A blog is not like a plant of the desert variety; it needs watering more often, so here’s an excerpt from my imminent Market Advisory on the marketing tectonic shift:
The Mirror: Customer Experience and Intimacy
We will see more changes in marketing practices from 2006-2015 than in the rest of the profession’s history because marketing will be the vanguard for the shift from an industrial economy to a knowledge economy, which will demand competence in all encompassing customer experience in order to achieve differentiation. Similarly, the globalization of markets is accelerating: emerging markets will represent extraordinary potential, but addressing them will demand unprecedented innovation. In a bright spot, ongoing CRM and BI initiatives, combined with continuing standardization of architecture (SOA) and messaging (Web services, XML), will begin to deliver the proverbial 360° view of the customer.
The Customer Experience Imperative
The customer experience will be mandated from producer and consumer quarters. Consumers have product fatigue. In many categories, there are too many choices with little differentiation save price. Producers will have unprecedented information, which they will explicitly use to create experiences. In fact, no consumer wants a product or service anyway; rather, consumers buy products and services in order […]
Last night I attended TiE Chicago’s “The Great Chicago Tech Debate,” which turned out to be a rousing panel discussion (no, that’s not necessarily an oxymoron 😉 replete with insights. As it was my first TiE (The Indus Entrepreneur) event, I enjoyed taking an informal survey of members afterwards, and everyone I spoke with found it extremely valuable (not awfully surprising, but still..). TiE, which was founded in The Valley and has chapters globally, is a network to support entrepreneurs. As its name suggests, many of its leaders originally hail from India, and many have founded, led or helped to launch successful start-ups that have leveraged offshore partners in India.
Although the setting of this tale is Chicago, its lessons will apply to many other cities, provinces or countries that find themselves in a global knowledge economy, with the need to form a vision to galvanize their citizens to make changes in order to succeed in the new environment. Two of the main challenges are: making the shift from the industrial economy to the knowledge economy and the need to differentiate to compete. “Technology” plays a supporting role, which we’ll discuss more in a minute. After some observations on the […]
Sidebar: Industrial Economy DNA
Chicago, in being one of the foremost industrial regions, has industrial economy DNA. This DNA isn’t well suited to the first phase of the knowledge economy, which turns many industrial economy assumptions on their heads. For example, even more remarkable than tech companies’ ability to create wealth quickly is their lack of constraints from raw material inputs: these companies can be located anywhere, irrespective of natural resources. Their main physical requirements are power and fiber, which can be built or brought almost anywhere. In contrast, putting together an industrial enterprise involves accommodating materials with physical constraints at every turn: the sources of raw material inputs are often limited and scarce. Moving the material or parts from one area of the enterprise to another often requires special machines and specialized equipment. Dangerous chemicals are often involved in transforming raw materials. Disposing of waste is not trivial. Often, machinery to transform the raw materials must be custom built, and the machinery imposes its own constraints. Consequently, Chicagoans are accustomed to changes being incremental; we are accustomed to things taking time. This economy is bits, not bytes.
Chicago is renowned as a distribution hub, which began with its proximity […]
The End of Corporate Imperialism, by C.K. Prahalad and Kenneth Lieberthal, encapsulates the obvious elegantly and factually, and its thesis is far more true today than in 1998, when it was written: “Too often, companies try to impose Western models of commerce on developing countries. They’d do better—and learn more—if they tailored their operations to the unique conditions of emerging markets.” Western MNCs (multinational corporations) perceive the primitive state of consumption in emerging markets, and they too often develop a strategy in which they: 1) focus on the extreme minority of wealthy consumers and/or 2) address the order of magnitude larger middle tier of the market by offering their past-mature products with minor cosmetic changes.
This is another symptom of MNCs’ being stuck between industrial and knowledge economies. As I stated in my Transourcing Point of View, “Enterprises are ambivalent about innovation and product creation because they represent an inherent conflict: the drive to amortize past investments (including process-oriented constraints of marketing, distribution, service, etc.) conflicts with companies’ need to satisfy customers’ wishes for novelty. In practice, this too often leads to vapid product extensions.” The industrial-era enterprise derived its competitiveness largely through production and distribution efficiency, and it marketed […]
In the entry on innovation, I mentioned that an excessive focus on the numbers produced irrational behavior, and I found a perfect example of it this morning. Coca-Cola spends millions of dollars on developing new flavors of Coke, most of which have proven to be well publicized, expensive flops, at least compared to projected goals. According to The Wall Street Journal (“U.S. Thirst for Mexican Cola Poses Sticky Problem for Coke“), the growing Hispanic community in the U.S., a large portion of which is from Mexico, thirsts for its home-grown version of Coke, which Coca-Cola refuses to import due to its agreements with U.S. bottlers. Some enterprising distributors manage to quasi-circumvent the system to import just under $120 million of soda into the U.S. each year. Coke threatens retailers and distributors with legal niceties when bottlers cry foul but otherwise looks the other way.
Let me get this right. Coke spends millions on developing product extensions that flop, yet it has a $120 million nascent market for a product that already exists, which it is resisting.. all because of its relationship with its distribution channel. This is a perfect example of industrial economy thinking: restrict and control while putting customers […]
At the MIT Enterprise Forum’s Innovation and Technology Forecast in Chicago Tuesday, there was significant discussion about China’s growth and what that would mean for innovation in Illinois. Many speakers also made references to the importance of catering to knowledge workers. Chunka Mui, Dan Ratner, Geoffrey Kasselman and Jerry Mitchell were panelists, and Jerry spends significant time in China. His admiration for what is happening in China was contagious and triggered the train of thought here.
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Innovation
I had the privilege of hearing Larry Keeley, Co-founder of Doblin, the innovation strategy firm, at the GCB Innovation Round Table last night. He painted a vivid picture of the white water global economy in which we find ourselves as a context for his talk on innovation. In brief, the degree of uncertainty and change has created a “nervous time” for corporate executives. The pace of change is probably unprecedented in the experience of the human race (my take on this below). He implied that the anxiety around terrorism is amplifying this underlying general nervousness:
We face a high degree of ambiguity on political, economic and societal levels. People hate ambiguity. Complexity has two meanings: things are difficult to understand and we cannot know the outcome of our actions (because there are too many inter-related concepts, dependencies and data for us to comprehend). People find this overwhelming. Volatility of markets; Wall Street (fill in the blank for other markets) punishes executives for vagaries in the numbers, which has led to a legendary “make the numbers at any cost” attitude. People find this mystifying and unsettling because it constantly produces nonsensical behavior.
If we define innovation as measured risk-taking and […]
Rare Legal and Business Insight into Offshore Countries and Regions describes Baker & McKenzie’s excellent webcasts focused on offshore business.
Depending on your business strategy, it may make sense to explore offshoring to several regions of the world to mitigate the risk that your partner might be affected by natural disasters or political upheaval. In fact, many offshore experts recommend a portfolio strategy for risk mitigation or operational effectiveness (follow the sun operations can reduce time to market) while meeting cost objectives.
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