  They have it all too but only in Spanish.  I also like “Paraguay, You have to feel it!”.  I’ve been there too and I suppose they’re talking about their vicious mosquitoes.

Τhe amazing thing about all of these slogans for states and countries (cities have them too; don’t get me started) is that they say absolutely nothing about the country, its culture and what makes it distinct and different.  Years ago, states had mottos or nicknames that said something about them and often appeared on auto license plates.  Alabama was “The Cotton State”, Florida was “The Everglade State”; Georgia – “The Peach State”; Hawaii – “The Aloha State”; Michigan – “Winter Water Wonderland” and so on.  Washington D.C. was “Nation’s Capital”, which tells me a lot and that no other state can say.  Now, it’s become “The American Experience”, which is ironic since it’s never been a place that Sarah Palin went looking for her “real Americans”.  As a child, I always loved the slogans on license plates and could recite a lot of them.  They told me something different about each state and I wanted to visit them all.  Now they all blend into a meaningless hodgepodge that I bet nobody but each state’s tourism employees can recite.  It’s bad for the state or country, self-aggrandizing and simply poor communication.

I used to live in Maine and often drive there for long weekends.  We have a house there and a car with Maine plates that says “Vacationland”.  I like that, although I also like that it’s been called “The Pine Tree State.”  Sure, there are pine trees in other states but drive into Maine and you’ll think there must be more of them there than anyplace else and it does give you a picture.  For many years, they had a slogan on a sign when you enter the state, “The way life should be.”  Yes, it’s another one of those silly slogans but I have to admit that as someone who lived there for 25 years, seeing that sign always made me feel like I was home.  It meant a way of life to me and I hoped for others visiting for the first time.

40937319A few years ago, they added another sign about a 100 feet further down the road that read, “Worth a visit, worth a lifetime”, which signaled to me that they hired a new ad agency that wanted to establish its own brand of creativity.  Then, a year or so ago, they plastered “Open for business” underneath “The way life should be.”  I suppose it’s nice that the state is trying but did anyone check to see that Forbes put Maine last in its best for business rankings?

OpenForBizAt its core, this is all about determining what a state or country’s marketing strategy is because slogans, if they have any purpose at all, should tell us why that place is worth our patronage for business, tourism or simply, aspirations. Anyone who pays attention to strategy knows that it must tell us why the product is both distinct and different from any other, and if that strategy is not true to what’s being delivered, it is totally meaningless.  Slogans, however, have become a tactic conjured up by advertising or public relations agencies without a thought to strategy and that’s why they are incomprehensible and instantly forgettable.

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The challenges of Christmas

Posted on December 20, 2013 by 2 Comments

Everybody knows Christmas can be a challenging time.  Gifts, parties, family, travel, decorations, cards all can present vexing problems to solve every year.  For me, an appropriate card is probably the toughest thing I face.  Every year, my friend George and I develop a cartoon to use as our card and it’s not easy.

You see on the side, we’re cartoonists or I should say a cartoon team.  George draws and I write except when he draws and write or I change his drawings with photoshop and write or he draws and his wife writes or my wife and kids make suggestions.  But however it’s done, we come up with a collaborative effort every year that goes on our website GigundoIndustries.com

No doubt you’ve heard of Gigundo Industries, the largest, non-existent, virtual company in the world.  If not, you better visit the website as soon as possible for there are hundreds of cartoons there for you to peruse and even buy.

In a way, creating cartoons is similar to writing strategy.  You take a complex set of facts and distill them down into something simple that cuts through the clutter.  Only with cartoons, you place that simple statement in an unusual setting such as a psychiatrist’s office, caveman times, a prison, the North Pole or Santa’s workshop.

There was so much news this year that was fodder for our a year-end card.  Off course, most prominent and recent in our minds was the malfunctioning of healthcare.gov and that led to an idea that really didn’t require any drawing at all.

ChristmasGov

But we quickly nixed that idea because who could possibly make jokes about their government failing at something, let alone Santa?  I mean nobody wants the government to fail. Right? Yeah, right.

So then we moved on to the saga and embarrassment of Edward Snowden and the NSA snooping and came up with this:

Snow_Done

But not exactly an uplifting story and we were looking for something more upbeat.  So we moved on to a couple of positive stories.  First, the extraordinary first-ever resignation of a Pope got us wondering if that could ever happen to Santa.

Dual Santas

Then came the idea that the battle for gay marriage might even have reached the North Pole.  (No, this is not for you people at Fox News who think gay marriage may as well allow us to marry a goat.  Who’d marry a goat anyway?)

Bucks

We just weren’t satisfied yet and then read the news that “Selfie” was the word of the year and would enter the Mirriam-Webster Dictionary.  Santa can get in on that too.

Selfie

Finally, we hit upon it, an idea that would really take us into the future but have that bit of mixed message that might cause us to wonder whether things are as they should be.  2013 also became the year of the drone, for both reasons that frighten us and, thanks to Amazon.com, frighten us.  Just think if Santa employed some new technology.

Amazon

That’s our holiday collection for 2013.  They’ll all go up on our site at GigundoIndustries.com soon.  Let me know which you like best.  Now, it’s back to my day job.  Everyone at Futureshift and GigundoIndustries.com wishes you the best of Christmas holidays and a great 2014.

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Strategy? Why do we need that?

Posted on November 21, 2013 by 10 Comments

I went to a wine event today in New York for the Bordeaux wine region.  While there, I asked the representative of one of the wineries, “What’s your strategy for the U.S.?”  She responded, “Strategy?  Why do we need that?”  I gave her some reasons but the conversation didn’t go very far.

When I returned to my office, I got an email from the Pew Research Center titled “Experts rank the top 10 global trends.”  When I clicked on the link, I found a report from the World Economic Forum on the 10 most important global trends based on a poll of 1,592 leaders from academia, business, government and non-profits.  Here’s the list:

  1. Rising societal tensions in the Middle East and North Africa
  2. Widening income disparities
  3. Persistent structural unemployment
  4. Intensifying cyber threats
  5. Inaction on climate change
  6. Diminishing confidence in economic policies
  7. A lack of values in leadership
  8. The expanding middle class in Asia
  9. The growing importance of megacities
  10. The rapid spread of misinformation

So what do these trends have to do with something as everyday as buying a bottle of wine?  Plenty.

It’s great that a provider of any product or service believes theirs is the best but neither consumers nor b2b markets think in linear terms.  Every decision is made in relation to another.  If I’m nervous about the state of the world, that will effect how I make decisions, and what and when I buy.  If I’m an importer or distributor and concerned about unemployment and the impact of economic policies, I may want to hedge my bets with tighter inventory control.  As people focus on the macro trends that affect us all, how companies approach the environment, social responsibility and their own governance (ESG) effects our perceptions of their brands.  It goes on and on whether you’re a consumer or corporation (remember, somebody once said, “Corporations are people, my friend.”)

If you don’t have a strategy that helps you wind your way through this maze or a brand with values that reassure consumers and customers, you’re dead in the water and it won’t matter how many fancy events, e-newsletters or facebook followers you have.

5year copy copySomething else was interesting to me at today’s Bordeaux event.  As I went around and asked people about their wines and what makes their winery better than the rest (to which there were a lot of blank stares), nobody asked any questions about me, about my tastes, concerns, or needs.  They may as well have been Enomatic wine dispensers with an information rack underneath.  Most handed me a sheet of paper about their wines in answer to my questions anyway.

There was neither strategy present nor any attempt at customer engagement.  I imagine the woman who asked me why her company needs strategy poured a lot of wine today.  At the same time, it wouldn’t surprise me if at the end of the day, she moaned about some of the trends on the list and how they were making life more complicated.  That’s too bad.  Strategy is the direction that helps us wind our way through and around those trends and we all give our loyalty to those that help us do that.

FutureShift asks a lot of questions and listens carefully so that brands and strategy resonate with customers to increase their engagement and loyalty.  It works.

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Where does good strategy begin?

Posted on November 11, 2013 by 1 Comment

There’s always a rush these days to get plans into action.  Action is what we value, just as we’re always looking for someone who “can hit the ground running”.  But what if they’re running in the wrong direction?  And how do you know in which direction to run?

The answer to that mistakenly comes in businesses doing what they’ve always been doing and whenever possible just running faster.  In the accelerated competitive environment of New York City, we’ve become accustomed to stores, restaurants, professional services and even hospitals suddenly disappearing.  These businesses failed even though they worked harder and ran faster than anyone around them.  Why did they fail?

Most likely, they never asked their customers whether the direction they were going, the products and services they were offering or the benefits they perceived internally met customer needs.  It’s the rare manager or entrepreneur who can intuit what the market is looking for.  Otherwise, there would be a lot more people like Steve Jobs around.  Businesses have to get feedback from their customers and understand how to match their offerings with what customers are seeking.

Not surprisingly, customers often see product plusses and minuses in completely different terms than the companies selling them.  The best advertising campaign in the world won’t convince customers that they should be seeking something different.  We’re just not in that linear world of the 1950s and 60s when we could be told what detergents make our clothing cleaner and then march in lockstep to the store to buy them.

Of course, businesses don’t always listen to their customers because internal beliefs are so strong as to refuse to change their strategy to meet customer needs.  Here are three examples to consider:

  1. Several years ago, we were asked by the Chilean Pisco industry to provide a strategy that would open up the U.S. market for them.  If you don’t know Pisco, it’s an eau de vie, somewhat like a refined grappa, that’s made in Chile and Peru.  Our research found that bartenders believed it made most vodka-based cocktails more interesting and one of our key strategic recommendations (futureshiftpisco.com) was to unleash the creativity of bartenders with a series of tactical programs that would challenge them to develop great Pisco-based cocktails that their customers would love. But Chile is a country where perfection in planning is highly valued and established.  That works when building bridges, tunnels and skyscrapers, of which you’ll see many in Santiago these days but not when variable decisions are involved as with bartenders and their customers.  The Chilean Pisco industry decided to design several “perfect cocktails” that they could then promote in the U.S.  The result?  Peruvian producers who gained a better understanding of the U.S. bartender now dominate the market.  There’s still time for Chile to adapt as Pisco still is not well known in the U.S.   They simply have to acknowledge that their customers have more power than they do.  Easy, right? Ad campaign #1
  2. While we’re on Chile, let’s move to technology.  This time the Chilean technology industry told us they wanted to sell their growing tech industry to U.S. companies.  Chile had already achieved tremendous success in establishing itself as a successful place to locate an offshore tech center.  Now, they wanted to have a presence inside the U.S. to provide SaaS and enterprise integration products. Again, we spoke to prospective customers for these talented Chilean companies and were told that if they could establish partnerships with Chilean companies in Latin America, a piece of their U.S. business would likely follow.  (FutureshiftChileIT.com)In other words, help us in your territory and then we’ll reward you in ours.  U.S. companies wanted to understand the Chilean miracle and how it had become an export powerhouse. But just as with Pisco, the forces that worked internally in Chile were too strong to persuade them to adopt a market-oriented strategy in the U.S.  Six Chilean IT companies came to the U.S. trying to sell their services based on low prices.  But why go to a company thousands of miles just for low prices when that can be found down the road?  Today, there is only a small amount of programming work going to Chilean companies, as talented as they are. Ad campaign #2
  3. Most recently, we conducted a research and strategy project for the Maine lobster industry.  Following 200+ interviews, there were a number of findings in that report that showed how Maine lobster possesses attributes to restaurant and hotel chefs that were not being considered within the industry.  There is ample opportunity for the Maine industry to differentiate its brand from all competitors.  However, lobstering is a traditional industry and change does not come easily.  Like the two Chilean examples, internal beliefs in Maine are strong.  Most lobstermen are focused on their first transaction with a dealer when they bring their catch to the dock.  The needs of restaurant and hotel chefs can be perceived as a distant concept and there is little patience for the time it takes to raise the foodservice market’s demand.  The local dealer and summer tourist who loves to sit at the water’s edge, even though they both pay rock bottom price, is more concrete.  It’s been that way for more than a hundred years so change, despite market feedback, isn’t easy.  There’s cause to remain optimistic but it remains to be seen whether Maine’s lobster industry adapts.

In each of the above cases, the right strategy began with listening to customers.  That helped set a direction for the industry to go.  But at that point, industry members often put up obstacles to change.  After all, it’s far more difficult to do something new than the things you’ve been doing for dozens of years, even though they may not be working.

FutureShift develops brands and rebranding programs by understanding how customer decisions can increase engagement and loyalty.

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Dancing on Michael Porter’s grave

Posted on January 15, 2013 by 3 Comments

No, Michael Porter is not dead.  Only the consulting firm that he co-founded in 1983 is gone.  Today, the global accounting giant, Deloitte, announced that it had completed its acquisition of Monitor, which had filed for bankruptcy this past November.  As reported in The Economist last November 14th, the once proud firm, was able to compete with the likes of much bigger McKinsey, the Boston Consulting Group and Bain.”

No mention was made in the announcement of what role Porter might play in the newly formed division of Deloitte but he remains a highly regarded professor at the Harvard Business School.

Businesses come and go all the time and acquisitions are a daily occurrence.  What is of note here is that Monitor was founded by a man acclaimed as one of the great business strategists of the past century, and more importantly by his principles, best known as “Porter’s Five Forces”.  Under the guidance of the Five Forces framework and Porter’s fame, Monitor’s legions of consultants found millions of dollars of billable work among foreign governments, multi-national corporations and commodity boards.  That work began to dwindle in 2008 when Monitor had to seek a series of loans from its partners and venture capital firms in order to stay afloat.

In the November issue of Forbes, contributor and business author, Steve Denning, uses his rapier-like writing skills to tear apart both Monitor and the philosophical approach behind it.  In other words, he does some dancing on Porter’s grave.  While the article is now two months old, it makes for compelling reading if you were a believer or doubter of Porter’s framework.  Put me in the latter camp.

I first read Porter’s seminal article in the Harvard Business Review, “How Competitive Forces Shape Strategy” in 1979. I was one year out of business school and a loan officer in a commercial bank.  My mantra was a phrase coined by another business guru, Peter Drucker, and known as “Managing by walking around.”  The idea is that by engaging with people both inside and outside an organization, managers can best understand how their companies, products and management styles are perceived, how they perform and what to do about them.  That’s a simple concept that one could explain in an elevator between the first and second floors.

It served me well then and has since as I’ve made the practice of engaging with both internal and external audiences to find the intersection between internal capabilities and external needs as the place to find the sweet spot for successful strategy.

Porter’s Five Forces, on the other hand, require a much longer elevator ride. The idea is that by managing a framework of five market forces, a company or industry could find sustainable competitive advantage.  “The state of competition in an industry depends on five basic forces…The collective strength of these forces determines the ultimate profit potential of an industry.”


I can’t say I fully understood it in 1979 and I can pretty much say the same today.  I looked at the model then as I do now and ask, “Why is the competition at the center?  Why not the customer?” Drucker taught that the only valid purpose of a business is to create a customer.  Yet, here was Porter, saying that it’s all about dominating the competition.

I had a memorable meeting at Monitor’s Cambridge headquarters in the early nineties.  At the time, I was doing some consulting for the government of Chile on export promotion, inbound investment and tourism development.  Monitor had built up a practice in consulting in these areas and proposed a partnership.  I felt this might add some prestige to the project.  At our meeting, one of their senior consultants explained how they would apply the discipline of the Five Forces to the project.  He drew lots of squares and circles on the board labeling them various types of competitive clusters and argued that it was winning against competing countries, not customer perceptions that would win the day for Chile.

I left there confused and unconvinced that the focus should be on “competitive clusters” rather than matching what Chile offered with customer needs.  If you spend your time focusing on rivalries, you’re losing time creating more innovation to meet growing market demands and before you know it, your competition will be your problem.  As the famous baseball pitcher, Satchel Paige, said,  “Don’t look back.  Something might be gaining on you.”

As Steve Denning notes about Monitor, “Its consultants were not people with deep experience in understanding what customers might want or what is involved in actually making things or delivering services in particular industries or how to innovate and create new value.”

Today, factors such as globalization, the Internet, and the growth of social media have heightened the importance of building strategy around customers.  Now that the world is flat, customers decide who wins in every industry and political arena.  As Denning ends his article, “Monitor was crushed by the single dominant force in today’s marketplace:  the customer.”

It’s hard to argue against the man who is one of the most cited scholars in economics and business and whose ideas are widely used by business and government leaders around the world.  But we are in a different time where the key is satisfying customer needs for innovation, whether they be in features, quality, service, or value.  Companies like Apple, Amazon, Fresh Direct, and Kayak are just a few of the examples of how our flattened world has given power to customers.

Our consulting approach is to put customers at the center and to understand their frustrations.  After all, a frustration is simply an unmet need.  Find the innovation to serve that need, erase the frustration and you’ll find a successful business — that’s a short speech in any elevator.

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Chief Little Turtle and the Second Amendment

Posted on January 4, 2013 by 1 Comment

I recently ran my “Should we politicize tragedy post?” on a University of Michigan alumni discussion group on Linkedin.  There were a lot of interesting and reasonable comments but overall, I was stunned by the vitriol that came my way from people who believe we are one step away from Nazi Germany and the Soviet Union – and yes, the two were mentioned in the same angry post without any sense of irony.  There also were stern lectures from many who absolutely, positively knew what the framers of the constitution had in mind, even though that was 223 years ago.

A lot of these people would like to think that the authors of the second amendment were wise, prescient men looking far into the future and recognizing that there could be a need for armed insurrection against tyrannical (perhaps even Socialist or Fascist – take your pick) governments, that would require assault weapons for every man, woman and child in America. You may need to read that again to fully absorb that.  Those people are out there, sure of themselves and if you’re one of them reading my blog, you may wonder where you took the wrong turn.

What seems to make sense to me is that times then were not a lot different than they are now in one respect. People often did things for their own interests and to serve the needs of the present day or in the case of the second amendment to organize the U.S. military and defeat Indian tribes who were preventing us from acting like most colonial powers (defeating the natives, occupying lands and annexing territory, i.e. our history). I know that’s anathema to all the faux Constitutional scholars and volunteer armed guards out there who lectured me but to others, you might take a look at this essay written by my friend, Eric George, after doing some historical research.  As with the title of this post, it’s called, “Chief Little Turtle and the Second Amendment”.

“During the American Revolution there emerged a great Native American military leader.  His name was Michikinikwa in the Miami-Illinois language; the closest English translation was Little Turtle.  Born into the Miami Tribe in what is now Illinois, he came of age fighting French troops allied with the Continentals in the Northwest Territories (present day Ohio and Indiana).  In 1780, General Augustin La Balme, after a successful raid against the British, made the grievous mistake of burning down a Miami village.   Little Turtle tracked down La Balme and killed him, along with many of his men.  He was by now a War Chief; he proved invincible in battle and his stature rose dramatically over the ensuing decade.

After the British ceded the homelands of their Native American allies to the United States at the Treaty of Paris in 1783, Little Turtle responded by forming a new Confederation of his own.  He allied the Miami with the Shawnee under Blue Jacket and the Delaware under the command of Buckongahela.  Their resultant victories against U.S. militias (the Continental Army having been largely disbanded after the Revolution) helped to expand their Federation to include the Ottawa, Wyandotto and even some of the fearsome Iroquois.

After the Confederation defeated the 1400-man force of General Josiah Harmar in October of 1790, a thoroughly irate President George Washington had had enough He ordered General Arthur St. Clair to march against Little Turtle with a combined force of former army, conscripts, and militia numbering over 2,000 men, to begin by the summer of 1791.  The ill-equipped force did not leave Fort Washington (think Cincinnati) until October.  By early November, fewer than 1000 troops remained due to desertion and disease when they camped deep in Miami territory. The result was as predictable as it was disastrous.  Confederation warriors surrounded St. Clair’s loosely guarded encampment under the cover of darkness and slaughtered over 600 men (and probably another 200 camp followers) at first light. Nearly all survivors were wounded.   By comparison, the Colonies had lost 88 men at the Siege of Yorktown, the last major battle of the Revolutionary War.  St. Clair’s defeat stands as the worst loss of life by U.S. forces in all the Indian wars.  The casualty rate, in percentage terms, remains unsurpassed by any other conflict in any war to this day.  In a matter of hours, the Western Confederacy had annihilated one quarter of what remained of the U.S. Army. The staggering loss of life generated both public fear and outrage; George Washington fired St. Clair and the first-ever Congressional investigation into the Executive Branch was initiated.

It was no small wonder that scarcely a month later, on December 15, Congress adopted the Second Amendment to the U.S. Constitution.  The Amendment read:

“A well regulated militia being necessary to the security of a free State, the right of the people to keep and bear arms shall not be infringed”

At the time, the right to bear arms was a given, as was the existence of now extinct militias.  Probably the most important words in the above Amendment, at least in 1791, were “well regulated” for Little Turtle had conclusively proved the new Nation utterly lacking in that department.

By word and deed, the Second Amendment was effective.  Five months later, in May 1792, Congress passed the Militia Act, setting minimum standards of readiness.  Among these were “a good musket, a sufficient bayonet, two spare flints, a knapsack, and a pouch containing at least 24 cartridges.”  In other words, just showing up was no longer acceptable.

In the summer of 1794, the Legion of the United States, well equipped and better trained, defeated the Western Confederacy at the Battle of Fallen Timbers, near present day Toledo, Ohio.  Casualties were modest on both sides.  Little Turtle eventually became a peacemaker; he finally met with Washington, and later on with John Adams and Thomas Jefferson.  He died in 1812, and was honored with a full military funeral.

The young nation that finally defeated him would clearly be unrecognizable to him today.  It has grown to have dozens of cities with more inhabitants than most of the original States in their entirety.  Its economy has become the world’s largest, an innovation engine for the entire planet.  The venerable militias have long since been replaced by State and local police forces, and a professional military that rules the land, sea and air.  The United States has become the most powerful Nation on earth. Its citizens now have little to fear, except each other.  For the Second Amendment that was written in large part to defeat Little Turtle and his Confederacy has now enshrined the use of a different sort of musket by our populace.

Weapons with a destructive force that our Founders could not have envisioned are now ubiquitous in America. With roughly nine guns for every ten civilians, the U.S. dwarfs all other nations in per capita gun ownership, with the possible exception of Yemen.  To the astonishment of the developed world, we trade assault rifles and semiautomatic handguns freely in unregulated markets. Our firearm related death rate last year was forty times that of our Founders’ old adversary, Great Britain.  Mass killings have become commonplace.   In the world’s most wealthy and powerful country, parents are now afraid to send their children to school.  Chief Little Turtle won a far greater victory over the White Man than he ever imagined.”

It’s a nice story that our Constitutional authors sat around pondering the future and how we might need to overthrow our government but the reality is that we had just finished overthrowing Great Britain, were bogged down fighting Indian Wars and dealing with the spectre of other adventurous European military forces.  Rather than think about how these men saw the future, we might ask what motivated them in the days in which they lived.  So, thank you Eric for this essay.  I enjoyed it and hope it gets some comments but please, save the vitriol for other venues.

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A difficult year to create a holiday cartoon

Posted on December 20, 2012 by 1 Comment

As many of my friends and associates know, I create a holiday cartoon every year with my good friend and former business partner, George Hughes.  This is the twelfth year that we’ve created a cartoon as the centerpiece of our holiday card.  George and I used to own an advertising agency together and we began to create cartoons there as one of the agency’s creative teams.  Now, as owner of my strategy consultancy, Futureshift, and George, who has gone onto wherever old artists go, continue to take on this annual project.

George illustrates and I write, although our best work has always come from equal collaborations.  When I moved to New York in 2000, through a series of coincidences, the famous cartoonist, Jules Feiffer, saw a few of our cartoons, liked them and sent me to The New Yorker to meet with their cartoon editor, Bob Mankoff.  When I called Mankoff, I used Feiffer’s name, which I’m sure is the only reason he took my call.  He told me to come in the following Tuesday and bring a lot of work.

I showed up at the appointed time with around a hundred cartoons.  Mankoff went through about 30 of them, never cracked a smile, told me most of them were terrible and before I could run to the door, said, “Show up every Tuesday with new work.”  That’s the way of the The New Yorker, I suppose.

For the next six months, I showed up every Tuesday with 7 to 10 new cartoons.  However, being a cartoonist wasn’t my day job nor was it George’s.  Mankoff always would tell me how we weren’t funny or our jokes didn’t work and then he’d hold onto a couple to take into their final grouping of 50 to choose from for that week’s issue.  Our problem, he lectured me one week, is that we were a team and he didn’t like the idea of teams.  After a few months, he began to support our work more but eventually, we ran out of steam in the face of having other priorities.  Maybe he was right about teams.

We didn’t view it as failure but as a call to take a different, more relaxed approach to cartooning and so we formed Gigundo Industries, the world’s largest, non-existent, virtual company, which is a subsidiary of an even larger, non-existent, virtual company called Enormco.  You can visit the websites for either company at gigundoindustries.com or enormco.com and there you’ll find dozens of cartoons to look at and even buy for your presentations, brochures, etc.  (A little crass commercialism doesn’t hurt now and then.)

The process of coming up with a good cartoon is not all that different from developing a marketing strategy.  Strategy formation requires taking a complex set of both internal and external inputs and distilling them down to a single direction that fulfills unmet needs.  Cartooning does the same but it ends with turning the situation upside down or placing it in a prison, doctor’s office, caveman times or some other real or unreal situation we can all envision.

Today, George and I come up with fewer cartoons but we always work on one for the holidays.  Typically, we talk about the year’s news and try to work up ideas based on what people have been talking about that is still current or top-of-mind.  Some years have been a lot tougher than others.  I think the most difficult year for us was 2001 following 9/11.  It was impossible to come up with an idea that would be funny or ironic.  I don’t recall now what triggered the idea of the cartoon below that was the result, but it seemed right for the times.  There was no caption.  There was nothing that needed to be said.

2002 was an extraordinarily tense year and you’ll recall the heightened security everywhere in New York and in other major cities around the world.  But at the same time, we began to laugh again and take ourselves a little less seriously.  That was the year we sent this cartoon out:

By 2004, the country was beginning to relax a bit more but still always conscious of our enemies around the world.  Santa, too, we thought, would have similar concerns and we came up with this.

By 2009, we felt we could move on to other topics and that was a year filled with the lunacy of the tabloids, or is that every year?  We decided that even Santa couldn’t be immune from tabloid scandal and this cartoon resulted:

We’ve moved around to a lot of different topics including the economy, labor, health and nutrition and last year, focused on the 1% who have become so wealthy during the last decade, even Santa.  All of our Christmas cartoons can be seen at the Gigundo Industries website and that brings me to 2012.

This has been a year in which we had a nasty and competitive Republican nomination race, a tough presidential campaign, the debt ceiling negotiations, President Obama’s re-election, the fiscal cliff and this past week, the horrific mass shooting in Newtown, CT of 20 young school children.  There simply is nothing but shock, dismay and sadness that can be expressed about losing these beautiful children and six of their teachers in such an awful incident.  The murders have been followed by outrage and arguing between defenders of gun rights and advocates of gun control.  While the majority of voices seem to be on the side of doing something about the seemingly endless stockade of automatic weapons in this country, we again seem so polarized in every societal issue that comes before us.  Where is there humor in that?  It’s hard to find but when you think about Santa’s world, you have to wonder how our times are affecting him.  Is his world as polarized as ours?  Of course, we’d like to think not, but then Santa has to decide whether we’ve been naughty or nice and you have to admit this has not been an easy year for him to make that decision.  That idea set our minds to wondering…and we came up with this for our 2012 holiday cartoon:

What else is there to say?  We’ll all find out on Christmas how Santa decided.  I hope that you and your families have a day filled with love, peace and joy.

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Should we politicize tragedy?

Posted on December 16, 2012 by 3 Comments

After Friday’s mass killing of 20 young children, ages 6 and 7, which follows so many other mass killings in recent years, it’s time we all read and thought about the 2nd amendment to the Contstitution upon which this nation is founded.  The amendment calls for:

“A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.”

Keep in mind that this amendment was written and adopted in 1791.  George Washington was still in his first term as president then.  It had only been eight years since the end of the American Revolution, although we were in the midst of the Northwest Indian War, taking place in what today, we know as the Industrial Midwest – Ohio, Michigan, Wisconsin, etc.  Vermont had recently become the 14th state.

To say the United States was a very different place than it is today is an enormous understatement.  The country’s population then was a little more than 4 million, nearly 1/80th of what it is today.  The inventions of the American Industrial Revolution were still 40 years away.  The Colt 45 Revolver wasn’t invented and didn’t see use for another 80 years.  The firearm of choice in 1791 was a single-shot muzzle loaded rifle.

While we can certainly say that the framers of the Constitution were wise and prescient men, it would be fantasy to think that they envisioned a world where anyone on the street could buy an automatic or semi-automatic gun with incredible firepower and large self-loading magazines…and that’s where we are today.

We have an amendment to our Constitution that has been sanctified as a bedrock right for any responsible or irresponsible person regardless of their intent to carry a gun of virtually any type on the street, into schools or even places of worship.

Now in 1791, it’s likely that you could carry your rifle with you almost anywhere you went.  Of course, then you might need it to scare off an attacking bear, bring home dinner or keep your scalp if in the midst of a territorial Indian war.  There was also the need to assure the populace that a militia could be formed at any time to ward of an attacking nation or people.  Today, we have what is known as armed forces and police to handle that responsibility.

Hunting, of course, is an American tradition and virtually all hunters, the possible exception being former Vice President Cheney, are well-trained and responsible gun owners.

So why the need for weapons that can so easily kill dozens of people in only a few seconds?  Why is this right so sacrosanct in the United States today?  The chief lord and high protector of gun-of-any-type ownership rights is the National Rifle Association, popularly known as the NRA.  Their website is nra.org.  You should visit it so you’re familiar with the people that are protecting our Constitution and intimidating our politicians.

One section of the NRA website is called “NRA Opponents”.  Here’s who is listed there:

  • Animal rights activists
  • Anti-gun politicos
  • Brady campaign (instituting background checks for gun ownership)
  • Clinton gun ban (and more specifically, anyone with the name “Clinton”)
  • International Action Network on Small Arms (a global movement against gun violence)
  • Mayors Against Illegal Guns (with a photo of New York mayor Michael Bloomberg to symbolize the arch-villain)
  • Obama Administration (you can guess which Marxist-Leninist, Kenyan-born traitor is pictured there)

The NRA has 4.3 million members and revenues of $205 million.  Yet, with this relatively small membership and revenue base, it has intimidated politicians of both political parties into subservience and fear of even having a discussion about gun ownership rights and laws to regulate them.  It has become an efficient political machine and advocate of gun ownership.  Today, there are more guns in the U.S. than there are people.  One-third of them are hand-guns and it’s estimated that another 20% are semi-automatic firearms.

It’s often said that we get the government and country we deserve.  If we tune out of politics and get politicians that create laws we don’t like, then we shouldn’t elect them.  I can accept that.  But I can’t accept that anybody deserves to be shot or have their loved ones shot and killed and nor should any civilized society allow this.

The NRA and its defenders who want to forestall any discussion about guns have already been saying we shouldn’t politicize this tragedy.  That’s exactly what we should do.  Even today, the 31 senators who are strong supporters of no restrictions on gun ownership refused to go on any of the Sunday morning talk shows.  Not a single one of them had the courage to stand up for their heinous beliefs.  This tragedy and others like it should cause us to take a stand like so many tragedies of the past.  Which side of the fence are you are on?  Are you for semi-automatic gun ownership or against it?  Are you for background checks and waiting periods or against them?  Are you for mass murders or against them?  These are not difficult questions to answer.

As perverse as it may sound, I’ve come to believe that these acts of murder are what the NRA wants, that they are anarchists at heart and their depravity guides them to thinking more murders equals more guns equals more support for their other political goals.  Does that sound extreme?  Maybe, but it’s less extreme than holding up rights for any clown to own weapons that can used to kill young children who only want to enjoy their school day.

Of course, we can do the usual and express our views to our friends and families and we can grieve with the victims who have lost their loved ones.  However, nothing happens in this country unless the majority speaks up and pressures their elected officials, the cowards that most of them are, to act and to do so now, to stop equivocating, to end their “cautious calls for action” and to do something real to end these horrid acts now.  So write, call and email your Congressional representatives and your town officials today.  Don’t straddle the fence or advise caution.  Get angry, politicize and demand action today.

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