Jump Starting Innovation - P&G Updates a Tired Brand

When P&G's new CEO took the helm, his observation was that the company was innovating, but not successfully executing to develop compitetive advantage. Below is a video from Businessweek.com with information on CEO A.G. Lafley's approach and his new book.



When Procter & Gamble acquired hair-care company Clairol in 2001, it inherited a floundering shampoo brand. By 2004, Herbal Essences, at the time nearly 35 years old and a mass-market hair-care brand for women, was in a "long-term decline," reports Chairman and CEO A.G. Lafley. Marketed to all women (or at least those who wash their hair), the line had gone stale, with little distinction from the many competitors it shared on the drugstore shelf.

Jump-Starting Innovation

To find the right new, smaller target market for the brand, P&G turned to an immersion program for P&G managers to jump-start innovation. There, the team came up with a new target audience for the brand—Generation Y. "In the case of Gen Y, there really wasn't another hair-care brand that was really meeting their needs," says Lafley. "The question was: 'Can Herbal do it?'"

P&G bet yes. They redesigned the packaging of the product to "fit" this more tailored market: The shampoo and conditioner bottles are curved so that they literally fit together on the shelf. The nesting shape not only helped Herbal Essences stand out from others on the shelf but also encouraged more young women to buy both products, driving up conditioner sales.

To appeal to Millennials, the team also updated the language on the packaging. The ho-hum "dandruff" reference gave way to "no flaking away." Names for different hair styles were changed to more youthful phrases such as "totally twisted" or "drama clean." "We totally reframed the proposition," says Lafley. While P&G doesn't break out sales figures on specific products, the company reported in a conference call soon after the shampoo was relaunched that the brand was growing again, with sales growth rates in the high single digits.

3G iPhone Pricing Plans - Apple Subsidies and Carrier Deals

Apple's stock is increasing on news of preliminary details for pricing plans. Speculation is that Apple may be receiving $300 to $500 per unit from carriers but this is still anyone's guess.

Here is a video from the Wall Street Journal:

Harvard Study Refutes Long Tail Theory

Two years ago a book was published that stated the Internet would turn inventory management and planning around. No-longer constrained by bricks and mortar, consumer consumption of goods would change. The internet brings about a new consequence: consumption patterns will change, and “hits” will shift to “misses.” Misses according to the book, “The Long Tail Theory” would become more profitable.

Now a new study that derived data from web sites says it isn’t so. The most popular items online are just as important than they are offline. The study was based on selected video and music eCommerce web sites.

Harvard associate professor Anita Elberse has penned a long article for the Harvard Business Review that used data from Rhapsody and Australian DVD-by-mail distributor Quickflix to demonstrate that rather than the Internet enabling a "long tail" of niche media which publishers should embrace, the blockbuster strategy is still what pays dividends for content producers. In other words, Elberse argues that media is still a hits business, and that the Internet is not necessarily the democratizing force The Long Tail author Chris Anderson says it is. Anderson says that Elberse's analysis isn't wrong, per se, just that they disagree on exactly what the "head" and "tail" mean. Except that Elberse worked with Anderson on researching his book, so one imagines the Wired magazine editor explained it thoroughly. Funny, it's as though two different people analyzing the same data have come to entirely different conclusions about the "truth."

Here is a video from the Wall Street Journal:

Rupert Murdoch on Politics and the Presidential Election

Is Murdoch manipulating the media via his ownership of The Post which recently endorsed Obama?  Is this what's next for the Wall Street Journal? As print media and traditional print media's web sites get aggregated, the independent voice of the Internet will be more important.  

Significance to our viewers: 1) This year's election will have the most globalized coverage U.S. election in history, with unprecedented print and video coverage online.  How will this impact our election process  going forward?  2) Electronic fund raising meets electronic media.  News, editorial opinion, pay per click information, and fundraising will converge in carefully segmented but unarguably integrated ways.  3) Start your own tally of WSJ Opinion posts and articles that endorse Obama vs. McCain.   See if the scale is balanced.

Tata Buys Auto Makers Jaguar & Range Rover: What Does it Mean?

Detroit - After years of struggling to make money with these two companies, Ford has sold them to Tata for $2.3 Billion. The sale to Tata changes the company's visibility on a global scale. The key strategy for them has been to grow as a global manufacturer via acquisition. The transaction helps them compete globally and increases their ability to sell into the U.S. market, and it increases their ability to learn and capitalize on lean manufacturing which is already strong in Jaguar plants. Chinese manufacturers have been unable to make such a large purchase, so this also increases India's market share vs. other major emerging economies.

Just over sixty years have passed since India became an independent nation (see related BBC news post), leaving behind its status as a British Colony. Ironically, today one of India's leading companies is purchasing two of the best-known British brand names. The sale of Jaguar this week to Indian car maker Tata has prompted some to question what this means for the motoring brand's rich associations with all things British. The concern, however, ignores the fact that for almost 20 years the pouncing big cat motif has been under the stewardship of American owners, Ford. The new parent is a huge Indian conglomerate aptly named Tata, the word for daddy or father in a string of languages including Latin, Serbo-Croat, Polish and Zulu. The Nano, acknowledged as the cheapest car in the world at about $2,500, is very different from the high-end brands they purchased. The acquisition of luxury brands helps growth because these brands tend to be more insulated from market fluctuations.

A very British Brand

BBC news noted that some in the UK are concerned over the potential loss of British identity with the acquisitions, but Tata stated that they are committed to retain and enhance their British identity. "Think of James Bond and you think of Jaguar. Think of 60s London gangsters and you think of Jaguar. Recollect Inspector Morse - Jaguar..." - branding expert Jonathan Gabay sums up why one of Britain's best known brands is so inseparable from the country of its origin.

Ford

What about the impact on Ford and it's strategy? First, Tata is not expected to become a full-line manufacturer, but this helps Ford strategically. Partnerships may come more from OEMs than private equity firms in the future.

Second, is Tata getting value or cast offs from Ford? Ford has already done much of the heavy lifting for Tata and has broken down some of the organizational barriers in these companies to optimize them. Cultural differences between Tata, Jaguar, and Range Rover may be an issue, however Tata's global roots may make it easier for them to own and maximize these companies than for Ford. For Ford, the luxury brands have been a bit of a distraction. Now Ford can focus, but this also means, "no excuses." Ford is not abandoning the luxury market as they still own Volvo and Lincoln. There has also been some talk of taking the Lincoln brand global.

Future Success, Innovation

The $20 Billion plus company is truly an industrial company with momentum and capital. It has a good record in terms of acquisitions - Tetley Tea was a successful acquisition, and Tata has helped the company achieve profitable growth. Under the company's leadership, Ratan Tata successfully managed through some difficult times. “But it hasn't been a smooth ride for Ratan Tata. When he became the chairman in 1991, he was seen as a pushover by the group companies' CEOs, who lorded over their entities.

He had to battle it out with these men, who treated their companies as their fiefdoms. So, the new chairman eased out CEOs like Rusi Mody (of Tata Steel) and Ajit Kerkar (Indian Hotels). Ratan revamped the operations of Tata Steel and made it one of the lowest-cost producers in the world. He made the critics eat their own words, when he launched India's first indigenous car, Indica, which turned around Tata Motors' fortunes.

Transformation, Business Strategies

As the group entered the 21st Century, Ratan Tata was obsessed with four critical issues. The first was to globalize his group's operations, where he has succeeded to a certain extent.

The second was to safeguard his companies against possible hostile takeovers after the London-based Indian, Lakshmi Mittal, purchased the Luxembourg-based Arcelor early in 2006 to become the world's largest steelmaker, and announced his ambitious plans in India.

So, to thwart any threats, Tata decided to up his stakes in most of the group companies. Ratan Tata's most important concern, however, was to protect his top lines and bottom lines in the face of ever-increasing competition from domestic and global players.

To achieve this objective, he had no option but to become aggressive, a quality that helped him in other areas. Today, the group, which was seen as risk-averse and cautious, has no qualms about taking on competitors publicly - be it in areas of policy-making, products launched or marketing tactics.” – BBC News

Significance to our readers:

1. First, increasing globalization requires increased efficiency in coordinating global teams. See our related post here.
2. No World Borders automotive consulting team is experienced in maximizing the performance in both automotive and other organizations. Our team's experience in firms such as Toyota, Honda, Kawasaki and others enables us to provide immediate value. Our certified Lean Manufacturing management consulting professionals and IT practice leadership has helped many firms achieve their IT, solution, and business goals. Best practices experience in ITIL, CMMI, ISO, and Lean have helped our team provide value to firms in over 200 engagements in this market.

The Role of the CIO in Transforming Business & Enabling Growth

The ability to redefine business can come in large part today from understanding technology and how it can be an enabler of transformation. The smartest companies realize that a strong CIO can take customer and transaction data and help turn it into knowledge that enables businesses to better understand their markets. When needed, information assets can also help transform business and underlying processes. How viable is it to hire an IT head who really understands the business? Today many companies hire an IT Director as their CIO - someone who may be more experienced at managing and leading only technical employees. However, understanding the business and having an intelligent conversation about it in the board room is important. C-level IT executives are embodied in CIOs like Charlie Feld formerly with Frito Lay and later successful at Burlington Northern and Delta Airlines. CIOs of this caliber have moved into the CEO position.

Fedex transformed itself from a shipper to a major player in logistics. It is now seen as a technology company in the logistics and transportation business. The momentum coming from the top, enabling the CIO.

One important philosophy to embed in transformation projects is growth. Is the transformation enabling business goals and business growth? Here are some thoughts to consider from one high-performance CIO:

The implementation of change initiatives hasn’t always been smooth: business leaders (and IT managers) who had grown used to an IT department that merely took and fulfilled orders had to get comfortable with IT leaders who challenged them and kept an eye on the IT strategy of the broader enterprise. But the changes were necessary—and, despite the bumps, ultimately successful.

• As the CIO for a rapidly growing technology vendor, one client had to scale the IT organization quickly so that it could handle not only its current tasks but also whatever might be on the horizon.

• Keeping systems up and running is just the beginning; the way the IT function uses resources to satisfy the demands of the business determines the real value of information technology. Our client explained how they organized the team to work closely with the business in order to ensure that IT’s investments match the organization’s strategic priorities.

• Even in the tech-friendly realm of Silicon Valley, IT leaders struggle to inspire their own people—and the business colleagues who depend on them—to move beyond an order-taking mentality by striving to understand the needs of the business and proposing innovative solutions to its problems.

Figuring Out What to Fix

Best practice: Conduct high-level interviews with executives and a series of work sessions to identify the biggest problems faced, as well as the top five or six things to focus on in the next 18 months to be successful.

For companies that are strong in product innovation this can not only help to acquire new customers but retain them with excellent service. For example when you sell to CIOs and other senior IT execs who understand IT operations, the expectations around IT customer support and professional services are high. Service capabilities that can remotely diagnose trouble in products and signal it, sometimes even before the customer becomes aware is a way of using technology to be proactive in providing excellent service, which in turn usually leads to growth due to high current customer satisfaction.

Setting transformational priorities – A business & IT partnership

Often when in rapid growth, companies do not focus on improving business processes. As part of a long-term growth strategy, improving business processes can be key. In a normal business process transformation, you would focus primarily on making improvements on the process side. Often, a high percentage of critical processes have IT implications, so you must deal with business processes together with the IT that supports them. Systems and processes are often tightly linked.

Assessment & Methodology to Develop a Roadmap

An assessment can reveal capability gaps between where you are and where you needed to be. Using something like Six Sigma alone may be too rigorous and might not enable you to move quickly enough to get from here to there. Instead, using a Lean or Lean / Six Sigma approach enable you to identify the five top critical process capability gaps that can prevent you from scaling up the business. Attack those gaps with gusto. This enables you to continue to build quickly while also looking at least two or three years ahead to make sure that we had a road map of where we wanted our business and our technology to go. We revisit the road map every year because our business is pretty dynamic. Our problem areas will change, and we need to be nimble enough to address changes in the strategy.

Improve Processes to Improve Scalability

For example, an order-to-cash process might be something needed to improve in order to be able to scale up our business. You might note that a large percentage of sales orders in your company have to be manually touched by someone on the order-management team. Since so much of your business comes at the end of a quarter, that really threatens your ability to scale. So start by attacking that from the business process and systems perspectives. Some companies reduced orders requiring a manual touch by 75 percent.

Strive to deliver tangible business value in 90-day increments

When the company doesn’t see the results fast enough, questions start to pop up. So communication and change management are paramount because you want to show clearly not only the road map but also the results that you are generating by working through the road map.

Significance to our readers: 1) read the Wall Street Journal / MIT Sloane Management Review's analysis of CIOs in the work place 2) No World Borders has helped CIOs in several industries to transform business process and improve organizational effectiveness through organizational development work.

McCain Links Up to Potential Voters on LinkedIn

Senator John McCain debuted with a question on LinkedIn this morning, with over 500 connections in his profile – something that takes less well-known people months or even years to accomplish unless they make LinkedIn a hobby.   The question, "What is the Biggest Challenge America Faces? received 70 answers in 9 hours. Althought less anwers than Bill Gates receieved, Senator McCain is the first national political figure to leverage a truly business-oriented social network to ask questions about what is important in American politics to a hyper-connected technology and business savvy network.  At last count, over 1,680 people have now responded to Senator McCain's question.  We would not rule out increased momentum online for the McCain campaign as they show their savvy for using mediums not yet tested by Senators Obama or Clinton.  View McCain's linkedin group here.

Obama - $1 Million Minute on the Web

"AnObamaMinute.com calls for pledgers to register a donation within 60 seconds, at 1pm on Apr. 21. Could the site be interpreted as just another stunt in an environment where $1 million isn't what it used to be? "There is certainly an element of theater," admits one member of Obama's national finance committee who's familiar with the project (the campaign is participating to make sure all contributions meet federal giving requirements). But, it is also another ambitious fund-raising effort in a political season marked by campaigns that have aggressively pushed the boundaries of raising money, both off and online." – Business Week

"This is another wrinkle, another innovation that confirms the Internet's potential." 

says Larry Sabato, director of the Center for Politics at the University of Virginia

"In some ways, the Internet connects Obama supporters better," adds Sabato. "Clinton and McCain supporters are generally older, and this kind of high-speed fund-raising may not exactly be the way they think." The irony, of course, is that Pennsylvania primary voters tend to be older, comprising exactly the demographic that might not be attuned to such online events. His war chest well-funded, Obama's biggest hurdle is to convince more white, working, and lower- and middle-class voters to back him.

 

 

 

Be an Arsonist and a Fire Fighter – by Paul Sloane

Innovative leaders are comfortable with ambiguity. They know that there are many ways forward. They are evangelical about the vision but agnostic about how to achieve it. They have a clear strategy but are quite prepared to change tactics. They recognise the need for different leadership styles at different times. When it comes to innovative ideas they are alternately arsonists and fire fighters. They go around starting fires under people – challenging them. They ask questions that confront their teams - the kinds of questions that demand answers and actions:

• Can you find a new route to market?
  
• Can you halve our service response time?
  
• How can we break into the Chinese market?
  
• Can we find a better way to provide this service?
  
• Can you design a lighter, cheaper, faster version?

The leader starts many initiatives and then follows up to ask how things are going. The projects that are not succeeding are cut back. If the new product prototype does not please customers, or is not technically feasible or is very costly then the fire is extinguished. Lessons are learnt and the team moves on. The leader has a restless curiosity to try new things. Some people may find this frustrating and ask, 'Why does she keep asking us to try new things and then stop them just when they are getting interesting?' The answer is that only by trying lots of different things are we likely to find the radical new initiatives that we need. Not every interesting project can be pursued to completion. Life is too short and resources are limited. It is essential to eliminate the less promising projects so that we can devote resources to those that show the most potential.

Innovative leaders are a little schizophrenic. They strive for success but fear it. They love to win yet they applaud failure. They are coldly analytical some times and hotly passionate at others. They use left brain and right brain techniques. Their management styles are sometimes tight and sometimes loose. They are proud of what their team achieves yet they are humble enough to listen to feedback. They start fires and they put them out.  

Paul Sloane is an advisor to No World Borders and the author of The Innovative Leader, published by Kogan Page. His website is www.destination-innovation.com