It’s hard to estimate the damage done to United Airline’s brand from yesterday’s “incident” on one of its flights from Chicago.  (I’m tempted to describe it in more Draconian terms but there’s more than enough social media for that.)  First, there’s the proliferation of the multiple videos that have now been seen by tens of millions of Americans.  Second, that the man so violently ejected was Chinese has created a whirlwind of social media among many millions in China.  (Anyone for a flight from Beijing to LA?  I hear there are seats available.)  Finally, for today at least, is the tone-deaf response of United’s CEO, Oscar Munoz in which his use of the non-word, “re-accommodate” is getting its own share of Internet derisiveness.  Wow!  What a mess!

If you think this will all pass, consider this:  Today’s drop in United stock has already cost the airline about $600 million.  What a waste of brand equity!  So, let’s assume Mr. Munoz calls you up and asks, “What should we do?”  We can expect the usual mea culpas, compensations to people on that flight and perhaps some people will lose their jobs.  But that won’t stem the long-term damage so here’s a proactive plan to retrieve that lost brand equity.

1. Send an email to all your customers worldwide. Apologize, but do more than that.  Ask them to answer a few questions that will help you ensure not only that this never takes place again but show United how it can improve its service to all its customers.  As to what questions should be asked, here are a few:

•  How did hearing about or viewing the incident make you feel?

•  How do you think an overbooked situation should be handled?

•  What is the most frustrating thing about flying from purchasing tickets to arriving at your destination?

•  How has this incident effected your willingness to recommend United to others?

Just those four questions – that’s all you need to ask.  They’re all that anybody cares about so don’t muck it up with marketing speak or other meaningless questions.

They are open-ended questions and they should remain that way because people will see that you really are interested in their opinions.  Yes, responses to open-ended questions can be difficult to analyze but don’t worry we have a solution (albeit self-serving) for you there.

2. Send every person who answers those questions a thank-you email.

3. Analyze the responses and create needs-based segmentations from the feelings and frustrations that are expressed. While you’re at it, create a lexicon of words that respondents used.  (Here’s the self-serving part.)  Oomiji can do all that.

4. Create a separate response for each major segment. Compose an email of what you heard, what you learned and that you’ll respond to them again in a few weeks with all the changes you’ll make.  (Oomiji can do that for you too because we append every single sentence to their email address.)

5. Make some real changes that help solve all the problems you learned about. By asking open-ended questions, you’ll hear some things you didn’t expect.  We’ve found that’s true for every client we’ve ever worked for.

6. Write the respondents again and let them know the changes you’re making. Send each segment all the changes but put the ones most meaningful to them at the top.

7. In a couple of months, ask them if they’ve seen any changes and their responses. Thank them again.  You might even reward them because ultimately, it’s the answer to the last question above about their willingness to recommend United that counts.

8. Repeat this process regularly and make sure you dispense with corporate speak and open yourselves up to active listening, acknowledging and responding. That’s the Oomiji pattern and it works.

Will this get United’s $600 million back?  We believe it will and they’ll reap the bonus of creating a better airline at the same time.

You can learn more about Oomiji at oomiji.com or watch our intro video here.

Tags: Americans, Assumptions, brand equity, Corporate Myopia, Customers, dragging passenger, Leadership, Marketing, Mistakes, Oomiji, open-ended research, Oscar Munoz, Outcomes, Situation Analysis, Social Media, U.S. Marketplace, United Airlines, United CEO

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.

Something 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.

Tags: Asia, Assumptions, Bordeaux, Bordeaux wine tasting, brand loyalty, climate change, Corporate Myopia, Corporations are people, Customer engagement, Customers, cyber threats, economic policies, Enomatic, ESG, facebook, futureshift, Global Trends, income disparities, Individualists, Leadership, linear thinking, Marketing, megacities, middle class, Middle East, misinformation, Mitt Romney, my friend., North Africa, Outcomes, Positioning, relational thinking, Rising social tensions, Situation Analysis, Strategy, structural unemployment, Trade Associations, U.S. Marketplace, Values, Winning, World Economic Forum

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? 
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. 
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.

Tags: Action, Advertising, bartenders, Change, chefs, Chile, cocktails, Corporate Myopia, Creativity, Customers, Direction, futureshift, Information Technology, IT, Latin America, Leadership, lobstermen, Maine, Maine Lobster, Marketing, Mistakes, New York, Outcomes, Peru, Pisco, Positioning, SaaS, Situation Analysis, Steve Jobs, Strategy, Tactics, technology, Trade Associations, U.S. Marketplace, Winning

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.

Tags: Amazon, Apple, Assumptions, Change, Chile, competitive clusters, Corporate Myopia, Customers, Deloitte, elevator speech, Five Forces, Forbes, Fresh Direct, futureshift, Governments, Harvard Business School, Kayak, Managing by walking around, Michael Porter, Monitor, Monitor Group, Outcomes, Peter Drucker, Porter's Five Forces, Positioning, Satchel Paige, Situation Analysis, Steve Denning, Strategy, Trade Associations, U.S. Marketplace, Winning

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.

Tags: 2001, 2002, 9/11, Americans, Bob Mankoff, cartoons, Christmas, Corporate Myopia, Crazy people, Creativity, Democrats, Dreams, Enormco, Events, Gigundo Industries, Holidays, Individualists, Jules Feiffer, Marketing, Mistakes, New York, Newtown, Outcomes, Politicians, President Obama, Republicans, Santa, Situation Analysis, Strategy, Tabloids, Terrorism, The New Yorker, U.S. Marketplace

Years ago, I saw a cartoon in the New Yorker called what lemmings believe.  It showed hundreds of lemmings charging off a cliff but instead of going down to their death, they were flying up to the sky.  Why else would they be so sure of themselves?

Being a part-time cartoonist (see GigundoIndustries.com), I thought of this cartoon the other day when reading about “the fiscal cliff” and the debate about whether going over it will harm the economy or is sure death…or perhaps, is the only sensible thing to do.  I spoke to my illustrator partner at our cartoon conglomerate and the following cartoon was the result:

Tags: Americans, Assumptions, Congress, Crazy people, Democrats, Economy, Fiscal Cliff, Governments, Leadership, Mistakes, Outcomes, President Obama, Republicans, Situation Analysis, U.S. Marketplace

It’s “silly season” – so sayeth the politicians.  It’s time to throw every piece of mud at the opposition simply because a lot of people will believe it.  Fox, MSNBC, pundits who claim to know everything but in reality know nothing, and thousands of horrid political ads – it’s all a lot of noise that provides no reliable indicators on which is the best way to vote.

Can we look at some of the realities of the situation and some of the facts?

REALITIES:

• Romney:
  • We don’t know what Romney would or would not do. Unfortunately, he’s changed positions so many times, it’s hard to figure whether he’s conservative or moderate.  The “etch a sketch” metaphor has been mentioned and fair or not, it was created by his own campaign manager.
  • Yes, he did a great job with the Olympics.  He had support and money from the government that he says isn’t working.  It’s unclear how he did as governor of Massachusetts but one would think that if he did a great job, he’d easily win the state this time.  Polls show he’s 15 points down.  You want to tell me that’s meaningless?  Please explain.
  • The only thing Romney has been consistent about is that he is a social conservative.  He’s supported the idea of overturning Roe v. Wade, favors DOMA and won’t take a position on the Lily Ledbetter Act.  If that’s what you want and you’re okay with his other murkiness, you should vote for him.

• Obama:
  • Four years ago, we were headed toward a full-on depression.  We’re not now.
  • Corporate profits had risen more than with any other president.
  • The stock market has risen 14.7% a year under Obama.
  • Housing values had fallen one-third on average at the end of the Bush administration.  They’re rising again and have recovered much of the loss.

Now that we’re here, who can take us further?

FACTS:

• The U.S. economy has done better with Democratic presidents than with Republicans.
• Personal disposable income has grown nearly 6 times more under Democratic presidents.
• Gross Domestic Product (GDP) has grown 7 times more under Democratic presidents.
• Corporate profits have grown over 16% more per year under Democratic presidents (they actually declined under Republicans by an average of 4.53%/year).
• Average annual compound return on the stock market has been 18 times greater under Democratic presidents (If you invested $100k for 40 years of Republican administrations you had $126k at the end, if you invested $100k for 40 years of Democrat administrations you had $3.9M at the end).
• Republican presidents added 2.5 times more to the national debt than Democratic presidents.
• The two times the economy steered into the ditch (Great Depression and Great Recession) were during Republican, laissez faire administrations.

Don’t believe me?  Why not read the self-proclaimed “Capitalist Tool”?  The above facts can be found all over the Internet but click here to read this article from Forbes magazine.

Investment managers always point out that there’s no guarantee that past performance is an indicator of the future but given the choice between uncertainty and past negative performance versus a record and past positive performance, logic should say to select the latter.  But when did logic and facts determine a U.S. presidential election?

Tags: Americans, Assumptions, Bush, Capitalist Tool, Corporate profits, Democrats, Democrats and business, Depression, DOMA, Etch a Sketch, Forbes magazine, Fox News, futureshift, GDP growth, Governments, Great Depression, Great Recession, Housing, Journalists, Leadership, Lily Ledbetter, Massachusetts, Media, Media responsibility, Mitt Romney, MSNBC, National Debt, Olympics, Outcomes, Personal income, Politicians, Polls, President Obama, Republicans, Republicans and business, Roe v. Wade, Silly Season, Situation Analysis, Stock Market, U.S. Marketplace, Winning

It has been several days now that we watched the Vice Presidential debate and have been subjected to a discussion that’s more about whose demeanor and facial expressions have been better than about their policies.

Depending on from which side you see things, President Obama has either brought the economy back to a place where it can now recover or he’s brought us to a Leninist-Marxist precipice.  Governor Romney is either the biggest liar that has ever run for president or he is just the man we need to help America get back to its revolutionary roots.  It’s that extreme and it’s that myopic.  We’re losing sight of the big picture.

Yesterday, I attended the annual shareholders’ conference for The Baron Funds, a group of mutual funds led by Ron Baron who believes that it’s the quality of people who make great companies and that investing in them is a long-term bet on America.  The event is held each year at New York’s magnificent Lincoln Center. 4,000 shareholders attended.

During the morning, you get to listen to presentations from CEO’s of companies the funds have invested in.  Then at lunch, various entertainers perform in one of the many auditoriums at the Center.  Yesterday, the choices were British rock singer Joss Stone, Broadway star Kristin Chenowith, or jazz stylist Harry Connick Jr.  After returning from lunch, the senior analysts from each of the Baron Funds engages in a panel discussion about the past year’s performance and how they pick stocks.  When this ends, there’s a musical performance from a big name headliner.  In the past, it has been people like Rod Stewart, Bon Jovi, Elton John and others who you’d pay a lot of money to see elsewhere.  Yesterday, the headliner was Celine Dion – more on Celine later.

I don’t know if Ron Baron chose the CEO’s who made their morning presentations to make a point about the country’s economic stewardship.  I want to believe he did.  Here’s a brief encapsulation:

• David Rubenstein, Co-Founder & Co-CEO of The Carlyle Group showed a different set of values for private equity firms than we’ve seen during the past year from Governor Romney’s turn at Bain.  From its start in 1987, Carlyle now manages $160 billion in investments with the goal of supporting good companies that create jobs and prosper for their shareholders AND employees.  For all his success, Rubenstein exhibited an amazing self-deprecating sense of humor and stressed the importance of giving back to America.  He has put his money where his mouth is by joining Warren Buffet in giving his fortune away.  What came across more than anything is that good values build great companies.  By the way, he said he has no problem with the regulations imposed by Dodd-Frank, which some politicians want to remove.

• Steven Spinner, CEO of United Natural Foods was a little more meat and potatoes in his presentation…well actually, more tofu and bulghur… but he expressed a need to be more conscious about our environment and both the chemicals we put into our environment and our bodies.  The company is now the largest distributor in the U.S. and Canada of natural and organic foods and has become a $4.5 billion company with 65,000 sku’s and 23,000 customers.  Healthy foods raise our awareness of our environment and build successful businesses – quite a contrast to the right wing preaching that the government (and in particular, Michelle Obama) is trying to force feed us healthy foods we don’t like.

• Robert Katz, CEO of Vail Resorts showed how a sizable business ($1 billion +) dependent on nature can prosper when it focuses both on good environmental stewardship and helping people enjoy all the recreational possibilities that enables.  What’s interesting is that they don’t own the land their resorts sit on.  They lease it from the National Forest Service, and have to work with the Service to show they are deserving of both permits and leases – a great example of how government helps improve our lives, supports business and is worth the investment we all make in it.

• Frank Coyne, CEO of Verisk Analytics is all about Big Data.  This company dominates the insurance risk assessment business.  I have no idea of his political leanings (or most of the others for that matter) but he’s a former Marine who grew up in a lower middle class family from Scranton, PA.  There was not a trace of ego in his presentation.  He is clearly an American success story who rose from the middle – no trickle down there.

• Kevin Plank, Founder and CEO of Under Armour, a $2 billion company that began in his basement in 1996, told an amazing story of how his experience as a college football player took him on a search to find better performance athletic clothing.  He displayed optimism, competitiveness and personal charm in telling his success story.  There was not a hint of dismay in his approach to the future.

• Rich Barton, Co-Founder & Executive Chairman of Zillow, Inc. was the moderator of the analysts’ presentation so he wasn’t really focused on his or his company’s story.  However, he founded both online travel giant, Expedia, and Zillow, an online real estate search site.  He’s another American success story who displayed extraordinary optimism.

The last presentation of the day came from Ron Baron, CEO of Baron Capital Group.  Baron founded the funds in 1982.  Today his enormous success has made him a billionaire.  I’ve never met the man but in every conference I’ve attended, he always stresses his middle-class roots in New Jersey, his optimism about American business and his belief in America.  He doesn’t hesitate to mix patriotism into business.  As in past years, Broadway star Kelly O’Hara came out to sing America The Beautiful as everyone sang along.  This year, there was an additional treat of Kristin Chenowith singing the national anthem.  She raised the roof and 4,000 hearts with it.  (That girl has pipes!)

Baron gave his outlook on the economy, the stock market and reminded us why a long-term investment philosophy in good people who build great companies pays off .  He praised Federal Reserve Bank Chairman, Ben Bernanke for his stewardship of the economy to a smattering of applause.  He showed how the stock market has climbed 60% since the days of doom and gloom four years ago to wild cheers.

Then, came the part that left me stunned.  He noted that we’re soon to have an election between President Barack Obama — maybe 20% of the audience applauded — and Mitt Romney to loud, enthusiastic applause that drowned out anything that had preceded it.  It left me wondering whether anybody had been paying attention all day.  The contrast to private equity investing with the Romney approach from David Rubenstein ‘s Carlyle Group couldn’t have been clearer.  Protection of our food sources and environment have helped businesses succeed, not fail due to over-bearing government regulation.  The economy never fell off the cliff.  Businesses and the stock market prospered and now they’re cheering for an uncertain change that promises to strip away a lot of the government support and regulation that has contributed to both success and fairness?  I don’t get it.

I grew up in a family that was firmly Democratic, although I believe I am more fiscally conservative than my parents.  While I live in New York, I continue to vote in Maine where I still own property.  There, like many Mainers, I’ve settled into a mode of independence, voting for moderate Republicans like Bill Cohen and Olympia Snowe, independents like Angus King and Democrats like George Mitchell.  The contrasts to me this year couldn’t be clearer.  While I’ve lost some of my love for President Obama, I think he provides a healthier direction for America.  We have serious problems to fix but I don’t believe those will come from cutting everything except defense and frankly, I have a problem with disingenuousness.  Neither party can claim sainthood in this regard but I saw Romney claim himself as “severely conservative”, heard his campaign manager say they could just take out the “etch a sketch” and remodel him once the Republican nomination was secure and now he’s transformed himself into a moderate.  It reminds me of that famous Lincoln quote:  “You can fool some of the people all of the time, and all of the people some of the time but you can’t fool all of the people all of the time.”

In the end, just like Ron Baron says and practices, it’s about people and their values.  Not only do good people build great companies but they also build great countries.  I left the conference a little dismayed at the shareholders’ reaction to the election but still optimistic about the long-term.  To that, I can thank Ron Baron for this annual event.

This brings me to Celine Dion.  I’m not a fan and never have been.  She’s too kitschy for me.  Yes, she’s talented and a professional song stylist who’s benefited from great writers but in one song, Kristin Chenowith blew her away.   After all the great rock stars I’ve seen at this event, I was surprised at her appearance.  “Las Vegas East”, Ron Baron called it.  It certainly was.  Her big band, violins, lots of costume changes and a self-aggrandizing video were all on display.  Like so many other successes — only in America.

I thought of staying for a few songs and then leaving but then I thought of my daughter.  She’s a fledgling comedy writer in LA and she loves Celine.  She’s dreamed of going to Las Vegas to see her and has even asked me to foot the bill for the $250 ticket.  You can imagine how far that went.  But as Celine came on, I texted her knowing that she would be excited.  It was only the texting banter between us that kept me there for the duration.

Here it is:

So the afternoon entertainment is Celine.

SHUT UP!

Here she is:

You are breaking my heart.

HOW IS IT THAT YOU GET TO SEE CELINE DION PERFORM AND I NEVER HAVE?

Tell me everything!  WHAT IS SHE WEARING?  How many costome changes?  How many times is she fake crying?  AHHHHH

Is she amazing????  OF COURSE SHE IS!!!!

I guess because I own $30K of Baron Funds.  I wish you were here.  She’s too sappy for me.  I don’t know how long I can last.

OMG omggggggg!!!  Just revel in it.

Oh, here come all the big hits!  “I’m your lady” oooh la la

OMGgggg!!!!

Imagine her an alien from a special planet where the wind is always billowing her hair and dresses!

A lot of eyebrow action and the motions.  WAIT!  We have violins!  It’s a costume change!

AHHHHHHHH.  WHAT IS THE NEW COSTUME?

This is so unfair.

We’re waiting with bated breath.  Maybe she went out to pee.

Slinky, black and silver.

It’s cabaret time.

She’s magnificent!

I’ll record Titanic if she goes there.

OH SHE WILL AND YOU  BETTER.

She tucks her 3 little ones into bed and there’s video to prove it.

Stop it.

I think I’m going to throw up.

Me too.

It’s “Beauty & The Beast” time.

Oh, I love that one.  This is so unfair, it hurts.

I feel your pain.

It’s another costume change.

What will it be?  There’s James Bond music.

Ughhhhhhhhh

No, she just went to pee.  She’s singing “Goldfinger.”

A medley of 007 songs.  She’s got her fist in the air.  The audience is in a state of rapture.

Now, she’s patting her hip and swaying.  This Québécois lady knows how to have a good time.

She sure does.

This all sounds glorious!

A little piece of heaven.

I’ve run out of responses.

I’m just really jealous.

It’s “All by myself” now.  I know how she feels.  Carla left to go to a meeting.  So sad.

Double fist pounding on her chest.  Serious stuff.

Now, she’s singing “Spinning Wheel”.  Am I back in college?

Costume change!

This is amazing.  Never forget how amazing she is.

Elvis is in the building!

Here we go:  I’m sinking.  There’s an iceberg and the ship is going down.  I’m recording this.

It’s over.  I’m exhausted.

Holy crap!  Me too.

The Baron Funds Annual Conference is one of my favorite days of the year.  I am reminded of why I am in business and what I tell my clients through my consulting business.  I’m entertained in this incredible city and my belief in America is always restored.  This year, it also provided some fun with my daughter.  Is there anything better?

Tags: 007, America the beautiful, American success stories, Americans, Assumptions, Baron Funds, Beauty & The Beast, Ben Bernanke, Big Data, Bill Cohen, Bon Jovi, Broadway, Celine, Celine Dion, CEO, Change, Chile, Corporate Myopia, Crazy people, Customers, David Rubenstein, Democrats, Democrats and business, Dodd-Frank, Dreams, Elton John, Elvis, Etch a Sketch, Events, Expedia, Federal Reserve, Frank Coyne, futureshift, George Mitchell, Goldfinger, Governments, Harry Connick Jr., James Bond, Joss Stone, Kelly O'Hara, Kevin Plank, Kitsch, Kristin Chenowith, Las Vegas, Las Vegas East, Leadership, Lincoln, Lincoln Center, Maine, Mainers, Marine, Marketing, Michelle Obama, Mistakes, Mitt Romney, National anthem, National Forest Service, Olympia Snowe, Organic foods, Outcomes, PA, Paul Ryan, President Obama, Quebecois, Regulation, Republicans, Republicans and business, Rich Barton, Robert Katz, Rod Stewart, Ron Baron, Scranton, Shareholders, Situation Analysis, Spinning Wheel, Steven Spinner, Stock Market, The Carlyle Group, Titanic, U.S. Marketplace, Under Armour, United Natural Foods, Vail, Vail Resorts, Verisk Analytics, Vice Presidential Debate, Winning, Zillow

This is the sixth in a series on Mistakes Countries Make and How They Can Get It Right

We just began work for a client in our 18^th country.  While that’s only 7% of all the countries in the world, they add up to over 30% of the top 50 countries in GDP.  That’s not a bad sample from which to draw some conclusions about foreign businesses that are marketing products in the U.S.  We’ve noticed a number of mistakes and major assumptions that seem to be common among all of the countries that our clients have come from.

One I’ve increasingly noticed is the assumption that Americans are waiting for foreign products with bated breath.

It’s always struck me as unusual that foreign marketers often think that just their presence in this country will create demand.  Yet, I’ve been stymied for an explanation as to why this is the case.  I think I’ve finally hit on it.

For decades, people in foreign countries have looked up at the U.S. as the bastion of top brands, particularly among consumers.  American brands have become a badge for people to show that they travel and have sophisticated and Western tastes.  This says nothing about whether they like the U.S. or about their sentiments on American government policies or even whether, more recently, the glow of American brands is wearing off.  It’s history.

From the time of the Cold War when a pair of Levis could buy you a hotel and meal in Russia to today when Nike shoes can be found on the feet of people in countries around the world, Coca-Cola at their tables and McDonalds around every corner, American brands have had a pretty good track record of coming into a foreign country and quickly generating sales.  True, there have been monumental mistakes like GM trying to sell the Chevy Nova in Latin America, but for the most part, U.S. brands have meant sales.

So, it might stand to reason to someone from outside the U.S. to ask if they buy our brands just because we’re there, won’t we buy their’s just because they’re here?  Foreign marketers often miss two key facts about the U.S. that can cause their sales efforts to fail:

1.  We’re internally focused.

The U.S. is a big country, no secret there (take a look at the maps in an earlier post, “Mistake #5:  Size Matters”) The point is that most Americans don’t think about the rest of the world.  With the exception of only two countries, Canada and Mexico, we don’t have countries next to us, just more Americans.  Many Americans don’t read the newspaper or watch the news on TV and if they do, it is often likely to be local news or something specific to their interest or vocation.  Products from countries like Chile, South Africa, Greece, Vietnam, even those that are successful,  just don’t have top-of-mind awareness here.  (A rude awakening has been coming to many American companies as they find American cachet diminishing, which means more hard work for us to sell abroad.)

A by-product of internal focus is the notion of “American exceptionalism”.  Personally, I find this to be both arrogant and naïve on the part of Americans but it has been aggressively promulgated by one of our political parties, and is associated with blind religious faith that promotes a strong belief that God has chosen America to lead the world.  What many Americans forget is that Irving Berlin wrote “God Bless America” as a musical prayer to God to please bless us and this has been turned around so that many people believe it to imply that God does bless America at the exclusion of others.

The U.S. State Department recently announced that more than one-third of Americans now hold a passport.  Approximately two-thirds of those have traveled abroad.  Whichever number you pick, it means that the vast majority of Americans have never been out of this country.  Many of them operate on old beliefs about life elsewhere and simply don’t know how strong the middle class is and how good life can be in other countries.  Many of the cheerleaders for American exceptionalism condemn “European socialism” in the same sentence without noting that most Europeans pay far less for health care and education and take more vacation time off from work.

2.  We’re less well educated

This is closely related to point number one but consider these facts:

• The U.S. ranks 33^rd in student reading performance; 27^th in math; and, 22^nd in science. (OECD Education at a Glance, 2009)
• The ratio of teachers to students in the U.S. is just below average in pre-primary education when compared to other developed countries; also just below average in post-high school education.  We do rank slightly above average at the lower and secondary education levels. (OECD, 2005)
• We rank 9^th in national IQ scores but 21 other countries including Mongolia, Estonia and Poland.  (We can take pride in tying Latvia and just narrowly beating out Belarus, Malta and the Ukraine.) (Lynn/VAnhanen Study)
• The U.S. ranks 27^th in gender equality, a key sign of both education and modernity. (WEF, 2008)
• In the recent WEF 2011/2012 rankings, the U.S. finds itself 13^th in higher education and training, 20^th in technological readiness, 10^th in business sophistication, and 26^th in overall education,
• We rank 12^th in overall human development (UN Development Program, 2008)

I’ll never forget walking into a neighborhood restaurant in the town of An Giang, Vietnam, near the border of Cambodia, truly a different world, and seeing about 15 patrons riveted to the TV over the bar as they watched clips from the PBS Nightly News hour and then debated an interview with Donald Rumsfeld that they just saw.  Can you imagine the reverse in a similar scene in the U.S.?  Not likely.  It’s a generalization but foreigners tend to know more about the world and even about the U.S. than Americans do.

A Norwegian pharmaceutical executive told me a story about looking for a U.S. marketing partner.  While driving along the Delaware River near Trenton, New Jersey, he asked his prospective partner, “Isn’t this near where Washington made his famous crossing?” to which the chief marketing officer replied, “I don’t know.  I don’t follow that stuff.”  The Norwegian decided that if the man didn’t know the history of his own country that he didn’t want him as a business partner.

So what does this mean for foreign marketers wanting to enter the U.S. and expand their market?

First, don’t assume we know anything about you or your products.  Despite our flaws, we live in the most competitive market in the world and largest developed market.  You’ll need to educate us and that will take some time.

Second, there are so many competing products in the U.S., both domestic and foreign, that the quality of your products often matters less than the relationships you build with us.  We always say, “all things being equal, we’d rather do business with friends.”  Become friends with us.  Develop relationships.  Become a part of our networks and communities and like the first, that doesn’t happen overnight.

Third, find ways to link your values and experiences with ours.  What do you have in common with us?  Do you play baseball or basketball?  Fine, so do we.  Talk about it and you’ll connect more often.  Are you troubled by high taxes, inconsistent investments or supporting the elderly?  These trouble us too.  Show us how we’re alike and we’ll be more accepting of you and your products.

Finally and most important, think strategically, not tactically.  You need a consistent direction here in order to break through the clutter and to be successful, it should be based on the unmet needs of the U.S. market, not your perceptions of who you think you are (if you’re not convinced, start from the beginning of this article again).  A strategy based on market needs will trump tactics every time.  A set of ad hoc tactics that are not integrated or tied to a strategy won’t cut it.

And if you’re confused about market needs, adapting or developing your strategy or what kind of tactics work, all you need to do is ask us.

Tags: Americans, Assumptions, Brands, Canada, Change, Chevy Nova, Chile, Coca-Cola, Cold War, Creativity, Due Diligence, Exceptionalism, God Bless America, Governments, Greece, Irving Berlin, Latin America, Levis, Marketing, McDonalds, Media, Mexico, Mistakes, OECD, Outcomes, Positioning, Socialism, South Africa, Strategy, Trade Associations, U.S. Marketplace, UN, Vietnam

How is your Spanish?  If it’s at reading comprehension level, you can read the article below about our recent work with the Pisco industry in Chile. Otherwise, you can go here and click on the English translation.   In another week, we’ll be sending out our own report of our work in Chile.  If you buy a bottle of Chilean Pisco, make a cocktail (as simple as Pisco, tonic, lemon or lime and a drop or two of bitters), it will be much more enjoyable.  If you’re not already on our list to receive this report (meaning that you participated in a market research survey about Pisco), send in an email and we’ll make sure you receive the link as soon as it’s published.  It will have some great information about the cocktail market.

Salud!

Tags: Chile, Creativity, futureshift, Governments, Marketing, Pisco, Positioning, Strategy, U.S. Marketplace