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Tuesday, September 9, 2008

Look forward to spur innovation

Companies that experience high levels of success often build models upon which to generate future growth. As success often becomes a byproduct of a new way of thinking, companies typically adhere to the principles that became pillars of growth in the past. In a constantly changing business environment, however, organizations must exercise a high degree of caution in adhering to the old ways of doing business. The reason is simple. What propelled a company to success in the past, might not work in a competitive business environment that’s changing at a seemingly exponential rate.

Moreover, organizations that implement processes and build infrastructure must always keep the end objective in mind. This means that the executive team must continuously reevaluate existing structures to ensure that they facilitate the end objectives with the highest degree of precision. Leonardo Da Vinci once said that “inaction saps the vigor of the mind."(1) In large organizations, processes and infrastructural components often become layers of bureaucracy that sap the vigor of innovation. With added layers of bureaucracy, organization are often confined to thinking within the structural components of the organization instead of mapping out a future based on changing marketplace dynamics. This type of inactive thought impedes innovation.

As a company moves forward, it’s imperative to ensure that an infrastructure is built on a forward-thinking philosophy and not the old ways of doing business. Remember, processes are a means to an end. Once a company becomes focused on the means instead of the end, it can lose sight of its vision for the future. In short, past successes can impede progress because there is propensity to adhere to things with a proven track record. Since companies are competing in an evolving competitive environment, it’s important to look forward on an ongoing basis to open up the doors to innovation—and not simply look backwards to open the new doors of success in today's changing marketplace.

Footnote (1): http://www.legacyproject.org.

Tuesday, July 15, 2008

The three ingredients of powerful branding

Building a powerful brand starts at the strategic level and continues with actions that support the brand promise. If you’re looking to maximize the value of your brand, it’s imperative that your brand is believable, defendable, and distinctive. By carefully blending the right mix of these three brand ingredients together, you can give you can give your company a competitive advantage in today’s crowded marketplace. Here’s what you need to know:

Making your brand believable
All branding strategies attempt to position a company in a way that’s advantageous to the organization. This typically involves a brand promise and corresponding attributes that define your branding strategy. To make consumers believe your brand promise, your company must simply deliver on it. Netflix did—and its brand value continued to soar. Blockbuster didn’t—and its brand value plummeted. The first step is making your brand promise believable. Walmart, for example, cannot position itself as a retailer to the rich and famous because its brand (along with its organizational strategy) does not currently support this position. In other words, customers simply would not believe this claim because Walmart did well on focusing its strategy as becoming as a low cost provider for its niche market. As you can see, making your brand believable is important for creating the right type of perceptions in the marketplace—and it’s a perquisite for making your brand defendable.

Defending your brand
Once you build a brand strategy that’s believable, you must defend the brand promise through action. If your company is attempting to build a brand around superior customer service, for example, your company must simply deliver on it. Companies like Bank of America and Direct TV are unable to defend claims of good customer service because callers are placed on hold for long period of times. In today’s competitive marketplace, consumers are getting more demanding every day—and companies that make claims based on internal standards (instead of customer standards), they risk reducing their brand value. That’s one of the many reasons why it’s imperative to build a brand around areas you can defend. If your company makes statements it cannot defend, your organization’s credibility suffers, thus making all future claims less believable.

Making your brand distinctive
While making your brand believable and defendable are certainly prerequisites for building a strong brand, making it unique is what’s needed to separate it from the competition. Netflix is a great example of a brand that made it itself distinctive by staying to true to its core business model and delivering on its brand promise. Apple continues to deliver on innovative products with clean design elements and added functionality to make its brand stand apart from the competition. To get the most out of your brand, you need to blend the three branding ingredients with strategic precision in order to make sure your brand recipe provides maximum value to the organization.

Tuesday, June 24, 2008

The power of culture

An executive looking for a distinctive competitive advantage doesn’t have to look too far. It’s all within the organization. The ability to create a working environment that facilitates desirable behavioral characteristics among the workforce is one of the most valuable skills a leader can bring to table. For the executive ready to move his or her company forward in a competitive marketplace, it’s all about creating a culture that guides a company in a strategically sound direction—and then leveraging it as a competitive weapon.

Leveraging the power of culture begins with creating an infrastructure that aligns culture with strategic goals. This means that an organization must evaluate the current culture to ensure that all policies and processes support strategic initiatives efficiently and effectively. The goal is create a lean infrastructure that allows an organization to create behavioral norms within the workplace that guide employee actions in a particular direction that is advantageous to the company.

The complexity with shaping workplace behaviors suggest that an executive team might want go beyond strategic alignment and make sure there is a reward system in place for behaviors that are in alignment with desirable actions. The power of culture is unmistakable—and we’ve seen companies such as Southwest Airlines(1) use culture as a competitive tool. At the same time, we’ve seen companies like as Enron(2) create a culture that contributed to its cataclysmic collapse. The key for the modern executive, therefore, is to recognize that an organization's culture can be used to his or her advantage. By creating a culture that supports strategic goals with the appropriate reward system, an organization is able to add a powerful ally in its quest to increase the company’s level of success and set itself apart from the competition.

1. Thompson, Arthur; Gamble, John; Southwest Airlines: Culture, Values, and Operating Practice
2. Lawrence, Anne; The Collapse of Enron

Monday, June 9, 2008

Innovation: How to rescue it from the abyss of bureaucracy

The largest companies in the world often suffocate innovation through multiple levels of unnecessary bureaucracy. As companies grow, structures are often put in place to standardize and streamline processes. The problem? The diversity of opinions and ideas that can spur innovation often get buried in a tangled web of red tape and office politics. In today’s competitive business environment, however, executives must create a multi-directional information infrastructure to open channels of communication in order to leverage the talents of a larger employee base.

Organizations with traditional hierarchies often forced information downward without providing opportunities to incorporate the insight and creativity of a larger resource base in the development of the organization’s corporate strategy. This means that organizations often failed to amalgamate “the collective intelligence and imagination of managers and employers throughout the company”(1) to provide the maxim benefit of a diverse workforce. With increased competition and changing conditions, companies must leverage the strengths of all persons in the organization through open communication channels.

Once the executive team understands that the collective talent of the organization is more powerful than the brains of the oligarchy, the team is able to foster a mindset that enables multidirectional communication. This starts with a culture that inspires employees to communicate upward with the same frequency that managers communicate downward. As the company expands its communication infrastructure, collaboration among executives, managers, and employees must occur horizontally as well. By facilitating communication in all directions, companies are able to develop a “more open-ended process of strategic discovery”(2) that can lead to increased communication and the opportunity to capitalize on the plethora of great ideas that are typically buried in the abyss of corporate bureaucracy.

Sources:
Hamel, Prahalad, Competing for the Future, (Page 26)
Hamel, Gary; Strategy as Revolution, Harvard Business Review (Page 11)

Saturday, May 24, 2008

The business value of a promise

In 2004, Blockbuster announced that it would no longer charge late fees for movie and game rentals. Good news, right? Well, not exactly. As droves of customers turned in rentals late, they found that they were assessed a new fee—a restocking fee. As customers became angry at how the company marketed its new policy, its reputation took a serious hit, damaging the Blockbuster brand for years to come.

While Blockbuster was busy alienating customers, Netflix was building loyalty due to its added convenience and its ability to deliver on its brand promise. There were no restocking fees, no hidden charges, and no deviations from its promise. The company simply delivered what it promised—and its brand value began to soar. At same the time, Wall Street began to take notice. In August 2003, the stock price for Netflix was on the rise $16.67 while Blockbuster was still holding strong at $20.49.(1) In May 2008, the stock prices for Netflix and Blockbuster were $31.21 and $3.32, respectively—demonstrating the connection between brand loyalty and financial performance.(1)

Why did Blockbuster heavily promote a no-fees approach while charging customers with hidden stocking fees? CNN reported that Blockbuster might lose up to $300 million without the late fees.(2) As a result, the company attempted to recoup some of the losses with hidden fees—and this type of short-term thinking ended up costing the company more in the long-run with unhappy customers, decreased brand value, and lower stock prices.

Companies looking to succeed in an increasingly competitive marketplace must take a long-term that focuses on building customer loyalty and brand equity. It starts with creating a brand that is believable. It continues with building a brand that is defendable. Netflix simply made a promise and kept it. Blockbuster, on the other hand, failed to deliver on its promise—and its brand continues to suffer. As both companies jostle for market share, which company will you find more believable in future marketing ads? If you’re not sure, you might want to check with Wall Street first.

1. http://news.moneycentral.msn.com
2. http://money.cnn.com/2004/12/14/news/midcaps/blockbuster_latefees

Thursday, May 22, 2008

A BRAND new definition

The brand value for companies like Apple, Google, and Coca-Cola continue to soar. For these companies, brands are billion dollar assets. According to a 2008 report by Millard Brown Optimor, a leading research organization, the financial value of the top five brands in the world is estimated at a combined $343 billion dollars!(1) The ability to take an intangible asset and turn it into tangible value is certainly impressive; the ability to turn it into a billion dollar asset, however, makes it necessary to take a closer look on how we define branding.

Merriam-Webster defines a brand “a class of goods identified by name as the product of a single firm or manufacturer.” It also goes further to define a brand name by saying it relates to “having a well-known and usually highly regarded or marketable name.”(2) The problem with these definitions is that they’re short-sighted, outdated, and incorrect.

I define a brand as “an intangible asset defined by customer and marketplace perceptions, which are shaped by the amalgamation of an organization’s symbols, colors, collateral, products, services, and human interactions.” In other words, a brand encompasses everything. Every person, every action, and every symbol is part of a company’s brand. The power of branding is well known. In fact, most know that a strong brand can give a company a significant competitive advantage—but in today’s global marketplace, it can also be worth billions.

1. Millard Brown Optimor, Top 100 Most Powerful Brands, April 2008.
2. http://www.merriam-webster.com

Tuesday, May 20, 2008

Healthy strategies for increasing productivity

The bottom line on employee health
Changes in the health care industry are making businesses rethink traditional cost saving strategies. Medical and prescription drug costs are now taking a back seat to a more significant cost driver—presenteeism. According to a report published by the Harvard Business Review, presenteeism is costing companies more than $150 billion per year in lost productivity.(1) As health care costs continue to rise, businesses must look to reduce costs through forward-thinking strategies that focus on overall health management and controlling the impact of presenteesim. After all, presenteeism might be putting a significant strain on your bottom line.

What exactly is presenteeism and how does it impact your business? In short, presenteeism is the term used for employees who show up for work and perform below capacity due to illnesses. Chronic conditions like pain and depression are among the leading drivers of presenteeism—and they’re costing companies money in the form of lost productivity. Productivity losses due to employee health are giving researchers and businesses a broader view of the current health care landscape. As the impact of presenteeism becomes clearer, forward-thinking businesses are taking action quickly—and they’re starting to invest in employee health. The reason is clear and simple: a healthy workforce leads to a healthy bottom line.

Keeping costs under control
According to a report funded by the National Pharmaceutical Council, a Texas-based employer saved an estimated $105 million over a three-year span by reducing presenteeism and absenteeism through specific initiatives.(2) This report does more than illustrate the connection between employee health and financial performance—it demonstrates the enormous power businesses yield at controlling health care costs. As health care providers continue to provide more tools for managing chronic conditions, it’s up to you to give your employees the resources they need to stay healthy. In today’s changing health care landscape, it’s all about health management and healthy living. In short, it’s about preventing the onslaught of serious conditions and keeping chronic illnesses under control in order to save your business money over the long run. With real solutions starting emerge over the horizon, what can your business do to control health care costs?

Solutions for your business
Businesses of all sizes can benefit by adapting to the changing health care paradigm. The keys are to (1) create a culture around total health management, (2) focus on reducing long-term health care costs, (3) reduce the impact presenteeism, and (4) select the right health care partner.

Creating a culture around total health management
Creating a culture that drives employee health forward ultimately drives your business forward. Often, employees are fearful of making a call to the doctor’s office or checking prescription information while at work. Removing these fears by encouraging your employees to take care of their health is in your best interest—even if it’s on your watch. By giving your employees the flexibility to manage their health, you’ll not only reduce stress on the job, but you’ll also save your business money in the long run.

Focusing on long-term health care costs
Managing health care costs over the long run translates into long-term cost savings. As a result, it’s important to invest in a healthy workforce today. By focusing on preventive care and health management now, you’ll be able to keep your employees healthier longer. With healthier employees, you’ll find that they’ll spend less time—and less money—responding to neglected (or even preventable) illnesses.

Reducing the impact presenteeism
As health care costs continue to rise, businesses must begin looking at how to reduce long-term costs by controlling presenteeism. The first step in controlling costs associated with presentessim is to understand the link between employee health and productivity. Once you make this connection, it’s important to provide your employees with the tools and resources to help them stay healthy and on top of their existing conditions.

Select the right health care partner
Today, health care providers are focusing on total health management. Providers that understand the changing health care paradigm are providing members with a wide range of health management and healthy living tools online through a sophisticated system of care. The goal for your business is to find the provider that suits the needs of your workforce—and helps your business build a culture of healthy living.

The advantage of a healthy bottom line
A healthy workforce does more than create a happy workplace—it provides your businesses with a competitive advantage. By focusing on total employee health, you’ll not only get a healthier workforce, but you’ll also benefit from increased worker productivity. With increased productivity, you’ll get greater efficiency and long-term cost savings—and that’s good business.

1. Hemp, Paul, Presenteeism: At Work--But Out of It, Harvard Business Review, Oct 1, 2004
2.Ronald Loeppke, MD, MPH, Et Al Health and Productivity as a Business Strategy, American College of Occupational and Environmental Medicine, 2007.