Anoop prakash 62
JUN/AUG 2014 | dialoguereview.com
The MD of Harley-Davidson India takes the sub-continent by storm Chandran Nair 74
The global sustainability guru attacks “voodoo economics” rethinking Luxury 44
The leaders in luxury branding talk about Asia and ethics
A brand new world From corporate to personal to luxury, the way organizations are managing their brands is changing beyond recognition PAGE 28
FEMALE LEADERSHIP 89
Introducing the women leaders shaking up Dubai’s business landscape
The science of giving and receiving feedback to improve management
Building an influential network is the secret to competitive advantage
Recognizing “position” is one of the biggest mistakes companies can make...
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A brand new world: global brands we believe in
Some brands manage to be anything but bland, despite the fact that they have near ubiquitous presence the world over, as David Arkwright explains
Developing your brand
Brands Made With tomorrow’s culture
Personal branding is a powerful way for people to distinguish themselves as leaders. Dorie Clark examines some of the key strategies to achieve this
John Grant explores the creativity, innovation, brand and design culture of the Muslim world
Golden rules of luxury brands
Luxury brands must adhere to certain rules if they wish to flourish and grow, according to James Ogilvy
Changing face of luxury brands
Experts in the global luxury market talk to Dialogue about the changing landscape of their businesses
Dialogue | Jun/Aug 2014
Brazil gears up to brand itself
With the World Cup and the Olympic Games looming, César Vacchiano examines how corporates will ensure their messages are absorbed by their target clients
How to avoid brand disasters
Rob Gray’s main purpose in writing Great Brand Blunders was to treat marketing errors and mishaps as an entertaining way to learn
On the road to success
Harley-Davidson decided in 2009 to ride out into the unknown and embarked on a journey into the Indian sub-continent, as David Woods discovers
The importance of gaining status by building alliances and partnerships is examined by Henrich Greve, Andrew Shipilov and Tim Rowley
Finding your Jackie Kennedy
Time to save the planet
Climate change is here to stay â€“ and so we have to change the way we live to deal with this new reality, according to Chandran Nair
Evaluation challenge The art of receiving feedback as a way to improve performance management is examined by Sheila Heen and Douglas Stone
Hierarchies laid bare
Once the shackles of tradition are thrown off, individuals can act in innovative ways and feel the freedom of choice, says JosĂŠ Manuel Casado
Voluntary sector leaders have a knack of motivating people to work for free. How can these strategies be successful in a corporate setting?
Women take the lead in UAE
Women leaders are playing a significant role in shaping the future of Dubai, as Rebecca Newton reports
Training from Sports
Murthy Chaganti examines how sport teaches professionals the power of focus, leadership, team work, execution and dedication
Dialogue | Jun/Aug 2014
Branding has to break through silos in business, according to David Woods. So leaders and teams must make sure they own and develop an inspiring and engaging proposition
Duke Corporate Education’s CEO on leading with purpose
Books and app reviews
Our reviewers in this issue look at using the human sciences to solve your toughest business problems, plus principles for winning more bids, tenders and proposals
Dialogue | Jun/Aug 2014
Vienna is the best city in which to work; countries with higher GDP growth tend to have higher levels of employee attrition; and strong recovery in leading nations has boosted global trade confidence
Connectivity at work
Ranked as one of the world’s most influential HR experts, our columnist takes a look at how people work across generations
A labour agreement announced in France means that employees will have to ignore their bosses’ work emails once they are out of the office and relaxing at home
A sense of purpose
Telefónica’s global director of corporate reputation and responsibility believes he has found the answer to establishing a corporate vision
The second country to fall under Dialogue’s MINT country spotlight is Indonesia, which looks set to be ranked seventh in the world in terms of GDP by 2050, based on economists’ predictions
A round-up of your Tweets and comments, what has featured on the website and a sneak preview of what the next edition of Dialogue holds for readers
Our columnist looks at why we lack the ability to figure out what the unintended consequences of actions might be – and warns leaders to be wary of the narrative fallacy
of Sciences VIENNA Hall Aula der Wissenschaften
Clayton Christensen, Professor of Business Administration at Harvard Business School Steve Denning, Member of the Board of Directors Scrum Alliance, Forbes contributor Yves Doz, Professor of Technological Innovation at INSEAD Pankaj Ghemawat, Professor of Strategic Management at IESE Business School John Hagel III, Director Deloitte Consulting LLP, Co-Chairman Deloitte Center for the Edge Gary Hamel, Management expert, Consultant, MIX Co-founder and Professor at London Business School Jeff Hoffman, Serial entrepreneur, Co-founder of priceline.com Herminia Ibarra, Professor of Leadership and Learning and Professor of Organisational Behaviour at INSEAD Adi Ignatius, Editor-in-chief, Harvard Business Review Roger L. Martin, Academic Director, Martin Prosperity Institute, Rotman School of Management Nilofer Merchant, Writer Marc Merrill, President & Co-founder of Riot Games Vineet Nayar, Vice Chairman of HCL Technologies Martin Wolf, Chief Economics Commentator, the Financial Times
Dorie Clark Dorie Clark is a marketing strategy consultant, working for a diverse range of clients, including Google, the World Bank, Microsoft, Morgan Stanley, the Ford Foundation, Yale University, the Mount Sinai Medical Center and the National Park Service. A former presidential campaign spokeswoman, Dorie is an adjunct professor of business administration at Duke University’s Fuqua School of Business. She has been named to the Huffington Post’s “100 Must Follow on Twitter” list for 2013 and 2014, and to the #Nifty50 list of top women on Twitter. A former awardwinning journalist, Clark is the director of the lauded documentary film, The Work of 1000.
David Arkwright David Arkwright has created and run a number of big brands in various categories, and every continent, in a career which culminated in five years as global brand director for Unilever’s global laundry business. He conceived, created and executed the “Dirt is Good” brand idea for Omo across five continents. David has helped major blue chip clients to achieve and land their brand ambition. Clients include GlaxoSmithKline, SABMiller, BP/Castrol, Cobra, Bacardi, Barilla and Unilever.
Zhang Liang Zhang Liang is president of Luzhou Laojiao Group. In 2013, the Group achieved revenues of 45.056 billion Yuan, total profit and tax 10.397 billion Yuan, and total assets 81.864 billion Yuan. In 2013, Luzhou Laojiao Group ranked 299 of the China top 500 enterprises, and became one of the China top 500 enterprises with the highest total net assets. He is also a doctoral tutor, a member of the China Liquor Committee of Experts, member of the Sichuan Province Evaluation Committee of Expert, executive director of the Sichuan Academy of Microbiology and academic and technology leader in Sichuan Province.
Chandran Nair Chandran Nair is the founder and CEO of The Global Institute For Tomorrow (GIFT), an independent pan-Asian think-tank in Hong Kong. He was chairman of ERM in the Asia Pacific until March 2004. He established the company as Asia’s leader in environmental consulting, with a presence in 12 countries. Clients included Fortune 500 companies, multilateral agencies such as the World Bank, the UNEP and the ADB, as well as governments. For more than 20 years, Chandran has advocated a more sustainable approach to development in Asia, and has helped governments and corporations instil these principles into their key decision-making process.
Sheila Heen Sheila Heen is a partner at Triad Consulting Group and a lecturer on Law at Harvard Law School. She has worked with a variety of clients. In addition to corporate clients like Ford, Citigroup, IBM, Shell, DuPont and Merck, she has also provided training for the Singapore Supreme Court, assisted Greek and Turkish Cypriots grappling with the conflict that divides their island, and worked with requestors who talk to families about donating a loved one’s organs for the New England Organ Bank. She specializes in particularly difficult negotiations – where emotions run high and relationships become strained.
REBECCA NEWTON A leadership expert and business psychologist, Dr Rebecca Newton works with leaders to expand their impact and influence. She runs a consulting practice, is a Visiting Fellow at the London School of Economics and a member of Duke CE’s educator network. Prior to this, Rebecca was a Visiting Fellow at Harvard University.
Dialogue | Jun/Aug 2014
O brand new world! The following passage might be familiar: “Oh, wonder! How many goodly creatures are there here! How beauteous mankind is! O brave new world, That has such people in ’t!” The passage is from The Tempest by William Shakespeare, which is set on a virtually deserted island, where the protagonist Prospero has been shipwrecked with his infant daughter Miranda. At the start of the play, the two are alone on the island, with the exception of its native resident, a disfigured creature named Caliban, and Ariel, Prospero’s servant, a spirit. Miranda grows up without meeting any other humans except her father, so when a horde of drunken noblemen are shipwrecked on the island, despite their unattractive inebriated appearance, she is drawn to them, famously declaring the lines above. To me, this connects with the idea of brand. If something is “branded” to us to be new, exciting and beautiful, without a context of comparison, like Miranda, we could be convinced by it – however it appears. Or at least, that’s what branding experts invest millions of dollars trying to do. But there is another more subtle connection in literature here – in Aldus Huxley’s 1931 novel Brave New World, where the lead character, John, grows up in a marginalized group in a dystopian future, ostracized from the clinical and peaceful “World State”. He learns to read from a tattered copy of The complete works of Shakespeare (banned in the World State). John leaves his “savage” surroundings to enter the World State – his own “brave new world” – only to face an ultimately tragic internal battle to make himself “pure” enough to fit in. I’m not doing either of the great works much justice in summarizing them, but my point is that both John and Miranda are demonstrated as innocent and naïve to the glittering visions that are put before them. But as our authors compellingly argue in this issue of Dialogue, in our “brand new world”, consumers are not so easily convinced.
+ digital exclusive
Without a genuine brand that backs up the marketing rhetoric, clients, prospects, staff and stakeholders will quickly become disillusioned in our connected, innovative world, where the strongest brands are anything but ubiquitous. Branding has to break through silos in business, so leaders and teams have to make sure they own and develop an inspiring and engaging proposition.
Don’t allow it to be a case of “the bland leading the brand”.
David highlights the main features in this issue of Dialogue
Branding is no longer merely about slogans, attractive logos and messaging. Branding – whether personal, corporate or consumer – requires a sense of purpose, a story, ethics, values, trust, heritage, vision, service – I could go on. Consumer branding can no longer be just the realm of the marketing department; employer branding is not a function of the HR team; and business values cannot be embodied by an A4 piece of paper taped to the wall in the staff canteen.
Dialogue | Jun/Aug 2014
90% of women business owners are concerned about gaining new customers this year Source: NAWBO/Web.com Group
Vienna is the city with the world’s best quality of living, according to the Mercer 2014 Quality of Living rankings. Zurich and Auckland follow in second and third place, respectively. Vancouver is the highest-ranking city in North America, ranking 25 globally. Singapore is the highest-ranking Asian city, whereas Dubai (73) ranks first across the Middle East and Africa. The city of Pointe-à-Pitre (69), Guadeloupe, takes the top spot for Central and South America. Mercer conducts its Quality of Living survey annually to help employers compensate staff fairly when placing them on international assignments. Two common incentives include a quality-of-living allowance and a mobility premium.
“I never predict, I just look out of the window and see what’s visible but not yet seen”
Countries with higher GDP growth tend also to have higher levels of employee attrition, according to study of European economies by Towers Watson. In Western Europe last year, the highest levels of employee attrition – i.e. the percentage of a company’s professionallevel workforce that voluntarily left their organization expressed as a percentage of organizations’ total headcount – occurred in Switzerland, the UK and Sweden. These countries also enjoyed among the highest GDP growth in the region, between 0.8% and 1.9%, revealing a correlation between GDP growth and employee attrition.
of women business owners are optimistic about their business’ economic outlook this year, a 12% increase over 2013
By contrast, countries such as Spain, Portugal and Italy, which suffered a decline in GDP levels in 2013, also had the lowest levels of employee attrition in Western Europe. These trends were also seen in other regions such as Central and Eastern Europe, the Middle East and Africa, where the majority of countries with high GDP growth also recorded high levels of employee attrition.
Source: National Association of Women Business Owners (NAWBO)/ Web.com Group
“It is worthwhile to think about how we organize our firms around inspiration, around the ambition of people and around purpose” Lukas Michel, author of The Performance Triangle, commenting at the Drucker Forum launch
Nelson Mandela’s former political adviser shares leadership lessons
One of the worlds thinkers crunches top business scientific data
How can employer s hope to lead a multi-generational workforce?
A strategy for
Dialogue is pleased to be an official media partner for the 6th Global Drucker Forum on 13 and 14 November in Vienna
“Anything plus management amounts to success” G S Alag
big data in business
Can’t see the woo for the trees? d
There is a broad consensus among economists that we enter 2014 in a period of limited economic recovery – even though it will be uneven by country and region and fraught with uncertainties. MAR/MAY 2014
Big data is growin g, but how can the analysis of from different large amounts roots uncover of data cutting-edge insights? PAGE 28
The connectio n between the empower ment of women and GDP growth
Opportunities to capital and start raise business in growth markets
Strategy without execution is aimless. Execution strategy is useless... without
Although the unconscious is invisible in the workplac e, it still has to be addressed
Are managers, leaders and entrepreneurs up to the task of tackling the great transformation that we face? Most would argue that they are not. Hence, what can we do about this? What does it take to reshape management as an effective social technology (as Peter Drucker called it) for transforming our institutions and organizations? This will be the core focus of the Forum and confirmed speakers include Clayton Christensen, Professor of Business Administration at Harvard Business School; Roger Martin (pictured), academic director at Martin Prosperity Institute, Rotman School of Management; and Vineet Nayar, vice-chairman of HCL Technologies. For more information or to book your place, visit www.druckerforum.org/
26% of women
business owners plan to invest in recruitment in 2014 Source: NAWBO/Web.com Group
Stronger than expected recovery in leading industrialized nations has boosted global trade confidence, but subdued growth in emerging markets makes for a contrasting trade outlook around the world, according to HSBC’s latest Trade Forecast. Longer-term prospects remain strong for emerging markets, however, and they are expected to be the driving force behind forecasted growth with the value of global merchandise trade averaging 8% annually to 2030. For instance, HSBC forecasts export growth in China and India to average 11% per annum and 12% per annum respectively over this period. At the same time, emerging markets are rapidly growing research and development investment to capture more of the value of their merchandise exports. This trend is clear in the high-tech sector and illustrates the need for developed economies to invest in innovation to remain competitive.
In April, Hult International Business School London hosted a Global Career Open House – a networking and connecting event taking place on five campuses in four countries. Hult brought together more than 200 companies, including Bloomberg, Tiffany & Co, KPMG and Infosys, from 140 different nationalities, speaking together 105 different languages. The employers delivered presentations, exhibited and also interviewed 80 Hult candidates live at the event.
of women business owners say the state of the economy is their top concern this year Source: NAWBO/Web.com Group
“Knowledge workers and knowledge entrepreneurs who are no longer suffocated by the straight jackets that large organizations force upon them and who contribute as largely autonomous partners to the enterprise could free up huge amounts of productive and creative energy” Richard Straub, president of the Drucker Society CLICK HERE to read more...
A group of Mexico City’s most influential business leaders gathered in April for the Mexican launch of Dialogue in association with the country’s leading business newspaper El Economista. In less than nine months, Dialogue has increased its circulation to more than 400,000 in 71 countries. The event, hosted by El Economista’s editor Luis Miguel Gonzales, marked the beginning of a media partnership between the two publications, in a bid to raise the profile of the economic and business benefits of Mexico, especially following its recent positioning as a MINT economy – one of the four most promising growth markets on Earth. Dialogue’s editor-in-chief David Woods and commercial manager Rebecca Nolan travelled from the UK to attend the event and were joined by Dialogue’s general manager in the region Ada Laura Luna and PR manager Bertha Herrerias. Delegates at the lunch included representatives from corporates such as Deloitte, as well as leading academics from the city’s universities, including Anáhuac.
Leading with purpose
I Michael Canning CEO, Duke Corporate Education
Jump in the Right Direction: Michael Canning at TEDxEncinitas
n a world of rapid, disruptive change – rich with data but light on certainty – leaders are seeking new ways to get their bearings. We are busily reshaping our organizations from structures designed to plan, act and scale efficiently in relatively predictable times to networks that sense and respond to frequent, disruptive shifts in the external environment by acting, learning and adapting rapidly. In this new age, stability must emanate from something more enduring than goals and strategy. As Simon Sinek explains in his well-known TED talk, most people in an organization know what the business does, many know how, but very few actually know why their organizations do what they do. According to Sinek: “inspired leaders and their organizations think, act and communicate from the inside out”. They start with why or, essentially, their purpose. While starting with why is good leadership practice, it is also grounded in business performance. In their study, Jim Stengel, former adjunct professor of marketing at the UCLA Anderson School of Management, and a team of his students identified 50 brands with the best growth and performance relative to their competition over the past 10 years had something in common – they were all built on ideals. Their brands were directly connected to an ideal, providing a higher order benefit, like joy or positive impact to society. Not appeasement or altruism, the brand connects to a fundamental human value – improving lives. Looking inside, demographic shifts in the workforce are making their mark, profoundly changing employees’ expectations of work and shifting the nature of employee/ employer relationship. Employees are demanding different things from their organizations. Leadership and generational expert Tammy Erickson explains: “For many today, meaning is the new money. It’s what people are looking for at work. Clear company values, translated into the
day-to-day work experience, are one of the strongest drivers of an engaged workforce, one primed for successful collaboration.” Erickson’s research reveals that high levels of engagement, and the associated discretionary effort, occur when our work experiences reflect a clear set of shared values. The values codify and operationalize what the organization stands for, linked to its purpose. While newer to business, this currency of meaning has been around for a long time and relates to our wellbeing. Psychologist Mihaly Csikszentmihalyi links purpose to “flow” – the state of intense absorption, in which we forget our surroundings and ourselves. Looking first at musicians, he set out to understand what made people feel that it was worth spending their life doing things without fame or fortune. Across 40 years in more than 8,000 interviews from artists to monks and business executives, he sought how to put more and more of everyday life in that “flow channel”, where we find meaning and happiness in what we do. He found that with a strong sense of purpose, you are likely to experience flow more frequently as well as other psychological benefits such as hope and self-esteem, critical in times of uncertainty. Yet despite this data linking purpose to success in the market, employee engagement, psychological wellbeing and discretionary effort, Deloitte’s 2013 culture survey shows the majority of employees (68%) and executives (66%) believe businesses are not doing enough to create a sense of purpose and deliver against it in a meaningful way. As leaders, we need a new compass to navigate an unfamiliar world, respond to customers who want more than utility for their money and to employees searching for the meaning behind their toil. It seems like a good time to reacquaint ourselves with the “WHY” of the businesses we lead and to make sure we’re leading with purpose, internally and externally. The world seems to be asking.
Dialogue | Jun/Aug 2014
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How people work across generations
I Dave Ulrich Professor at the Ross School of Business, University of Michigan, and partner at the RBL Group
n almost every management conference and popular press on the workforce, we are reminded how different millennials or Gen Y (born 1982 to 2004) are from traditionalist (pre 1946) baby boomers (1946 to 1964) and Gen X (1964 to 1982). Any of us who spend time with mixed generations recognize these differences. But to really work across generations, we should separate why people work from how they work. Knowing why people work explains underlying motives and helps forge bonds across generations. Understanding how people work explains current behaviours and helps tailor management approaches for each generation. Why people work is about finding meaning from work. According to Ken Dychtwald, Robert Morison, Tamara Erickson, when asked to divide 100 points across 10 motives for work, each generation divides the points about equally. When asked to define their “dream”
To really work across generations, we should separate why people work from how they work company, all generations in a Latin American study highlighted inspirational work environment (~30%), organization flexibility (~27%), and organization purpose (~10%). In mine and Wendy Ulrich’s summary of why people work (Why of Work, 2010), we found seven common drivers that apply equally across generations (identity, purpose, work environment, work itself, relationships, learning and delight). It appears that people are people. While some propose that next generation employees’ altruistic values are changing society, those of us who are baby boomers remember that we also changed education, housing and work. All generations want to
Dialogue | June/Aug 2014
do work that makes a difference in the world. Leaders who understand these common motives can better relate to employees across generations. How people work is about work expectations and style. Most of the Gen Y uniqueness comes from how they approach work. At the risk of over simplifying a complex phenomenon, there are three primary work patterns that differ with millennials. First, access. Millennials are digital natives who readily access information, make technology part of their identity and who risk process addictions. We all appreciate reverse mentoring around technology. Second, alienation. Millennials often lack trust in traditional organizations. They have seen their caregivers lose their jobs; government not serve them; college degrees not leading to jobs; and religious beliefs failing to morally sustain them. Organizational cynicism has replaced loyalty and millennials emphasize life/work more than work/life in their professional trade-offs. Their distrust of organizations also leads to reliance on personal relationships and close teams. Third, disposability. Among millennials, short-term and throwaway philosophy exists in possessions, relationships and work. Long term is often Tuesday and there is a passion for what matters today. This mindset encourages more flexible work schedules for Gen Y employees. Leaders who appreciate these life and work style differences can adapt work requirements to individual employees. Leading others is a subtle art. It requires connecting around common values to build mutual understanding. It also requires appreciating differences to personalize a relationship. Effective leaders get the most out of others by finding commonality about why people work and appreciating generational differences about how people work. Likewise, HR professionals who distinguish the why and how of work can also build both common and unique HR practices to help employees deliver to their full potential.
CONNECTIVITY in the modern world of work A labour agreement announced in March in France means that employees in the country will have to ignore their bosses’ work emails once they are out of the office and relaxing at home – even on their smartphones. Under the deal, which looks set to affect 250,000 employees in the technology and consultancy sectors (including of Google, Facebook, Deloitte and PwC), employees will not be allowed to work-related material on their computers or smartphones. In fact, companies will
world of work
be legally obliged to ensure employees come under no pressure to do so. But, as this issue’s infographics show, this might be easier said than done, with employees seemingly addicted to reading emails outside work hours, according to a variety of sources. A whopping 93% look at emails outside of work, equating to 23 extra days work every year. But as the KPMG statistics show, the need to read emails at all times – especially after getting off aeroplanes – can lead to serious cyber risk for busy executives.
48% Almost half (48%) of employees cannot live without email, with the majority citing it as “the biggest transformation in the world of work during the last 50 years” – putting it above equality laws and the advent of mobile phones
11% One in 10 men (11%) said they could not live without their BlackBerry and more than a quarter said the same of their laptop Source: Reed
93% of employees continue working when they have left the office ...for a total of three hours and 31 minutes each week. That’s a total of 15 hours a month or 183 hours a year - the equivalent of...
23 extra working days a year source: YouGov
Dialogue | Jun/Aug 2014
CHECKING EMAIL: the statistics
immediately when i wake up
BEFORE I GO TO BED
WHEN i travel for business
during my commute to work
on holiday OFTEN
of smartphone owners access the same email account on mobile and desktop
Daily we spend 9 minutes on email via a mobile device, that is
More email is read Mobile than on a desktop email client. Stats say 49% of email is now opened on a mobile device
of the total 119 minutes we use our phone per day
Source: o2, exact target, litmus
Dialogue | Jun/Aug 2014
more than a third of people confess that they respond to work mails
from bed and...
use their commute to read and reply to work emails...
of people check their work emails
before 7am, with the average UK worker checking their phone at 6:51am Source: yougov
HOW DAYs OF THE WEEK EFFECTS WHERE EMAIL IS VIEWED 3% 2% 1% Monday
-1% -2% -3% -4%
Source: email on the move: the future of mobile messaging. retirn path inc, 2011.
Airports are a hotspot for data hacking due to the tendancy for busy execs to “switch back on” after time offline in-flight. As a result, there are key points where data is most at risk in airports:
ANYWHERE LUGGAGE IS OUT OF SIGHT
EXECUTIVE LOUNGES WITH WIFI
Dialogue | Jun/Aug 2014
Leave Wifi switched off until you are outside the airport
Use pre-paid 3G cards and avoid free internet sources/wifi
Assume that all your conversations are being overheard
Companies should set up a hotline enabling execs to instantly terminate access
travelling safe: what you can do to secure your data
Do not click on unknown links that are sent to you when abroad
Never use the shared PCs in executive lounges
Do not let anyone borrow or connect to your devices
Companies should provide clean travel laptops and phones
Only take the data you need â€“ and encrypt it
How safE are your senior execs abroad? oVER THE PAST FIVE YEARs, ONE BILLION PEOPLE HAVE BEEN AFFECTED BY DATA LOSS INCIDENTS
of all data loss incidents in the last five years were due to hacking
of all hacking incidents are from sources outside an organization
Dialogue | Jun/Aug 2014
How to establish a corporate vision
I Alberto Andreu Global director of corporate reputation and responsibility at Telefónica and visiting professor at Economics and Business Administration, Navarra University
t’s very strange. In the corporate world, everybody is always talking about “vision”, but when you ask them what it is, it seems less clear. You either find that a single aspect is referred to as vision; or you find that there are as many visions as the company has departments; or people think it means company values or the strategic plan. Or they just ask you to let them get on with their work. If the vision is a perception that overarches the whole organization, because it sums up the reason for its existence (the purpose) and the factors which distinguish it from any other business operating in the market (the values), why is it so difficult to understand it, establish it and take advantage of its whole potential? Why can’t it be used to organise everybody around a shared goal? After years of working in a number of toprank companies and sharing experiences with executive training students, I think I’ve found a few answers to this problem: 1. Because the “standard” executive is more action oriented than thought oriented. It may be because managers are under an obligation to present attractive quarterly results for investors, but it’s common to meet them literally telling you that they “can’t allow themselves” to think about theory. They’ll say what really matters is knowing the business, knowing where the margin is, getting a return on capital and implementing plans as approved. That’s why, whenever they hear or read that the vision is “like a guiding star on the horizon, forever pursued but never reached” (Collins and Porras, Built to Last and Building your company’s vision), they think we’re talking about “psychology or theory”. 2. Because an incoming CEO usually wants to distinguish himself from an outgoing CEO. It’s merely human nature for someone who has just arrived to want to leave their own mark. And it’s also human (although not very bright) to think that the past is now
history, and that what you have to do is start from scratch. And it’s this “starting over” that leads many incoming CEOs to decide to reinvent the vision without realising that a vision is neither a five-year strategic plan nor a new product line. Put simply, these new CEOs think that they are above the institution they’re running and that “they” are the institution. 3. Because being consistent with the vision also means knowing how to say no. A lot of CEOs thank that a clearly-defined vision is a restriction and may imply a certain “competitive disadvantage” because carrying the vision to the extreme (the purpose and the corporate values) may mean establishing limits or drawing red lines around fresh sources of income (not directly connected with the core business) or different ways of doing business (setting aside some values or principles). 4. Because the vision is not being correctly communicated downstream. The outcome of all this means that establishing a vision is not only an exercise in in-house communications, but above all it means you must ensure that the decision-making process and the in-house filters which guarantee consistency between what is said and what is done are clear. For example, Johnson & Johnson “live their vision” by means of their Credo (the statement which sums up their purpose) and guarantees in-house consistency by means of the Credo Office and their “credo decision-making process”. All these reasons make it very difficult to maintain consistency with the corporate vision. And although it may appear naïve, I recommend that all executives, before they act, should ask themselves three simple questions: Why does my company exist? How can we do it? What can we offer the customers? These three simple questions would at least help establish the vision… without having to “think about theory”.
Dialogue | Jun/Aug 2014
COUNTRY FOCUS: INDONESIA
Indonesia Needs a sense of purpose Republic of Indonesia Population:
million (UN, 2012)
Major languages: Indonesian,
(742,308 sq miles)
he second country to fall under Dialogue’s MINT country spotlight – highlighting the regions with the most interesting and promising economic and demographic prospects over the next 20 years, according to economist Jim O’Neill – is Indonesia. Indonesia is one of these “emerging economic giants” and looks set to be ranked seventh in the world in terms of GDP by 2050 based on economists’ predictions. It is the world’s fourth most populous country after China, India and the US, and the world’s third most populous democratic country after India and the US. In 2009, the BRIC countries (Brazil, Russia, India and China) and Indonesia represented about 42% and 3% of the world’s population respectively, and about 15% of global GDP altogether. But in an interview with the BBC earlier this year, O’Neill himself said that he fears that one of the stumbling blocks to Indonesia’s growth, along with infrastructure, is leadership, saying: “The country needs more of a sense of commercial purpose beyond commodities.”
300 regional languages
INDEPENDENCE FROM NETHERLANDS DECLARED:
Islam GNI per capita:
US $2,940 (World Bank, 2011)
Dialogue | Jun/Aug 2014
COUNTRY FOCUS: INDONESIA
import / export
Indonesia has a mixed economy in which both the private sector and government play significant roles
According to World Trade Organization data, Indonesia was the 27th biggest exporting country in the world in 2010, moving up three places from a year before Indonesia’s main export markets (2009) are Japan (17.28%), Singapore (11.29%), the United States (10.81%) and China (7.62%)
The country is the largest economy in Southeast Asia and a member of the G-20 major economies
The industry sector is the economy’s largest and accounts for 46.4% of GDP (2012), followed by services (38.6%) and agriculture (14.4%)
The major suppliers of imports to Indonesia are Singapore (24.96%), China (12.52%) and Japan (8.92%)
Oil and gas, plywood, textiles, rubber, palm oil Since 2012, the service sector has employed more people than other sectors, accounting for 48.9% of the total labour force, followed by agriculture (38.6%) and industry (22.2%)
source: world trade organization
2010 November – US President Barack Obama visits, hailing Indonesia as an example of how a developing nation can embrace democracy and diversity. 2011 December – Pay deal ends acrimonious three-month strike by 8,000 workers at copper and gold mine owned by US company Freeport-McMoran in the restive eastern province of Papua.
Agriculture, however, had been the country’s largest employer for centuries
Dialogue | Jun/Aug 2014
2013 June – Parliament approves a major petrol and diesel price hike to cut the ballooning fuel subsidy, sparking violent protests.
focus A brand new world Developing your brand as a leader Brands Made With tomorrowâ€™s global culture The golden rules of luxury brands The changing face of luxury brands Brazil gears up to brand itself to the world How to avoid brand disasters
Dialogue | Jun/Aug 2014
anything but bland What truly makes us loyal to any specific brand? Is it the marketing? Maybe the price? Or a combination of things? Brand management includes analysis and planning on how that brand is positioned in the market, which demographic the brand is targeted at and maintaining a desired reputation. But our traditional views on brand are changing as ethics, the increase of wealth in emerging markets and the â€œcult of the individualâ€? all come into play. On the next pages, we investigate the mechanics of brand, from the individual to the super-corporate, and analyse what makes a brand thrive in an ever-changing world.
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focus A brand new world Developing your brand text as a leader? Brands Made With tomorrowâ€™s global culture The golden rules of luxury brands The changing face of luxury brands Brazil gears up to brand itself to the world How to avoid brand disasters
A brand new world: global brands we believe in Some brands manage to be anything but bland, despite the fact that they have near ubiquitous presence the world over, as David Arkwright explains Illustration: Elly walton
Dialogue | Jun/Aug 2014
personalized experience. It is a highly customWhen Andy Warhol created his iconic ized experience tailored to individuals – be that Campbell’s soup cans image in 1962, the art the unique playlist we make from the iPod’s (nonworld was divided. For some, it was the ultimate unique) MP3 capability or the modestly bespoke representation of meaningless dystopia: a world hardware that holds this neatly in place. There’s in which sameness and commercialism had finally certainly nothing that feels generic or impersonal been exposed in all its generic ugliness. Indeed, about iPods, iPhones or iPads to those using them. at one of his early shows, a rival dealer displayed Think Nike. Another brand truly masterful in a pile of soup cans as an act of protest at the giving the very real illusion of being both a personal depths of generic banality to which Pop Art was brand with deep meaning to those who wear their making a descent. sneakers or sports apparel, while at the same time Warhol, contrarian to the last, went on to see being available and visible on every street corner the iconic image of 32 soup cans, graphically wherever you go in the world. Worse still, in the demeaned of their marketing dollars, to be his case of Nike, you don’t even have to qualify with most treasured work. He would reflect later and any kind of athletic prowess. By Nike’s very own wish he had only ever made this one painting internal marketing definition, we all qualify for the and simply gone on to riff around it privilege of the brand as we are all what they for the rest of his career. For Warhol, call “athletes”. These athletes range from he had finally captured the greatest of the more sedentary armchair variety meaning. Far from being generic, this to those that actually run marathons image encapsulated all that was meanand might perhaps qualify as being ingful about apparent sameness. sporty. It is a broad target audience This cameo from more than 50 apparently at odds with the discourse years ago has a certain poignancy in poll of personalized meaning that is foreseeing the great paradox, which Which of these brands, targeted at the individual. surrounds brands today. To what extent do you believe has My former colleague Simon Clift, have the great, global brands of the 21st achieved the most when he was chief marketing officer at century finally succumbed to the mind‘believable’ consumer Unilever, charged with globalizing what is less, meaningless sameness that allows us campaign? known as personal care, spoke of this great to call them by name wherever we are in the challenge confronting marketers. The chalworld and whatever language we speak? To lenge, as Clift stated, was to navigate the path what extent is the ubiquity and universality of between being “hopelessly local” while avoiding the global brands, available in splendid samedescending to becoming “mindlessly global”. ness from Bangkok to Birmingham, the final In short, making the Dove beauty products, the nail in the coffin of the very uniqueness which Axe deodorants and the Vaseline skin cream the brands were originally meant to embody? world over the most personal of experiences for The greatest challenge their many users in pretty much every country The reality is that modern marketers and across the world. If as marketers we fail to modern brands have to deal with this very elevate our offer beyond the parochialisms paradox as perhaps the most real hurdle of local markets and personalization, we fall on their way to global success. Navigating victim to the tyranny that is lack of scale, the trap of sameness and dystopian generiand ultimately an economic equation cism, while being truly meaningful to consumers that is simply not viable. Conversely, in their very own world – be they in Sao Paulo an offer, which has charted the or Singapore – is the great challenge of our course of least resistance – a brand time. It is this challenge that defines successful lowest common denominator – brands of today: creating real, personal and will fail to engage any self-respecting apparently tailor-made meaning for individuals, consumer’s attention. while operating in the ultimate mass market So if this hallowed ground between the of the global stage. extremes of mindless globalism and hopeless Think Apple. It is almost guaranteed that wherlocalism is what global brands need to assume, ever you are in public – be that a plane, train or then two questions emerge: any other public space – you will see the brand at 1. Is it feasible? large, usually plugged into the individual earholes 2. How do you actually do it? of one of its consumer cohorts. It is that intimate. Ironically, the very paradox that Warhol Yet for every one of those millions of people with canvassed with relative ease can prove somewhite cords dangling from their ears, it is the most what harder to unlock in the commercial world.
Dialogue | Jun/Aug 2014
About Dirt is Good In 2005, Unilever launched its “Dirt is Good” marketing campaign, consolidating multiple washing detergent brands under one global brand positioning with a value in excess of $3billion. The Dirt is Good idea has transformed Unilever’s top performance laundry business – including brand names such as Persil and Omo – and is celebrated as a great case study in marketing circles. The whole campaign is based on an insight that if you don’t get dirty, you can’t experience life and grow. The idea takes the often banal world of detergents and connects it to a bigger world that matters to and creates a connection with parents across the globe.
Yet unlocking this is exactly what brands need to do, and is this that will define their commercial success or failure. Against the rub of dystopian misery, there is some real cause for optimism around global brand circles. The global challenge that businesses face is in fact more exacting and resultantly – a force that has the potential to create ever better, more meaningful brands, as opposed to brands of dubious meaning and mindless, swashbuckling global ambition.
Dirt is Good The creation of “Dirt is Good” in the super-competitive world of laundry detergents is a very strong case in point. Worth some $3billion globally – despite operating across some radically different washbowls, washing machines and attitudes to laundry – Unilever’s Omo brand is a case study in “mindful globalism” par excellence. But Omo and Dirt is Good are only a part of the story. For beneath this single common idea, now operating across five continents, sits a number of brand names – from Omo to Persil; Rinso to Breeze and more to boot. Such is the common conception of what this brand means – both within Unilever and, most importantly, in the consumers’ world that the idea can easily hold together a common core of meaning across the globe, despite having different names. I would venture that it is the fact that Dirt is Good contains an idea at its very core, that it can prosper and bring meaning to housewives the world over, regardless of nationality or so-called stage of market development. At the core of Dirt is Good is an idea that the brand presents and goes on to resolve. It resolves the tension which operates beyond, yet hugely pertinently also within
the world of laundry; namely that as parents we seek to be ever more libertarian in how we bring up children, as opposed to succumbing to the control of disciplinarianism. Being a freer parent as the great symbol of progress – generation to generation – who does not aspire to that? And beneath all of the marketing collateral, which so effortlessly positions this brand as being deeply relevant to the indigenous consumers it serves so meaningfully, lies a single insight. “It’s only when you are free to get dirty that you can truly experience life and grow.” An insight, which encapsulates the great tension of parenting as lived through children, and all of which pertains to keeping clothes clean. This is a priceless global approach, which does not countenance mindless genericism. This is the real 21st century challenge for brands – not how to navigate all of the new digital media and marketing opportunities that technology now offers us, but rather how to create brands that inculcate and embody meaning at their very core. Without the latter, the former will remain a series of clever executions that may reach millions, but will remain unallied to any common core meaning. And of course, the challenge is to be able to create these brands as we look forward, as opposed to succumb to lazy journalism that merely commentates on them after they have already become successful.
We need a recipe for brands that can transcend the banality of their often generic functionality
Evaluating global brands I think this is where we stop? So the “to do” list goes online. What we need is something of a recipe for brands that can transcend the banality of their often generic functionality, and keep them relevant the world over. A recipe for what we might call global brands we believe in. I have a checklist that helps to elevate global brands beyond the banal.
Dialogue | Jun/Aug 2014
First, the brands we truly believe in pursue their own agenda. They have a view of the world that is borne of who they are, where they come from and, often, from their founding myth. It is this deep ideological DNA that forms the root system from which the ensuing distinctiveness is nourished and fed. In the case of Apple, it is of course the iconoclasm of Steve Jobs himself. Likewise the founder, Phil Knight, at the root of Nike’s global success story. Yet it is not always the case that a founder exists to wave their ideological magic over the brand. In the case of Dirt is Good, the unique belief in a more human understanding and depiction of the world in which a laundry detergent plays is evident way back in the reels of brand’s history. It is somehow of the essence of Unilever, and of its Omo brand, that makes it a more human brand. It is this very humanity as the ideological core of the brand that gave birth to this idea and created a connection to consumers that sustained it across different locations. Second, brands we believe in resolve something for the user – be that a tension, that they unlock, or a desire they realize, they move the world of their consumer forward by means of this resolution. They allow the consumer a glimpse of themselves seen differently – not who they are, but rather who they aspire to be. In the case of Omo, the libertarian parent; for Apple, the creative free-thinker and, for Nike, the athlete – whether chained to the sofa or pushing off the blocks at the running track. It is by resolving this tension, or realizing this desire, that brands create attractiveness, and ultimately distinctiveness, in their subjects. Closely allied to this is the fact that the brands we truly believe in connect at a higher point of relevance to the consumer’s wider world. They create connection beyond the microscopic world of the what, and connect with the why. They touch a universal driving value and, in doing so, they create an emotional connection and deep personal meaning with their target. They connect their specific category – be it running shoes, computers or washing powder – with a bigger, more macroscopic conception of their world. They touch the idealized selves of their consumers. It is by locating the universal human value that will enable us to connect deeply with consumers in the category, that we can create the bond of intimacy, while at once create a band of broad affinity with the brand. That’s the thing about
values – we experience them in a deeply personal way, while they are at the same time universal and therefore shared by their very nature. It is this phenomenon when applied to brands that enables them to become “mindfully global”.
Create a ritual A fourth critical component of creating a successful global brand we believe in is to create a ritual so that the idea sitting at their very core, for which they stand, can be experienced and lived by the consumer. For Nike, it is the extraordinary trial, which is the ritual of Run London - and you can insert any other of some dozen or so city names here. It is by allowing consumers to live the idea in such a real experience that the idea becomes truly integrated, inculcated and, of course, meaningful. Premium spirits are highly reliant on using a ritual to embed their distinctive meaning in a consumption pattern, which makes the idea at their very core deeply experiential and personal. By insisting on a unique serve, the world’s favourite cocktails embed their own unique blend and create an intoxicating ritual. That is why the likes of Hendrick’s gin work so hard to ensure you take your tipple with its quirkily British slice of cucumber. It reminds you whoever you are, wherever you are of your idealized self as the idiosyncratic, yet savant sophisticate that you want to be. Just once too often I think. In addition to these factors, it is important to mention the teams who manage the brand. It is these people who define these brands and successfully navigate the perils of being generic to remain truly relevant to the individuals they serve. They see their task as one, which is way beyond the commercial or the merely functional. They drive their brand with a zeal and desire that has true purpose. And by connecting with their brand in this way, they become brand activists as opposed to mere brand managers. Like Warhol some half a century before them, they see the real possibility that is true meaning which sits within the apparent sameness they peddle so passionately – for this is the real possibility of the modern-day global brand. Like the soup cans, they can be apparently generic, yet filled with deep personal meaning.
By connecting with their brand, they become brand activists as opposed to mere brand managers
Dialogue | Jun/Aug 2014
● David Arkwright was formerly chief marketing officer of Persil and is co-founder of MEAT, a brand development agency specializng in creating brands with a transformative idea at their core. He is author of The Making of Dirt is Good
focus A brand new world Developing your brand as a leader? as a leader? Brands Made With tomorrowâ€™s global culture The golden rules of luxury brands
Developing your brand as a leader
The changing face of luxury brands Brazil gears up to brand itself to the world How to avoid brand disasters
Personal branding is a powerful way for people to distinguish themselves as leaders. Dorie Clark examines some of the key strategies to achieve this successfully Illustration: elly walton
Do you believe that your brand is in fitting with the brand of your company?
Dialogue | Jun/Aug 2014
you blog, the topics you talk about, and so on. Do you have leadership potential? If you That means your personal brand is not just want to advance successfully in your career, it is something you tell people; it is something you essential to understand how you are viewed in your live out every day, which is why authenticity is so organization and in your field. But too many of us crucial. Even if you wanted to, you can’t sustain still hold onto the idea that hard work is enough phoniness over time. Instead, the far better soluand that keeping our heads down will surely tion is to determine what is unique and powerful lead to future reward. But other professionabout who you are, and find ways to leverage als – including your boss and your boss’ that to your professional advantage. boss – are increasingly pressed for time, I often recommend that executives start to the point where they generally cannot with a quick, informal poll of a few friends focus on recognizing or cultivating your or colleagues: if you only had three words skills; they’re too busy putting out fires and to describe me, what would they be? This worrying about revenues. If you want them forces people to focus and only list what to understand who you are and what you’re they view as your most important charactruly capable of, you will have to make sure teristics. After you speak with three or four they take note. people, you’ll begin to see patterns that can Of course, the challenge is that we can’t be quite illuminating. As executive coach (and wouldn’t want to) just launch into a Alisa Cohn told me when I interviewed her self-congratulatory monologue about our for Reinventing You, it’s essential to compare skills and abilities. Instead, we have to find a the adjectives you hear with the ones that are clear but subtle way to ensure others are necessary for where you want to go. Cohn getting the right message about us. The notes: “Maybe people say, ‘I see you as term “personal branding” – popularthoughtful, methodical and nice.’ Those ized after a famous 1997 Fast Company are lovely professional qualities, but it’s cover story – raises the hackles of not a leadership brand like ‘decisive’. some, who fear that it implies a lack of It’s not bad, but it’s not going to get authenticity or a desire to “market” youryou to the C-suite.” self to the point of artifice. But that’s digital exclusive not what we’re talking about. Instead, Watch Dorie Clark’s The right brand fit personal branding is simply another term film ‘Starting Over: Next, think through how your brand for your professional reputation – someRebranding Yourself overlaps – or doesn’t – with your thing that most professionals would agree Mid-Career’ company’s brand. It may be a perfect fit; is very important to their future success. you’re innovative and they’re innovative. Thinking strategically about your personal But most often, we share some elements brand means starting to take control of your with our company’s brand and diverge in reputation and ensuring it reflects who you other places. In order to thrive professionally, it really are. is useful to think of it like a Venn Diagram from The form personal branding takes varies high school math: find the places where you by culture. But in any country, it makes sense overlap and emphasize those. One executive at for successful professionals to understand how a large company, whom I interviewed on how to they are viewed by others – and, if that doesn’t become a recognized expert in your field, told match what they’d wish, to take steps to close the me about the process he went through in finding gap and ensure their abilities are truly understood. the right brand fit. “A number of the people on Personal branding the company leadership team come from an The first step, then, is being clear about the engineering background and look at things in a message you would like to send. Sometimes methodical, process-based way, and that’s not people conflate your personal brand with your me at all,” he said. “There’s a streak of the rebel in “elevator pitch” – the short, pithy statement that me and I had to realize my natural brand wasn’t describes who you are in 10 seconds. going to fit, but it still had to be me. What are the That is one element of your personal brand, things we could agree on? I knew we could agree but your brand is actually much more faron results.” So he emphasized his brand as a reaching: it is the totality of the message you “results-driven leader” and made a point of talking send when people look at things like how you about his work in those terms. “I’ve had to actively dress, how you speak, who you hang out with, manage my brand – to know what it is and be what organizations you’re a member of, what cognizant of it,” he says. As a result, he’s been very charities you support, whether and where successful in the company.
Dialogue | Jun/Aug 2014
your expertise; instead of people citing outside “experts” to validate their posiDan, an engineering director who joined a new tion, they are going to start citing you company, realized he needed to establish his brand and the things they read in your blog or as a leader. In developing your personal brand, you heard on your podcast. And anytime a must recognize how you’re perceived, determine client or prospective client mentions how you’d like others to think of you, then take a challenge they’re facing, it is enormously powerful to be able to say: action to live out your brand. Dan realized since he’d “I just wrote about that; let me send come from an international company and was now you a link.” at a firm with a “hip” reputation, he needed to guard The best way to ensure your brand against the perception he was bureaucratic. “I had to as a leader spreads throughout your work to get people to understand I was comfortable organization is to make an effort to in the new environment,” he says. “It’s a grassroots network. Not in the sense of going culture, so I had to start building trust. It was lots of to “networking events” and trading time ‘managing by walking around’, being visible. business cards – instead, it is about With anything that smacked of a big company, breaking out of the ruts that we typilike having a standing staff meeting, I overreacted cally fall into as professionals. Most against it.” people eat lunch with the same people He also determined that, despite his introverted and talk with the same colleagues all style, he needed to build relationships and wanted the time. It is easy and comfortable, but to be perceived as connected and knowledgeable. it is also a mistake. Something as simple He knew it was critical to his ability to succeed in the as inviting one new person in a different departjob, so he extended beyond what he would have done in ment out for lunch each week can have a dramatic the past. Today, Dan is living out his brand – and ensuring impact on your ability to access best practices, he is known in the company and in his community – by connect with others, hear about opportunities networking his favourite way, through breakfast meetings. and add value to your organization. Networking “The biggest change is my default answer used to be no,” doesn’t have to be an exhausting form of gladDan says “And now my default answer is yes. I’ve focused on handing; rather, it is about keeping yourself open reasons to say yes.” to new encounters and new possibilities, and ensuring that you don’t allow your connections to stagnate. If you want to keep your career moving Demonstrate your brand forward, it is important to do the same with Finally, it is important to demonstrate your your network. brand. Particularly if you’re “rebranding” Personal branding is a powerful way – wanting to shift people’s perceptions to to distinguish yourself as a leader. see you in a new light – it can be useful to When done right, it is the ultimate harness the element of surprise. Volunteer form of authenticity because it for a project that highlights new skills in the makes clear the value you can add poll direction you’re looking to rebrand yourself and draws people to you, specifior start a new initiative. If you want to be seen cally. An investment in these stratDo you believe that your leadership team’s as a global leader, sign up for a language class egies is one of the best forms of brand is in fitting or join the diversity committee. Find ways to career insurance you can make. with the brand of proactively demonstrate your interest and your your company? brand to others. ● Dorie Clark is a marketing strateCreating content is also valuable. It has never gist who teaches at Duke University’s been easier to start a blog of your own (you can Fuqua School of Business. She is the author use free software like WordPress) and, in most of Reinventing You: Define Your Brand, Imagine companies, the marketing team will love you if you Your Future volunteer to help write posts. Even if you detest the Further reading process of writing, there are options, because it is about your ideas, not their format. You can create Reinventing You: Define Your Brand, Imagine Your Future, Dorie Clark podcasts or video blogs literally using just the software on your smartphone and many corporate Personal Branding For Executives In Asia, Dorie marketing departments will also have staff that Clark, Forbes (2014) www.forbes.com/sites/ would be glad to help you, if you show an interest. dorieclark/2014/02/24/personal-branding-forexecutives-in-asia/ Creating content is a powerful way to showcase
Dialogue | Jun/Aug 2014
focus A brand new world Developing your brand as a leader? Brands Made With tomorrow’s global culture The golden rules of luxury brands The changing face of luxury brands Brazil gears up to brand itself to the world How to avoid brand disasters
Brands Made With tomorrow’s global culture John Grant explores the creativity, innovation, brand and design culture of the Muslim world by talking to some of the region’s entrepreneurs Illustration: ELLY WALTON
Where in the world should we look for tomorrow’s brands? One place to watch is the Muslim majority countries – a region that stretches from Istanbul to Indonesia. The 56 countries in these emerging markets have an average GDP growth of 6% – almost doubling every 10 years. Some, like Turkey, Indonesia and Malaysia, are leading producer markets. Others such as the resourcerich UAE, Iran and Saudi Arabia are leading consumer markets. All have young populations: 60% under 30. And all are avid adopters of fresh technologies such as smart phones. Saudi Arabia has the highest smart phone penetration and the highest Twitter and YouTube use per capita in the world. Saudi – in a way that defies its reputation in the West – is also on track to join Qatar and Abu Dhabi at the forefront of sustainable resource technology, having half of the world’s solar power capacity by the 2020s. Turkey will quite soon have the most digitally-enabled classrooms in the world – a tablet for every child. Malaysia is the number one in integrated circuits manufacture. Sleepy little Amman, Jordan, is fast becoming “the Silicon Valley of the Middle East”. Lebanon, despite its tragic geopolitical fate, is home to many global stars of design, fine arts and fashion. These are – as well as being ultra modern, high-paced and fast emerging – also some of
the most tradition-, religion-, community- and family-focused cultures in the world. Ninety-three per cent of youth across the Middle East say: “My religion is very important to me”. And yet they effortlessly mix modernity and tradition in a way that to the Western (Cartesian, either-or) viewpoint looks paradoxical. And perhaps it shouldn’t, given that historically one of the other more religious cultures in the world has been the US itself. This is far from a homogenous region, but it seemed to me from my travels to be among the most vibrant and less well understood. So I set out to explore this region’s creativity, innovation, brands and design culture by interviewing some of its leading lights. Defining these innovators as “Muslim designers” or “Muslim entrepreneurs” is far too one dimensional; like calling Walmart or Silicon Valley “Christian” or Hollywood “Jewish”. So instead, I decided to call this region “The Interland”, since what I found was a region that regards itself not as outside the West, but in-between. And a common idea that emerged, from Turkey to Malaysia, was the idea of being a melting pot, a place of fusion. In Istanbul, people refer to the bridge that joins the landmass of Europe and Asia. In Lebanon, the culture was described to me as like a Tabbouleh (an Arabic salad) and a very similar metaphor was used in Malaysia; with its vibrant mix of Malay, Chinese, Indian and other cultural ingredients.
Dialogue | Jun/Aug 2014
Silk Route success
Being surrounded by and also carrying so One creative entrepreneur that has achieved many cultures, Debs felt that what she was really international success for her fusion of Arabic ornadoing with patterns was “bringing parts of myself ment, Japanese organic minimalism (and a hint of together. It goes deeper than what we see. It’s her American modernist training at RISD) is Nada about emotional design”. In working with patterns, Debs. Debs’ furniture is to be found in some of the she had held back, taken a minimal line. “I do chicest hotels and residences in global cities, and work with patterns, but only as far as going into a is particularly sought-after, she told me, in the Gulf polygon, square, circle, triangle. That means I keep countries where her use of Islamic geometrics it as pure as possible. Then from that, I will probfeels most at home. You can also find her artier ably start recreating the shapes, layering them, work in the Victoria and Albert Museum in London shadowing or superimposing.” and other galleries. She describes her Those two key ideas – of creating a new global work as “East and East”. She is based fusion and also remaining true to the artiin Beirut, the original home of her sanal craft of the creative traditions of your Lebanese family, but grew up in Japan. culture – run through most of the examShe told me that her work was “a ples that I have come across; and are two personal Silk Route. Picking up ideas in main meanings of the title of my book the same way as blue and white Chinese Made With. A third key theme was a porcelain was brought to Istanbul, or refusal of Western ego-based individupoll learning how to make silk brocades, or ality, preferring community. As Debs Do you believe that the inlay work I use now, and damasks, pointed out, this idea runs deep into the the principles from originally from China and India”. culture of the region: “If you look at the John Grant’s ‘Interland’ Debs told me that her personal Silk tradition, the great designs of the past, can be applied to Route had started when she grew up in nobody knows who actually made all this Western markets? Japan, where she absorbed a deep sense of work. There isn’t one name. In the West, you minimal purity. She then travelled to study know who the architect was or that the artist in New York at the Rhode Island School of was Da Vinci. Our culture wasn’t ever about the Design, worked for a time in London, then person who made it, it was just the craft.” When finally returned to her homeland in Beirut. As you start to consider how bound up with ego, she tells it, Debs then just “put it all together identity and individuality Western brands are (from in my work”. But it can’t have been easy to do. Chanel, to Nike, to Apple and Facebook), you can On the face of it, all these styles contradict. start to see how different brands from a different, Furniture is either starkly modernist and funcmore collective mindset could be. And this may tional; or it is florid and ornamented. How can it be where the world is going. As Turkish artist Burak be both? As Debs’ work shows it can be both, and Arikan pointed out to me, seeing the world as led more, but through creating a hybrid that allows the by iconic figures is giving way to a new ideology spirit of all to combine. that is led by networks of interconnection. Arikan’s Debs told me that more than anything what she own working, since his masters at MIT Media Labs, had come to value was the craft element, working has mapped network subjects ranging from his with artisans and the magic they worked with own credit card spending, to a Turkish political materials. And with this as a kind of anchor, the scandal, to overlaps in board of director and founother accommodations become possible. dation memberships, to the network patterns of “I came from a school of thought that said mosques, malls and republican statues. ornament is a big ‘no no’ – that it is just a surface Making craft relevant today is easier within the element. But then it kept touching me emotionally. elite world of luxury and design where it can be People are so attracted to patterns. They have no readily afforded and where small scale is an advanbeginning and end. You get mesmerized. I’m sure tage. But how can the same principles be applied there is a scientific background to this. You can to more mainstream markets? Here, the difficulty take a child and put them in a desert – and they can be that even though people may prefer the will probably draw a circle. A child in the snow in authentic, crafted and locally relevant traditions, Alaska will do the same. It is the most universal the modern alternatives win on economies of element in a human being.” scale, efficiency and convenience. Even in France,
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there is hence a growing market for McDonald’s and delivery pizza. An answer could be to create efficient networks of infrastructure so that craft can scale, find customers and delivery just as well on service. You can see this, for instance, in the models of eBay and Etsy, providing a route to market that is as efficient as Amazon.com
Turkish take-away business model Yemeksepeti was founded by Nevzat Aydin after picking up the “dotcom” mindset at business school in San Francisco and working in Silicon Valley in the 1990s. Aydin originally thought it could be a good idea to bring something like eBay or a dating site back home to Turkey. But there were too many regulations that would have made it difficult at that time. So, he solved one of the great problems of Turkish life: how to get that great kebab restaurant the other side of town to deliver its delicious food to your house with any consistency or predictability. The resulting company, Yemeksepeti, arranges delivery on behalf of one in seven such restaurants in Turkey, and has been funded to expand into six more countries. What Aydin thinks they got right from the start (and where comparable sites in the US went wrong) was the business model. First, they never charged a restaurant except for commissions on actual orders. No fees for membership, listings or leads. And they never ever charged the end customer, who hence always paid the same as if they had phoned the restaurant direct. Second, they never went in for logistics (and hence only signed restaurants who could already do local deliveries). All they did was take and transmit the order in the fastest, most robust way, and also offered perfect end-to-end support to customers if anything ever went wrong. They also started ahead of the curve and the early years were tough. Towards the end of 2005, they reached financial break-even. Today, they process more than 55,000 orders a day. What Aydin and his team had done was create something that made existing small businesses more successful – giving them everything they needed to rival with the big players like American pizza delivery chains. Their latest venture, Aydin told me, was taking this even further, into the much more local specialities. Their new model so far includes only 50 to 100 suppliers that have been handpicked by food experts as offering the best of the unique regional speciality food. Aydin thought that if he had founded the company in another country, he is not sure it would have got this far – as his employees in Turkey had
a particular knack for trying things, being practical and making changes. They also really stuck with stubborn problems until they solved them. And they didn’t mind adversity, struggle, chaos and setbacks – that was just normal to them. He told me about a Yemeksepeti group ordering feature (it allows not only groups to pay as individuals, but also for the order to be bundled and delivered from multiple restaurants). It had been really problematic, so they had to remodel it four or five times. But now it was a huge hit with university students and was on track to account for a quarter of all their orders in a few years’ time. Mobile a year ago only accounted for 1% of Yemeksepeti’s volume. Now it will soon hit 20%. And while the practical, improvisational Turkish entrepreneurial mindset might cope better than most, Aydin expected that things would change even faster in the future. The pace of change in the region due to adoption of these technologies is dizzying even by Western standards. Sixty per cent are under 30 and this generation has adopted digital lifestyles with a passion – so countries with the highest levels of smart phone penetration, mobile Facebook, YouTube views and social media posts all lie within countries in this new Muslim world.
Where human history is changing is also where powerful brands tend to emerge
Resurgence of traditions A fascinating result of this can be the resurgence of traditions – as reinterpreted by this new generation – in new digitally-amplified forms. One example that was fascinating to me (as a Western male author) was the Hijabers Community in Indonesia. Originally a group of hijab (veil) wearing street fashion fanatics in Jakarta, most of them in their late teens, who met up in person as well as sharing photo blogs and instructional videos, this scene exploded with the advent of social media. The group went from 50 to 1,000 members in its first morning on Twitter, and from there has exploded in only two years into a panAsian fashion, publishing, events and ecommerce phenomenon. I was fortunate to have a contact in this community – Afia Fitrati – who was able to interview leading members of the community, giving a fascinating insider account of how fresh and non-Western modernities are emerging in this culture. Once the simple community of shared interest took off, a more complex cluster could develop, including fashion labels, hijabi boutiques, photo blogs and magazines. And Fitrati contrasted this with the situation for earlier generations of Islamic fashion designers. In the 1980s and ’90s, these
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A bi-product of history To see this as more than a catalogue of interesting case studies, I think it is important to look at these examples in context. They help us appreciate what brands actually are, how they are created and what their ultimate meaning is. Put simply, brands are a bi-product of history. I don’t just mean they are cultural artefacts or signs of the times. But where human history is changing fastest is also where powerful new brands tend
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Photograph and permission supplied by KAVI Indonesia
were mostly solo efforts. Now you see many more collaborations, “between the designers and their families like Dian Pelangi, Ria Miranda or among friends”. Fitrati’s hypothesis is that this is a cultural inclination: “Indonesians are a pretty collective bunch and we have a strong herd mentality.” But also she said there had been a dearth of positive role models for young Islamic women. This generation also had to cope with growing up in a world of confusing signals, caught between modernity and traditional Islamic values. “So when this community emerged, it’s just like oil and fire. The young Muslim women need role models to look up to and a community that they feel they could belong to.” The first thing to understand was what wearing hijab means within these cultures. In Indonesia, the former secular dictatorship of Soherto had suppressed the veil in many settings, so that re-adopting it had become a sign not only of modesty and religious adherence, but also of something like activism and freedom of expression. However, as my correspondent, journalist and entrepreneur Fitrati pointed out: “That didn’t mean we wanted to look like our mothers and aunties.” And so a unique fresh youth fashion scene was born; drawing influences from diverse sources and styles – from local fabrics like Batik and tropical colours to styles inspired by Bedouin and other global cultures. The designers within the scene have contrasting styles and also philosophies. Some, like Jenehara, told us that they were about recreating the image and self-identity of Muslim women: “Simple, edgy, modern. I also want to dispel the belief that Muslim clothing is complicated and uncomfortable. It is not. Contrary to what many people in the West think, Islam actually liberates a woman with its rules.” Others like Kavita Rezi (pictured), while a hijab-wearer herself, wanted her appeal and also the culture impact to be less exclusive: “On one side, you can find strength in numbers, in meeting and grouping with people who are similar to you (wear hijab). I’m trying to mingle with everyone and not be defined in one community. I’m neutral. I’m an Indonesian.”
to emerge. As do fashions, art movements and technologies. All of these express new ways of being human. They resolve new conflicts. They epitomize new paradigms. What was striking about this case study was how other cultures (than the Americanized Western one) are perfectly capable of adopting modernity as a neutral set of communication, education and production technologies, without the baggage of specific Western values and lifestyles. Brands that represent the lifestyles and values of the Muslim populations have more than a quarter of the world’s population to target as a home market. This population is just as diverse as those in our own part of the world, and indeed many of the world’s Muslims are living with the West and already infusing our societies with their own cultural ideas and values. If Japan could produce so many world-relevant brands in the past 50 years, why wouldn’t these cultures do so in the next 50? ● John Grant is an author, speaker and consultant. He was co-founder and head of strategy at creative agency St Luke’s Further reading Made With: The Emerging Alternative to Western Brands, John Grant (2013)
focus A brand new world Developing your brand text as a leader? Brands Made With tomorrowâ€™s global culture The golden rules of luxury brands The changing face of luxury brands
The golden rules of luxury brands Luxury brands must adhere to certains rules if they wish to flourish and grow, according to James Ogilvy Illustration: ELLY WALTON
Brazil gears up to brand itself to the world How to avoid brand disasters
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What is luxury? The answer to that question luxury market growth is quite easy: something we don’t need. But what is a luxury brand? That question is a little harder to answer because luxury is in the eye of the tag lUXURY STOCK beholder – the consumer. FTSE 100 Twenty years ago, the luxury industry was very S&P 500 different and, in terms of brands, it was a different landscape altogether. London’s now iconic Sloane FRANCE CAC Street was, in the ’90s, still the home not just to the early designer boutiques, but to supermarkets, pet shops and dry cleaners. Gucci was an organization in turmoil, Prada was up known for making nylon bags and Burberry was still at the back of a dusty cupboard. Then in the 1990s, 29 April 2013 – 29 May 2013 three things happened: the development of technology as the internet started to develop; the 2008 2010 2012 democratization of wealth and a global spread of affluence; and a “brand language”. If you keep an obsession the development with the level of detail in your language, this of the emerging means it will become more recognizable markets. llService – the human factor – is a huge part As wealth of being a luxury brand and this describes the moved from the everyday “mythology” of the brand and how EU, US and Japan into well the people stick to the brand code and the east, the luxury brands followed implement it in their deals with customers the money and there was a new on a daily basis. surge of awareness and aspiration. Consider the luxury consumer This developed into a steady march of market. This used to be small, but it growth. Take Louis Vuitton, for example. has grown and high-end customers It had just 50 stores in the early 1990s. digital exclusive now represent a complex challenge This figure is now more like 500. to luxury brands. These customers – And for brands to flourish and grow, Liz Mellon talks to like the brands they buy into – have they should stick to the following “golden James Ogilvy in a distinct culture; and what could be eight” rules: exclusive interview tasteful for one customer could be seen as vulgar by another. Also, buying habits llSet a vision for your brand, then define it are changing and 30% of purchasing deciand make it relevant in the market sions are made by the click of a mouse, so it llRemember the heritage of your brand has become harder for brands to engage in person and maintain a direct reference to your with their clientele. But if luxury brands keep story thinking about the golden eight, customers will llHave tight control of your distribution and respond – brands just have to be more persuasive try to avoid unofficial “grey market” imports than ever before in a competitive market. llMake sure the quality of your materials is As such, luxury brands have moved into more exceptional aspirational branding – making their products llThe design of luxury brand goods has to be more accessible to those who have saved up. perfect – as if we need reminding For instance, the “blue box” has become llThe “hand of man” should still be evident and synonymous with luxury jewellers Tiffany & craftsmanship has to be exquisite – from the Co. Consumers want a product in a Tiffany box stitching to the finish and, as such, the retailer’s most popular llStick to the brand code and make sure you use
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purchase is a padlock which retails for less than $150 – just so customers can have a Tiffany product in a blue box. Armani has made its men’s briefs an affordable brand lead-in and used soccer player David Beckham to model them, appealing to a more aspirational audience. And in the automotive world, you can buy a low-spec Land Rover for less than a specced-up Ford Focus. The danger for luxury brands, though, is that if they make their products too “cheap” or too accessible, they risk diluting their brand’s prestige. Luxury brands are connecting into new and sophisticated markets, and they are moving to use the digital world to drive aspirations through websites and social media. Travel signifies the rising levels of disposable income and acts as a catalyst putting people into contact with luxury and offering them a direct experience compared with just being online. Travel drives aspiration. The growing trend is for personalization and, as such, luxury brands are moving to create bespoke – or at least personalized – products. Design is a great driver, and we now look for great design in everything ranging from clothes and furniture to kettles and toasters.
What is the best brand of all? It would have to be Hermès because it adheres to the golden eight impeccably time and again. It has both superb brand management and financial performance, and has become a best-performing business within its sector. But how can the lessons from poll luxury branding apply to leaders? The What do you think has principles that have brought long-term had the biggest impact success to the likes of Hermès have a on the luxury market surprisingly broad application for busisince the 1990s? nesses. We have seen it with Apple – witness the visionary leader, the brand story, great design and materials, control of distribution, exceptional service, premium pricing, personalization through all the accessories, etc. But the principles also apply to individual leaders in terms of driving through the vision, heritage, design, control, the brand code and, of course, service and the whole human side. There is almost no area in the business world, however unglamorous, where attendance to these apparently “luxury brand” fundamentals will not lead to the establishment of a long-term position at the top of a sector with premium pricing to match.
● James Ogilvy is former publisher of Luxury Briefing and principal at Ogilvy & Co
Market value in billion euros
VALUE OF THE PERSONAL LUXURY GOODS MARKET WORLDWIDE FROM 1995 – 2013 (IN BILLION EUROS)
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‘95 ’96 ‘97 ’98 ‘99 ’00 ‘01 ’02 ‘03 ’04 ‘05 ’06 ‘07 ’08 ‘09 ’10 ‘11 ’12 ‘13 YEAR
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focus A brand new world Developing your brand text as a leader? Brands Made With tomorrow’s global culture The golden rules of luxury brands The changing face of luxury brands Brazil gears up to brand itself to the world
The changing face of luxury brands Martin C Wittig, Fabian Sommerrock, Philip Beil and Markus Albers, the authors of Rethinking Luxury, talk to several experts in the luxury market about the changing landscape of their businesses
How to avoid brand disasters
Shifts in demographics, money flows and values mean luxury consumers are becoming more digital and more interested in sustainability. They are also more Asian, with cultural backgrounds that are often alien to traditional makers of luxury products and services in Europe. Today’s luxury consumer still longs for purchases that are steeped in European tradition and craftsmanship, but this is changing. The future of superlative products remains based in tradition, but non-traditional things such as smartphones, the internet and social media are influencing it. Companies can now embrace the power of digital technology to lure the most high-paying customers and increase customer loyalty with carefully crafted offers of exclusivity. To do this, they enlist the help of carefully tended databases that include sales histories and clues about what the customer finds interesting on the company’s website. Today, a blogger can be more important to a luxury brand than any of the traditional “gatekeepers”. For companies such as Burberry, communicating digitally with their customers
is at least as important as opening a shiny new flagship store in London. At the same time, sustainability is becoming more and more important because a new breed of customer is asking questions about ethics and the environment. Some Gucci handbags already come with a “passport” detailing the history of the leather it was made from – Gucci only sources leather for its bags from approved ranches in Brazil. The company says it is acknowledging that its customers are changing, and that they now want to know the origin of materials and how products are made. In addition to the digital revolution and concerns about sustainability, the rise of China and other Asian
economies is changing the way luxury brands and their marketers operate. The US remains the biggest luxury market, but influences are increasingly Asian. Pop culture can now come from Gangnam, Seoul, as well as from the streets of Brooklyn in New York City. China is the fastest growing market for luxury products and it is only a matter of time before it becomes the nation with the largest number of purchasers of upmarket goods. And in India, the number of millionaires jumped by 22% in 2012. In the following interviews, leaders in luxury give their views on the changing landscape of their business and which strategies they plan to implement. Jiang Qiong Er, CEO of Shang Xia, the Chinese luxury brand of Hermès, which now also has a Paris boutique
Shang Xia is considered to be China’s first domestic luxury brand. Why aren’t there many others? Shang Xia is walking on a new path.
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We actually don’t position ourselves as a luxury brand, even though people often say we are. Shang Xia is a brand of 21st-century fine living, where contemporary design meets Chinese heritage crafts. It is new and it will need quite a long time to develop. We hope there will be more companions walking the same path as we are. That way our Chinese inheritance could be continued in a healthy and substantial way.
How did it all start? I was introduced to traditional Chinese art when I was little and had the opportunity to explore it in different fields of art. As I understood more and more about Chinese craftsmanship and the deft skills of craftsmen over the years, I was truly touched by the power and beauty of their work. Over time, I developed a dream to share this appreciation with the world. In 2006, I told Patrick Thomas, CEO of Hermès, and Pierre-Alexis Dumas, artistic director of Hermès, about my vision and we decided to create this new baby called Shang Xia. It took us a few years to build the team, searching for the finest craftsmen throughout China, and interpret it with contemporary design. In 2009, Shang Xia was officially founded in Shanghai, with its first worldwide boutique opening in Beijing in September 2010.
Right now, most Chinese luxury customers seem to be interested in European brands, products and heritage. Will they start embracing their own tradition more? We definitely see more and more Chinese customers at Shang Xia. As a matter of fact, our Beijing boutique caters to up to 70% Chinese customers, embracing their heritage and culture. I believe that emotion is the key to one’s art of living. The finest touch of craftsmanship, innovative design and contemporary lifestyle are all linked by a personal touch. Without a true emotional understanding, this link is
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of pursuing the best quality. And we produce almost all of our objects in China, such as finely wrought homewares and elegant clothes, including sculptural dresses made from handfelted cashmere in a centuries-old process with its typical attention to detail.
disconnected. The inheritance of our culture and fine art will lead Chinese customers to come along the way with us as they’re searching to fulfil their emotional demands.
Could the tables even be turned soon and Chinese and other Asian luxury brands start conquering Europe? I wouldn’t use the word “conquer”. – I would call it an offering. The Western world has a long history of appreciating culture and art from the East. So the revival of contemporary Chinese craftsmanship and design will also be shared and appreciated by international citizens, without doubt. The question is not about turning tables. The question is about time. Unfortunately, over the past 100 years, China has faded from the cultural continuum. I believe that the rise of the Chinese economy will foster craftsmanship and design, but it will take some patience. When we opened our first overseas boutique in Paris in September 2013, we didn’t want to do it big, but we wanted to do it well.
Should more European luxury brands form collaborations such as the one between you and Hermès? If so, what’s the secret to a successful one? I can only share what Shang Xia is keen to achieve. We are not another branch of Hermès, but we share the same value
The Chinese luxury market comes with its own unique challenges. Many are concerned about the rift between the country’s rich and poor. Are you seeing a political or cultural backlash against luxury spending, especially for Western brands? For a while, Western luxury brands have been making inroads with the most fashion forward of the country’s sizable population that has an appetite for luxury. However, the perception is slowly changing as many homegrown, high-end brands are being developed, often with a traditional bent and sophisticated designs. People used to desire anything from a luxury brand. Nowadays, more people want something different. In the first 30 years of economic development, the Chinese did not have the opportunity to pursue this desire. It was about fulfilling basic needs, not going hungry and not being cold. Now, we’ve started to return to our cultural roots. In the past five years, people have started to realize the importance of creativity and quality in China.
Bernhard Maier, member of the executive board and head of the sales and marketing division at Porsche AG
How is the brand experience changing in an age of increasing digitalization? This is best explained by the so-called “customer touch point map”. We see some modifications here, but some shifting as well. Based on our contact history, we can see how many times interested parties visit a Porsche centre before they sign a sales contract with
us. In the past, a Porsche buyer would make five or six visits beforehand to learn about various models and options. In recent years, this number has been decreasing. The reasons for this are an increase in digitalization and the aroundthe-clock availability of information. Today, a potential buyer finds a lot of this information on the internet. So people come to the dealership having specific ideas in mind. But this need not be a disadvantage – especially when you can influence the customer’s digital touch points.
But they are still coming by to have a look? Yes, but instead of the five or six times, it will be only two or three visits. Because there are a lot of things that a computer will never be able to replace. There’s simply no app for emotions – for instance, how it feels to sit in a Porsche, the smell of its fine leather, taking in its ambience. Or during a test drive, experiencing its driving dynamics and feeling the butterflies in your stomach.
Are you seeing changes in your physical showrooms because of digitalization? Yes, this is happening. A customer configures and saves their desired vehicle on the internet. Each configuration receives a Porsche code. The customer comes to us and says: “I made a change on the internet and now I’m not quite sure if it was registered. Can you help me?“ The salesperson at the Porsche centre can respond with: “Dear customer, do you mean our offer from March 23? Where you configured a 911 in dark blue with a leather interior?” The salesperson calls up everything on a screen and can then say, for example: “Let’s take a quick look at this car’s configuration. To really make this your dream car, your most personal car, I recommend...” This is effective because it saves time, is emotional and it works with images. These are exactly the kind of tools that we’re already using in some of our markets today. And we’re working hard to provide this feature everywhere.
Is the experience involved when buying a luxury product becoming increasingly important? You could say that. Besides rational reasons for making decisions such as quality, retaining value, longevity and safety, there are many critical emotional reasons for deciding to buy a product. These include associative values like company image, product design, the personal driving experience and the community, which is especially important too. Particularly in saturated markets, people are searching for new experiences for things previously unknown and unexpected. This is why an experience like the Porsche Travel Club, which we’ve been offering for many years now, is becoming increasingly important.
Could it be that luxury customers are finding the experience increasingly more important than owning something? Fortunately, our customer base distinguishes itself from others. We cater to everyone, from 18 to the over-80s. The over-50 target group, as well the ones below it, is growing and this is due to the fragmentation of markets and segmentation of customer groups. In addition, Porsche is no longer represented in 70, but in more than 125 markets. And we not only have two, but five model series. Many of our customers still find ownership important. We call them the “Proud Patrons”. After breakfast in the morning, they go down to their garage with a cup of coffee in their hand, take a look at their automotive “babies” and think, “Nice to have you here!” These customers actually don’t have much time to go driving. They simply enjoy possessing things. On the other side of the coin, there are the customers who we call the “Top Guns”.
They have discovered their passion for driving and on Sundays, when they have time, they will go out to a racetrack to explore the limits of their vehicle. The Porsche experience also means being able to exchange thoughts within a community. That’s why the community idea is such a strong part of our company. Lutz Bethge, non-executive chairman and head of the supervisory board of Montblanc
Luxury brands used to know exactly who their customers were. Is this still true? This has changed greatly over the course of time. Going back, it was actually the nobility – in other words sovereigns, kings and princes – who invented luxury as a part of their personal lifestyle. They hired the best craftsmen of their region, country or even of the world to create something special for them. Customers like this are no longer around. Today we see the “financial aristocracy”, the ultra high net-worth individuals (UHNWs) and the high net-worth individuals (HNWIs). They are completely immune to crisis, are highly demanding and very much interested in made-to-order products and services. But of course, they are quite a small target group. Then there are the “old money” customers who have acquired a particular lifestyle over generations and are mainly conservative. At Montblanc, we call them “conservative achievers”. This group is somewhat larger. The luxury industry’s success over the past 20 or 30 years has been to use brands to bring the luxury’s elite range to the “aspirational customer”. Because today, the trust we once placed in craftsmen has shifted over to brands. And the brand is hopefully authentic and, with its value, offers customers what they want.
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Who do you include as aspirational customers? This group is at least twofold. On the one hand, there are the so-called “elite of tomorrow”. In the 1980s, they were known as yuppies. In principle, they have similar conservative thought patterns as the “old money” group – for example, a profession, career, earning money, the black Porsche as a status symbol. They want to show that they’ve made it. In emerging markets, there are many people who fall into this first segment. Montblanc is extremely successful in the developing markets. With a product for less than €1,000, you can still symbolize a cultivated, sophisticated and successful luxury lifestyle. For other companies, this often starts at several thousand euros.
You spoke of the two groups of aspirational customers… In mature markets such as Europe and North America, but increasingly in developing markets as well, there is a new type of “aspirational customer” who advances through the story much faster. They no longer rely exclusively on the revered, traditional status symbols. Instead, they live a different lifestyle and value a work/life balance. They want to be surrounded with items that fit their lifestyle, things that are beautiful, authentic and sustainable. All of these play a bigger role, but what it finally comes down to is status. Luxury is always the aim, but status can also mean that I’m living a lifestyle that is very creative or one in which I become familiar with interesting products.
How do I get these different target groups to become loyal customers? Authenticity is of utmost importance. This includes craftsmanship, which also needs to be represented. In 1997, when Montblanc entered into making watches, we chose the path of taking on the production process ourselves. We made a conscious decision back then to build a manufacturing facility in Switzerland and to produce watches where the expertise and experience
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has been present for generations. It was a signal to customers that we mean business.
Don’t new Montblanc product categories carry a danger of diluting the brand and irritating loyal customers? When we develop products, it’s important to us that they’re new, modern and creative, but the customer should still love that product in 10 or 20 years’ time. On the one hand, there is fashion, a short-term pleasure that is popular and important to everyone. But then there are things that have a companion quality. That’s what we produce. This quality must not only be reflected in longevity. The desirability of a product must also be maintained over many years. For example, my writing instrument is a Montblanc pen that I received 24 years ago before I came to the company. It was a gift from my girlfriend at the time. She is now my wife, by the way.
The message of authenticity and timelessness – is this told the same way in all markets? The core message, yes, but sometimes it takes on different forms. For example, we entered China in the mid-1990s. And right from the start, exclusively with our own shops, where you could experience our brand as a whole. As a result, we created a very select distribution. We deliberately utilized mega-events as a means of communication. In a market that doesn’t yet know much about a brand’s story, you need to do two things. On the one hand, you explain the story because in developing markets people want to buy what’s “right”. But in the beginning, they don’t know the story. On the
other hand, we wanted to communicate that Montblanc is a major brand. We achieved this through events for up to 3,500 VIP guests. We built a Montblanc city at a film studio outside Shanghai for our 100th anniversary. There was a Montblanc mountain that you could ski down, a Montblanc tramway and a Montblanc café.
As a luxury brand, you also need to be a digital storyteller, and these stories must be authentic and verifiable, right? At the same time, you need to have a certain amount of sustainability today because, especially during tough times, people who spend thousands of euros on a watch could be viewed ambiguously. Successful brands or successful companies must give something back to society. Examples are our activities with UNICEF, who we are helping in the fight against illiteracy, or our cultural projects, such as the Montblanc de la Culture Arts Patronage Award, which honours individuals who have distinguished themselves as modern patrons. This offers us the opportunity to present ourselves as a brand in a cultivated environment. Our most loyal customers want to keep up a strong dialogue with the brand.
By purchasing a luxury item, I am also part of a world. Is this becoming more important or was it always like this? I think it’s become much more important. It used to be that a craftsman enriched a particular customer’s world. Today, by purchasing a luxury brand, you’re buying a piece of a world. The question now is: how attractive is this world and how can I renew it regularly? How can I keep finding creative new ways to say
something different about the same thing? That is a fine line. You have to constantly be thinking of new ways to bring people together, how to excite them and how to reach them digitally. At some point during my time as CEO at Montblanc, I decided to set up an official Montblanc CEO Facebook page where I replied to posts from customers personally. It turned into a meeting point for satisfied and dissatisfied Montblanc customers. I find that exciting.
Bernd Kolb, founder of the Club of Marrakesh and owner of the Riad AnaYela hotel
You successfully started a business in the new economy and led it to the stock market. So you were in the classic luxury customer target group. What did you buy back then and what criteria did you use when you purchased something? With the career I’ve had, there came a point in my life when I was able to afford just about anything that I wanted as far as material things are concerned. As a customer, you expect to receive very intense, joyful consumer satisfaction from all these luxury products. And I have to honestly say the promises and expectations were not fulfilled.
Could you give us a list? It was the classic mix: house, boat, sports car, fashion items – you name it. Typical of the 1990s and the 2000s. However, for me things became disappointing relatively quickly when I discovered after three days that a luxury sports car is just a car. That’s one thing. The other thing is, I quickly became sated. The moment you’re able to say “I can afford anything”, the question arises: what do I want to afford? With all the products I’m capable of owning. I quickly came to the disappointing conclusion that purchasing things didn’t have a large impact upon how satisfying my life
are rich in luxury when you can afford things that have a disproportionate relationship between their cost and reward. A yacht is very expensive and, in fact, you use it so infrequently because its true usefulness really doesn’t exist.
What happens when you realize that one more sports car isn’t going to make you happy?
was. It was a different standard of living, but it had no effect on the actual longing that was, and is, in me. However, I believe that you can only first be the judge of that if you’ve gone through it once yourself. The power of seduction through the “dreams” that advertising is projecting is great, and the greed simmering inside us for glitter and trinkets is large.
But there were some satisfying moments, weren’t there? Anticipation is greater than the pleasure. Actually, purchasing something is already a depressing moment. It’s actually really good that you can’t, for instance, drive a car straight out of the showroom, but may have to wait four weeks for it, because those four weeks are the best moment of the whole process. That’s where the fantasy and the illusion are still perfect. It’s destroyed when they become the reality. The trap that many fall into, and myself included for a while too, is to immediately try to find the next illusion. That is to say, maybe it’s not the sports car. Maybe it’s the sports car collection.
Always wanting more… … it’s like an addiction. The whole thing has nothing to do with needs anyway, because luxury starts when you’re buying and doing things that you really don’t need. When I bought myself my first yacht, the seller congratulated me on having reached the status in life where I was now able to afford a yacht. A yacht is the ultimate thing that you don’t need. You
In my case, I felt a certain amount of emptiness in the sense that, at some point, the fun I had fulfilling the dreams of my youth eventually ended. And when you see how much effort you must invest in order to live in such luxury – when you’re working 14-hour days, seven days a week, having expectations that are never met – because in the meantime I must say: real luxury doesn’t come from luxury products. The next step is to ask yourself, if that’s not it, then what is it? Then we have to talk about all these issues such as true experiences and adventure, perhaps even mysticism, meaning, time, nature and love.
In the end, is it primarily about telling stories? When customers in saturated markets have reached the final stage of Maslow’s hierarchy of needs, Maslow sees physiological needs at the bottom and self-actualization at the top. In the luxury segment, you are often speaking of a desire for “things that money can’t buy”. In the 1980s, you made it possible for your customers to gain access to the driver’s lounge at a Formula One race because the average person is not allowed in there. “Things that money can’t buy” then turned into “things that money CAN buy”. Self-actualization is the ultimate human need and it certainly can’t be reached through “having”, but only through “being”. ● Dr Martin C Wittig and Philip Beil are partners, and Fabian Sommerrock is a principal, at Roland Berger Strategy Consultants. Markus Albers is a contributing editor at Monocle magazine
Dialogue | Jun/Aug 2014
The changing face of Chinese liquors Zhang Liang, president of Luzhou Laojiao Group
Luzhou Laojiao is one of the four oldest liquors in China and, since its formation in 1573, the company has developed a large-scale liquormaking enterprise, based on 36 traditional liquor-making workshops in the Ming and Qing Dynasties. Luzhou Laojiao owns the largest organic liquor-making cellars in the world and the oldest wine cellars in China. With the concept of making the quality of Chinese wine visible, at Luzhou Laojiao we strive to make our product perfect and, as such, we were granted the title “one of the four China famous liquors” in 1952 and were awarded the honour of “famous liquor in China” for five years successively. “Luzhou” was selected for 10 wellknown trademarks in China in 1991. We practice the strategy of “dual brand strategy and multi-brand operation”, and have set the goal of reaching an income of 100 billion Yuan in 2016. But while our brand is well known in China, the management team is on a mission to exploit the overseas market – and we have embarked on a World Tour in a bid to achieve this ambitious goal. We called this “1573 – Love China” and The Louvre in Paris was the first stop on our campaign trail to use the brand to transcend borders. I believe it is important to promote the culture of traditional Chinese wine, to strengthen exchanges and cooperation between Chinese and foreign wine, and nurture integration between Chinese traditional culture and modern Western civilization.
The event in Paris last year was a great success, with various media present to experience the Chinese national brand and this was a very important moment for me. Over the next five years, “1573 – Love China” will carry the historic Chinese culture to New York, Rio de Janiero, Moscow and Sydney, sowing the seeds to the world. This trip will not only promote our tradition (as well as national and international integration), but also strengthen the “1573” brand value proposition to the community. Luzhou has a profound cultural heritage of Chinese traditional liquor business and we have consistently said
that Chinese liquor enterprises must unite and strengthen the exchange of learning. I believe this is a key step for Chinese liquor enterprises to go global as one single company, regardless of its size and influence, does not have the capability to impact the drinking habits of non-Chinese. With the “1573 – Love China “ 2013 Paris conference, China has opened a new chapter in the world of wine culture and I believe that, in a diversified and changing world, culture can connect and bind us like glue. Luzhou is a culture-oriented company and we will face our chances as well as challenges.
Dialogue | Jun/Aug 2014
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focus A brand new world Developing your brand text as a leader? Brands Made With tomorrow’s global culture The golden rules of luxury brands The changing face of luxury brands Brazil gears up to brand itself to the world
Brazil gears up to brand itself to the world With the FIFA World Cup and the 2016 Olympic Games looming, César Vacchiano examines how Brazil’s corporates are preparing to ensure their messages are absorbed by their target clients infographics: laura Hawkins Photograph: shutterstock
How to avoid brand disasters
Dialogue | Jun/Aug 2014
Dialogue | Jun/Aug 2014
Brand Strategy (75.4%)
Engagement Brand Management (59.6%)
Do you know how many “visual marketing impacts” you see every day? If you imagine yourself at Times Square, New York, you’ll be immediately mentally overloaded by more than 100 messages. But wherever we are, as soon as we open our eyes it all starts: from the alarm clock that wakes us up, the toothbrush and toothpaste, whenever we enjoy cereals, bread, milk or coffee for breakfast at home or on our way to work, when we take the bus, metro, car. We face more than 75 brands before lunch every day. But our brain does not necessary recognize or even remember all those visual impacts. “Seeing” doesn’t stand for “remembering” and there is an even bigger distance from “seeing” to “engaging”, which is a shame because this is the number one objective of branding. A nice logo or corporate identity does not ensure the consumer receives the right message from a company, product or institution. This year, Brazil will stage the soccer FIFA World Cup and in two years’ time, Rio de Janeiro will play host to the world for the 2016 Olympic Games and Paralympic Games. As the country prepares to brand itself to the world, the brandScore study, representing the views of 60 key decision-makers in the Brazilian branding industry, shows how corporates in Brazil are gearing up to ensure their messages are absorbed by their target clients. According to the results of this study, almost nine out of 10 companies in Brazil hired an external expert in branding projects. The main projects were brand strategy (75.4%), brand management-tracking (59.6%) and visual identity (55.3%) (Fig 1). Are there any clues that can help companies make the right decision when deciding to select their ideal branding partner? Within the companies and in terms of departments, the main departments responsible for branding projects in Brazil are corporate marketing (32.1%), product marketing (20.8%)
Data in %
fig 1: Projects | Demands
Brand book Brand logo Visual identity (55.3%)
A nice logo or corporate identity does not ensure the consumer receives the right message from a company, product or institution
18.5% 18.5% Brand video
fig 2: DISCIPLINES | WHO DOES WHAT?
KEY: ONLY INTERNALLY ADVERTISING AGENCY ACTIVATION AGENCY BRANDING AGENCY DESIGN STUDIO OTHERS
fig 3: IMPORTANCE (SCALE 1-10 POINTS)
KNOWLEGDE OF CLIENT’S BUSINESS
VALUE FOR MONEY
SUPPLEMENTARY + ARTICLE
Read ‘The reality of Brazilian World Football Cup and the Brazilian Olympic Games’ by Alex Swiec
10 Dialogue | Jun/Aug 2014
Data in %
fig 4: client / agency relationship | who does what? branding / corporate identity
KEY: 100 90
MARKETING SERVICES AGENCY
80 70 60 50 40 30 20 10 0
and the communications department (18.9%). Branding agencies and design studios get most of the work. Few corporates solve their branding needs internally (Fig 2). When defining the “ideal” branding partner, strategy is the most important service attribute that a brand specialist needs to offer. This attribute ranks among the top five attributes when evaluating relationships among agencies and marketers in the UK, Spain, China and Brazil. The study reveals that when professionals are asked to define the concept of the ideal brand consultancy when facing a selection process, the most appreciated attributes are expertise (34.7%), value for money (32.7%) and strategic vision (30.6%) (Fig 3 and 4). The Brazilian advertising market, especially when it comes to branding projects, is becoming a more mature and innovative market (Fig 5). Cannes Report 2013 ranked Brazil as the second most creative country in the world, with more than 114 Lions won by Brazilian agencies in 2013. This year, Cannes Lions Festival will welcome Brazil, celebrating “Brazil Day” on June 19. ● César Vacchiano is president and CEO of Grupo Consultores, which advises the communications market across the globe
Dialogue | Jun/Aug 2014
fig 5: CONSULTANT / CLIENT RELATIONSHIP | INVESTMENT IN BRANDING (LAST YEAR) How much did your company invest in branding in the past year?
More than R$ 3,01 mill.
Between R$ 1 mill. – R$ 3 mill.
Between R$ 500,1 thou. – R$ 1 mill.
Between R$ 300,1 thou. – R$ 500,1 thou.
Between R$ 100,1 thou. – R$ 300 thou.
Average = R$ 1.444
Less than R$ 100,1 thou.
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How to avoid brand disasters
focus A brand new world
Developing your text brand as a leader Brands Made With tomorrow’s global culture? The golden rules of luxury brands The changing face of luxury brands
Rob Gray Journalist and author of Great Brand Blunders, The Worst Marketing and Social Media Meltdowns of All Time… and How to Avoid Your Own
Brands are at once powerful and fragile. The greatest brands, carefully nurtured to be attractive and consistent, are worth billions to their owners because they have real meaning for us, their target audience. We relate to them, are reassured by what they stand for and consider them aspirational. Yet building a new brand or ensuring an established brand remains relevant and appealing are enormous challenges. Consumers expect more from brands than ever. In today’s social media age, people feel a sense of shared ownership. That’s positive and wonderful when all’s going well. However, it’s a different matter when problems arise. Social media is a recurring factor in recent marketing disasters: it’s either where an issue caught fire in the first place or where the flames were fanned to inflict huge damage on brand reputation. So while brands are more potent today, they are also more vulnerable. A roll-call of the world’s greatest brands including McDonald’s, Apple, Qantas, Starbucks, Nestlé, Virgin, Ikea, Microsoft and many others on the global A List can and have made a mess of their marketing from time to time. Here are the worst things a brand can do: 1. Lose faith. One of the world’s top drinks brands got so spooked by the success of a rival that it reformulated its recipe – and then had to scramble to bring back the original product in response to howls of consumer protest.
Brazil gears up to brand itself to the world How to avoid brand disasters
2. Lose focus. Innovation is vital, but so too are values and consistency. Bad partnerships or diluting what you stand for lead to trouble – like the airline rebranding that so upset former UK Prime Minister Margaret Thatcher that her scornful response made national TV news. 3. Over-extend. There’s no shortage of ill-advised or stupid brand extensions, from the jar of food that provoked a backlash because it was given a ludicrous consumer-tech name to the strange case of a toothpaste brand that thought it logical to launch a line of ready meals. 4. Over-promise. A giant car manufacturer over-hyped a new series of cars so much that the reality of the launch proved very disappointing. Sales were so dire that out of desperation, consumers were offered the chance to win a pony if they signed up for a test drive. 5. Alienate its audience. Dissing President Obama, joking about sexual coercion and making light of natural disasters are just a few choice examples of errant behaviour. Offending your target audience is not a smart move. Of course, there’s a rich vein of humour to be mined at the expense of those who have brainlessly invited disaster on themselves. But while there are laughs aplenty, my main purpose in writing Great Brand Blunders was to treat marketing errors and mishaps as an entertaining way to learn. l Great Brand Blunders is published by Crimson Publishing
Buiding a new band is an enormous challenge
Dialogue | Jun/Aug 2014
The classical concept of the open road was challenged, so we had to change perceptions by actively demonstrating the relevance of the Harley lifestyle
Dialogue | Jun/Aug 2014
On the road to success Harley-Davidson took a decision in 2009 to ride out into the unknown and embarked on a journey into the Indian sub-continent, as David Woods discovers Illustration: MIKE JONES
hen it comes to iconic brands, Harley-Davidson could be described as an archetype. The very mention of the name conjures up images of James Dean or Steve McQueen living the American dream and powering off on their bikes down an open road towards exciting new horizons. In fact, the image of the Harley rider oozes the idea of power, authority and freedom; and the popular slogan “God rides a Harley”, while controversial, certainly positions the bike as a product of choice. Fans of the bike have popped up in unexpected places – Pope Francis famously sold his own HarleyDavidson for $327,000 earlier this year at a Bonhams auction in Paris. The price far exceeded the $16,000 to $22,000 pre-sale estimate. A leather Harley-Davidson motorcycle jacket signed by the pontiff also sold for $77,485 this year. The company culture is strong; it’s a case study in branding and it’s fair to say that few companies could boast as many fans that have their logo tattooed onto their very skin as Harley. John Russell, who was formerly the European managing director of the company, once famously said: “HarleyDavidson sells to 43-year-old accountants the ability to dress in leather, ride through small towns and have people
Dialogue | Jun/Aug 2014
be afraid of them.” In short, Harley-Davidson is very clear about what it is selling; and that’s not necessarily just bikes; it’s an image, an experience and a lifestyle. It is essentially selling its brand to people. But in 2009, the company faced a new and daunting challenge – to enter the Indian sub-continent; a country with an equally strong myriad of cultures, far from the “American dream’”– at least that described above – both geographically and metaphorically. This was a country where Harley faced a very real threat that its established iconic brand could actually work against it. Anoop Prakash, who was selected to head the company’s expansion on the sub-continent as MD of HarleyDavidson India, explains: “In India in 2009, there was a high brand awareness of Harley-Davidson, but awareness does not always translate to relevance. There were broad misconceptions about Harley-Davidson customers, originating from the pop culture stereotypes of Arnold Schwarzenegger and Hells Angels on one hand, or older white men with beards, bellies and tattoos on the other. “In India, the classical concept of the open road was also challenged, so we had to change perceptions by actively demonstrating the relevance of the Harley lifestyle.” Prakash, was a man with a more than ambitious plan. But he had the varied experience to back up this ambition, having served as deputy
Anoop Prakash’s top five tips for global leaders “It’s important to find the right talent. You need a diverse and resilient team around you. Communicate frequently and effectively with them to make sure nothing falls through the cracks” “Transferring company culture and values are vital – ensuring the local team adopts the global values and expected behaviours builds cross-border connections and makes them feel like part of one company and team”
chief of staff on former US president George W Bush’s Department of Housing and Development, promoted trade and entrepreneurship at the US Small Business Administration and worked in corporate roles including VP of strategy and development at LexisNexis and business development at Siebel Systems (see box on page 67). “I had a variety of experiences that together helped me navigate the challenges of this role – working in the public sector, building new businesses, retail strategy, and sales and business development. I also had broad Asia exposure, through consulting projects in India and as part of a US trade delegation to China,” he explains. But how much of a Harley fan was Prakash himself? “I grew up in the Midwestern US,” he adds. “And there is a strong passion for Harley-Davidson there. When the snow melts in the spring, the highways around my home would be covered with Harley owners enjoying riding season. Later, when I was in the Marine Corps, I again witnessed the fan following - there is a real affinity for Harley-Davidson across the armed forces, which goes back to the role Harley’s played in WWII.” He
laughs: “I didn’t ride before I joined the company – so I took a HarleyDavidson Riding Academy course and received my license. I think it’s critical that I learned right away, because that’s one of the great traditions at Harley: we ride with our customers, and are often customers ourselves, allowing us to better understand the customer experience.” However, he describes his move to the company as “mystical”. “As a first generation IndianAmerican, I always had an itch to go back to India for sometime and connect with relatives, and live in the city in which my parent’s grew up. Purely by chance, I was speaking to a former classmate of mine from business school who was at Harley at the time, and he mentioned that Harley was working on a plan for India. He introduced me to the Asia-Pacific leadership, and the rest is history. I found I had many common connections with some of the key executives and of course shared the same Midwestern upbringing and values. It was a great fit in both directions.” And so, against the aforementioned challenging backdrop – and with an experienced and enthusiastic leader in
“You have to make your organization as flexible as possible so when surprises crop up, they get addressed before they spin out of control. Train your team to be agile and avoid a structure that’s too rigid” “Challenge orthodoxy. You must be driven by your strategy and do the right thing for the market and customer” “Pick the right partners to work with. You need partners in the region that understand your brand, your market, your history and your values. You need partners that will listen to you and make your brand an important part of their portfolio. This will help you drive volume and deliver the brand experience. And make sure you’re working with honest people”
Dialogue | Jun/Aug 2014
place - Harley set itself the challenge, not merely to sell bikes on the sub continent, but to build them on site. Prakash explains: “Harley-Davidson drew upon previous experiences in developing its strategy for India. For example, we have a subsidiary in China today, but when we launched there we had a sales office, and worked directly with dealers for import and distribution. While this allowed us to reach customers, distributors tend to operate with a short-term view of the business. A subsidiary structure provides the advantage of positive control of the brand and customer experience, which in the long-term is a good return on the investment.” Harley-Davidson India is a wholly owned subsidiary of Harley-Davidson Inc and commenced operations in August 2009. “In India, we established a subsidiary from day one – allowing us to guide the business and brand with a longterm view in mind. There were two major challenges in driving the business forward in India,” explains Prakash. “The first challenge was to make
We wanted to help local people see the relevance of Harley-Davidson and we had to be the ones to demonstrate this the brand accessible given the import tariffs and taxes made the price point of a Harley motorcycle in India almost double the price in the US. “The second challenge was to meet the world class customer expectation – and generally speaking, Indian dealers were not known for delivering the high levels of customer service we wanted
to achieve. Thankfully, with more and more premium brands entering the market, this trend is changing. ‘One of the key strategies toward greater accessibility was the establishment of assembly operations, allowing us to assemble motorcycles from Complete Knockdown (CKD) kits imported from our US plants, thus lowering the import tariff and ultimately the retail price.” And true to its word, Harley started putting motorcycles together at its assembly unit in Haryana in 2011. Prakash picks up the story. “The initial assembly operations started in 2011 when we started assembling three models from our Sportster family,” he says. “We added a further three models from the Dyna family in 2012, three more from the Softail family in 2013. And in 2014, we launched a new global platform called the Street 750, which will be built in the US and India. The India-built motorcycles will be exported to Europe and Asia. Each of these investments created greater accessibility, which helped spur our growth.” And moving to address the
HOG members take to the road during the 2nd India HOG Rally
Dialogue | Jun/Aug 2014
branding hurdle, he adds: “HarleyDavidson is an American company and Indians had a long-standing affinity for American brands, such as Levi’s and McDonald’s. “When we launched here, rather than spending too much energy on advertising, we felt it was a better investment to create events that could provide on-the-ground demonstrations of our lifestyle and culture. We wanted to help local people see the relevance of Harley-Davidson to their own lives. Although we were a ‘foreign brand’ when we opened our assembly plant, we were telling Indian customers: ‘We are here to stay and invest in the market – not just to import and sell’. “We wanted to make it clear that this was a long-term investment for us and inspire confidence in the brand and the purchase. This was particularly important, as other motorcycle brands had entered as importers, only to face challenges and exit the market (like BMW Motorcycles, who has since re-entered) or terminate their distributor (like Ducati, who will re-enter next year). Our investment in a subsidiary, an assembly plant and in appointing a strong dealer network built trust with Indian enthusiasts.” Just taking a look through HarleyDavidson’s press cuttings for 2013 alone shows how hard Prakash and his team have worked to nurture a love of biking in India. It is full of pictures of groups of riders cruising along India’s roads, or testimonials from customers putting to bed the Schwarzenegger stereotype. “We had what we called ‘Founders’ Rides’ where we asked the earliest owners to come ride with us at our new dealership openings – it created excitement and gave the local community a sense of the lifestyle they could now access,” says Prakash. “We also launched a rock music property with Rolling Stone magazine called ‘Harley Rock Riders’, which were a series of ‘rock rallies’. We are providing a stage for independent Indian rock bands to showcase new music and we’re spreading these around India – bringing together our love of bikes and
our commitment to the Indian rock music scene – a further demonstration of the global lifestyle in a locally relevant way. “Last year, the event was set up as a competition where consumers voted for their favourite new band and the winner will perform this year in front of more than 100,000 enthusiasts at the European (Harley Owners Group) HOG Rally in Austria.”
When we opened our plant, we were telling Indian customers ‘We are here to stay and invest in the market – not just to import and sell But in spite of the innovative marketing and PR the company has carried out to translate Harley into India, Prakash is adamant that resilience and focus in the face of scrutiny has always been paramount in his approach. He explains: “Most importantly, we have to have belief in the universal values of freedom and independence our brand represents, and the transformative effect it has on our customers. We will always have naysayers who say the roads aren’t good enough in India for HarleyDavidson or the bikes are ‘too heavy’ for Indian riders. We have to constantly work to position the product and lifestyle as accessible to a broader group.” And in order to find out what is accessible to the Indian markets and other key markets, the company has had to do its homework and carry out expansive research into consumer behaviour. In fact, during the development of the new Street 750 & Street 500 models, the company carried out detailed focus group studies of
3,000 people globally, and 500 of the respondents were from India. Data suggests China is the largest two-wheeler market in the world, with India not far behind selling more than 13 million two-wheelers last year. Of these, 80% are motorcycles, as opposed to scooters (data sources: Society for Indian Automobile Manufacturers - www.siam.in). Prakash explains: “India has a rich motorcycling history and culture where people enjoy travelling and socializing together in groups. Economic development has led to middle class growth here and an increase in leisure time. We are talking to people about using this free time for self-expression and re-discovering their true passions. For many, that includes fond memories of riding an old Yamaha or Yezdi in college, for others they are riding for the first time. “Consumer data has been vital to us as we develop our business in India. It has helped us measure our brand awareness, how we are perceived against other companies and our customers’ preferences and attitudes. When we first entered this market, we didn’t know who our customer would be. But we carry out detailed research – for instance, who are our customers? What do they read? Where do they go?” “This allows us to hone in locally – if we had positioned ourselves strictly based on our initial price point as a luxury product, we would have failed – because it’s not in our DNA. Instead we had to find the balance between being premium, while being accessible.” And does he believe the company has been successful in its Indian expansion? “I think it’s been incredibly good looking back,” he says. “We’ve been here for four-and-a-half years now and we made smart investments early on. Our volumes are growing and we have 1.3 million fans on Facebook in India – second only to the US.” In fact, India is now has the thirdlargest Harley-Davidson manufacturing operation on earth, after the US and Brazil. But in spite of this exponential
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Biography Anoop Prakash is the managing d irector for HarleyDavidson India, where he led the brand’s entry into India in 2009. He is responsible for all sales, business development and marketing activity for motorcycles, parts and accessories, and general merchandise, and oversight of sourcing and plant operations. Prior to taking responsibility for Harley-Davidson India, Prakash served as a senior executive service appointee in the administration of President George W Bush as deputy chief of staff at the US Department of Housing & Urban Development. Prior to that role, he served as associate administrator for entrepreneurial development at the US Small Business Administration, where he led the agency’s efforts to increase technical assistance to entrepreneurs in underserved markets and actively participated in US-India trade promotion. He has held several senior private sector roles in strategy, sales and business development, including as a VP of strategy and business development at LexisNexis, director of business development and alliances at Siebel Systems (acquired by Oracle Corporation) and as a consultant at McKinsey & Company. A former US Marine Corps officer, Prakash holds a Bachelor of Arts degree in Economics and Public Policy from Stanford University, and an MBA from Harvard Business School. He serves as a mentor to the Young India Fellows Program at Ashoka University and as a board member of the United Way of Delhi/ NCR, and is an active member of the Young President’s Organization (YPO), American Chamber of Commerce India and US-India Business Council. He previously served on non-profit boards in the US, including the Indian-American Republican Council, Harvard Business School Association of Boston, and Brainfood, where he was the board chair.
growth and a bright future, Prakash is under no allusions that the story is finished – on the contrary, he believes there is much more work to do. “There is now a strong brand awareness and an appreciation of the lifestyle and product here,” he says. “But we are continuing to work on developing the strong brand awareness and this involves constant outreach. “I would say we’re starting to see the potential now. We will launch the Street 750 in India this year – a HarleyDavidson for the next global generation. This will bring the entry price within reach to many younger enthusiasts and provide a platform for new growth. “Branding-wise, there is a lot of awareness in the 15 biggest cities, but we want to target the tier-two and tier-three cities. We have mostly
Dialogue | Jun/Aug 2014
communicated in English up until now, but we want to talk in the vernacular media and position ourselves slightly differently there.” As Dialogue’s interview with Harley’s “man in India” comes to a close, it is evident that his management style embodies the qualities that his company’s product also boasts – speed, agility, strength, determination and resilience. But in the same way that new technologies improve and enhance the bikes, Prakash wants to evolve and enhance both his own leadership style and the performance of the company. “This job is measured beyond spreadsheets and sales reports,” he says. “It’s about listening to customers. The best part of my job is when people say to me: ‘Thank you for bringing Harley-Davidson to this country and
changing my life.’ On the flip side, the worst day is when a customer will tell me we haven’t lived up to their expectation– this is what drives us every day. “For this reason, talent is important and you need to have the right (and resilient) people around you, who are endeared with the company’s values globally. It can’t be a case of India v HQ, and the experience has to be consistently world-class in every market, every time.” In this vein of flexibility and agility, Prakash’s leadership style is not just about grit and determination in facing the mammoth task of “breaking” a new market with an established product, but also about challenging the leaders in his own company and telling them when a strategy won’t work in his region. “Harley-Davidson is 110 years old and we do many things very well – but it’s important to challenge the status quo and orthodoxy when you know a market operates in a different manner than what has worked elsewhere. There is also a need to segment emerging and developing markets from mature markets at times to ensure the right approach is being taken and for the right reasons,” he explains. But on the other hand, Prakash puts a lot of belief in the company’s established culture in planning the growth of his own branch of the business. He says: “I believe in the power of the alignment of our business and the long-term plan. There was never a doubt in any of the leaders’ minds when we set out here and this allowed us to have a strategy that the whole company stood behind – we needed to have this or we couldn’t have broken through.” In fact, current Harley-Davidson India could be described as similar to that iconic referred to at the opening of this interview: a strong product riding out into the unknown – albeit with a clearly defined roadmap – and it’s Prakash and his team who are powering this machine forward down the Indian open road. This journey has just begun and it is one that leaders and managers around the world will be following with interest.
Can you find your Jackie Kennedy? Building network status to achieve competitive advantage + read more Read Dialogue’s ‘Five pathways to high status’
any people around the world remember November 12, 1963, as the date of US president John F Kennedy’s assassination in Dallas, Texas. As dictated and legitimized by the Constitution and US federal law, Kennedy’s vice-president, Lyndon Johnson, assumed the Presidency immediately following confirmation of Kennedy’s death. Even though Johnson had the title, he didn’t immediately have command of a nation that idolized Kennedy and was plunged into frantic hysteria during this time of crisis and uncertainty. In other words, Johnson became the legitimate president in the eyes of the law, well before he gained the respect of the people.
Status is a perception held by customers, suppliers and competitors that a company is respected and influential. Henrich Greve, Andrew Shipilov and Tim Rowley examine the importance of gaining status by building alliances and partnerships
He acted quickly to confirm his status as the new president using a method that was both brilliant and cruel. In the ensuing chaos of the day, the secret service wanted to move President Johnson from the room at Parkland Memorial Hospital, where Kennedy’s body lay, to Air Force One, which was considered a flying fortress. But President Johnson refused to go until Jackie Kennedy (the former president’s wife) was ready to leave, which meant waiting for President Kennedy’s body to be fully examined and transported. Once they moved to Air Force One, Johnson again refused to leave until both Mrs Kennedy and her husband’s body were on board. Why did President Johnson choose to remain exposed and vulnerable to other possible attempts to decapitate the US government? By putting the wellbeing of the Kennedy family ahead
of the country’s security, was President Johnson simply thinking irrationally? Photographs of President Johnson’s swearing-in aboard Air Force One provide the answer. As the President raised his right hand to recite the oath of office, witnesses crowded around. The photographs show Johnson’s wife, barely visible standing on his right, and Jackie Kennedy, still wearing the coat stained with her husband’s blood, framed perfectly and standing prominently on his left. This ceremony occurred less than two hours after her husband was pronounced dead and not more than 20 feet from her husband’s coffin. From a legal standpoint, Mrs Kennedy didn’t need to be present at the swearing in. In fact, it was also unnecessary to conduct the ceremony before returning to the White House. However, according to Robert Caro
Dialogue | Jun/Aug 2014
Photograph: REX/Everett Collection
writing for the The New Yorker (2012), Johnson seized the opportunity to use Mrs Kennedy’s status to legitimize his Presidency. At this time, many considered the Kennedy family to be the closest thing to royalty in the US, and Americans admired Mrs Kennedy as much as her husband. Standing next to President Johnson served as more than just a symbolic gesture of Mrs Kennedy’s support: her presence confirmed Johnson’s status. Brilliant and cruel, but effective. And like Johnson, your business can gain status by building alliances and partnerships. Status is a perception held by customers, suppliers and competitors that a firm is a respected and influential player in its industry. Status has two main components: operational status and network status. ●● Operational status is related to the actual quality of a firm’s products
Dialogue | Jun/Aug 2014
Network status is a pecking order, which determines relative merit and/or services. It results from how well the firm has delivered in the past and is reflected in its corporate reputation and brand. ●● Network status is a product of the quality of a firm’s alliances, which in turn is judged by whether it has high-status firms as alliance partners. Network status is also influenced by what happens in the firm’s alliances. Do the firm’s
alliances last; are they successful and does the firm behave well as a partner? Network status is similar to reputation, which is better known and understood as a term, but it differs in two important ways. First, an important component of network status is derived from the firm’s alliances. That is, your network status is determined by the company you choose to keep and not to keep. A popular cue used to judge you or your organization’s quality is the quality of those willing to associate with you. The decision-making shortcut is to assume that if high-quality people or organizations are your partners, then you must be of high quality too.
Jackie Kennedy witnesses Lyndon B Johnson taking the oath of office
Table 1: The world’s highest status alliance Partners, 2008-2011 Name
2. Petroleos de Venezuela
Oil and gas company
3. RWE AG
4. Mitsubishi Corp
6. Mitsui & Co Ltd Trading company
7. Itochu Corp
Oil and gas company
9. Mitsubishi Heavy Industries
Shipbuilding and heavy industries company
10. Hitachi Ltd
Engineering and electronics conglomerate
So, having many ties to high-status partners will increase your status – you will be perceived to be of higher quality as well. The opposite is also true. Building an association with a low-status partner will reduce your own status. In some situations, the consequences of low status associations can be devastating. J Willard Marriott, founder of the hospitality chain, understood the power of status when he coined the phrase “choose your friends wisely – they will make or break you”. Second, network status is a pecking order, which determines relative merit. Status involves comparisons, where some will be seen as better than others. We see this idea played out in high school cliques or in caste systems, which establish hierarchies of social classes to separate groups, set relative roles and provide
opportunities for some groups, and impose restrictions on others. Companies do the same. For example, investment banks take status into account when they make syndicates and allocate roles to each syndicate member. High-status law firms are more flexible in market entry than law firms in the tier below them. Status rankings are an extremely powerful force in networks of all kinds including, of course, alliance networks. Some researchers argue that a low-status ranking will lead to low-level performance. That is, status rankings create a self-fulfilling prophecy so that we adjust our effort and performance to fit with our status levels. In the late 1930s, sociologist William F Whyte spent more than three years living among Italian immigrants in the slums of Boston and observed the social dynamics of gang
members. He noticed gang members’ bowling scores were aligned with their relative status rankings. The highstatus gang members were consistently better bowlers. Unless bowling skills enhance one’s abilities to excel at other gang-related activities, it seems that the pecking order influenced bowling scores and the lower status gang members were more willing to lose games to the higher status ones. Investment banks often work together in syndicates to share risk and it is not uncommon for them to turn down invitations to participate with lower status banks. It used to be common to announce syndicates through advertisements known as “tombstones”. The “tombstone” was a list of the banks contributing capital to the new issue. The list of banks on the “tombstone” was organized in a particular order, with the banks playing a more prominent role in the issue listed first followed by the banks that had a less prominent role to play. The tombstones created an additional problem: high-status banks turned down invitations, if their positions on the tombstone did not appropriately reflect the status order of the syndicate members. If a highstatus bank participating in a public offering saw that its name would be listed below the names of other highstatus banks or, worse, be listed below the names of banks that it considered to be of lower status, the high-status bank would lobby for rearranging the names on the tombstone or withdraw its capital from the new issue.
Status has tangible advantages Information advantage: Partners are likely to share more information with the high-status firm. This means that the high-status firm is well informed about what is going on in the industry. The high-status firm also doesn’t need to spend as much money spreading information about its own activities as a low-status firm. Because high status attracts attention, this makes the highstatus firms the trendsetters in their industries and reduces their advertising costs. Ideas of high-status firms
Dialogue | Jun/Aug 2014
ILLUSTRATION: IKON/PHIL WRIGGLESWORTH
Choose your friends wisely – they will make or break you
+ POLL Do you agree that ‘status’ can provide the biggest competitive advantage that a company has?
also become more readily acceptable and their understanding of what is a “good quality product” becomes the industry norm. Cooperation advantage: High-status organizations are attractive alliance partners. Other organizations seek them out for partnerships because they not only view them as highquality partners, but would also enjoy
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a status ranking increase for themselves. High-status organizations, therefore, have greater opportunities to enter alliances and to get more information from their current partners. Their partners are also likely to invest a lot of effort to make sure the relationship works. For example, in the Formula 1 racing competition, carmakers are more likely to make performance-enhancing modifications to
the engines of cars used by the highstatus racing teams as compared to the engines of cars used by the lowstatus racing teams. Power advantage: When high-status organizations make claims or requests, others are more likely listen and acquiesce. This gives them greater influence in their industries. Since a high-quality employee would much rather work in
Chubu Electric Power Co Inc
Mitsubishi Corp Sumitomo Corp
Mitsubishi Heavy Industries
Mitshbishi Auto Lease Hldgs Co
Alternenergy Philippine Holdings
Mitshbishi Motors Corp Shikoku Electrtic Power Co Inc LG Corp
Kyushu Electrtic Power Co Inc Petro Vietnam Amco Co Ltd San Miguel Corp
TEPCO Hitachi Ltd
Long Tao Energy Holdings Co
Sharp Corp China Datang Corp
SongDa Invest & Constr JSC
Corpoellec KDB Value VILLC
ENDE PTNuansacipta Coal Investment
STX Corp RWEAG
Tenaga Nasional Bhd Thyssen Krupp AG
Zenel Co AMECPLC
Yellowcake Mining Inc
Figure 1 KEPCO Alliance Network
a high-status firm than in a low-status firm, the employee is more likely to accept lower wages from the highstatus firm. Lenders prefer to lend money to high-status firms because they expect them to repay more readily. This is why lenders are more likely to agree to high-status firms’ requests for lower borrowing costs.
The highest status companies Which is the highest status company in the world? You won’t find the answer to this question on Wikipedia. But we can answer it using alliance mapping tools we’ve developed based on data for 15,000 firms that announced alliances between 2008 and 2011. Recall that the status of a firm is a function of the status of the firm’s partners and
that of its partners’ partners. So, to answer the question about the highest status company in the world, we need to look not only at which partners each firm has in its alliance portfolio, but also whether the firm’s partners have connections to high-status partners of their own. Table 1 shows the ranking of the 10 highest status firms in the world according to our research. As it turns out, this list does not include Google or Microsoft or even Apple. The highest status firm in the world is called Korean Electric Power Corporation (KEPCO). Figure 1 shows KEPCO’s alliance network. Because KEPCO works with many other highstatus firms such as Sumitomo Corp, ThyssenKrupp, Toshiba and firms from the Mitsubishi keiretsu, such
as Mitsubishi Motors and Mitsubishi Heavy Industries, new partners are willing to do business with KEPCO. This allows the company to expand into emerging markets as varied as Vietnam, the Philippines, UAE and Venezuela. KEPCO’s revenues from worldwide activities amounted to a very respectable $39 billion in 2010.
What about low-status organizations? Although low-status firms find it more difficult to find alliance partners, some can still connect to highstatus firms if they can offer something unique to them. Consider the case of Electromode, a South African music label. It was able to enhance its status by partnering with high-status firms. As compared to the big players in
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the music industry, like Warner and BMG, Electromode is definitely a lowstatus firm. Faced with the reduction of revenue from the traditional music media of CDs and cassettes and a slow increase in revenues from digital products associated with music (song downloads or artist-branded paraphernalia such as digital wallpaper), Electromode wanted to identify a new business model. The new idea came when the company’s owner decided to combine elements that were not connected before. He decided to bring together music artists, major consumer goods brands and companies with social media data mining expertise. Departing from the traditional sponsorship model, Electromode decided to transform itself into a music advertising agency that heavily relied on social media to reach its audiences. It capitalized on its knowledge of music tastes in South Africa and used this to approach global consumer goods companies such as Puma and Nestlé. Instead of creating commercials in which artists would explicitly promote a company’s product, Electromode suggested that the artists adopt the product as a part of their personal expression in the social media space. It proposed that the positive aura around the artists created by its social media followers would then result in a positive aura about the consumer goods with which the artists associated. To capture the resulting buzz around the product (or the company brand) and provide the client (Nestlé or Puma) with this information to use in determining the return on its marketing spend, Electromode planned to used web-data tracking firms. Using this business model, “Cone Like a Rock Star” was one of the most successful campaigns produced by Electromode. This campaign involved connecting Lonehill Estate – one of the top performing South African bands – with Nestlé, the global food and consumer products company based in Switzerland. Nestlé’s objective was to promote selling its waffle cone ice cream products. In the summer of 2012, Lonehill Estate
Dialogue | Jun/Aug 2014
agreed to perform in Montreux, Switzerland. Its South African and worldwide fans were asked to make funny web videos where they would “cone like a rock star” (in other words, sing or dance to a band’s music with some imagery of a cone around them). The fans also voted for the best videos, whose authors were invited to accompany the band to its concert in Switzerland. The campaign generated many funny videos that indi-
Status rankings are an extremely powerful force in networks of all kinds rectly promoted Nestlé’s products, including people dancing with the highway yellow cones on their heads, having their faces poked with ice cream cones, etc. Many of them were posted on the Facebook page “Yes, We Cone [With Nestlé King Cone]” and the band itself posted heavily followed videos about their stay in Switzerland. After the trip, the “Yes, We Cone” page was transformed into the Nestlé fanclub community and the web data analysis firm provided Nestlé with research showing how the brand’s positive visibility and buzz from the fans increased. Essentially, Electromode became the hub in the portfolio and the artists, consumer goods companies and web data analysis companies became the spokes. Despite Electromode’s low status, its deep relationships with South African artists made it an attractive partner for Nestlé, a high-status firm. Electromode was also able to use its relationships with the web data analysis companies to show global consumer brands their return
on investment. For our five pieces of advice on achieving high status, visit www. dialoguereview.com
Going forward You have to recognize that building alliances takes time and you’ll have ups and downs. When you remain committed, you demonstrate the long-term perspective associated with high-status firms. Obviously, developing a track record for being a good alliance partner is a long exercise. But, remember that status is a durable source of competitive advantage and once you build status, it becomes difficult for others to copy. After you have put this journal away, it might be time to develop a plan for how you can find your own Jackie Kennedy (or Nestlé). The journey might be long. But the resulting status advantage will definitely be worth it. l Henrich Greve and Andrew Shipilov teach strategy and entrepreneurship at INSEAD, a global business school with campuses in Singapore, France and Abu Dhabi. Tim Rowley teaches strategy at the Rotman School of Management, University of Toronto. They are the authors of Network Advantage: How to Unlock Value from Your Alliances and Partnerships Further reading Annals of History, “The Transition”, The New Yorker, Robert A Caro, April 2, 2012, p32 Street Corner Society, William Foote Whyte, 1943, University of Chicago Press Network location and learning: The influence of network resources and firm capabilities on alliance formation, R Gulati, 1999, Strategic Management Journal, 20(5) What’s in it for them? Advantages of higher status partners in exchange relationships, F Castellucci, G Ertug, 2010, Academy of Management Journal, 53(1) 149-166 A status-based model of market competition, J M Podolny, 1993, American Journal of Sociology, 98 829872
Itâ€™s time to reshape capitalism and save the planet Climate change is here to stay â€“ there is no going back to the way things used to be and so we have to change the way we live to deal with this new reality. Chandran Nair tells Liz Mellon a different conversation is now called for Illustration: Michelle Thompson
Dialogue | Jun/Aug 2014
Chandran Nair Founder and CEO of The Global Institute For Tomorrow (GIFT)
handram Nair is founder and CEO of the Global Institute for Tomorrow (GIFT), which looks at why the 21st Century is very different and uncovers fresh ideas for how global societies should organize. Nair challenges conventional thinking. He dislikes the intellectual dishonesty that passes for the currency of our times and the endemic dumbing down of serious issues to political sound bites. His first book, Consumptionomics: Asia’s Role in Reshaping Capitalism and Saving the Planet, was named one of the top 50 Breakthrough Capitalism books in 2012 and has been translated into several languages. He is interviewed for Dialogue by Dr Liz Mellon. Liz: We have always believed that a public good, such as clean air, should be legislated by government, leaving private enterprise free to compete and create wealth and jobs, as long as companies comply with the regulations that underpin the public good. Has that changed? Chandran: It has. The basic public good-private enterprise model is still intact, but global political leaders, serious people who should know better, fudge the issue. No one wants to lose votes, so we pretend that individual or company carbon offsets will reduce the effects of climate change. Even if they could – which is dubious – we are beyond that point. The IPCC has just told us that it’s no longer about simple mitigation – it’s about adoption
Dialogue | Jun/Aug 2014
of entirely new practices. Climate change is here to stay, there is no going back to the way things used to be and so we have to change the way we live to deal with this new reality. We need a different conversation and a more honest narrative.
+ POLL Do you think it’s time humanity reversed the rush to urbanization and settled instead on a simpler, self-sufficient life?
Liz: But haven’t we learnt from our mistakes? Can’t we help the BRIC, N 11 and MINT economies to industrialize better and smarter than the US and Europe did? Chandran: It’s been fun to focus on the Chinese because that’s what the liberals want. India, on the other hand, seems to get a free pass despite its serious problems with pollution because it’s a democracy. But the Chinese, Indians and the other emerging economies are not the problem. They are simply playing the game that they learned from the West. The West industrialized and then, 150 years later, started cleaning up its pollution. The West embarked on global colonial expansion and took what it wanted, from resources to people. Who are they to blame the Chinese if they are playing follow my lead? Of the four billion people in Asia, the 700 million middle-class consumers have already rocked the world by aping Western consumption patterns. They provide growth, while
Liz Mellon Chairman of Dialogue’s editorial board
many Western economies stagnate. But we can’t expect billions of Asians to consume enough to kick-start the global economy, while at the same time reducing the emissions that fuel global growth. That is both unfair and unrealistic. It’s convenient to distract ourselves with scare stories about the Chinese, but why should they act differently? At least they are not taking everything for free – for example, they are bringing trade and investment in exchange for the resources they are extracting in Africa. And it is useful to remember that the global commodities trade is still very much in the hands of the developed world. The so-called ABCD group, for instance, of ADM, Bunge, Cargill and Louis Dreyfus control between 70% and 90% of the global grain trade. Liz: But doing nothing is not the answer either. When you can’t see across the bay in Hong Kong or see your hand in front of your face in Singapore, we are all too painfully aware that, as you say, climate change is irreversible. We need firm action and we need it now. It’s a shame that China is late to the game, but surely it’s not a game we should any longer be playing? Chandran: Focusing on Asia as the “bad boy” is a convenient distraction. The real culprit is the voodoo economics exported from the West and that we all now practice, not just Asians. Let’s take a basic human need – food. Why do you think you had a recent horsemeat scandal in Europe? Because, as a supermarket, being competitive means offering a wide range of food, mostly out of the local growing season and as
Biography Chandran Nair is the founder and CEO of The Global Institute For Tomorrow (GIFT), an independent pan-Asian think tank based in Hong Kong. Mr Nair was chairman of ERM in the Asia Pacific until March 2004. He established the company as Asia’s leader in environmental consulting with a presence in 12 countries in the region. Clients included many Fortune 500 companies, multilateral agencies such as the World Bank, the UNEP and the ADB, as well as governments. He has been involved in a wide range of projects including natural resources master plans, power generation, waste management (landfills and incineration), energy efficiency, air quality, fisheries, environmental impact assessments, audits and numerous policy studies. For more than two decades, Mr Nair has strongly advocated a more sustainable approach to development in Asia, and has helped governments and corporations instil these principles into their key decision-making process. He has worked and travelled extensively; corporations seek his advice on how to meet the challenges of doing business in Asia and of globalization, on investment geopolitics, leadership development, ethics, sustainability and corporate social responsibility. He has addressed many of these issues at forums around the world, notably at speaking engagements in London, New York, Sydney, Tokyo, Beijing and all the major Asian capitals. Major forums he has spoken at include Organisation for Economic Co-operation and Development (OECD), Asia-Pacific Economic Cooperation (APEC), World Economic Forum (WEF), Asian Financial Forum (AFF) and TEDx. He writes frequently and his articles have appeared in international publications including The International Herald Tribune, New York Times, China Daily, Financial Times and The Guardian. He has been interviewed on many of the leading television channels in the world, including the BBC, CNN, CNBC, Bloomberg, Channel News Asia, Deutsche Wella and CCTV. His first book is entitled Consumptionomics: Asia’s Role in Reshaping Capitalism and Saving the Planet, which was published in December 2010. It was ranked as one of the top 10 books of the year for 2011 by The Globalist and one of the top 50 breakthrough capitalism books by The Guardian. The book has been translated into German, Chinese and Bahasa Indonesian. Mr Nair has served as adjunct professor at the Hong Kong University of Science and Technology’s School of Business, running a course, “Leading in Asia for the Future”, as part of the HKUST MBA programme and also is an adjunct professor at the Lee Kuan Yew School of Public Policy. He has been an adviser to the Prince of Wales International Business Leaders Forum, the World Wildlife Fund in Asia and to the Jane Goodall Institute. He is a fellow of the Hong Kong Institute of Directors. He is also a Fellow of the Royal Society of Arts. A keen sportsman, Mr Nair managed the Hong Kong hockey team for seven years, taking it to the 2002 Asian Games in South Korea. He plays the saxophone and used to head a band in Africa where he worked as a volunteer for three years, building rural water supply and sanitation schemes. He has lived and worked in Asia, Europe and Africa.
Around 15 million tonnes of food in the UK and at least 90 million tonnes across the EU are wasted as a whole each year cheaply as possible. The only way to do this is that everyone cheats in the supply chain. If you are flying bananas across the world and the consumer expects to pay only 20 pence or 24 cents for each one, then you have to cheat somewhere along the line to supply them that cheaply. With meat, it was mixing beef or pork with horse in order to be able to supply the meat at a bargain price, when all the other inputs had gone up in price. And don’t even get me started on the topic of Buy-One-Get-One-Free offers in supermarkets. Buy-One-Get-One-Free and other incentives encourage the consumer to spend money in order to seemingly save money – but the savings are illusory. Most of the extra food that is bought gets thrown away. In April 2014, a UK Government study showed that consumers in industrialized nations waste up to 222 million tonnes of food a year, which is equivalent to nearly the entire level of net food production of Sub-Saharan Africa. The House of Lords EU Committee said that food waste in the UK and EU was “clearly a huge issue” and condemned governments for not doing enough to tackle it. Around 15 million tonnes of food in the UK and at least 90 million tonnes across the EU are wasted as a whole each year. The West subsidizes food production and consumption, and then gets surprised when there is waste – it’s an inevitable outcome of voodoo economics. The real crisis is that this model
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crisis, like a war, nations pull together and re-direct resources away from individual consumption into public goods – sadly, in the case of war, the public goods are weapons. But where is our global sense of crisis today? The problems, in as far as we acknowledge them – and even climate change remains contested today – are always someone else’s fault. Yet you are recommending a policy of global accountability?
has arrived in Asia too and resulted in huge conspicuous consumption and food wastage in a region where there are still hundreds of millions of people who are malnourished. Liz: Wait a moment. I get the point and it’s exactly why I don’t have bottled water at home or in restaurants, when there’s perfectly good Chateau de la Pompe available. In fact, tap water also works in most reasonable Indian hotels too these days. But what do you mean by food subsidies? We do support our farmers through the European community, but it’s a vicious circle. We have to support them because the prices in the supermarkets are too low to pay them a living wage. So are the supermarkets – or even capitalism itself – to blame? Chandran: I point my finger straight at the consumer – in other words, at you and me. The consumer is treated as some kind of sacred animal when in fact most of us are prone to behaving like idiots, lemmings prey to the next must-have fad or brand. We demand shampoo that comes in five brands and 10 differently coloured bottles or cheap food that we stuff ourselves with and we want this and next year’s goods at last year’s prices. As a whole, we are making bad decisions and only the public sector, governments or inter-governmental bodies can take
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the unpopular decisions that result, ultimately, in radical changes to our lifestyles. We are in denial. Most people won’t be “good” just because they know they should. Most of us need regulation and legislation to curb our endless appetites and ability to behave badly. We need new, tougher rules for a constrained 21st Century. As humans, have we lost the will or chance to change? Smog isn’t just China’s fault – it’s all our faults and we should all pay. Instead, we all want cheaper goods made in China or Bangladesh. McKinsey has predicted that there will be 1.5 billion cars in the world by 2020. If Asia reaches Western levels of car ownership, that number will be three billion instead, and just keeping that number of cars on the road would require four times OPEC’s current output of oil. Even as it is, the World Health Organization predicts road accidents will be the third leading cause of death by 2020. We simply can’t allow it. Instead, we need to create a globally shared model of prosperity and normalize human lives across the planet. Liz: Isn’t this Utopia beyond the grasp of most of us? Haven’t we already proved that communism doesn’t work and that capitalism is pretty broken too. So what is the vehicle that can ensure global enforcement of a simpler individual life for us all? In a
Chandran: I never said the execution would be easy. What is easy is identifying what needs to be done and the steps we need to take. There are two steps we should take immediately. The first is to elect political leaders with the will to take action, rather than the will to get re-elected. The ideological struggle between East and West is an unhelpful distraction. The future of humanity in the 21st Century depends upon equal access to resources. We already have too many p00 burger, a burger which takes into account the 55 square feet of rainforest and the 2,393 litres of water that it takes to produce it. Real pricing, not subsidized pricing or exploitative pricing, which ensures that we have underfed children and underpaid adult workers at the same time as endemic obesity in the Western world and rising obesity in the developing one. Underpinning all of this is our apparently insatiable desire for variety, as long as it’s cheap. No more Buy-One-Get-One-Free’s encouraging us to buy what we don’t need at prices that don’t anywhere near reflect the cost of production. Sadly, an entire generation of young people is currently being taught just these tactics at business schools around the world. Liz: In the UK today, the Trussell Trust estimates that one million people will rely on food banks in 2014. How can these people, without even a sustainable amount of disposable income, survive if they have to pay the “real” price of the food they eat?
Everyone should have the right to safe food; to water and sanitation; to low-cost housing; to energy; to public health; and to education Chandran: That’s a common reaction to the suggestion of re-pricing, but, in fact, the truth is that it is the poorest who are most severely negatively affected by global underpricing. Climate change, which will affect the poorest the most, is a good example of this. This is a more complex issue than we have time to go into fully. But simply put, what the poorest own and have to offer – that is, access to basic resources like land, food and water – is either taken away or made essentially free, so that the middle-class can consume more and more. We have taken what should be the most valuable commodities, because they are the ones that make possible all economic activity and made them cheap in order to produce vast quantities of things we do not need to keep the current economic model going. As a result, we have developed a skewed notion of even human rights where the need, not the right, to consume is considered more important than other much more fundamental human rights like access to clean water and safe food. For example, car ownership is not a human right. Car ownership should be made very expensive in cities and we should tax the hell out of it everywhere else too. People’s livelihoods are being taken away because they have no control over ownership of fundamental resources. Take urbanization for example. Most cities are dumps, over 90% of urban growth takes place in the developing world and one in three urban dwellers there live in slums. Why should people move into them and so lose contact with their ability to grow the food that they
need? The catfish has disappeared from Asia – so we want more roads? How does that add up? We need to change our definition of what progress looks like. The US invented debt, but what’s wrong with paying our way as we go? The Rockefeller Foundation trains Cambodians on carbon saving, simultaneously feeling good about what they are doing and exporting the problem at the same time. Look in your own backyard for the problems, don’t look at Asia. We can’t let kids today grow up like their parents, because the model is unsustainable. We cannot do this century the way we did the last.
Liz: This conversation makes me think of models of industrialization that have been founded on egalitarian and philanthropic principles, like the Quakers. Port Sunlight was a garden village of houses built for workers at the Lever Brothers (later Unilever) soap factory in the UK, where workers had everything from a hospital to an art gallery to provide for their welfare. So, if car ownership is not a human right, then what is? In your view, what is the new list of fundamental human rights that we need to consolidate in a kind of global constitution, agreed between governments? Chandran: Everyone should have the right to safe food; to water and sanitation; to low-cost housing; to energy; to public health; and to education. Four hundred million Indians welcome darkness at 7pm each evening because there is no light bulb. Herbicides
contaminate ground water and 70% of the world is unsewered. The Arab Spring was sparked by lack of food. Freedom of speech comes a long way down the list under those six, which we need to get in place first. Education is central, because these ideas can be legitimized and socialized through education. We have proven that trickle-down economics – relying on the rich to spend and hoping it trickles down to support the poor – doesn’t work. Instead, the poor get poorer and the rich get richer. Politicians speak in generalities and mouth platitudes like “green growth” and “eradicating poverty”. Pop stars use the cloak of philanthropy as a way to launder ill-gotten gains and to build their own celebrity. No. Let’s get real. Let’s redefine prosperity, re-price resources and redefine freedoms. Then we stand a chance of survival. Liz: Thank you, Chandran, you never disappoint. We really want to throw this open to readers to engage with us in Dialogue. What do you think of Chandran’s six fundamental human rights – what would you add and is there anything you would take away? Where are we going to find politicians with the courage and authenticity to redefine our global system, starting at home? Do you think we should reverse the rush to urbanization and settle instead on a simpler, self-sufficient life? Let’s hear your views... email us at firstname.lastname@example.org
+ POLL Chandran Nair suggested six fundamental human rights are: safe food, water, sanitation, low-cost housing, energy, public health and education. What would you add to this list?
Dialogue | Jun/Aug 2014
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Managing the volunteer mindset Leaders in the voluntary sector have a knack of engaging and motivating people to work for free. Marla Tuchinsky and Thomas Hughes find out how theses strategies can be successful in a corporate setting Illustration: Michelle Thompson
magine if every December you had to recruit, motivate and organize 7,000 volunteers working in two-hour shifts to sort, wrap and correctly tag almost 67,000 holiday presents for kids – a specific present requested and delivered to each specific child. And that’s after having collected, assembled and distributed close to 15,000 back-to-school backpacks just a few months before. Queen Elf of Family Giving Tree, Jenn Cullenbine, and her team do this year after year. They are so successful at getting people to donate their time, effort and money, that Cullenbine actually has more volunteers every year than she can use. Alternatively, imagine you were responsible for constructing a new church building, but had little money to pay for most of the work on the $3 million project. Yet, you still managed to get it built on time, on budget and with half the labour coming from people who didn’t even belong to your congregation. Reverend David Bradbury of the Anglican Church did just that. How do these leaders get people to work hard, doing what needs to be done, in their personal time, repeatedly and for free when many managers cannot even coax their paid employees to do the jobs they were hired for? More and more, we hear from middle and senior managers that their younger employees act like showing up and working is doing the manager a favour, as if they are volunteers. These
managers are finding it harder to motivate and focus their teams than it was 10 or 15 years ago. They are paying these employees, offering good benefits packages, and yet the employees give little discretionary effort.
Those who manage volunteers successfully concentrate on creating the experience What are people like Jenn Cullenbine and Reverend Bradbury doing to inspire enthusiasm, labour and loyalty? Not-for-profit organizations (NFPs) rely heavily on volunteers (people who are not paid or who are paid relatively little for their time and effort) to accomplish their mission. If NFPs cannot attract, retain and use their volunteers well, their organizations fail. We decided to ask these leaders for their advice on managing and engaging volunteers. We believe these same strategies also work well in a corporate setting. We interviewed a varied set of people around the world who work in
the NFP sector. Most also volunteered with one or two other organizations. So, what should Gen X and Boomer leaders be doing more or less of, if they want to manage Gen Ys (and all their other employees) more effectively? A combination of culture, leadership and day-to-day management makes the difference.
Culture: create the experience As leaders, we have the ability to shape the culture in which we and our teams work. The environment we create communicates our values, sets a tone for behaviour and attracts or repels people. Think about a situation you have been in where you checked your watch every few minutes, feeling oppressed and put upon, wanting desperately to leave, but feeling obligated to stay. Now, think about a situation where the time flew past, where you were stimulated by the people you were with and what you were accomplishing. Which environment would you rather visit and spend time in regularly? Which would your team members want to spend their time in? Those who manage volunteers successfully concentrate explicitly on creating the experience. They think about the physical environment that they bring people to. They consider how best to express the mission and outcomes – that is, what the volunteers’ efforts will accomplish – and make sure the volunteers understand what the experience will be like. They
Dialogue | Jun/Aug 2014
+ POLL Do you agree that in the business world all members of staff should be treated as ‘volunteers’ to the organization, even if they receive a pay cheque?
try to make the people feel welcome, valued and useful. Volunteers’ roles have to fit what they want from the experience. A former CEO of an organization running support centres for the homeless noted that feedback and connecting people to the right tasks is essential. She told us about a volunteer in another NFP who had worked on an arts campaign. The volunteer had been a teacher, so the staff gave her a project relating to arts education. After a week, the CEO checked in with the volunteer. The volunteer revealed that she had been away from education for some time due to health issues. She indicated that she had really preferred to be doing administrative tasks. The CEO made the job shift and the volunteer thrived. “She had the place shipshape in no time.” The volunteer was able to make a difference in a way that matched the experience she wanted.
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Another way to shape the experience is to set clear expectations and standards. We heard from several of our interview subjects that they negotiate a “volunteer agreement” with people, setting out what the volunteer will do and by when. The NFP staff support and train their volunteers, then trust them to do the work. They allow autonomy where possible, check in periodically and set people up to succeed in the tasks. Flaminia Mangone noted that The Nature Conservancy has volunteers working side-by-side with paid staff, even when doing hands-on controlled burns in forests. Those volunteers are trained just like full-time staff and are expected to act safely and appropriately during that experience. These NFP leaders strive to create a culture that values accountability and results. People must want to be there and feel included. And, they also need
to know that there are standards to meet. As one interviewee noted, when she herself volunteers, “the staff takes it seriously, so I feel I should as well”. The people who come to work with those organizations know their efforts have a positive effect and are pleased to be part of something great. They are looking for an experience where they can use their skills (or learn new ones) to make a difference. The cultures that attracted and retained their volunteers were ones where the managers respected people and the time they were offering. The cultural values mirrored the organization’s mission, and promoted dignity and respect for those involved. The leaders explicitly focused on the experience they were creating for all stakeholders: is it a positive one? Does it meet people’s needs for being in a group, or growing as a person, or making a difference or feeling heard
At the Intersection of Culture and Vision: Several leaders we interviewed spoke about an important shift in volunteers’ expectations. In the past, people who worked with NFPs would commit to a long-term relationship with an organization, contributing wherever needed. Today, an increasing number of individuals and organizations are looking to do charitable events: a corporate give-back-to-thecommunity day or a single teambuilding event. NFP leaders welcome the contributions people make this way, but also acknowledge that this kind
and touched? Were the volunteers’ skills used well and efforts appreciated? Were they greeted with a smile and a hello, or instead did the manager just bark orders at them?
Leadership: share your passion People want to be part of something meaningful and they want to be part of a winning team. “Of all the events that engage people at work, the single most important – by far – is simply making progress in meaningful work,” noted researchers Amabile and Kramer in their 2011 New York Times opinion piece. People look to their leaders for inspiration and direction – where are we going and why? In the NFP sector, a critical piece of advice was to have a clear vision and communicate it well. Be sure to communicate where the project or organization is on the path, what the end state looks like and why it matters that they succeed. Remember Reverend Bradbury, the leader who led his parish’s efforts to build a new church? It started out just as a new church, but morphed to include community space and
of volunteerism raises challenges. How do we create a one-off event that is consistent with our vision and provides an experience we want associated with our organization? If many volunteers are only doing events, then where do we find enough volunteers to manage the day-to-day “business” of the organization? One of the executive directors we interviewed said even when she needs people to staple flyers, the key is to acknowledge that it is menial work and to explain clearly how that work serves the mission
meeting rooms. It was built in two years, on budget and almost entirely by volunteers, many from outside his congregation. He cited two factors that helped: first, he went around to community groups, told them what the project was and asked for help. He shared the vision and how the project would fit into their community. Second, at the end of each project stage, they had some form of a celebration. They recognized where they were and reaffirmed where they were going. These events provided an opportunity to remind people of the vision, their role and what to do next. The events were a way for Reverend Bradbury to share his energy and focus. Leaders who can connect the work to a larger vision help people feel engaged. Lisa Wardle twice worked for the organizing committee for the Olympic Games. For the 2002 Winter Olympic Games, they had more than 20,000 volunteers working long hours on a fixed schedule over three weeks. They directed traffic, took tickets,
– how stapling flyers will lead to a child getting educated. The implication for managers is clear: Boomers and Gen-Xers might be willing to be the “staplers” of the workforce, doing what needs to be done simply because it needs to be done. Millennials might not unless persuaded that they are helping brighten a child’s future, or providing clean water to a village or whatever your organization’s equivalent is. They are serial volunteers and they will likely be serial employees unless they can find a connection to a real purpose.
hauled trash, operated elevators or other such jobs – for hours and hours at a time. Sometimes those volunteers were standing out in the cold for those long shifts. In exchange, they got free burgers, pins and a watch. Yet, those Games had zero attrition in volunteers. Zero. She credits the clear, simple vision set for those games: “Best Games ever.” That vision set the positive, aspirational tone for all the leaders, all the staff and all the volunteers. Communication about the purpose is essential. The other part of leadership is sharing your energy and passion about what you’re doing. Passion is contagious, just like laughter and yawns. We spoke to an executive director who said after he listens and asks questions to understand someone’s interest in volunteering, he then explains why he got started in the NFP sector and what he loves about the community he serves. We spoke with others who shared similar stories, including a gentleman who as a young man spent two years on a Mormon mission to an American Indian reservation. Seeing people who were truly in need led him to a career where he could help change people’s lives for the better. He did that work for 37 years, ending his career as head of a large humanitarian aid organization. Sharing their purpose and the
Dialogue | Jun/Aug 2014
passion driving them helps these leaders connect to others and get others excited to join the organization’s work.
Build a relationship and grow together Many of us have been lucky to encounter amazing leaders – these are leaders who others point to and say, “I’d follow that person anywhere,” and they mean it. It comes down to establishing a strong relationship: sharing a vision and understanding what role that other person can and would want to play. Relationship management is a core leadership skill. In order to match people to roles and create the experience they’re looking for in a way that meets the organization’s goals, a leader needs to know his or her team. They need to connect as people, not just as role-fillers. Our NFP experts made it sound simple: ask people questions and listen to their answers. Ask why they want to volunteer. Ask what they would like to do or try. Ask how it’s going. Ask what they have seen elsewhere that might work here. Then, pay attention and listen to the answers. When an executive director was new to his community, he met with Sarah (one of his staff) about holding a young leadership programme. Having run them before, he laid out his plan and asked her what she thought. “That won’t work here,” she said. He replied: “Okay, so how do we make one that will?” Together, they reshaped the approach based on Sarah’s input. Strong relationships rely on feedback going in both directions. Our experts advised to find out from the people doing the work what is going well and what else might be needed. We heard over and over that many volunteers are there to learn new skills or to get to practice existing skills. So, the better-run NFPs offer training to staff and to volunteers. They help their people try new activities and support and coach them as they learn. Not coincidentally, getting to develop skill mastery and grow additional skills are two features of motivation and
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engagement, as Dan Pink explained in Drive and large-scale engagement studies have found. Providing opportunities can be a great recruitment tool as well. A distinguished giving director related how she “recruited” one of her best volunteers: she was having dinner with a friend. Her friend’s brother came by, but was preoccupied, having heard that a colleague had been diagnosed with breast cancer. The
Leaders who can connect the work to a larger vision help people feel engaged director, herself a survivor, invited the brother to a planning meeting for a cancer-related fundraiser. He came and joined a logistics committee. The next year, he asked to take a lead role, even though it would require public speaking. This man was an introvert who sat behind a desk at his regular job. But he knew he’d get advice and support whenever he needed it. He did so well, he won a volunteer award. After three years of trying new roles and gaining fresh skills as a volunteer, the man decided to buy his own business, something he never could have done before. Due to the training, growth and support the NFP offered him, he is a committed and now more skilled volunteer who is there for the Giving director, for whatever she needs whenever she needs it. The director allows people to try doing what they are not initially qualified for, ensures they know that they have whatever support they need to succeed (and then really does provide that support to them), recognizes and rewards their achievement,
and builds a relationship over time. A final piece of advice was to let people know you appreciate them. Recognize what they’re doing and the contributions they are making. This is a particularly powerful opportunity for the leader to do something that blends all three principles outlined in this article: ●● Acknowledging achievement, effort and contribution is an important part of a culture – it demonstrates the leader’s and the organization’s values and enhances the workplace experience ●● By connecting the thanks or praise to the “why” of the organization, leaders can reinforce the vision and their own authentic passion for it. Say something like “I want to thank you for _____. It has added significantly to our ability to fulfil our mission of ______.” Linking thanks to outcome deepens the mutual commitment to the mission ●● Appreciation strengthens the parties’ commitment to one another, provided that the form of recognition is aligned with the recipient’s desires for recognition. All of the advice from our NFP leaders seems straightforward: give people meaningful work, in an environment they feel comfortable in, with a chance to learn, grow and be treated with respect and appreciation, and on a team led by an energizing leader who communicates vision and goals clearly. Anyone who works chooses how much discretionary effort to give. People choose whether or not to share a new idea, or work a little faster, or help another team member. In that sense, all managers are leading volunteers, even those who get a paycheck. Acknowledge that, apply the lessons from our NFP experts and see how much more engaged your people will be. l Marla Tuchinsky began working with Duke CE in 2002 and is involved indelivering executive education strategies and programs for corporate clients. Thomas Hughes is an organization development, learning and development consultant
Evaluation challenge The science and art of receiving feedback as a way to improve performance management within organizations is examined by Sheila Heen and Douglas Stone Illustration: cAMERON LAW
onest performance conversations don’t happen – at least not as frequently as they should. It is a complaint that crosses industries, spans geographies, runs up and down the hierarchy, and suffuses organizations large and small. Candid conversations about performance are avoided, softpedaled or stumbled through. In fact, according to a 2010 study on the State of Performance Management, a survey of 750 HR professionals by Sibson
Consulting and World at Work, 63% of executives believe that the biggest challenge of performance management is managers’ unwillingness to have difficult conversations. And, according to another study by Globoforce (2011), even when managers tackle them with the best of intentions and a solid set of skills, employees are often left feeling resentful or discouraged – 55% of employees believe their review is inaccurate or unfair, and one in four say it is the thing they dread most in their working lives. You already know the challenges; you live them in your organization. We
all do. And our usual approaches do not seem to make much of a dent in the problem. Below are three common mistakes managers make in trying to address the problem and what can be done instead to both dramatically improve the quality of conversations in your organization and accelerate your own learning as a leader.
1. We teach giving but not receiving The usual response to the organizational feedback challenge is to teach managers how to give feedback more skilfully – how to frame
Dialogue | Jun/Aug 2014
+ digital exclusive Doug Stone & Sheila Heen: “Thanks for the Feedback”, Talks at Google
the conversation, what words to use and how to be persistent when feedback is resisted. That makes sense, and the more skilled the feedback giver is, the better. But it is still a “push” model of learning and it doesn’t change a fundamental truth: the receiver is the one who decides what they let in, how they make sense of what they hear and whether and how they choose to change. It doesn’t matter how much authority, power or skill the giver has, if the receiver isn’t ready or able to hear the feedback, learning is blocked. In fact, damage may be done in terms of trust, engagement or motivation. Sharpen your darts all you want – if the dartboard is made of steel, it’s not going to help. This is not to say that your colleagues are totally impervious to feedback. Taking in negative feedback
is something all human beings struggle with. The dilemma is built in: we want to learn and improve, and at the same time, we want to be accepted and respected just the way we are now. You can’t “train” that dilemma out of people or get around it by using exactly the right words; it will always be with us. But you can teach people to manage the resulting tension more skilfully, to have better two-way conversations about feedback and to drive their own learning. You can cultivate a “pull” model of learning, where the receiver shares the responsibility for turning any feedback – even poorly given or off base feedback – into something useful to them. Here are two examples of skills that receivers can learn. First, we can be taught to “spot labels”. Most feedback is delivered in labels, which convey very little information. Labels like these: “Be
The more skilled the feedback giver is, the better
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more assertive”. “Work on your people skills”. “Take your performance to the next level”. Each of these could turn out to be a valuable piece of feedback, but, as stated, each could mean almost anything. The mistake receivers make is to assume we know what the giver means and decide to accept or reject the feedback based on the label. Instead, we should reserve judgement until we understand where the feedback is coming from (ask: What did you observe me do that prompted concern? What are you worried about if I continue to do it this way?) and where the feedback is going to (ask: What specifically do you think I should do differently?). Too often we dismiss the feedback label immediately (“I’m plenty assertive!”) or
assume the giver means something they didn’t. When told to be more assertive by his sales manager, one young salesman began pressuring customers to decide ‘right now, today, before you walk out the door’. His manager was horrified. By “more assertive” she meant more animated, more engaged with the customer, more openly enthusiastic and caring. The manager’s intended meaning was the opposite of how the sales person interpreted it. A second skill: often when we receive feedback we “switchtrack”, which effectively kills the conversation and blocks any learning. What is switchtracking? It’s this: your colleague asks for your help handling a particularly difficult call with an unhappy client. By the end of the call, the client decides to go forward with the next big phase of the project. After hanging up, relieved and ebullient, you receive an email from your colleague saying that you were interrupting others on the conference call and that it came across as rude, even culturally inappropriate. You are floored and indignant, and (with considerable restraint) respond by saying: “Hey, we turned it around. Let’s celebrate instead of taking shots at each other.” That is a perfectly reasonable thing to say. Maybe you should be celebrating and maybe your colleague’s feedback is stunningly poorly timed. But that is an different topic from the one your colleague raised: whether you were interrupting and what impact that may have had. When you change the topic from their feedback for you to your feedback for them, that’s called switchtracking. The two of you head down divergent tracks,
unaware that the other is on a different topic train. The answer is not to ignore your own reactions, or to pretend that you don’t have a problem with your colleague’s lack of appreciation. The answer is to point out that there are two topics – your alleged interrupting and their lack of appreciation for your help – and plan to discuss both. If you don’t, the two of you will continue to talk past each other, the relationship is damaged and learning is defeated.
+ POLL Who or what do you believe is most responsible for failures in feedback in your organization?
2. We conflate evaluation, coaching and appreciation A second mistake is that leaders, HR and learning professionals, and managers ask too much from our performance management systems or, at least, too much at one time. Broadly, there are three different kinds of feedback: appreciation, coaching and evaluation. Each has its own set of purposes, and we don’t do a good job keeping those three purposes separate and clear when we exchange feedback. Evaluation rates or ranks people so that the organization can make informed decisions about compensation,
promotions and work allocation. Evaluation also helps employees know where they stand and what to expect. A second kind of feedback is coaching, which is designed to help you improve, to grow your knowledge or capabilities. This is the lifeblood of professional development, of mentoring, of a learning organization. Finally, appreciation says: “I see you”, “I value what you’re doing and how hard you’re working” and “you matter.” Some want appreciation to be explicit; they need to hear occasional and heartfelt thanks. Some hear it in a pay rise or title change, and still others hear it in the fact that you give them the juicy assignments or consult them about tricky problems. Whatever our language, it’s appreciation that keeps us motivated and encourages us to persist in the face of tough problems and daily challenges. Too often managers pack all three of these diverse and important purposes into performance reviews. But in this situation, there is too much to talk about and the topics do not fit well together. It is almost impossible to rank, teach and appreciate someone all in the same moment. Especially when the evaluation is a surprise (we are delighted or devastated), their emotional reaction drowns out any coaching on offer. The mind is not in learning mode and they can’t take in appreciation when they’re feeling under-appreciated or unfairly treated. In organizations and as individuals, we need all three kinds of feedback, but they need to be pulled apart rather than muddled together. Coaching conversations should happen day in and day out, in real time: “Here are a couple things I noticed that would make you more efficient or effective here.” Appreciation is foremost a matter of being awake to the contributions of others. Amid the meetings, deadlines and keystrokes, remember that you and those around you have an array of human needs running alongside whatever it is that the client or customer or boss needs. And while it is tempting to get
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rid of the anxiety by getting rid of evaluation altogether, both the organization and the employee need some sense of where they stand in order to guide expectations and decision-making. If we do not provide that, people put their ear to the ground to listen for it in coaching or appreciation: “Are you giving me lots of coaching because I’m not doing well?” Or “I was singled out for appreciation last week, but not this week – does that mean I’m falling behind?” You may or may not need a formal performance review to do so, but letting people know how they are doing against expectations provides the reassurance they need to focus on the coaching and appreciation that helps them grow.
3. Our superstar mythology undersells the role of learning By and large, we like our superstars to have been born that way: Francisco in sales was born to sell – the smile, the intuition, the mix of humility and confidence, the exquisite timing. You can’t learn that, can you? Superstars are different, touched by a divine grace that makes them worthy of our adulation and of the rewards they reap. Well, yes and no. Some people show up in the world with particular gifts, it’s true. Not everyone is going to win Wimbledon. But it turns out that these superstars have a secret. While others attribute their success to talent or skill at playing the political game, what is often true is that they are particularly good at learning, at eliciting and building on feedback. They ask to sit in on the client meeting to better understand client needs and also get to watch those at the next level and in the next role. They are alert to what they could have improved and take note of what their peers are doing well. They are so open and so committed to doing it better that they quickly become the ‘go to’ person for the most complicated projects and most visible campaigns.
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No matter what level we’re at, we all improve with feedback. And it may especially be true for those with the most natural talent. Track down anyone who is great at what they do and ask them about a time they received tough, honest feedback that had an impact on them. They will tell you why they resisted at first and how they grappled to make sense of it – and why learning from it has made all the difference. So find those learning stories in your organization – not the pat stories of easy learning, but the tough ones that involved doubt and vulnerability – and make sure everyone who works with you can recite them backwards and forwards. Every organization has myths, and it’s the myths of the organization that tell you what’s really valued.
Take advantage This is why we think that the most valuable thing that leaders can do isn’t to switch up their performance management system one more time, or even learn to be better givers. It’s to learn to be better receivers themselves. Not only will you accelerate your own learning curve as a leader, but you’ll demonstrate what is valued and what you expect from your team. You’ll show others what it looks like to get good at receiving. And you also communicate that nobody should be sitting around waiting for the perfect mentor to show up, or the perfect stretch project to arrive. Your life is mostly populated by everyone and everything else – bosses who don’t have time for you, projects that are more of a headache than a hand up. By getting better at driving your own learning, you can start to see these as the opportunities they are – it’s the project nobody wants, done well, that sometimes is most valued in its success. And it’s the off-hand, unskilled feedback you get
that may still contain just what you need to learn and grow. The good news in all of this is that receiving feedback well is a skill – it may be fraught, but it can be taught. And as leaders and decision-makers, we should be the first to sign up. Those under us take their cues from our behaviour; if we seek out feedback and demonstrate openness to learning, this signals what you value and what you expect from those around you. Particularly for senior leaders, asking for feedback from those below you is tricky. They are reluctant to jeopardize their relationship with you. So don’t ask: “Do you have any feedback for me?” The question is too broad, and too overwhelming, and it’s not clear how honest you want your colleague to be. Instead, ask: “What’s one thing you see me doing, or failing to do, that’s getting in my own way?” Or you can ask: “What’s one thing I could change that would make a difference to you?” In either case, it’s clearer that you want them to be honest and it’s an easy, discrete question to answer. They can name the latest thing that has annoyed them or the most important on their list. Either way, you get some input that you can work with. And you start to see that the biggest variable in your own learning isn’t the quality of your HR department, your performance management system, or even the skill of your colleagues as givers of feedback. The biggest variable is you. ● Sheila Heen and Douglas Stone teach negotiation at Harvard Law School. They are the founders of Triad Consulting Group, a global consulting firm specializing in management communication, and are co-authors of Thanks for the Feedback: The Science and Art of Receiving Feedback Well. They are also co-authors of the New York Times business bestseller Difficult Conversations: How to Discuss What Matters Most.
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women in the UAE
Women take the lead in the UAE Passionately driving change in business, government and society, women leaders are playing a significant role in shaping Dubaiâ€™s future. Rebecca Newton looks at how a leadership initiative gave some of these incredible women the confidence, skills and focus to make a positive difference Illustration: BEN TALLON
Dialogue | Jun/Aug 2014
women in the UAE
We can change the culture, remove barriers and gain the trust of society to make a positive difference
ive years ago, I had the privilege of working closely with several women who held positions of influence across different sectors in Dubai, and those who were identified to have great potential for leadership. To be honest, having not worked in any part of the United Arab Emirates (UAE) before, I was incredibly uncertain of what to expect. As part of a widespread leadership initiative, Duke Corporate Education, along with other providers, ran a series of leadership development programmes for professionals from the most influential levels of Dubai’s existing leadership and for recent graduates considered to be Dubai’s future leaders. Unfolding throughout the programmes were remarkable stories of women working alongside men, determined to drive positive change across Dubai’s businesses, government and society as a whole. Visible initiatives to develop women in leadership in Dubai coincide with regulations regarding the participation of women at the highest level in corporates and government. It is now compulsory for corporations and government agencies to have women on their boards of directors, following a 2012 ruling of the UAE’s Cabinet. Furthermore, local investment into high-quality leadership education follows suit with the country’s overall commitment to education. In 2013, the UAE ranked the highest globally in the education section (ensuring top education for all children) in the Global Network for Rights and Development (GNRD)’s annual Human Rights
International Indicator. Five years on from these intensive leadership development initiatives, many of the women leading in Dubai are driving positive change beyond their sponsors’ highest expectations. Here are some of their stories.
“I have to do something”: Reem AL Buainain Having experienced first-hand the tremendous impact of cancer on a family after her sister was diagnosed at a young age, Reem AL Buainain was determined to make a difference for other families similarly affected. Formerly an IT manager, Reem felt she was empowered during her leadership development experience to become the change agent she aspired to be. “I need to do something,” Reem had
long felt. Acquiring leadership skills through experiential learning, she built the confidence to step out and act. She received an overwhelmingly positive response from a broad survey, which highlighted the needs: “Yes, something is missing.” Now the founder and CEO of Positive Cancer, a notfor-profit foundation supporting cancer patients and their families, Reem and her team provide muchneeded information and resources in Arabic, particularly beneficial for the many non-English speaking people in the UAE and across the Arab world. After years of preparation and with a determination to “give back to society”, Reem established this foundation – the first of its kind in the UAE, recognized by the United International Cancer Controller in Geneva. “We’re looking to change the thinking of the community about cancer and how we can live with cancer,” says Reem of Positive Cancer’s ambitious goals, “We can change the culture, remove barriers and gain the trust of society to make a positive difference.”
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Increasing personal capacity: Asma Al Shihi In a full-time leadership role as head of master planning and GIS, Commercial, at Nakheel (one of the world’s largest real estate developers), Asma Al Shihi is (at the time of the interview) sixmonths pregnant with her first child and has just completed training to volunteer on an Executive Office initiative to help high school students set clear objectives. Asma recalls how the leadership programme was a turning point for her: “I came to know who I really am, the way I can contribute and, most importantly, my potential.” While many fear it will lead to critical feedback, a 360-degree feedback experience for Asma gave her greater self-awareness and selfconfidence. “It opened my eyes on how I am different from others, especially my strengths and interests – the things that I am passionate about. I felt like I woke up.” Since that point, Asma has spent time building on her strengths, and her influence and capacity have subsequently vastly expanded. A recent study on the impact of strengths interventions (helping people identify, understand and build on factors that energize them) found that, like Asma, 79% of people have improved confidence in their strengths and how they could best contribute at work. Dr Paul Brewerton, co-director of The Strengths Partnership, says: “We know that people understanding their strengths and proactively building on them leads to a significantly improved level of work-place engagement and overall higher work performance.” Energized by developing others and having the opportunity to help students map out their future, Asma’s capacity in this busy season of her life is greater than ever.
Ambitions to be world-class: Sara Al Rumaithi Looking to the global leaders of the fashion
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LEADERSHIP DEVELOPMENT EXPERIENCE Some of the modules these women participated in during their Leadership Development programmes included: ●●Leadership Styles and Communicating with Impact ●●Leading Change ●●Leading with Impact ●●Negotiation and Persuasion
world, Sara Al Rumaithi decided during her leadership development experience to turn her hobby into a business and four years ago started her own fashion label of abayas (the cloak worn by many Muslim women). Sara’s abayas are linked to the latest global fashion trends and follow the seasonal colours and styles. With great success in a short period of time, Sara’s designs have graced fashion shows in not only Dubai, but also Paris and London. “I have a passion to represent my country worldwide and to be a great reflection of what we can do,” she says. This is at the same time as having recently completed her Masters’ degree and continuing with her “day job”, where Sara is an executive in business transformation for the Emirates National Oil Company (ENOC), currently overseeing about 120 business transformation processes. “I had a fear of starting a business out of my hobby, but the programme pushed me to grow bigger and bigger, and to take a chance.” As with so many leadership initiative experiences, a large influence for Sara’s development was the people around her: “I was inspired by the quality of leadership in my country, and was especially inspired by the other women. It was great to see how others are taking on challenges, and they pushed me to do more.” Sara draws on her family for support: “My husband encourages me saying, ‘You can do it Sara’ when times have been tough. I receive both comfort and positive challenge from my family.” Echoing both Reem and Asma,
Sara adds that she sees great value in her ventures, driven by benefiting many beyond herself. “I’m serving my community with what I’m doing, and I’m contributing to my society and country. It’s a wonderful opportunity.”
Empowering others to lead: Samya Ketait “You are not born a leader,” says Samya Ketait, VP learning and development for Dubai Airports. “Maybe 20% is innate, but the rest is about how much a person works on it and develops themselves. Success comes from an internal belief about what you want to accomplish with this life. Visualize what you want to achieve, work hard and you will achieve it.”
women in the UAE
Women in the UAE ●● In 2011, 8% of the senior management positions in the UAE were held by women. By 2013, this had increased to 11% ●● Small and medium enterprises accounted for 60% of the UAE’s GDP in 2011. More than 30% of the SMEs in the country are owned by women ●● Of the UAE women who work, 66% are in the public sector, 30% of them hold leadership positions and 33% work in professional fields such medicine, engineering, general education, nursing, police and military ●● The first female speaker of the UAE’s Federal National Council was appointed in 2011 ●● Women were granted the right to vote in 2006 ●● Around one quarter of the UAE Government Sector Board members are Emirate women
Samya is personally convinced about making a difference when it comes to talent development across the UAE. Five years on from her own leadership development experience, she now designs and facilitates leadership and professional development initiatives for thousands of people – and she does it well. In the past two years alone, she has won multiple awards for her work, including the Diversity and Inclusion award for women’s empowerment in the Diversity and Inclusion Leadership Forum, 2014; the Emirates Women Award – Leadership criteria, 2013; and the HR Professional of the Year in the public sector in the 2013 MENA Travel Awards. Her most recent award – the Feigenbaum Leadership Excellence Award, Women Leaders – is testimony to her impact in leadership. It is “dedicated to honour men and women in the Arab World for their exemplary
leadership in driving their organizations to fulfil their role in business and society, for their uncompromising style to instigate a quality approach and culture to work, and for acting as role model to all”. As with the other women, Samya is committed to her work not just for her personal gain, but for the country as a whole, determined to play an active role in creating a bright future for the UAE. Her approach to leadership development is similarly generous and outward-looking. “Give someone tools and equip them, regardless of where they might go and what they might do. If they want to move to a different organization or a different country, it doesn’t matter – an investment in talent is never lost.”
I’m serving my community, and I’m contributing to my society and country
What advice do these women offer to others who are, or aspire to be, leaders? ●● Go for it! To lead well, women need to build their confidence, recognize the skills they have, not compare themselves and be confident that if they set their mind to it, they can achieve ●● Knock on the door and take action, don’t sit there waiting for opportunities to come to you. Etha wojedat al erada.... Wojeda al tareek: “If there’s a will, there’s a way” ●● Inclusive leadership, not command and control. Ensure you facilitate full collaboration with the team – this
is the only way to be successful. Leadership is not about being the boss or manager or even about a position, it starts with being happy to work in the direction of the way you want to go, having a goal and getting others to reach it with you – it’s about influence not force, and is fundamentally underpinned by trust ●● Don’t listen to the negative voices – either the external ones or your internal ones ●● Passion – if you love it, you’ll do it without thinking how much time or effort you have to put in ●● Never underestimate yourself and continue to keep growing ●● Encourage others to move away from individualism and competition towards cooperation and innovation ●● Pursue a higher purpose – see how you might be able to contribute to your country and society. Trust others and help them be confident in what they can do, because if they’re confident in how they can contribute, together you can do something incredible ●● Recognize culture is not a restriction, religion doesn’t stop you – respect it and it doesn’t hold you back. If you want to do something, don’t blame society or culture; if you’re determined and passionate, nothing will stop you. Humble, passionate, hard-working, determined, focused on making a difference beyond themselves… just some of the words I would use to describe these women. As I did when we first met five years ago, I finish each conversation with these women with a smile on my face, truly inspired by what women in leadership can do. l Rebecca Newton is a leadership coach and consultant, and a Visiting Fellow at the London School of Economics and Political Science
Dialogue | Jun/Aug 2014
ANOOP PRAKAS JUN/AUG 2014
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95 HIERARCHIES STATUS 68
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James ogilvy, former
publisher of Luxury Briefing, and Liz Mellon, chairman of Dialogue’s editorial board, debate the future of the luxury sector in an exclusive interview.
Mike Canning, CEO of Duke Corporate education, shares his TEDx talk on “purpose”, by urging leaders to “jump in the right direction”.
Watch the video of the highlights of the launch of the 2014 Drucker Forum in Vienna. This year’s theme is The Great Transformation – Managing our Way to Prosperity.
Sheila heen and Doug Stone, authors of Thanks for the Feedback, take an honest look at why feedback can feel so hard to hear, and give readers the framework and tools needed to metabolize challenging information and use it to fuel real change. And Duke University Fuqua School of Business Adjunct Professor Dorie Clark helps explain the process of evaluating your brand and changing your reputation. Her advice is especially powerful for people who are looking for a change mid-career.
CTIVITY All this, plus exclusive IN ThEEm wOrld OdErN Of wOr sound bytes from k A leading authors and commentators, case studies, research, forums, opinion, interactive infographics, slide shows and much, much more labour agreem ent announ means that ced in March employees in France ignore their in be legally bosses’ work the country will have obliged to of the emails once to ensure employ smartphones. office and relaxing they are out pressure to do so. ees come at home But, as this – even on under no Under the issue’s infograp their said deal, which employees than done, hics in the technol looks set to affect with employ show, this might reading emails (including be easier ees seeming ogy and 250,000 outside of Google consultancy ly of sources employees , Faceboo . A whoppi work hours, accordi addicted to sectors will k, Deloitte ng 93% look ng to a variety equatin their comput not be allowed to at emails work-related and PwC), statistic g to 23 extra days ers or smartph outside of work every s show, the material on work, ones. In year. But need to read fact, compan cially after as the KPMG getting off emails at ies will all times aeroplanes, risk for busy especan lead to executives. serious cyber wor
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The INSTITUTE FOR ECONOMIC EMPOWERMENT OF WOMEN’s PEACE THROUGH BUSINESS ® Program 2013 Graduating Class Pictured with dignitaries: H.E. Ambassador of the Republic of Rwanda to the U.S., Mathilde Mukantabana; Charlene Lake, AT&T Senior Vice President Public Affairs & Chief Sustainability Officer; Hon. Mrs. Sultana Hakimi, Spouse of the Afghan Ambassador to the U.S.; Dr. Terry Neese, Founder/CEO IEEW; Mary Millben, Broadway Actess & Singer/Global Ambassador for Education Africa; Dr. Kevin Fegan, President, Northwood University Texas Campus
investing in a peaceful future It is widely acknowledged that economically stable societies have a much greater capacity for peace. Since 2006, the PEACE THROUGH BUSINESS® program has educated women business entrepreneurs in war torn countries such as Afghanistan and Rwanda, graduating over 400 students. As of 2013, 80% of our students are still growing their businesses, working to create an atmosphere where peace is possible. Learn more about how you can help us educate and empower women at ieew.org.
INSTITUTE FOR ECONOMIC EMPOWERMENT OF WOMEN 2709 W. I-44 Service Rd. Oklahoma City, OK 73112 | P 405.943.4474 | F 405.606.4855
José Manuel Casado President at 2.C Consulting and distinguished clinical professor at IE Business School
Hierarchies laid bare
ifteen centuries ago, the Neoplatonic philosopher Dionysius the Areopagite introduced the concept of hierarchy. It is a term that literally means to bring under control through holy means. Dionysius following a logic, that was probably only understood by him, came to the conclusion that heaven was organized hierarchically. He even went as far as to state that there were nine different levels. God was the president, the archangels were trusted advisers and Jesus was God’s right hand. Dionysius considered that hell was hierarchical as well and had a similar structure. The set of works written by Pseudo-Dionysius in the Corpus Dionysiacum was very popular and evidently had an important influence on St Thomas Aquinas and the scholastic philosophers, Dante, particularly in the hierarchies of heaven and hell in The Divine Comedy, Milton in Paradise Lost and the first British humanists to name but a few. Hierarchies were useful for stable environments with predictable processes where outcomes were already given. If we had all the answers, it would be foolhardy to change the organization. However, nowadays in our uncertain world, we hardly know where we stand and what we should do. We are unsure about what will happen to our competitors, our clients, our suppliers, our employees, future technology and future demand. In this challenging environment, traditional hierarchies can actually hinder an organization as it struggles to adapt and respond to change and key issues. Jack Welch, former General Electric
Dialogue | Jun/Aug 2014
CEO, described hierarchical organizations as places in which “everyone has their face toward the CEO and their ass toward the customer”. Most of the time, it is more important to please the boss than serve the client. He called this bureaucracy and considered it to be the Dracula of organizational behaviour.
Narrative is the universal human principle and currency British sociologist Anthony Giddens has a theory that post-traditional societies are characterized by the everdecreasing importance of the precedents set by customs and hierarchy in determining people’s attitudes and behaviour. Once the shackles of tradition have been thrown off, individuals can act in innovative ways and feel the freedom of choice when taking key decisions. At this point, you may wonder how traditional hierarchies will be able to cope in the future or what problems they will cause. But there are many of us who believe this will not be an issue – simply because traditional hierarchies will cease to exist. The new organizations will be heterarchical, although they may be made up of different types of hierarchies. All companies have three organization
systems. We can call them the three Ps of position, profession and process. Position is the contacts list, the who’s who, the organizational chart, etc. Profession is the most confusing of the three and provides information about employee background, skills and competencies. Process is the part that shows what people are actually doing day by day and takes us beyond the limits of the company. With the plethora of collaborations and relationships being forged by companies today, we should add a further organization system. This system would show the degree of power and influence the agreements and alliances etc, established by the company, have on the company itself. Historically, one of the main mistakes companies have made has been that of only recognizing position. The directors managed the structures, controlled processes and considered themselves to be all-powerful. The bosses are usually obsessed by the need to know and control everything. They believe they alone hold the truth, their own truth. Therefore, should people speak up and make useful suggestions or dare to offer helpful corrections, they will not be listened to. The bosses merely hear what they want to hear. Many managers have read Hans Christian Andersen’s The Emperor’s New Clothes. Most apply the tale to their own lives, literally, as if it were an instruction manual. But, unfortunately, it would appear they are unable or unwilling to learn the most important lesson from the story – the moral at the end. Perhaps that is why there are so many executives laid bare.
Training from sports Murthy Chaganti
he greatest sporting extravaganza in the world, the Football World Cup, is here. As the eyes of the world get glued to what is happening in Brazil, it is a great opportunity to learn what sport can teach corporate leaders and professionals.
Sport teaches us the power of focus, leadership, team work, execution and dedication Sport teaches us the power of focus, leadership, team work, execution, dedication, communication and taking risks. Millions of articles have been written and films been made using sporting examples as metaphors for improving the way we work in our offices. While many of the thoughts have been about the here and now of execution, in this article, I have attempted to explore what sports can teach is about making an organization succeed in the long run. Are there any indicators in sports that throw light on increasing longevity of organizations? If we equate an organization to an individual running a race, we can start seeing some patterns. Let us say the test of longevity is simply the distance run by an athlete. The more the distance, the better prepared the athlete is on the parameter of longevity. Here are some statistics on the world
record-holders in each distance category. Given below is distance, the world recordholder and his weight in the year when he set the world record: 100 and 200 metres – Usain Bolt – 94kg 400 metres – Michael Johnson – 77kg 800 metres – David Rudisha – 67kg 1,500 metres – Hicham El Guerrouj – 58kg 3,000 metres – Daniel Komen – 55kg 10,000 metres – Kenenisa Bekele – 54kg Marathon – Wilson Kipsang – 62kg Now, let us do a creative leap of faith. Let us visualize the distance as the tenure/revenue of an organization and the weight a representation of total assets of the firm. What this simple set of numbers tells us is that: 1) If a firm wants to have a long run, it needs to be light on assets; 2) The longevity asset matrix is not linear. The fact that a marathon runner is heavier than a 10K distance runner indicates that, at various orbits, there is a need for reinvestment in assets. To further distil this thought, the longevity of a firm is about how well each cell of the body or the employee/asset of the firm is made to sweat. It is about how to get the best productivity from each pound of resource available at ones disposal. As a concept, this might be interesting, but does it have any relevance to the real world of business?
Dialogue | Jun/Aug 2014
The link between the concept and the world of business is the asset ratio. It is the ratio of the total turnover to the total assets of a firm. If the ratio is less than 1, it indicates that the assets are under leveraged. If it is more than 1, it indicates that the assets are being made to sweat. The other aspect that needs to be looked at is the rate of growth of turnover and the rate of growth of the assets. If the asset growth is outgrowing the revenue growth and there are no firm plans to increase revenue, the firm might be heading towards trouble. If, on the other hand, the ratio is very low for a long duration, it might mean that the firm could die because of malnourishment. This approach towards longevity of an organization is simplistic and does not take into consideration issues like leadership, market conditions, environment, geopolitical realities, and so on. This model is only looking at how well the assets are being leveraged. Some possible business scenarios and the recommendation for them basis this model: 1) If a firm is being put in place for a real short-term activity, it has to be assetheavy. Examples of such firms are election campaigns, making stadia and facilities
Dialogue | Jun/Aug 2014
If the horizon moves to the real long term, it is important to start planning to reinvest for events such as the Olympic Games. 2) As the horizon changes from the short term to the medium term, it is important to go asset light. Across the globe, the hiving off of IT projects, customer service management and other non-core areas are examples. 3) If the horizon moves to the real long term, it is important to start planning to reinvest. This takes cue from the gain in weight from the 10K runner to the marathon winner. This is possibly one of the reasons why Britain chose Clement Attlee as prime minister over Winston Churchill, because Churchill was still in the blood, sweat, toil and tears mode of austerity in a scenario where the country required massive reinvestment. â—?â—? Murthy Chaganti is a seasoned business professional from India who writes about business, politics and sports. He holds a senior role in the Indian telecom sector
books and apps
under the spotlight
In association with:
The Moment of Clarity Using the human sciences to solve your toughest business problems Christian Madsbjerg and Mikkel Rasmussen Harvard Business Review Press
Few people would argue with the assertion that we live in an increasingly volatile and complex world, and yet the methodologies that managers learn on MBAs and in their workplaces are largely built for a simpler, more predictable environment. Authors Christian Madsbjerg and Mikkel Rasmussen call this traditional approach to management “default thinking”. In their compelling book The Moment of Clarity, they identify default thinking as the prime suspect in many poor business decisions, and offer a way of thinking called “sensemaking” to help managers harness complexity and find a way through the volatility. Madsbjerg and Rasmussen draw heavily on the “human sciences”, such as anthropology, ethnography and sociology to describe a more nuanced and qualitative approach to decision-making that may feel uncomfortable, and even alien, to many current managers. You should not conclude, however, that their approach is not evidence-based, but rather that it encourages managers to seek different types of evidence from less familiar sources. Any management textbook which is well read and quoted has at its heart a multistep method, and Moment of Clarity offers a handy five-step approach for managers to become better “sensemakers”. These are:-
1. Frame the problem as a phenomenon. 2. Collect the data. 3. Look for patterns. 4. Create the key insights. 5. Build the business impact. Of course, each of these five steps is underpinned by rigorous process and you will need to read the book if you seek to understand and, ultimately, master these steps. The book is packed with cases from fields as diverse as sports goods, medicine, children’s toys and technology, with each case offering an almost voyeuristic lens through which to view key reframing moments for a number of well-known businesses. Moment of Clarity is one of those books that you will not want to put down – full of engaging stories, simple (but far from simplistic) methods and a humanistic approach that will attract and retain many readers. It seems clear to me that executives from all sorts of industries could learn much from embracing Madsbjerg’s and Rasmussen’s “sensemaking” approach. It is a must-read for any manager who wishes to thrive in this volatile, uncertain, complex and ambiguous world in which business must now operate. Mick Holbrook is MD, Duke Corporate Education (US)
Dialogue | Jun/Aug 2014
Discovery path: Resilience So much has been written and said about “resilience” and how business people – and indeed their organizations – need to have an inner strength to deal with a complex and trying economic environment. But what do “resilience” and “agility” actually mean in practice? There are so many interpretations of what it means to be resilient – is it staying focused and alert in a world that never sleeps? Is it being like UK tennis player Andy Murray and bouncing back from defeat after defeat to win at the Olympic Games and Wimbledon?
Contents: • The Economist: Managing Uncertainty This great introductory chapter sums up the case for resilience and agility, outlining the problems managers will face in a complex and uncertain world. It sets the scene. • The Economist: Managing Uncertainty Another chapter from the same book – this provides a useful overview in what resilience means to individual managers, with insight from a variety of sources and useful tables to communicate the various messages. • Success Under Stress Moving away from theory onto practice, the author introduces advice-driven content on how to instil a sense of resilience in individuals and cope with the stresses and strains of the everyday work landscape. • Coaching for Resilience Taking forward the information from the previous part of this pathway, this chapter uses techniques from positive psychology to help you understand what causes stress in your own working life and how you can rise above it. • Executive Advantage Jacqui Grey’s book arms managers to be resilient in times of massive change – and empowers
The following lessons summarize what individual resilience in the corporate world means and takes the readers on a journey from learning about the theories of resilience and how they can apply them to their working lives. The discovery pathway should take no more than 90 minutes to complete and will take you to key chapters and articles that will enhance your knowledge and challenge your thinking on the topic. Take part in the full discovery path here: http://www.bluebottlebiz.com/book/ resilience
workforces to do the same. Executive Gremlins are a major component in why strategic change programmes fail, from mergers and acquisitions to takeovers, downsizing and aggressive growth. You will see that far from business plan failure being purely about the market, the plan and the process implementation, it is the reaction (rather than rational response) of key leaders to any given situation that makes the difference between success and failure. When challenges and disasters hit a business, it is a distinct executive advantage to understand how to control your own behaviour and that of your leaders. This creates an advantage in that once other leaders see it working at the top, they emulate the behaviours and a positive culture shift occurs. Teams come together seamlessly without the usual conflict phases because everyone is behaving consistently. Confidence and resilience are improved. • Choose Resilience To finish off, this set of info graphics will sum up some of the ideas in the learning pathway. They explore all forms of resilience from the global organisations that have dominated the Fortune 500 since inception to the largest employers on Earth; from the world’s oldest organizations to the digital-age companies forced to adapt their strategies to quickly changing global trends in order to survive and, in some cases, thrive.
See more at: http://www.bluebottlebiz.com/book/resilience Dialogue | Jun/Aug 2014
big data - BLUE BOTTLE BIZ’S TOP FIVE
The New Brand Spirit
Christian Conrad, Marjorie Ellis Thompson Ashgate
This book is for sustainability managers grappling with how to communicate what their company does in sustainability; for marketers integrating social and environmental messages; for PR professionals balancing risk and opportunity; and for HR managers building employer brands.
Forget Strategy, Get Results Michael Tobin OBE Wiley
Digital Branding Daniel Rowles Kogan Page
Digital Branding gives step-by-step, practical guidance on how to build a brand online. Through exploring topics like content marketing, social media, search optimization and web analytics, Daniel Rowles develops a robust framework for brand planning, channel selection and measuring the effectiveness of your brand campaigns.
The Power of Unpopular Erika Napoletano Wiley In this book, you’ll learn about how to inject personality into your brand; the difference between popular and profitable; why you want to be unpopular; how to manage a brand that becomes popular with an unlikely audience; and why your fans don’t care how big you are.
The Brand Strategist’s Guide to Desire Anna Simpson Palgrave Macmillan Blending emotional branding and sustainable thinking, this book will help brands understand the foundations of desire to create sustainable loyalty, healthier societies, and more fulfilled customers. Simpson explores five primary desires: selfworth, social life, culture, comfort, and exploration.
Brand Real Laurence Vincent AMACOM Laurence Vincent presents cautionary tales of supposed brand superstars and instructive case studies of genuine brand giants. Readers will learn how to connect the outward-facing elements of their brands to the core elements of strategy and forge powerful connections with clients.
Any book with this title has to get my interest, given that we waste $35 billion globally every year on strategy consultancy that doesn’t get results. I liked this book as soon as I saw the contents – 10 chapters, one-word titles, all beginning with F. Felt Fresh – and because the first chapter is entitled Fear (which I am on a mission to eradicate from any business I advise). The Introduction assaulted my attention. A management technique that sends two rivals to the Arctic Circle to learn to work together and support each other – YES PLEASE! Chapter 1 on Fear continued at the same level – get rid of fear by putting it into context. OK, the context happens to be comparing it to death by getting the board to swim with sharks – but after that, a tricky business deal looks about as dangerous as a bowl of porridge. Chapter 2 is about giving people the freedom to act. For me, this is central to creating ownership – and ownership, at every level, is core to making strategy happen. Chapter 6, Fortune, really struck a chord because there is a section on remembering how fortunate most of us are compared to the impoverished. Chapter 8 brings us to Focus, somewhat of an obsession with my friend the late, great Sumantra Ghoshal, the strategy guru. Just like Sumantra, Tobin says: “There is not a minute I waste.” This is followed by a tremendous sequence putting lessons from Deepak Chopra (the guru) and Floella Benjamin (former children’s TV presenter) side by side – what a lateral thinker. And, as Tobin is an amateur magician, Chapter 9 had to be called Fun – of which there is not enough in business. But what I liked about the book was its emphasis on learning. In every encounter and reaction, the author reflects and then plays back what he learned. Is this book the product of the mind of a highly educated CEO? No – Tobin makes a point of his lack of university education. Is it a case study on what can be achieved by a leader if you have no fear? Absolutely. A wonderful read. Not for the faint-hearted. Liz Mellon, chairman, Dialogue editorial board
Dialogue | Jun/Aug 2014
Scot t K eyser
a contract is often based on marginal differences u want to raise your tendering win-rate and ROI, ng you can to widen those margins and shorten Full of hints, tips, tools and techniques, this book that. Proven on hundreds of bids and tenders, pages could save you years of coming second.
What gives them the edge? Knowing and applying proposals best practice. Whether you’re prequalifying an opportunity, meeting the buyer(s), submitting a bid document, delivering a powerful pitch or seeking client feedback post-award, this book unpicks best practice at every stage of the process. Having worked on hundreds of public, private and voluntary sector proposals, Scott Keyser will show you how to:
ve read on the topic. As Scott says, ‘It may only take ted to transform your win-rate’. This book is packed nd great ideas that have taken me 25 years of bid ment to work out! Have fun finding them and enjoy success when you use them.” CM, Marketing & Business Development Director, ingham Group Contracting Ltd
tor tenders, you might think this book is not for you. f you communicate with the buying organization cott’s teachings, your win-rate will increase. ll those involved in bids, tenders and proposals.” ector Bids, Contracting and Marketing specialist
th Scott for several years now, I can vouch for is both a practical and personal take on winning ides being very real-world, what I particularly cott’s conviction that competing for business at you’re doing – can be incredibly exciting.” le, founder and CEO of Client Magnets Ltd
Scot t Keyser
£14.99 IN UK ONLY
Winner Takes All
apps for leaders
Every day in every industry around the world, thousands of business contracts are tendered and awarded. Yet only a handful of organizations are good enough to win key contracts at will.
• • • • • •
Seven-and–a-half principles for winning more bids, tenders and proposals
• • •
Seven-and-ahalf principles for winning more bids, tenders and proposals Bid only for winnable opportunities and avoid costly ‘done deals’
Build rapport with each buyer and shape their perception of you Position yourself as an equal partner, not a subservient supplier Excite the buyer(s)
Get on the inside track of the opportunity
Personalize your response to each buyer Showcase your expertise intelligently Write concisely
Scott Keyser Use simple graphics to convey complex information Nail your ‘story’
Submit a clear, compelling, competitive bid Deliver powerful pitches that stay long in the memory
Business development boils down to two key strategies: growing the existing customer base and winning new business. Winner Takes All focuses on the latter and, as the title suggests, recognizes today’s challenging global business marketplace is more competitive than ever. It is hard to imagine any organization is fortunate enough to not need new customers and, with that in mind, Keyser’s book will be a useful tool for any sales, marketing and business development professional. Drawing on his experience of doubling Ernst & Young’s tender win-rate, Keyser provides an accessible and practical guide to increasing success at bidding. Delivered in a user-friendly format of seven principles, the book is full of hints and tips, which can be applied immediately. Addressing both newcomers to the world of tendering and senior execs looking for inspiration, Keyser’s principles have been theorized in such a way that they can be applied by any executive, irrespective of the industry or clients. Without giving away the gems, I’d already taken something from the first page. The principles follow the entire bid process, from qualifying when to actually enter into one, through to the presentation itself and obtaining client feedback. The in-depth look at the entire the process ensures that while there might not be relevance in every point for every reader, there is something here for everyone. I personally enjoyed the look at persuading through the written word, appreciating Keyser’s remarks that most bid documents are badly written, and taking plenty from his step-bystep guide to constructing a winning proposal. If you have an appreciation for the straightforward, no-nonsense business book, then you’ll certainly get a lot from this. Whether it’s the simple tips such as which pitch slot to take to the fundamental questions you need to ask if you’re not winning enough tenders; I’m sure, just as Keyser himself managed at Ernst & Young, this book will help you increase your win-rate. Rebecca Nolan, commercial manager, Dialogue
Dialogue | Jun/Aug 2014
Podio The phenomena that is “apps” seems to know no boundaries and creates new things we need that we wonder what we did without them. Checking trains, checking in on flights and downloading music are all now done through apps. What about checking in on the state of that project you’re flying out to Amsterdam to join the final test walk through on and sign off for? On a big corporate system hidden deep behind a firewall? Or a flip of the smartphone cover, a press of the app, et voila: you can look over all the project status you need simply by swiping your finger over your screen. There are many project management app-based tools, so rather than detail them all (Trello and Basecamp are two that I have used), the feature here is on a relative unknown – Podio. Working on an amalgamation of a social network and a workflow tool, Podio brings you project management in your pocket. Everything you want from a project management application is there: • People on your team/contacts/contractors • Tasks with deadlines and owners • Messaging, activity timeline and notifications • Integration with other file-sharing tools like Google Drive and Dropbox A user guide video greets you on sign-up, but be warned, only the sub 5 users version is free – other use is licensed and bears a small fee. Tracking progress; staying connected; allocating tasks; resource planning – all now done in an open workspace environment so no one is having to manage MORE emails. Podio even lets you build your own apps specific to your workstream within the project. Podio is being used to keep everything happening as it should be. Welcome to the world of app-based project management – helping drive a re-evolution of work from emails and Gantt charts to open, collaborative apps. l Perry Timms is an independent HR/OD practitioner, writer and speaker, and is CIPD adviser on social media & engagement. Follow him on twitter @PerryTimms
back to the future
Six Thinking Hats Edward de Bono
Edward de Bono is a hero of thinking techniques and one of his most famous books was Six Thinking Hats (1985). It was an important milestone in constructive thought and the technique has become one of the most successful approaches to business thinking. The six hat types are: 1. White Facts, figures, information 2. Red Emotions, feelings, intuition, hunches 3. Black Cautious and careful (beware overuse) 4. Yellow Speculative positive, benefit-led, constructive 5. Green Creative, lateral, provocative 6. Blue Control, structuring, organization The technique forces people to adopt different approaches to thinking, which is intended to remove them from bias and politics. If followed, the six hats provide a process to what can otherwise be a random brainstorm. In subsequent versions of the book, de Bono noted with dismay that the method was often used incorrectly, in that one individual often wore the same hat for the whole meeting. Everyone should wear each hat simultaneously to make best use of everyone’s intelligence and experience. As some of the novelty of the process has worn off, and business techniques have developed, the system has attracted criticism. “It is not a complete solution,” claim Yudelowitz, Koch & Field, with no understatement. There may be two reasons for this: 1. Six frames of thinking are probably too many for most people to remember accurately. The majority of business people are unable to name all six colours of hat, let alone specify their function. 2. It is hard for people to adopt one other mode of thinking, let alone six. Some people are so set in their ways that they are unable to fully enact a different character type, even for a short period. If used correctly, the technique is a good way to discipline your business thinking. The enemy of good thinking is confusion, which becomes more likely the more active the mind. Clarity is good, but not at the expense of comprehensiveness. The main cause of confusion is trying to do everything at once. The system makes this orderly. The book is short and simple, but it should not be applied simplistically, so care and attention is needed, especially when dealing with complex issues. Kevin Duncan is a business author. His blog greatesthitsblog.com summarizes 200 important books. Contact him on email@example.com
Thanks for the Feedback: The Science and Art of Receiving Feedback Well Douglas Stone, Sheila Heen Penguin Group (USA)
We are bombarded constantly with feedback – how quickly a friend responds to our email, others’ facial expressions when we speak, the number on the bathroom scale, the comments we overhear after a meeting. Yet, even if we want to use that feedback to grow and learn, we often find ourselves unable to make sense of it. Worse yet, if the feedback is unflattering, we may not be able or willing to hear it. It may not match our view of the world or of ourselves. Stone and Heen take a richly detailed look at getting feedback. They allow readers to explore what helps people develop and change, as well as what stops us from doing so. In many ways, the book is as much about having a growth mindset and resilient orientation as how to communicate well. They offer insight into common mistakes when receiving feedback and how to remedy them. Each chapter sparks reflection on our own behaviour and thought patterns. It’s easy to see ourselves in the examples they highlight and the traps we fall into. For example, the authors talk about the need to be clear what kind of feedback a person is seeking – appreciation, coaching or evaluation – and what happens when the feedback given takes a different form. “Do you like what I’m doing?” is different from “how can I do this better?”. They get into our heads and explain some of the neuroscience behind our response to emotions, both threats and pleasant events. They tackle relationships dynamics – how complex it can be to disentangle the what from the who, balance multiple agendas and break our habitual attribution cycles from “you vs me” to “you and me”. Stone and Heen share stories, model conversations and deliver plenty of solid advice: seek to understand, take a step back and get a different perspective, and ask for what you need. Although the title says “receiving feedback”, this is really a useful handbook for personal and professional growth. Marla Tuchinsky, faculty, Duke Corporate Education
Dialogue | Jun/Aug 2014
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Goes for business owners too! “2014: The year of the social CEO”
Your comments: We asked: Is it time to “kill the stupid rules” to nurture an innovative culture in business? Jane Sunley, CEO & founder, Purple Cubed. Author of It’s Never OK To Kiss The Interviewer
Yes absolutely. Think massively detailed standard operating procedures when ‘be nice to the customer’ would do. And it’s so
important to set aside thinking time – at any level – to move from being bogged down by ‘the way it is’ into ‘what if?...” Christian Horne, HR director Sweden at AbbVie
Stop, Start, Continue is so basic but so under-used, likewise applying input from all employees to process improvement. This is a simple yet effective exercise to help free the process/time/mind.
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The day Brazil was given the right to host the summer Olympic games of 2016 was an important milestone for South America. Never before had a city in this region been given the opportunity to host such an important event. This was a high honour and responsibility, and Brazil’s president, Lula da Silva, could not contain his emotions and cried. This was a way in which the world started to give a voice to a region and a country, which has been exploited and ignored since beginning of times. Alex Swiec presents an analysis of the World Cup and Olympic Games in Brazil related to leadership. We could say that the modern societies should not only learn but enable South American leaders to influence world politics with their different ideas, while also make an effort not to impose responsibilities and ways of management and leadership through events that could not be aligned with principles and leadership in the region.
Management consulting firms are sometimes accused of charging high fees to state the obvious – which led advertising executive Carl Ally in the 1960s to define a consultant as “someone who borrows your watch to tell you the time, and then walks away with the watch.” Getting an accurate picture of existing employee interactions is perhaps the greatest difficulty in most organizational change initiatives. By helping make sense of an organization’s communication patterns, the emerging discipline of Organizational Intelligence (OI) can help business strategists understand the relationships that drive their company’s business. In this exclusive interview for Dialogue, Serguei Dobrinevski, CEO of Hypersoft Information Systems based in Munich, Germany, talks about how companies can use OI to identify employee workflow and collaboration patterns across geographies, divisions, and internal and external organizations.
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Global spotlight on Brazil
Dialogue | Jun/Aug 2014
COMING UP NEXT MONTH: Organizational risk is important when considering the “new normal” of the global business environment. Tight control systems may reduce risk, but they can restrict the organization’s ability to adapt to change and respond quickly to customer needs. They can also slow or prevent the development of innovative products or processes that reduce operational costs or increase profit. The equation is regarded as keeping risk low, but sacrificing flexibility and responsiveness. What is right or wrong has to be clear in the mind of every employee.
This is the global leader’s opportunity to demonstrate his or her business understanding and relevance in a new area – to lead the building of a moral compass. The September issue of Dialogue will:
• Ask is the biggest risk factor in business in fact talent…
• Investigate the long-term risk implications and “new normal” post-2014 recovery • Ask how dramatic political events (albeit rare) affect business • Analyze the risk/reward matrix – balancing long-term investment and short-term return • Look into innovation and the risk in creating new things • Explore the threats posed by cyber risk
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Copyright 2014 by Duke Corporate Education and LID Publishing Ltd. All rights reserved. Material may not be reproduced without permission of the publisher. While we take care to ensure that editorial is accurate, independent, objective and relevant for the readers, Dialogue accepts no liability for reader dissatisfaction rising from the content of this publication. The opinions expressed or advice given are the views of individual authors and do not necessarily represent the views of Dialogue. This journal is also supported by Knowledge Partners, including Duke Corporate Education as Lead Knowledge partner. Whenever an author is related to a Knowledge Partner it will be noted as such. Dialogue takes every effort to credit photographers but we cannot guarantee every published use of an image will have the contributor’s name. If you believe we have omitted a credit for your image, please email the editor. ISSN: 2053-4361 Printed by Pensord, www.pensord.co.uk
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Dialogue | Jun/Aug 2014
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Beware the narrative fallacy
ecent events have set in train Vladimir Putin’s disappearance from the world stage. The only uncertainty is how long it will take, whether it will be months or years. It will happen due to the unintended consequences – a concept first analysed in 1936 by US sociologist Robert Merton – of his Crimean annexation. US Defense Secretary Robert Gates, in the memoir about his years serving under Presidents Bush and Obama, notes that during the Cold War, Soviet interests were taken into account to avoid military conflict. However, “when Russia was weak in the 1990s and beyond, we did not take Russian interests seriously. We did a poor job of seeing the world from their point of view and of managing the relationship for the long term”. He confesses that he “dutifully” supported the effort to bring Georgia and Ukraine into NATO, even knowing that this would feed Russia’s “paranoia” about the West. Russia’s feeling of geopolitical weakness, allied to an economy that has failed to diversify and a mistrustful leader, resulted in the Crimean invasion and troublemaking in Ukraine. But the unintended consequences of its escapade are an increase in its irrelevance to the world and the beginning of the end for Putin. Consider these factors. Europe depends on Russia for one-third of its gas needs. From complaining halfheartedly about their dependence on Russian energy, the Germans have
woken up to the reality. Nuclear power could be back on their agenda, although in 2011 it was announced that it was to be phased out by 2022. Who can doubt that serious discussions are now taking place behind closed doors between ministers and energy companies?
We lack the ability to figure out what the unintended consequences of actions might be Meanwhile, the vociferous voices against extracting shale gas from the soil in Europe have lost ground to more widespread fears about a resurgent Russia, and the US export of shale gas to Europe, contentious for some Americans, now has strong government backing. As for Putin, he has infuriated his main constituency, the oligarchs who long ago agreed to keep out of politics in exchange for permission to carve up Russian’s economy in a monopolistic and oligopolistic way. As the stockmarket falls, the currency plummets and targeted sanctions start to bite, they are not a happy bunch. IPOs are on hold, foreign customers are wary of dealing with any company that is substantially owned by
Russians and domestic banks are having trouble with their wholesale funding. Whether he backs down, is taken out or compromises with the West on other multilateral issues to soften sanctions, Putin has fatally undermined his own rule. Does this scenario sound too complicated and therefore implausible? As humans, we generally lack the ability to figure out what the unintended consequences of actions might be, even knowing they will always occur. Nassim Nicholas Taleb, the philosophercum-trader best known for The Black Swan, talks about narrative fallacy – our tendency to construct simple stories to explain the world. Narratives about the past are often wrong. Hindsight is a myth because we do not and cannot know what did not happen, which would have resulted in a different story. At the altar of the story and the storyteller, we unconsciously sacrifice the uncertainty of human existence, what Nobel prize-winner Daniel Kahneman calls the “illusion of understanding”. When I was a reporter at Bloomberg News, we were forced to find reasons for stocks going up or down. We called up analysts and traders, found the most convincing explanations and banged them out on the screen. Those stock reports read well. Similar ones are being churned out today. They are examples of narrative fallacy. Beware believing them… although sometimes they may have more than a smidgen of truth about them – as does the Putin story.
Dialogue | Jun/Aug 2014
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MAR/MAY 2014 | dialoguereview.com
Nelson Mandela’s former political adviser shares leadership lessons
ROGER MARTIN 40
One of the worlds top business thinkers crunches scientific data ANALYSIS 64
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Can’t see the wood for the trees? Big data is growing, but how can the analysis of large amounts of data from different roots uncover cutting-edge insights? PAGE 28
EMERGING MARKETS 89
EXECUTING STRATEGY 76
Opportunities to raise capital and start business in growth markets
Strategy without execution is aimless. Execution without strategy is useless...
Although the unconscious is invisible in the workplace, it still has to be addressed
Dialogue recognizes this fact and provides a vital source of new ideas for top executives creating, leading and developing businesses in today’s world.
By 2025, of members Y will ion generat up make al the glob 70% of ce workfor
FEMALE LEADERSHIP 70
The connection between the empowerment of women and GDP growth
answers. There is a need for different individuals, companies and governments, and their cultures and traditions, to learn from each other so they can better understand and resolve leadership challenges.
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Published on Jun 4, 2014
Dialogue is an original, practical and world-class journal, which focuses on key issues and challenges encountered by business leaders and m...