“BRICS” to set up “$100B contingency fund”, to tackle financial crises |by: Reuters | VCCircle

” BRICS nations have decided to set up a $100 billion Contingency Reserve Arrangement to tackle financial crises in the emerging economies”…. 

At a summit in South Africa on Wednesday, Vladimir Putin likened the BRICS nations – Brazil, Russia, India, China and South Africa – to Africa’s “Big Five” game beasts of trophy hunting lore – the lion, elephant, buffalo, leopard and rhinoceros.

The Russian president’s comparison captures the dilemma of these muscular emerging global powers, which together present a formidable potential economic and political counterweight to the developed West, but individually could hardly be more different.

The question is whether the BRICS five can run as a herd or hunt as a pack on the global stage, transforming their diverse but collective strength into real institutions and coordinating structures to project their voice in the world.

At a two-day summit in Durban, South Africa, the leaders of countries that make up more than 40 per cent of the world’s population and a fifth of global GDP seemed to have little concrete to show from their mostly closed-door deliberations.

After mooting plans for a BRICS development bank at a summit in New Delhi a year ago, the leaders in Durban were only able to announce the start of formal talks on the constitution of the bank, a lumbering pace even for a group as diverse as the BRICS.

“We have decided to enter formal negotiations to establish a BRICS-led new development Bank based on our own considerable infrastructure needs, which amount to around $4.5 trillion over the next five years,” the host, South African President Jacob Zuma, told the summit.

He added the bank aimed to cooperate in the future with other emerging markets and developing countries, but revealed little about the structure of a world institution pitched as a potential complement, if not rival, to the IMF and World Bank.

A separate statement from the “FIVE Heads of state” blandly hailed the development bank plan as “feasible and viable”.

Russian Finance Minister Anton Siluanov had said on Tuesday that BRICS ministers in Durban seeking to thrash out the technicalities of the bank had not been able to agree yet on details of its funding or its location.

“It cannot be done overnight. We just used one year since the New Delhi summit to complete a feasibility study and now we are at a very different stage where, as always, the devil is in the details,” Russia’s deputy foreign minister Sergey Ryabkov told Reuters on Wednesday.

Zuma also announced the group’s “resolve” to set up a $100 billion foreign exchange reserves pool, again indicating little real progress on creating another financial coordination tool.

Born in a research paper : 

That the BRICS have come even this far could be seen as surprise. The group began as an idea in a 2001 research note by a Goldman Sachs banker, who coined the term BRIC to refer to fast-growing big countries Brazil, Russia, India and China, on a path to overtaking the world’s rich nations in economic power.

Those four are the only developing countries that number in the world’s top 10 by GDP, and each is a giant in its region, but they have little else directly in common. Yet they share a sense that institutions set up by the West are ignoring their interests, and in 2009 they held a summit in Russia, announcing their goal of joining forces to counterbalance the West.

They have held annual summits since, in 2010 adding South Africa, the largest economy on its continent, although it barely cracks the global top 30 and is a twentieth of China’s size.

“We have firmly established BRICS as a credible and constructive grouping in our quest to forge a new paradigm of global relations and cooperation,” Zuma said on Wednesday.

At the Durban summit, the South African hosts announced the signing of two multilateral agreements, one on “green economy co-financing”, the other on infrastructure co-financing for Africa, but no figures or details were immediately given.

Bark, but no bite? : 

Seasoned BRICS observers said they were not surprised by the lack of concrete institution-creating results from the summit.

“I think there was too much hype around it,” said Martyn Davies, chief executive of the Johannesburg-based Frontier Advisory consultancy that focuses on emerging markets.

“They are still battling to create the economic institutions to back their geopolitical rhetoric … the rhetoric is not supported by the substance,” he told Reuters.

Just as lions, elephants and rhinos are not natural allies, Davies saw the BRICS countries as “very disparate, with no political commonality”.

After only a few hours of plenary talks at a Durban conference centre, the BRICS heads of state retreated to a nature reserve lodge on Durban’s outskirts for a closed-door dialogue with a score of African presidents about “unlocking Africa’s potential” by supporting infrastructure construction.

Led by China, the BRICS are now Africa’s largest trading partners and its biggest new group of investors. BRICS-Africa trade is seen eclipsing $500 billion by 2015, with China accounting for 60 per cent, according to Standard Bank.

African governments and leaders broadly welcome the multi-billion-dollar Chinese-led BRICS trade and investment influx.

“You have to put money into development. The West has not put money in. This is what China does,” Congo Republic’s Transport Minister Rodolphe Adada told Reuters in Durban.

He said Africa could only benefit from the eventual creation of the BRICS development bank: “What we already do individually (with BRICS members), we can multiply if we have this instrument,” Adada said.

Signals to the west : 

Bala Ramasamy, economics professor at Shanghai’s China Europe International Business School, said that despite kindred statements about rebuilding the world’s financial architecture, the BRICS nations have struggled to find a common identity.

“The BRICS as a group does not mean much. They mean something individually. This is not an alliance of equal partners. China is the dominant player here,” Ramasamy said.

“If you think about BRICS as a balancing power to the US and the EU, this is not one entity. So how do you expect them to counterbalance the United States?” he added.

The World Bank has always been led by an American and the IMF by a European since both bodies were founded in 1946. Last year, the BRICS failed to agree on a developing world candidate to be the new World Bank president and could not stop the appointment of another US citizen, Korean-born Jim Yong Kim.

Frontier Advisory’s Davies said he believed the only emerging power which presents a real substantive challenge to the existing world political and financial status quo is China. But he added Beijing seemed unwilling to shoulder this burden alone and sought company in the BRICS group.

In Beijing, the influential Chinese tabloid the Global Times acknowledged the BRICS would face some problems when seeking to deepen their multilateral cooperation.

“But they are at least encouraging each other and increasingly distancing their interests from Western ones. This will further define fairness and justice worldwide.”

In the absence of concrete institutions to consolidate and leverage their clout on the global stage, Davies said the BRICS should consider widening their organization. “What about new members … Turkey, Indonesia, Mexico, Nigeria?” he said.

Ramasamy said the BRICS summits served as “a signal to the developed world that the emerging markets are getting their act together one way or the other”.

“Whether they do it or not is a separate question, that time would speak of “.

The “New Mating-Rituals of Consumer-Goods Companies” & the “Buyers they Want to Attract” |by:Patti Putnicki | Outsourcing Center,WIPRO

There was a time when brand recognition was a consumer product’s best friend. A pretty package and eye-level shelf placement, coupled with some targeted print campaigns or lever TV ads, and you had it made.

Whether you sold fashion or food, golf clubs OR barbecue grills, the right combination of product, price, promotion and in-store placement moved merchandise.

While all of those things are still important, they’re just not enough anymore. The way that people buy products has fundamentally changed. Your product might catch their eyes; your name might ring a bell; but they’re not taking you home until they get to know you a little better.

Love at first sight is less important than the deeper, mental connection.


“ Today, customers are buying value—consumer goods that not only give them the most for their money, but make them feel good about their purchase,” explained Vivek Venugopalan, chief technologist, Retail, Consumer Goods, Transportation and Government, Wipro Technologies.

“ The economic downturn made buyers more focused on how to get the most for their dollar, and the rise of mobility has fueled information access. These TWO trends have converged to produce a more informed, more inquisitive consumer.”

In other words, people aren’t buying on just looks alone. They now have a relationship with the brands they buy before they make a commitment.

That need has ushered in some significant trends in the consumer goods market :

  • Searching for “Product Right” 
  • Creating the “Store within a Store”
  • Taking the Relationship to the Next Level
  • Applying Analytics to Gain Customer Insight
  • Going Local with Promotional Campaigns
  • Making a Long-Term Commitment 

Clearly, the way consumers shop and make buying decisions has dramatically changed, forcing a fundamental shift toward digital transformation. To thrive, consumer goods companies are using new technology to both become more valuable to their retailers and connect their customers with their brands in a multitude of ways.

And, from all indications, it’s a match made in heaven…..

“Chasing break-even a mistake”; products should have been early focus |by:Hitesh Oberoi | VCCircle

Industry veterans on ” What makes it difficult to build a successful product business in India”.… and how to overcome it ??


Chasing break-even a mistake; products should have been early focus: Info Edge’s Hitesh Oberoi | VCCircle.

Want Your Company to Grow? “Fire Your Managers!!” | by: Ilya Pozin, Founder of Ciplex & Columnist for Inc,Forbes.

” Too many employees work for their boss rather than their company or their clients “….

Businesses these days are filled with multiple layers of management, and employees often find themselves playing politics and focusing on tasks to make their boss happy.

At the end of the day, the company quickly forgets what their goals are and what they are in business to do — and everyone is focusing on the task at hand with little sense of how it fits into the bigger picture.

If you notice this in your workplace, your top-down hierarchy is the culprit.. 

By eliminating this model at my digital marketing agency, Ciplex, we created a company people love working at, and saved money in the process. Our customer satisfaction went up, and the quality of work improved. We have happier employees, satisfied clients, lowered costs, and a better company overall.


Create a Team Culture –  

I created small three to five person teams and removed any ‘bosses’ those teams or team members had. I also dismantled any “senior” or “VP” titles within the team. Though leaders will naturally emerge within a team, there’s no need to have a strict reporting structure. Your senior employees may initially be taken aback by this idea, but it’s important to remind them that the changes in culture and work habits will lead to increased productivity and motivation. Let your team choose their own titles, without implementing hierarchy, and have teams measure their own performance so they can learn and grow.

Set Goals – 

Employees need to work collectively–not just as task-doers. After creating teams, I gave each team a goal, one that could easily be measured in short intervals–like one or two weeks. This helps employees to see exactly what outcome they’re working for–they now focus on the why and no longer on the how. Given a goal and consistent short time-frames, teams are able to measure their performance and learn from previous mistakes, allowing them to improve during the next time interval. Establish the philosophy of team goals, and employees will no longer feel as if they’re just “doing tasks for the boss.” Employees will appreciate the effort to allow their team (or even individual team members) ownership and responsibility of the goal. If they need help, they have a support layer, but no hierarchy is involved.

Provide Support, Not Escalation – 

In a hierarchical workplace, escalation occurs when a problem arises. Instead of team support, you get individual workers passing problems off to other people. And when a problem is passed, so is its ownership. In my model, managers and bosses are repositioned as team support, working for the teams, helping them in whatever they need. Former high-level executives provide help and support, rather than telling employees what to do or how to do it. Getting rid of company hierarchy means client or customer satisfaction becomes priority and ownership stays with the team. Since no one is able to “pass the buck” when a problem comes up–everyone will tackle problems collectively. No more navigating departments and roles (politics) that once divided them.

Take Money Off the Table – 

By default, salaries are hierarchical. When you flatten your company hierarchy, you don’t have to flatten salaries to make them equal for everyone–but you do have to talk to your employees. Ask what they need to feel comfortable on a monthly basis. We didn’t lower any salaries, but we did give out some raises. Create pay levels that are tied to performance, not job titles and seniority. As soon as your employees aren’t constantly worrying about money, your culture can thrive. Remember, you want your employees to work towards a team goal, not towards their paycheck.

Remove Rules, Give Autonomy – 

No one likes to feel they’re living under authoritarian rule. Autonomy is one of the biggest motivators, so let your employees act like the adults they are. By removing unnecessary rules and offering flexibility, they can determine how much they need to be in the office on a given day, or whether or not they’ll be able to take a vacation next week. Structures like strict work hours, location requirements, limited vacation time, fancy titles, and even employee reviews scream one message: employees are working to satisfy rules–not to meet goals.

Lead, Don’t Manage – 

Dismantling your company hierarchy means your teams will measure their own success, giving you the freedom to lead instead of manage. Don’t correct employees or solve their problems–guide and support them with leadership instead. If there’s a problem, ask key questions to guide them to the solution instead of jumping in to take the reins and own the problem.

Reap the Benefits –  

By flattening our hierarchy and getting rid of the bosses, Ciplex’s culture has thrived. Our employees are happier because they actually want to come to work every day–they don’t feel forced to work because of money, nor do they feel shut out of big decisions. In addition, we watched the quality of work and customer satisfaction increase, while costs were lowered. Grow your company by getting rid of the hierarchy, and you will create a company people love working at.

Could your company culture benefit from dismantling your hierarchy ? Why OR why not ? Share your thoughts in a comment below !!! 

“Unisex Salon chains rising in India” | G. Seetharaman | Business Today

The grooming industry is getting a makeover . A few years ago, if a man wanted a haircut, he went to the local barbershop, the kind with posters of film stars with gravity-defying hairdos on the walls. Women who wanted their tresses snipped or eyebrows threaded went to a nearby beauty parlour, usually for ‘ladies only’ and run by an enterprising neighbourhood woman. But the rise of unisex salon chains is changing all that.

A typical example of the new salon client is Aditya Mahajan, a 31-year-old auto industry professional in Mumbai. He switched from traditional barbershops to unisex salons a few years ago. “I wanted a better hairstyle and better service, so I tried one of these salons,” he says. He tried out several and eventually settled on the Enrich chain.


“Men acount for 35 per cent of our footfall and 40 per cent of our revenues,” says Vikram Bhatt, Director, Enrich. The Mumbai-based chain expects sales of Rs 55 crore this financial year and plans to take its salon count from 28 to 40 by March.

Even established chains are hopping on the unisex bandwagon. Lakme Lever, a unit of Hindustan Unilever, which already has 170 salons across the country, launched its first unisex salon, Lakme Ivana, in July 2011. Clients such as Mahajan are an important factor in the growth of unisex salons.

Veena Kumaravel, Chief Executive of Naturals Beauty Salon, says men are increasingly going beyond haircuts. “We see them getting pedicures, manicures and facials, and even getting their hair coloured,” she says.

A visit to the flagship Jean-Claude Biguine salon at Bandra, Mumbai, corroborates her words. As we talk to Dharmendra Manwani, the dapper Founder and CEO of JCB Salons, the Indian franchisee of the Paris-based chain, a man in his twenties sits with his head under a hair steamer, while a couple more await their turn.

A recent report by PricewaterhouseCoopers, or PwC, and the Federation of Indian Chambers of Commerce and Industry pegged the size of the salon business at Rs 7,000 crore. Rashmi Upadhya, Managing Consultant, PwC, says the industry could double in size in three years.

“These chains use franchising to scale up and move to Tier-II and Tier-III towns,” she says. Jawed Habib Hair and Beauty, for instance, owns only 15 of its 329 outlets in the country. Naturals, which has over 100 outlets, has set up shop in small towns in Tamil Nadu, such as Thanjavur and Chidambaram, through franchisees, and is exploring possibilities further north to nearly double the number of its salons.

However, franchising is not everyone’s style. Enrich owns and operates all its salons. “Though it may limit our ability to expand, it helps us follow a consistent process and centralise key functions,” says Bhatt.

While small-town India has huge potential for salon chains, some, such as b:blunt, are sticking to big cities, as going beyond them might mean lowering prices. “We don’t want to fiddle with prices too much, because others have got into trouble doing that and trying to be too many things to too many people,” says Satyajeet Thakur, Director, b:blunt. The chain has two formats: the flagship b:blunt, where a haircut costs between Rs 850 and Rs 4,000, and b:blunt mini, which charges half as much. Jawed Habib, too, has a compact and cheaper format – JH HairXpreso – for locations such as malls.

Besides Indian chains, global ones, such as Toni & Guy and Saks, are making their presence felt. JCB Salons’ Manwani says the Indian salon industry is changing rapidly. “Earlier, salons took 12 months to break even. Now it’s four months.” Each of JCB’s five salons makes an average of $1 million (Rs 5.3 crore) a year.

While demand is no problem, what could stand in the way of salon chains’ expansion is the lack of skilled stylists. To get around it, they have their own academies, whose graduates start with salaries of Rs 10,000 to Rs 20,000 a month, plus commissions and tips. “The growth of the salon chain is impossible without skilled stylists being produced regularly,” says Rohit Arora, Executive Director, Jawed Habib.

Even companies such as L’Oreal, which supply products to salons, play a role in skill development. “We train 80,000 hairdressers a year,” says Dinesh Dayal, Chief Operating Officer, L’Oreal India. “We do not supply some products to salons without first training the staff to use them.”

Another hurdle salon chains must overcome as they grow is financing. The PwC report notes that funding through internal accruals is not conducive to rapid growth. Jawed Habib filed in February for a Rs 60-crore initial public offering, and is awaiting clearance from the Securities and Exchange Board of India. In late 2010, Enrich raised a reported $10 million from JM Financial India Fund. Analysts say Enrich’s peers may also take the private equity route as they grow bigger. Remarkably, the growth of the salon business is something nobody doubts.

“Skills for Global Business” in the new-age | by:Peter Vanham | FT.com

United Steelworkers


“PVR BluO partners with Sony”,will Launch “Playstation-Lounges in India” | IndianRetailer

While offering premium entertainment to its wide set of audiences, PVR bluO encompasses a plethora of fun zones like karaoke lounge, tattoo parlor, fine dining spaces, gaming lounges and much more apart from the celebrated cosmic bowling. Over the years PVR bluO has established itself as the connotation of entertainment in India in the true sense.

As a part of its overall strategy, PVR bluO has tied up with Sony to launch its first-ever “Playstation Lounges” in India. 

The company is on an expansion mode wherein they are fervent in getting for their patrons, nothing but the best. With the launch of India’s first-ever Playstation lounge, PVR bluO has yet again outshone the combat of marketers in captivating the hearts of the patrons with love for gaming.

PVR bluO which has evolved as an organization while strategically building a strong array of interactive entertainment zones since 2009.

“Social Intelligence” and “Emotional Intelligence” | by: Beth Miller | ExecutiveStreet

In past posts, I have discussed the value of Emotional-Intelligence, commonly called EQ or EI. Daniel Goleman developed a theory of emotional intelligence in the mid-1990s, and it’s applicability for both education and business.

People with a high EQ are :

  • self-aware, monitoring and regulating their own motivations;
  • adept at reading and responding to the emotional needs of others;
  • and are able to learn from mistakes.

While all of these are important, they are not all a leader needs to succeed and have the highest level of communication and engagement among their team members. Social intelligence also plays a role, and sometimes an even more important one than EQ.

“You can be the most brilliant innovator, problem-solver or strategic thinker, but if you can’t inspire and motivate, build relationships or communicate powerfully, those talents will get you nowhere,” says Goleman, pointing out how crucial social intelligence is for leaders. Leaders need to coordinate people with resources, to understand needs, motivations, boundaries, reactions, and limits, and none of this can be accomplished without keen social awareness.

What are the basics of social intelligence? Being able to talk to people is one key trait—and not just people who will be useful to you, either, or who will stand still while you talk about yourself. Another ability that is a large part of social intelligence is being able to actively listen, in a way that allows you to understand another person’s feelings and patterns of thought. With these foundational skills, continually developed, you can navigate your way through difficult negotiations and important team collaborations successfully. All these skills are learned and developed throughout everyone’s life, but not everyone makes the most of naturally occurring opportunities to grow their social intelligence.

Without social intelligence, even the smartest and most competent leader will not advance, because without the strength of social bonds on a team, employees can often become frustrated with the lack of communication or the poor method in which information is delivered. Even worse, their frustration can even cause them to mirror a leader with low social intelligence, bringing down the efficiency of the entire team. A leader low in social intelligence will be critical to others in non-constructive ways, or display a lack of interest in others’ projects, thus unraveling morale. A leader who does these things won’t remain at the top for long.

Social intelligence is something that everyone improves upon throughout their lives. And, good leaders develop social intelligence as they progress in their careers. Ways to accomplish this include the simple act of paying more attention to how social interactions work, obtaining an executive coach to develop behavioral techniques to strengthen social intelligence, and formal assessments, such as Strengths-Finder, which allows individuals to identify thematic strengths of character that they can then build on in their day-to-day interactions.

What steps do you plan on taking to continue to develop your social intelligence ? 


“Great Innovation”, starts with the “Fundamentals” | Operations | AT Kearney

In a series of studies, A.T. Kearney is examining the drivers of sustained innovation success. In our last study, we focused on innovation management and found that leading companies place three times more emphasis than followers on the front end of their innovation funnels—developing an innovation strategy, generating ideas, and screening ideas. And these same leaders place six times more emphasis than followers on developing an innovation strategy.

In this study, we analyze a cross section of companies and interview executives to understand how to build a successful innovation strategyBased on the media attention given to innovation, you might expect that the path to success would involve something like a unique brainstorming process that generates unique ideas or a Jobs-like leadership figure who can predict what customers want and shepherd this vision to fruition.

However, the primary findings of our current study are far more fundamental:

  • Leaders have an explicitly defined and tested innovation strategy and governance process
  • Growth, not profits, is the primary reason to pursue innovation
  • Innovation is too often led by business unit leaders who may compromise the needed firewall between today’s needs and tomorrow’s plans
  • Sustainable innovation requires identifying and monitoring specific success metrics to enable corrective action

A sound innovation strategy ensures that innovation doesn’t get subjugated to the pressures of today’s business needs. In simple terms, great innovators do not permit the present to crowd out the future. The leaders in our study create separate engines for managing today’s business versus planning for tomorrow—pursuing an immediate impact while expecting to capitalize on a longer-term growth advantage. For example, longtime innovator IBM dedicates three teams to drive the company’s innovation agenda by focusing separately on innovation strategy, technology trends, and innovation operations. To ensure an emphasis on both current and future priorities, IBM organizes business opportunities across three different time frames: short-term core business opportunities, medium-term growth opportunities, and long-term emerging opportunities. IBM made a conscious decision to maintain a set portion of funding (about 10 to 15 percent) for longer-term opportunities so they are not sacrificed to immediate priorities—or the infamous fire drills.

Do We Really Need an Innovation Strategy ? 

As expected, the findings of our study, which is an expansion of A.T. Kearney’s European Best Innovators competition, illustrate the benefits of an explicitly defined strategy. Most executives with a defined strategy (86 percent) view their innovation performance as meeting or exceeding their expectations, while just 50 percent of those without a strategy say the same (see figure 1).

However, a defined innovation strategy alone will not improve performance. Equally important is defining other components of success, including accountabilities, resource commitments, and performance metrics. Governance and mechanisms to drive implementation are critical. Procter & Gamble (P&G), for example, has a dedicated innovation organization with a dotted line to each of its businesses. Each business has dedicated personnel in R&D responsible for driving innovation and interfacing with external partners, such as suppliers, to connect internal needs with outside ideas.

Committing investments and resources for use in executing the innovation strategy is an even greater challenge. Most executives fail to separate today’s and tomorrow’s needs when developing their business plans; as a result, when resources are limited, acting in today’s business interests takes priority over innovating for the longer term. This amounts to triage. When it comes to committing resources, innovating for tomorrow often becomes a casualty of managing for today.

A handful of companies have removed the resource roadblock. Consider Google and 3M, where flexible employee work policies encourage the pursuit of innovative ideas. Google’s well-known 20 percent time policy has allowed its engineers to spend one day a week pursuing projects outside of their area of responsibility. Similarly, 3M has a 15 percent rule to allow scientists to explore ideas that could lead to new business opportunities.

Although executives generally agree that innovation objectives must be aligned with corporate strategy, most believe they achieve that goal even when no explicit innovation strategy exists. They say an explicit innovation strategy is not needed as their efforts are guided by external factors: customer needs and mega-trends, such as the emergence of social media. Additional (though lesser) inputs to the innovation strategy process include intelligence on competitors, technology requirements, and internal competencies.

Our study reveals the following :

  • A majority (70 percent) of companies use simple scenarios to test their innovation strategies, and the rest use no scenario planning at all. In our experience, it is a mistake not to deploy sophisticated scenarios developed through a combination of external variables, industry dynamics, and company-specific elements.
  • Only half of companies refresh their innovation strategies annually or more frequently. The other half refresh every two to three years, on an ad hoc basis, or only in response to external events.
  • Refining the innovation strategy is three times more likely to be driven by near-term events (financial performance, current economic conditions, leadership changes, or competitor moves) than by long-term factors (long-term economic outlook or the imminent end of a product life cycle).

Given the importance of innovation to growth, and the well-known fickleness of consumers and trends, is it wise to rely on overly simplistic methods to develop and test your strategic direction? If the purpose of an innovation strategy is to set the course for tomorrow, shouldn’t that strategy be tested using thorough scenario planning, refreshed on a regular basis (at least once a year), and driven by long-term factors? Otherwise, some innovation strategies really are innovation tactics aligned to the overall corporate strategy.

Growth or Profits ? 

Top-line growth is invariably the main goal of an innovation strategy. Respondents state that they are three times more likely to focus their innovation strategy on growth versus profitability. In other words, innovation strategies are far more likely to yield more product introductions, faster time to market, or increased sales than to reduce costs or increase the efficiency of operations.

When seeking top-line growth, the customer is king. Our study reinforces this maxim, as most executives say that meeting customers’ demands is the leading criterion used to prioritize innovation efforts—besting all other criteria, including the ability to increase financial returns and fit with existing capabilities (see figure 2). For example, 3M’s first step in pursuing innovation is connecting a customer need with a technology that can address the need. Many of 3M’s successes stem from scientists having a direct relationship with customers and sometimes identifying customer needs before the customers recognize that they have that need. P&G is known for capturing customer comments in real time to gain feedback on how a product is performing, which enables continuous improvement and leads to repeat purchases and product loyalty.

Who Leads Innovation ?  

Most companies see innovation as being led from near the top, though not from the top, of the organization. Figure 3 shows the breakdown. In two out of every three companies, business unit heads have a leading role in innovation activities. Leadership from business units rather than CEOs is likely to complicate the separation of today’s and tomorrow’s priorities.

Innovation stars P&G and IBM separate those leading an innovation initiative from those running the business. The head of innovation at P&G reports to the chief technology officer, and IBM’s second-highest ranking executive is specifically charged with creating and maintaining innovation programs across the company.

Open innovation, the kind P&G is known for, which involves collaboration with outside parties such as suppliers, is not systematically practiced. Only 9 percent of executives say they collaborate with value-chain partners, and 45 percent say that procurement does not have a significant role in innovation. (The only function with a lower score is information technology.)

We are not surprised by this result despite the allure to imitate leaders such as P&G and Google. P&G’s innovation strategy strives for more than 50 percent of its innovation to come from suppliers, individuals, or even competitors. Google has a hybrid model: It typically encourages open collaboration but is closed at times to surprise the market. For example, mobile device operating systems Android and Chrome OS were the results of collaboration between Google and the outside community. Chrome was based on Chromium, an open source environment and the LINUX open source operating systems. To obtain feedback about its early version of Chromebook, a personal computer running Chrome OS as its operating system, Google gave away 60,000 to testers, reviewers, and developers.

Nevertheless, open innovation is so leading edge that it’s not something we necessarily recommend for the average company—because it won’t be sustainable. In part, open innovation requires a sophisticated procurement function with a seat at the CXO table, which is a challenge for many companies. More fundamentally, it requires procurement to augment its sourcing capabilities with collaboration skills, an investment that few companies have made.

Where Are the Innovation Metrics ? 

Measuring innovation effectiveness with metrics and key performance indicators (KPIs) is the most often cited challenge. It beats most other obstacles—including innovation expertise, resource commitment, and executive sponsorship—even as measurement is considered the least important component of an innovation strategy, likely because it is viewed as too difficult. This presents a chicken-and-egg problem: A lack of metrics deprives companies of the ability to measure progress and drive corrective actions—knowing exactly what’s needed in the competition between innovation capabilities and today’s business needs. The IMProve initiative in Europe is one way companies are addressing this issue, as it provides an online innovation bench-marking tool for enterprises.

KPIs don’t always need financial performance targets. For example, although IBM defines business performance targets for its core business and growth opportunities, it does not set financial targets for emerging opportunities. Instead, it ensures that clear milestones are defined to track the progress of riskier projects to signal that they are on the right track.

Today and Tomorrow – 

Although different company situations and cultures will define different innovation strategies, they lead to success only with a commitment to pursue both current and future goals— separately. However, tomorrow’s success through innovation requires investment today.

This can be difficult to understand and do. It requires commitment to keep resources applied to innovation even as near-term crises arise. It requires creativity to grasp and implement metrics that help innovators defend against compromise and ensure a continuity of effort. It also requires a methodical approach to governance that establishes and maintains the firewall between today’s needs and tomorrow’s plans.

Developing an innovation strategy is a difficult process that requires addressing industry-specific variables, company-specific cultures, and in some cases (such as open innovation) approach-specific capabilities or alliances. “How should my company innovate?” might seem a daunting question. Yet our findings show that when companies falter, it’s not because they can’t answer that question. The biggest obstacle to successful innovation is not a faulty or misbegotten strategy, but something more fundamental: commitment and will.

“IKEA getting into Hotel-Business” : Marriott & IKEA to launch European budget hotel-chain | Reuters | ChicagoTribune

Marriott International moved into the economy hotel market, teaming up with IKEA’s IKEA-UL real estate arm to launch a new European chain for travellers seeking style on a budget.

Cool and contemporary budget hotels such as Motel One, B&B Hotels and CitizenM are springing up all over Europe to meet demand from people who are keen to get away from it all despite squeezed leisure budgets.

Marriott said that in Europe, the economy tier represented nearly half of total room supply, but that there was still space in the market, which also includes the likes of Ibis, Holiday Inn and Premier Inn.

“You’re talking about 2.5 million rooms in this segment and we don’t have anything yet,” Marriott Chief Executive Arne Sorenson told Reuters at the IHIF hotels fair in Berlin, where the group installed one of the chain’s 17 square meter rooms with cream and brown furnishings and flat screen TVs.

The first Moxy Hotel is expected to open in Milan in early 2014 and rooms will be priced at 60-85 euros.

Ikea hotels

Marriott said it was aiming for 150 of the hotels in Europe over the next 10 years in countries from Britain to Germany, the Netherlands and Sweden.

“That would be 25,000-30,000 rooms, so that’s a small segment of the market. It gives us hope at least that we could be a number of multiples of that size over time,” Sorenson said.

Inter Hospitality, a subsidiary of IKEA parent Inter IKEA, will be the initial developer and owner of the first Moxy hotels, while Nordic Hospitality will be the first franchisee to operate the brand, Marriott said.

Rooms at Moxy hotels will all have USB ports next to wall sockets and floor-to-ceiling wall art representing the local city, such as the Brandenburg Gate for Berlin or bicycles by canals for Amsterdam.

To keep costs under control, each room will be the same size and feature the same decor, although not from IKEA, Sorenson said, stressing that Inter Hospitality was separate from Swedish-based group IKEA’s retail arm.

Marriott’s European head Amy McPherson said the plan was to focus on Europe for now, with no plans at present to introduce the chain farther afield.


Highlighting the importance of the economy sector to the big hotel chains at the fair, Hilton announced plans for 10 new mid-range hotels in Germany and Austria, and Intercontinental Hotels (IHG.L) said it had signed a deal to develop 15 new Holiday Inn Express hotels in Russia by 2019, doubling its estate there.

Inter Hospitality, which has been keen to expand in the budget hotels sector, said that it wants to secure 50 sites over the next five years, mainly in Germany, Britain, Italy, the Netherlands, Belgium and Austria.

“The great thing about Inter Hospitality is that they come with a significant balance sheet so there is no financing challenge,” Sorenson said.

Like German rival Motel One, Moxy is hoping to attract a mix of leisure and business travellers.

“Given the product we have, I believe the space is still wide open. There’s room for a number of good competitors,” Sorenson said.