The “State of Strategy Today” : Good strategy is worth doing well | A.T. Kearney

In a study performed, we found a strong correlation between a company’s total shareholder returns (TSR) and its planning horizon…Those with longer horizons saw stronger returns than those with shorter…!!

We were not surprised then when our latest strategy study found a similar correlation. Only this time, the comparisons are between successful and unsuccessful strategies. Of companies with longer strategy cycles—five years or more—85 percent see beneficial results. For companies whose strategy cycles are less than five years, 53 percent are successful. Interestingly, there is little difference between companies that take an ad-hoc approach to strategy (46 percent) and those with planned strategy cycles of less than five years (47 percent)…

This last point is reassuring, as it suggests that a properly executed strategy is worth pursuing. Just 6 percent of companies have strategy cycles of more than 5 years. It can be argued that strategy cycles are more important in today’s competitive environment or, as one study participant says, “To succeed today, we need to innovate, and innovation requires strategy and commitment. So it makes sense that committing to a strategy over time results in success over time”…

Strategy is more difficult now..When working on consulting engagements, our clients sometimes complain that it’s much harder now to craft powerful and easy-to-communicate strategies. “Strategy formulation and deployment is a complex, moving target,” explains one CEO. Another blames the difficulties on what she calls “an ever-changing business environment that requires spending more resources on strategy.” Our study findings reflect the same frustrations: 62 percent of business executives say strategy has become more complicated over the past decade, and 74 percent say complexity forces them to spend more time and effort on strategy formulation. Yet, despite these increased efforts, 46 percent of strategies fail to meet expectations..

Interestingly, C-suite executives are much more optimistic about the effectiveness of their companies’ strategies than those in management…Indeed, 81 percent of executives believe their strategies are meeting or exceeding expectations, while 48 percent of those at the management level are less optimistic (see figure 3). Further, this C-Suite misconception is even greater for companies that are lagging their peers as almost 100 percent of executives believe their strategies are working just fine, while management is much more skeptical..

Agility to the rescue – maybe It is commonly accepted that today’s business environments are fast changing and dynamic, and much more so than just a few decades ago. These tumultuous conditions have caused some executives to question whether strategy is even possible anymore. Isn’t a strategy outdated before it can be implemented? Aren’t we better off to focus on agility in order to capitalize on emerging trends faster than peers? These are some of the questions we heard. We put this thinking to the test with surprising results: More than 80 percent of global executives consider agility as important, or more important, than strategy when it comes to securing a company’s future success. And only a slim 19 percent believe a strategy-induced competitive advantage is still possible (see figure 4). In the minds of business leaders, it appears that strategy is failing…

figure4

However, a deeper dive into the survey data finds that “agility as a substitute for strategy” notion is flawed. We wonder if it isn’t simply a self-fulfilling prophesy :  Those who believe agility is the foundation for success have failing strategies, while those who believe strategy is a source of competitive advantage, have exceptionally successful strategies. The more interesting question, which begs further investigation, is in which direction the causality flows: Do companies have trouble formulating and deploying strategies and so turn to agility? Or, does a focus on agility as the answer to today’s challenges lead to the demise of strategy? Does a string of successful strategies mean strategy is the answer to all that ails an organization ??

What’s to blame for strategy failure?

Judging by the responses of our study participants, strategy failure is an emotional topic. One participant puts it this way : “In large organizations, strategy formulation is too complex and too top-down, leaving the rest of the organization to play catch up. And before they can do so, the next strategy is being rolled out.” Another says: “Strategic planning often takes place in an ivory tower by individuals who haven’t a clue what happens at the implementation level.” These and other comments suggest that the interface—the handover—between strategy formulation and deployment is to blame for failed strategies. Our findings confirm this. When asked to identify the trigger of a failed strategy, 7 percent of executives point to formulation, 6 percent point to deployment, and 86 percent say it is a mix of the two (see figure 5)..

figure5

Strategy formulation: What goes wrong?

If there is ever a need for knowledge, experience, and preparation, it is during strategy formulation. When asked about their strategy formulation failures, most executives complain that it is an insufficiently inspired, unrealistic, impractical, and detached process :

  • Lack of understanding of future trends (88%)
  • Little understanding of internal capabilities (87%)
  • Too much top-down approach (84%)
  • Not enough logical thinking (84%)

One interesting finding is the conflicting perspectives about the role data analysis plays in a failed strategy formulation process. Some blame “too much data analyses” while others say there is “not enough data analyses.” The reasons for the different views depends on the participants’ backgrounds. For example, many in the too-much-data group have firsthand experience in data analyses of the “boiling the ocean” type—in which substantial efforts yield few real insights. The other group is accustomed to formulating strategy using strategy statements that are not backed by sound financial justification or based on quantifiable competitive opportunities..

Several study participants consider secrecy an issue…“The C-suite is afraid competitors will learn our strategy and so do not involve middle-level managers as much as they should in developing the strategy,” explains a manager. “Clearly, keeping our organization as much in the dark as our competitors about our strategy is not a fast lane to success”..

Strategy deployment: What goes wrong?

Many of the reasons for failed strategy formulation are also attributed to failed deployments. For example, a strategy might be too ambitious and broad for the organization, too narrow to cope with the full breadth of changing market conditions, or deployed from an impractical top-down perspective. “Strategy deployment is now our greatest challenge,” explains a CEO. “Market conditions require a more aggressive strategy, but execution has not changed.”

Not surprisingly, reasons for failed deployments have more to do with the handover between strategy formulation and deployment:

  • Lack of internal understanding of the strategy (90%)
  • Lack of internal capabilities to execute the strategy (90%)
  • Lack of ownership (86%)

This makes for bewildered, disenfranchised, overwhelmed, and under-supported deployments. As one manager admits, “We underestimate the combined effects of overlapping initiatives on the same group of people”..

Gauging the future –

Study participants largely agree that a better understanding of future trends is a prerequisite for sound strategy formulation: “Our strategies fail at the development stage because we do not accurately determine where the market is heading in the next three to five years.”

Not surprisingly, over the last decade many companies have increased use of future-focused tools such as fore-sighting, trend analyses, and scenario planning (see figure 6)..

Organizational inclusiveness –

Involving the organization in strategy formulation resolves the handover issue between formulation and deployment. “Strategy that doesn’t make it out of the boardroom isn’t really strategy,” admits an executive. “Attempting to make it purely process-driven overlooks the importance of the ‘goodwill’ factor—the people who actually deploy the strategy because they buy into it, and not just because it is their job to deliver it.” Our findings break down this thinking into a number of distinct points. At the base, is the conviction that involving more people with firsthand experience in dealing with markets, customers, competitors, processes, and suppliers makes for better and more practical strategies.

“Bringing in a general workforce opinion helps management make more informed decisions,” says a manager. “All levels of the organization can contribute to strategy formulation and implementation. Middle management and the workforce provide practical input.” Organizational involvement is also essential for making strategies sufficiently ambitious. As one executive says, “The most important area for innovation in achieving goals and targets are the skills and knowledge of staff. Without these, the top-down approach is doomed to mediocrity.”

Our findings back up these observations : Two thirds of companies that pursue meaningful organizational inclusion in strategy formulation have successful strategies. Yet, involving the workforce doesn’t just make strategies better and more practical, it also lays the groundwork for engaging the right people in strategy deployment: “We involve our people at all levels in strategy development and find that innovation and diversity of ideas are pluses, both in adopting change and in people acting as change agents. An engaged individual is more resourceful than one who is simply employed.”

Organizational involvement is not a panacea. It provides innovation and practicality and, while it does not really affect speed, it does make things more complex (see figure 7). As one CEO says: “Consultation can be a bit of a pain and slow down a good planning operation, but the results following the consultation can make the extra time well worth it”..

figure7

Strategy needs to be led- 

not just decided on Despite the virtues of organizationally inclusive strategy formulation, the complexity that accompanies it can be an issue. For this reason, inclusive strategy requires top-down leadership, with top management establishing the ideas, ground rules, organizational teams, and direction that are critical for middle and lower management. Strategy, at its best, becomes less of a decision and more of a direction to inspire the organization to follow—not once, but on an ongoing basis.

As one CEO says : “Strategy & Leadership go hand-in-hand, you can’t have one without the other”…!!

“Large Mixed-use Retail Schemes” are the Most-Desired Style of Projects in Indian Real-estate space | ET Retail

Malls in India and elsewhere are increasingly becoming #LifestyleDestinations, posing challenges for #MallDesigners, as they need to create retail properties that engage, are cost efficient and sustainable…From mixed-use developments to family entertainment centres (#FEC) to streets and squares–such as those in Dubai–mall designers are constantly trying to innovate with #RetailFormats…Head and director of UK-based mall design firm, spoke on the latest trends in mall design…The company has designed #ShoppingCentres, in India such as DLF Place in Saket, Delhi, Phoenix Mills in Mumbai and Pacific Mall, also in the National Capital Region(#NCR)..!! 

Going by your experience of designing malls in India and abroad, what are the latest trends internationally that define shopping complex properties today?

The latest trends which we are seeing reflect the changing Global #RetailLandscape…#Consumer Demands are shifting because of the growth of #e-commerce, and designers must now create retail developments which entice shoppers beyond shopping. Creating a retail environment that is as much about leisure, as it is about retail, is essential..

Retail environments need to be in tune with and fully embrace developing lifestyle choices. Visitors should be able to enjoy a much broader experience, rather than be limited to simply shopping alone. Benoy is seeing many more mixed-use developments, which incorporate retail alongside other elements such as residential and commercial offices. These can become iconic structures that also encourage a variety of activities in the shape of leisure offers, entertainment and dining, and which ultimately create a destination. Any great mall design should also be flexible and adaptable so that it can compete with future competition, which employ the most advanced technology.

What kind of retail format has the highest demand in India, according to you– kiosks, speciality retail formats, large size formats etc.

The larger mixed-use retail schemes are the most desired style of projects in India at the present, but there is not a prevalent style or format for retail. Our schemes illustrate a mix of unit types, creating a balanced retail offer. Moreover, because India is so large and diverse, it is hard to define one style of retail design which will be successful and attractive to all areas of the country.

Always approaches India as a continent rather than a country due to the sheer magnitude of the market…The firm understands that what works well in one city may not necessarily translate to another in terms of look, feel and scale. As a country with a wide range of people, finance and consumerism, it is imperative to understand who the regional client is. As designers, Benoy is also very mindful of the natural surroundings and the history of the city.

When it comes to controlling costs of mall construction and design, how can a mall developer cut down on the expense of designing a mall yet make it more consumer friendly?

In other parts of the world, there is a defined trend towards retail developments that are either enclosed malls with natural ventilation strategies or which are open to the environment. Both allow the developer to reduce initial capital expenditure and ongoing running costs, particularly where mechanical conditioning is concerned. Of course, these strategies are not applicable in all parts of the world, yet even in Dubai, a part of the world with an aggressive environment during its summer months, there is a new wave of ground breaking open street developments – streets and squares, if you like – that are setting new benchmarks in sustainable developments. So in parts of India with a benign climate, such strategies should have a role to play.

Also seeing an emphasis of simplification of development so that the nature of the construction is cost efficient. That is not to say that developments should be visually bland or banal, rather that the architectural solution hides an efficiency of construction.

What is the contribution of the mall developer when it comes to facilitating a mall design and construction? Do you think Indian mall developers are up to the mark in that respect ?

Is seeing a wide variety of retail developments across all parts of the Indian retail scene. Of course, like elsewhere in the world, not all projects are world class, but there is a fast developing industry which is devouring new ideas and strategies.

In this, the developer is key. Despite the importance of the statutory authorities, the developer controls the funding, design and construction streams like the conductor of an orchestra. Their role is crucial in setting the tone and direction for any project.

Which international trends that have been extremely popular can be adopted in India according to you?

India is becoming an extremely popular market for foreign companies because of the opportunities on offer…This has led to a highly competitive environment, which is fantastic for driving growth but does highlight the need to have an established brand that sets you apart from your competitors. The recent global downturn has led to developers spending more wisely and they are becoming more selective about the partners they identify as bringing the most value to developments. As designers, it is essential that we offer beautiful schemes that are commercially viable.

Internationally, the rise in dining as an important component of any development has been well documented and it is an important trend that will define the nature of Indian retail developments over the coming years. Out will go standard, run-of-the-mill food courts to be replaced by higher-quality food villages and individual restaurants – dining will be an important anchor..

What are some of the top observations on Indian shoppers according to your psychographic studies?

As an #EmergingMarket, India has the advantage of being able to look to other countries and evaluate what works well. India, therefore, has become a platform for some of the most ambitious designs currently being actioned and offers one of the most exciting retail environments…

Shopping in India is therefore no longer a requirement, rather a choice – a leisure activity – has observed that Indian shoppers take great pleasure in the social aspects of “#RetailTherapy”…Whether Indian shoppers are couples, groups of young people or families, the social aspect of shopping is important and will continue to become more important over the coming years…!!

“Flipkart vs Amazon” : “How they Stack up in India” | VCCircle

” Amazon chief Jeff Bezos says that at the current scale and #GrowthRates, India is on track to be its fastest country ever to reach $1 billion in Gross Sales…”

The big daddy of #OnlineCommerce, in India hit a new milestone bagging a record $1 billion in Fresh #Funding…In less than 24 hours of this announcement, the one thousand pound Gorilla of selling things online, Amazon followed it up with $2 billion in Fresh Investment commitment in India…!!

Mind you, in the #ServicesBusiness, paying salaries to employees and adding human skill set are also considered investment and with both firms employing thousands, a good chunk of this money could be simply about paying wages (though Flipkart has said it’s looking much beyond using investors’ money to burn in existing operations)…Moreover, this could also include the imputed value of discounts to be offered to consumers…

Nevertheless, the numbers are huge and have just raised the decibel levels in the Indian #E-commerce, sector…Here we attempt to glance at how Amazon & Flipkart, are stacked against each other when it comes to India in terms of some comparable Metrics and other Features….!!

Products on offer:

Amazon claims that in just over a year it had pooled in vendors to offer as many as 17 million products on its site. It has not clarified whether this represents #StockKeepingUnits or #SKUs, but that is what it most likely means…#Flipkart, which has been in operations for almost seven years now, looks to be on a weak wicket here as its latest communication says it stocks over 15 million products. #Snapdeal is far behind with over 5 million products…!!

Indeed, what really matters is how much they are able to sell, but in terms of offering to the #Consumer, Amazon seems to have done a much better job and far quicker too..

#Amazon, does not share finer details about how many users it has in India ; so that one is not comparable…Flipkart, in contrast, says it has 22 million registered users clocking over 4 million daily visits and is delivering 5 million shipments a month, which in itself is huge…

Who Sells More ?

Flipkart said early this year it has hit the milestone of $1 billion #GrossRrevenue (#GrossMerchandiseValue or #GMV) run rate (which means based on monthly sales on its site it is set to cross $1 billion in GMV over the next 12 months (though its latest official communication erroneously says it has become the first Indian e-com firm to hit $1 billion in GMV)…

Amazon, though public listed, does not share India-specific numbers but its founder and chief Jeff Bezos has just said that at the current scale and growth rates, India is on track to be its fastest country ever to reach $1 billion in gross sales. It is estimated that it took it years to cross the revenue benchmark even in China, where it has been present since 2004 and another market dominated by local giants…But it would be fair to assume that Flipkart currently outsells Amazon..

Interest in Virtual World:

This one is somewhat superfluous but we look at it to get some additional insights. Rather than looking at Alexa (which is dismissed by many as not too accurate) or comScore (which we don’t have access to), we considered Google Trends to see how the two sites stack up against each other…

As the graph shows, Flipkart has been under the radar for over five years but really took off only three years ago and with momentary blips has been on an ascend. Amazon has been growing at about the same pace as Flipkart after its launch in June 2013… However, it seemed to have gained pace in April this year and surpassed Flipkart and though the gap has narrowed since then, it seems to have stayed at the top this month too.

Amazon Prime vs Flipkart first:

Not much of a comparison really, as Amazon Prime, the paid membership programme of Amazon, is not yet present in India. However, Flipkart has got a head start with launch of its own version of the premium membership last month. Though its benefits are limited to one vendor (more on that later), it manages to stand up against Amazon’s Fulfilled by Amazon service under which consumers are already getting free deliveries for majority of products sold on the platform.

Flipkart First (at present in a free trial period for randomly chosen members) is currently limited to free or subsidised delivery benefits for a section of its product assortment besides an early access to hot products.

Where the battle may be won, however, is other bling factor in terms of digital content strapped for free. Amazon already offers such content for its Prime members and early this year paid a bomb for a package of shows from HBO which now comes free to its premium members. It also offers movies, music on the go and free e-books for its Kindle users as part of the membership.

Flipkart has got the platform to redo this. But having tried and exited digital music store it would be a challenge for it to sew such content deals going forward…It remains to be seen by when Amazon would roll out Prime membership in India.

X-Factor:

One crucial thing in the e-com war could be the key vendor on the sites. In the case of Flipkart it is WS Retail, which used to be the in-house and sole seller through the platform before it turned a marketplace early last year. This firm is owned by an angel investor and employees of Flipkart, to comply with FDI norms. However, this is a key player for Flipkart….Although, the breakup of sales from WS Retail and other vendors is not in the public domain, it is estimated that the bulk of its sales are through this vendor (it also happens to be the partner for Flipkart’s run away hits like Motorola Moto series of handsets)…WS Retail also happens to be a key spoke in its Flipkart First offering, at least for now…

Amazon is still dependent on its third-party vendor base to sell in India. However, it has reportedly sealed an unconventional deal with Catamaran Ventures, the private investment arm of Infosys co-founder N R Narayana Murthy. Catamaran is holding a majority stake in a venture which is supposed to work at the back-end of operations for Amazon in India. However, this is seen as the first step for preparing groundwork for Amazon to start selling in India on its own as and when (as anticipated soon) multi-brand online retail is brought on par with offline retail in terms of FDI norms.

This could really pump up the activity for Amazon and take the competition right to the door steps of Flipkart….!!

Apparel:

Flipkart has strengthened its apparel vertical, one of the juiciest part in terms of margins by acquiring Myntra early this year. Although Amazon also has launched apparel section, Myntra provides a strong positioning and vendor base to Flipkart which can be important going forward.

Myntra remains a separate site but its chief is now involved in strategy making for Flipkart’s own apparel vertical and that can help the firm boost sales from this segment going forward.

To be fair, Amazon may well acquire a Myntra rival (say, a Jabong, for instance) to plug this gap that would be dependent on nifty deal structuring.

Reviews, #VendorServices, Fulfilment Centres:

One differentiator for Amazon globally is its enviable consumer reviews, which helps a prospective buyer to decide in their purchase decisions. Flipkart too has built a strong review database and in many cases has a far comprehensive review section compared with Amazon’s Indian marketplace.

If customer acquisition was key metrics to focus for Flipkart or for that matter any internet commerce firm to begin with including Amazon, now add vendor acquisition to it.

The future pace of growth for both be partly if not fully dependent on how fast they add sellers to their platforms. A factor determining this would be how smooth Amazon or Flipkart offer to get their products to the consumer. This would in turn be dependent on the fulfilment infrastructure and logistics services offered by the two firms. Both Amazon and Flipkart have their own logistics units unlike many other horizontal e-tailers in India and vendor addition could be based on who takes the minimum fee or cut from the sale of products on the site. This is where the money aspect comes in where the fresh funding announcement of Flipkart and additional investment by Amazon make them even-steven.

Meanwhile, Amazon has just announced FIVE New #FulfilmentCentres, in India which would take total such facilities to seven in the country…Flipkart has FOUR such Centres at present and is also looking to expand the number…!!

We will get more insight on how the two firms are performing a couple of months down the line. So watch out this space for their actual revenues and growth in numbers…!!

“India Retail-Property Market” Overview | by: Vivek Kaul | ET Retail

The Retail #RealEstateMarket, in India has developed steadily over the past decade as the quality of stock improves and local developers realize the importance of Modern #ShoppingCenter Management, such as zoning, branding, marketing and promotions, as well as the all-important strategy of following a pure lease model instead of the earlier practice of divesting units to individual investors… This evolution has led to the creation of a number of high quality shopping mall developments in the major cities of Delhi, Mumbai and Bangalore which have set the benchmark for future retail schemes..

The adoption of rental models (such as revenue-sharing) has provided support to retailers in India seeking to establish themselves in the market, and has also enabled shopping mall developers to attract international and domestic retailers to set up flagship stores…!! 

Retail Real Estate Supply: 20072014 (P) : CBRE Research

In the run-up to the global financial crisis of 2008, around 300 new shopping centers were scheduled to be completed in key cities across India. This pipeline was decimated by the credit crunch, however, leading to a shortage of modern retail estate stock. In 2011, the development pipeline sprung back to life as construction work resumed on a number of projects. At the end of 2013, the supply of modern retail space across the country’s seven largest cities stood at about 54 million sq. ft. Around 70% of this space was in New Delhi, Mumbai and Bangalore…

Leading cities including New Delhi, Mumbai, Bangalore, Pune, Chennai, Hyderabad and Kolkata have all seen a steady rise in retailer enquiries in recent years. Shopping mall rents in prime sub-markets of New Delhi have witnessed growth, while values in high streets have increased in Mumbai, Bangalore and Pune. Transaction activity as well as sizes are expected to increase on the back of an increase in consumer spending and expanding mid-income purchasing power. In Mumbai, premium international brands continue to focus on affluent southern parts of the city; but the lack of quality retail space remains a major challenge to growth. Despite the scarcity of quality supply, most retail chains continue to launch their first Indian store in Mumbai and New Delhi usually in a street shop or mall before expanding elsewhere. Even as domestic big box retailers gradually expand to tier II locations, the major foreign brands remain primarily focused on tier I cities.

New supply is steadily coming on stream in the NCR, and will provide opportunities for retailers to operate in an organized retail environment. High street formats continue to dominate the retail landscape, while most luxury retailers prefer to operate from five star hotels and premium malls. Bangalore has a large quantum of organized retail supply in the pipeline which will provide retailers with further opportunities for expansion..

Amongst #RetailCategories, international #F&B outlets have continued to expand in 2013 both at the fast food and fine dining ends of the market. Luxury retailers remain focused on tier I locations but continue to refine their strategy and product offering for the Indian market, which in selected cases has seen them consolidate and reduce the size of some stores. Fashion and apparel remains a high growth sector and major apparel brands from the US and Europe continue to seek opportunities to enter or expand in major markets across the country, including certain tier II locations…

Lack of Quality Retail Real Estate Impedes Market Entry by Global Retail Giants:

There is approximately 54 million sq. ft. of retail stock in India spread across leading metropolitan cities and their surrounding regions. Even after the steady growth in supply of organized retail space over the past ten years, however, retailers of the size of Ikea often find it challenging to secure space in a prime mall in any of these cities. This is essentially because the majority of retail space developed in India to date lags behind global standards, and does not provide the quality, ambience, design, services or post-construction maintenance that global retailers are accustomed to. This is one reason why out of the more than 300 malls in the country, only a handful can be described as successful retail projects. These include Select CityWalk, DLF Emporio and DLF Promenade in South Delhi, Ambience Mall in Gurgaon, Inorbit and High Street Phoenix in Mumbai, and Forum in Bangalore. The total size of these successful malls is just 45 million sq. ft. About 31% of the upcoming supply addition is expected to be centered in smaller cities such as Pune, Chennai, Hyderabad and Kolkata over 2014, with approximately 1011 million sq. ft. of organized retail supply lined up across leading cities..

According to research estimates, India will require an annual supply of about 20 million sq. ft. of organized retail space in order to sustain growth in the sector. This will necessitate a concerted effort from developers to construct successful shopping centers to global standards. However, domestic developers are still in the middle of a steep learning curve with respect to undertaking shopping center development. Many developers view shopping centers simply as another asset class, no different from building offices or housing units. In fact, shopping centers have an organic and perpetually changing quality that needs to be planned, developed, owned and managed as a single property..

It is in this context that the role of global #RetailChains, such as Tesco and Ikea will be crucial….These retailers possess extensive experience of running successful retail stores and properties in markets like the US, China, Europe, Middle East and South East Asia, with local partners to create successful shopping formats..

By utilizing this knowledge they will be able to help usher in a revolution in the development of organized retail real estate in India..

The “Go-to-Market Revolution”: Igniting “Growth with Marketing, Sales & Pricing” | by: Rich Hutchinson | BCG

Whether you ask a company’s CEO or its investors, they’ll likely identify revenue growth as the single biggest driver of #CorporateProfit, and #ShareHolderValue..!!

Over the long term, revenue growth powers 75 % of total #ShareholderReturn (TSR) for the upper-quartile value creators of the S&P 500. Even in the short term, growth accounts for nearly a third of TSR for these out-performers—double the boost from improving Margins or #Cashflow…A growing business also Empowers Employees, Attracts Top-talent, and helps Fund Expansion, Transformation, and more Growth…!!

Growth is an imperative. But it needs to be profitable growth—and that is not a given…!!

In the recent era of uncertainty and financial constraint, many companies have focused on efficiency. They have energetically cut costs, even in the “go-to-market” commercial functions crucial to driving revenue—sales, marketing, pricing, branding, and customer insight. These companies have achieved productivity gains, but they’ve reached the point of diminishing returns. We’re learning again that we can’t cut our way to growth..

exhibit

A small set of successful companies are taking a different path…They are transforming their commercial functions and capabilities to create an engine of short-term revenue growth and long-term profit. They are doing so with little risk…These near-term victories are “ Self-Funding” the creation of #StrategicCapabilities..

These leading companies are taking advantage of what The BCG, calls the “Go-to-Market Revolution”…!!

The Go-to-Market Revolution is a wave of technological and customer-driven change that is altering the level of sophistication with which companies deploy their commercial capabilities. This new era hasn’t altered the fundamentals required for go-to-market excellence, but it is creating new possibilities. It is taking what is now possible—the current state of the art in commercial functions—to the next level.

THREE Tides of Deep-rooted Change are driving the revolution…The first is the dramatic shift, in almost every industry, of what BCG calls customer pathways—the ways customers learn and communicate about products and services on the path toward a purchase. Second, technology and advanced analytics are providing new tools for sales and pricing teams, marketers, and researchers. Third and finally, companies now navigate a globalizing world that requires most of them to compete in new markets, often against unfamiliar rivals. (See “A Revolution Driven by Three Tides of Change,” below)..

A Revolution Driven by THREE Tides of Change :

The rich opportunities—and the perils of failing to act—emerge in the details of the three historic and concurrent tides of change driving the Go-to-Market Revolution..

1. Customer Pathways – The first tide is the rapid recent evolution of what BCG calls customer pathways. The ways consumers learn about and buy products have shifted dramatically and quickly, triggered by changes in technology, communications, and media..

2. Advanced Data and Analytics – The second driver of change could be called the go-to-market arsenal…It is the rapid and transformative evolution of “smart” data, advanced analytics and modeling, and other tools capable of increasingly sophisticated approaches in segmenting and analyzing information and reaching customers…The data revolution has transformed business sectors, from retail to financial services. For example, one vehicle company in India was able to map more than 95 percent of all its potential customers in the country—who bought what and where—in less than three months..

3. Global and Emerging Markets – The final driver of the “Go-to-Market Revolution is Globalization”, which creates two fundamental commercial challenges..First, “Globalization” has changed the competitive landscape in every market…The rise of globalization has opened labor markets and expanded offshore production, resulting in lower product costs in developed countries even as it destabilized brands and prices. Globalization is also ushering foreign competitors to the doorstep of domestic businesses. It is shortening product cycles and speeding shifts in consumer tastes. Go-to-market strategies need to adapt to these dynamic market conditions..

Second, ” Globalization in Emerging Economies” has been accompanied by rapidly expanding wealth. Consequently, emerging markets represent a huge source of growth…The challenge is this: most companies have commercial capabilities in emerging economies that are less sophisticated than those in established markets. Accurate data can be scarce, rendering marketing ROI calculations difficult. Distribution channels are a mix of modern options—such as mobile—and Old World…And the recipe for commercial success differs significantly by country… Winning in India and China may require fundamentally divergent approaches…To succeed, companies must create emerging-market commercial capabilities that are as sophisticated and promising as the growth opportunity…!!

A Self-Funding Go-to-Market Transformation :

A go-to-market transformation aggressively retools a company’s commercial functions—sales, marketing, pricing, branding, and customer insight—to exploit the new possibilities while navigating a fast-moving landscape. It adapts processes to changing customer pathways and needs, prepares the company to face new global markets and competitors, and arms its go-to-market teams with the latest and most effective technology…

Go-to-market transformation is a particularly potent lever for growth because it exploits tactical, short-term victories to fund broader commercial transformation over the medium term…For example, one company started with a sales force effectiveness program that drove more than $20 million in near-term value—an early success that energized the organization and created a financial foundation for a broader go-to-market transformation. From such beginnings, the ambitious company funded a larger set of programs, which in turn produced a step-change in both commercial capabilities and value delivery..

This transformational approach contrasts with conventional attempts to adapt through continuous improvement—a recipe for simply keeping pace with market growth. Our view is that, for most companies, the current scope of change in the commercial landscape is too disruptive for incremental change to be effective. Maximizing value requires an aggressive and dedicated response..

Commercial transformation has a confirmed record of success in generating growth for a broad range of companies worldwide. They include a global manufacturer of mobile handsets, a European gas and energy utility, a U.S.-based retail bank, retailers, postal operators, and media companies…

The resulting revenue benefits are powerful in today’s era of difficult growth, when even modest revenue growth can create substantial shareholder value. Mature companies that increased their #Topline, by just 2 percentage points or more delivered shareholder returns 40 percent higher than the market average…!!

Growth Zealot or Go-to-Market Laggard ? :

Your company can ignore the potential benefits of the Go-to-Market Revolution, but it can’t avoid the perils of failing to take part. The gap between capability leaders and laggards is growing…If you are prepared to be a zealot for growth, here is a sample sequence of actions and best practices to consider…

  • Start with vision and ambition. Does your company currently have the vision to transform your go-to-market capabilities? Do you have the ambition to increase your top line 10 or 20 percent beyond current projections in the next few years? A necessary First-step is helping your #LeadershipTeam, understand the opportunities inherent in the #Go-to-Market, Revolution..
  • Undertake a quick initial diagnostic step. Map how your customers’ purchase pathways have changed. Assess your commercial capabilities: marketing, pricing, sales, branding, and insight…Determine where you stand compared with best-in-class competitors and identify which commercial functions offer the greatest near-term opportunity : 
  • Tailor a series of programs to build capabilities and improve performance simultaneously. For example, start with a high-impact pricing initiative. Some leading companies we know have begun with a pricing program that added tens of millions of dollars to the bottom line. Simultaneously, the programs have funded development of new pricing tools and capabilities, such as sophisticated discounting, mobile technologies, and advanced analytics.
  • With initial success in place, expand your efforts rapidly. For example, launch a program that boosts marketing effectiveness—such as a brand advocacy campaign. Then launch another—such as a sales-activation initiative—to equip your sales force with a technical arsenal of twenty-first-century tools.
  • Make no mistake, you may need several waves of activity to meet your objectives in each commercial discipline. Indeed, achieving your overall profit and strategy goals will take years, not months. If it’s done right, however, the journey will be self-funded. What is more, every growth gain and each advance in capabilities can create a reinforcing cycle of improvement for the entire enterprise.
  • Crucial to Success in this Endeavor is capable “#ExecutiveLeadership”. Company leaders must be committed to guiding and supporting the transformation across all three tides of change that drive the Go-to-Market Revolution: the new and uncharted pathways your customers are taking to discover and purchase your products; the evolution of data, advanced technologies, and analytics that can re-arm your commercial teams; and the rise of emerging markets, which brings new growth and also new global competitors..

These are real challenges…For the bold, though, they present powerful paths to competitive advantage…The growth zealot must be a Leader—able to inspire Executives, Managers, and Employees ; capable of transforming the whole by reinventing its parts; and committed to forging a new commercial future for the enterprise..!!

SEBI fine-tunes “Draft-Regulations” for “Infrastructure Investment Trusts” in India | VCCircle

Leasing of land on which a Hospital or Hotel is located shall not be considered as an “ Infrastructure Project for the purposes of #InvITs”…!!

Securities market regulator #SEBI ( Securities and Exchange Board of India), has come out with more elaborate Draft Regulations for setting up “Infrastructure Investment Trusts (InvITs), which prescribe at least 80 per cent of the corpus to be invested in completed or income generating assets for InvITs issuing public units, strategic investors to bring at least 5 per cent of the amount, InvITs offer size to be at least Rs 250 crore (around $42 million) and that the proposed holding of an InvIT in the underlying assets shall be not less than Rs 500 crore ($83 million)..

This follows a previous consultation note circulated late last year and incorporates the provisions delineated in the Union Budget which provided tax pass-through status to such investment vehicles..SEBI has called for comments on its draft proposals by July 24…

Here are some key points:

InvITs are proposed to provide a suitable structure for financing/refinancing of infrastructure projects in the country..It shall invest in infrastructure projects, either directly or through SPV. In case of PPP projects, such investments shall only be through SPV…

InvITs which propose to invest at least 80 per cent of the value of the assets in the completed and revenue generating infrastructure assets, shall raise funds only through public issue of units and minimum subscription size and trading lot for such InvIT shall be Rs 5 lakh. Rest 20 per cent may be invested in under construction infrastructure projects (subject to maximum of 10 per cent) and other permissible investments. The minimum public float in such issues would be 25 per cent, which is at par with equity issues on the bourses.

These other permissible investments include listed or unlisted debt of companies or body corporate in infrastructure sector (provided that this shall not include any investment made in debt of the SPV); shares of companies listed on a recognised stock exchange in India which derives over 80 per cent of operating income from infrastructure sector; government securities besides money market instruments, liquid mutual funds or cash equivalents..

An InvIT which proposes to invest more than 10 per cent of the value of its assets in under construction infrastructure projects shall necessarily raise funds through private placement from Qualified Institutional Buyers and body corporate and the minimum investment and trading lot for such InvITs shall be of Rs 1 crore. Such InvITs shall mandatorily invest in at least one completed and revenue generating project and not less than one pre- commercial operation date (COD) project. In such InvITs there should be at least five QIBs and a maximum of 1,000 institutional investors holding units.

Listing shall be mandatory for both publicly offered and privately placed InvITs…!!

The InvIT shall refund money to the applicants if it collects subscription of amount less than 75 per cent of the issue size as specified in the final offer document or in the case of public issues less than 20 subscribers buy the units of the InvIT. SEBI has also said the maximum oversubscription amount which can be retained by the InvIT would be capped at 25 per cent over and above the target.,

An InvIT prior to making an offer of units, either through public issue or private placement, may have strategic investors such as banks, international multilateral financial institutions, foreign portfolio investors including sovereign wealth funds, etc., which together invest at least 5 per cent of the size of the InvIT or such amount  as may be specified by SEBI.

An InvIT shall be a trust with parties such as sponsor(s), investment manager, trustee and project manager(s). A trustee can either be a debenture trustee registered with SEBI and not an associate of the sponsor(s)/investment manager; or an associate of the sponsor/investment manager having not less than 50 per cent of its directors as independent and not related parties to the InvIT. However, a trustee of InvIT cannot be trustee to another InvIT or an Alternative Investment Fund engaged in infrastructure sector.

The proposed holding of an InvIT in the underlying assets shall be not less than Rs 500 crore and the offer size of the InvIT shall not be less then Rs 250 crore at the time of initial offer of units.

The aggregate consolidated borrowing of the InvIT and the underlying SPVs shall be capped at 49 per cent of the value of InvIT assets. However, this may exclude any debt infused by the InvIT in the underlying SPV. Further, for any borrowing exceeding 25 per cent of the value of InvIT assets, requirement of credit rating and unit holders approval has been made mandatory.

SEBI has said leasing of land or building on which a hospital or hotel is located shall not be considered as an infrastructure project for the purposes of InvITs but if revenues are generated from operation and management of a hospital or hotel, then the same shall be considered as infrastructure project under these regulations.

If the sponsor of the InvIT is a developer it needs to have at least two projects which have achieved financial closure…

It calls for the investment manager to have net worth of at least Rs 5 crore if it is a body corporate or a company or net tangible assets of value not less than Rs 5 crore in case the it is a Limited Liability Partnership..

It should have at least five years experience in #FundManagement/#AdvisoryServices/development in the #InfrastructureSector and have at least two employees with five years or more experience each, in fund management/advisory services/development in the infrastructure sector; at least one employee who has five years of experience in the relevant sub-sector(s) in which the InvIT has invested or proposes to invest; an office in India from where the operations pertaining to the InvIT is proposed to be conducted…!!

From “Demand-Generation” to “Revenue-Generation”: How to “Become a Revenue-Driven” Marketer |by: Glenn Gow |Marketing Profs

In this article, you’ll learn…

  • How leading marketers are turning their organizations into revenue engines
  • Best-practices for transitioning Marketing into a revenue-focused organization

The days of being grudgingly accepted as a necessary #CostCenter, are numbered for #Marketing…Today, the writing is on the wall: Either demonstrate how Marketing will contribute to the company’s top-line revenue growth… or be prepared to change careers…!!

#CMOs and VPs of Marketing need to step up and take responsibility for #RevenueProduction…That means coming to the table with a #RevenueMarketing Forecast and aligning tightly with #Sales, to ensure the revenue goal is met…

Some companies are even assigning Revenue Quotas to Marketing and compensating marketing executives on meeting those quotas…Your company might be next…!!

As a #Marketer, you can view this trend as a negative, or you can approach it as an opportunity to finally achieve credibility within your company, especially with the #ExecutiveSuite…Showing a return on investment is the entrée to a strategic place at the executive table…

The big question is How to make the transition from being a Demand Generation-focused Organization to becoming a Revenue-Generating Organization…??

There is no cookie-cutter solution, but there are proven best-practices being used by savvy marketers to successfully drive revenue-focused marketing (also see the infographic at the end of this article)…

FIVE Best-Practices for Becoming a Revenue Marketer :

1. Start at the Top to create a Revenue-generation #MarketingPlan – The first step in the revenue marketing process is to look at your company’s overall business plan, including the revenue goal. Your marketing plan should align with the business priorities and goals for your company as set out in the company plan.

You then determine the percentage of the overall revenue goal that marketing should contribute. Though the percentage will vary by industry, in our experience it’s not uncommon to see targets starting at 30% or even higher. Based on that target, you can set performance goals for the demand waterfall, including the number of visitors, leads, opportunities, and closed deals you need to make your revenue quota..

2. Get your measurements in place – Many marketing departments don’t know how to focus on revenue as a goal because they don’t understand how they can measure it. You must have the proper systems in place so that you’re able to track a lead from the moment it comes in all the way through the buying cycle, when that buyer purchases, renews, or cancels.

A connected view of the buyer lifecycle allows you to demonstrate marketing’s contribution to revenue..

The problem is that many marketers have disjointed systems or they lack the right marketing solutions altogether, which limits their ability to track performance across the buying cycle…A VentureBeat study found that only 20% of large companies use marketing automation today..#MarketingTechnology, will be imperative to connect the dots across the buyer’s journey and Measure Key-performance-indicators, that support Revenue Generation…!!

3. Speak the same language as Sales – Becoming a revenue-generating marketing organization means working much more closely with Sales than in the past. And to get their attention, you need to speak their language. When you talk about open rates, lead generation, and automated nurture campaigns, Sales hears “marketing-speak.” Don’t talk about leads. Talk about qualified opportunities and closed business..

As marketing organizations make the transition into revenue generation, the shift to speaking the same language will start happening organically. Planning, forecasting, pipeline, bookings, and revenue become the common ground for the two organizations to work together..

4. Maintain the Relationship with Prospects and Buyers – It’s no longer acceptable to hand off the lead or opportunity and walk way. Marketing has to take responsibility for working with Sales to find ways to help move the buying process along. When Marketing hands off the opportunity, it shouldn’t lose the relationship. It needs to maintain the connection throughout the buyer’s journey.

Once a lead is qualified and converted into an opportunity, Marketing should create pipeline acceleration programs to help Sales close deals…For instance, marketing could create an individualized program for opportunities that have been stuck for 30 days or more, to help move them forward..

5. Define Service-Level Agreements – Part of committing to a partnership is agreeing on how you’ll work together…#SLA (Service-level agreements), can help you better define your working relationship with Sales. For example, you might decide that Marketing will provide only leads that meet certain criteria as an opportunity, then once that opportunity is handed to sales, Sales must make contact within 48 hours, else the opportunity reverts to Inside Sales..

The point is to agree on when an opportunity will be handed off, how long Sales will hold it, and what happens when the required action does not occur. The agreement needs to be ratified at the most senior levels within Sales and Marketing to ensure buy-in and commitment from the top down…

It’s All About Revenue Now :

Nearly every marketing executive is feeling the pressure to show a financial return. But signing up for a revenue number should be viewed as a positive: It’s an opportunity to expand Marketing’s influence and justify a larger budget..

As you build your Revenue-Engine, you can scale your Success, Grow Marketing’s contribution to the #BottomLine, and make that Seat at the Executive-Table permanent…!!

 

What You “Need to Know About Segmentation” | by: Gretchen Gavett | HBR

The marketers of Clearblue Advanced Pregnancy Test, a product that can tell you if you’re one-week, two-weeks, or three-plus weeks pregnant, asked a couple of D-list celebrities to tweet out their positive tests back in 2013… IbisWorld researcher Jocelyn Phillips as pointing to the high-tech aspects of Clearblue’s test, also noting that young women might be more willing to shell out more money for such technology — the digital version costs about $5 more than the boring old blue and pink line version…

There is nothing new about this kind of segmenting in the pregnancy test market, however. And it’s actually a really useful (if not slightly unsettling) example of how you might segment potential-customers with very different needs and behaviors..

For example, you could segment the market for early pregnancy tests based on demographics such as age and income, or you could segment the market based on consumers’ price sensitivity…

But in this situation, it is useful to ask why : Why would a woman want to take a pregnancy test ? And are these reasons the same for everyone? A little bit of thought would suggest that there are two groups of women: hopefuls, those who want to be pregnant, and fearfuls, those who are afraid that they might be pregnant.

How would you identify these two segments and market to them differently? Often companies offer multiple products that appeal to different market segments and let customers self-select. That is, the firm does not identify customers in various market segments; instead, the customers reveal their market segment identity by choosing different products. Quidol, a company based in San Diego, California, created two different products to appeal to two segments in the market for early pregnancy tests: the hopefuls and the fearfuls. The actual test products were almost identical, but the two products were given different names and package designs, were placed in different aisles of a drugstore, and were priced differently.

Segmenting, at its most basic, is the separation of a group of customers with different needs into subgroups of customers with similar needs and preferences. By doing this, a company can better tailor and target its products and services to meet each segment’s needs. This isn’t, as McKinsey’sJohn Forsyth says, simply for marketing or retail firms.

“We see many, many companies saying, ” I want to get more consumer-driven and customer-facing…But sometimes the organizations don’t know how to start….I’d say you really start with a basic understanding of your consumers or customers, right ? And that’s segmentation…”

It sounds straightforward but often it isn’t. Here are a few pitfalls that many companies fall into when they start thinking about segmentation…

  • One, companies rarely create a segment  — more often they uncover one.
  • Two, segmentation and demographics are very different things. “You have two people, we know they’re the same age, we know they’re British citizens, and we know they’re of royal blood,” explains Forsyth. “One of them is Prince Charles. The other is Ozzy Osbourne, the Prince of Darkness. They’re in the same demographic segment, but I can’t imagine marketing to them the same way.”
  • And three: you have to ask yourself why you want to segment and what decisions you’ll make based on the information. “Many companies say, well, I think I just need a segmentation,” says Forsyth. “But before you even start the segmentation, you need to really understand why you’re doing it and what some of the actions are that you’re planning to take, based on what you think you might see. It helps you understand what’s actionable in terms of driving a company’s business.”

Once you’ve answered these questions, you have to decide whether you want to start segmenting by needs or behaviors. “If you’re doing something strategic and you’re trying to figure out if you have the right brands, the right value proposition, the right product line, then I would say you should start with needs or attitude segmentation,” explains Forsyth. This is basically trying to identify what needs your product or service is or could meet.

“But if you think you’ve got that pretty much under control,” he continues, “and you need to understand how to go to market or target your digital and TV spending, then I would start with behavior.” This involves trying to identify differences in customer groups based on their buying and lifestyle patterns, for example –

Regardless of your approach, a useful “Segmentation” should include these SIX Characteristics :

1) Identifiable. You should be able to identify customers in each segment and measure their characteristics, like demographics or usage behavior.

2) Substantial. It’s usually not cost-effective to target small segments — a segment, therefore, must be large enough to be potentially profitable.

3) Accessible. It sounds obvious, but your company should be able to reach its segments via communication and distribution channels. When it comes to young people, for example, your company should have access to Twitter and Tumblr and know how to use them authentically — or, as Clearblue smartly did, reach out to celebrities with active Twitter presences to do some of your marketing for you.

4) Stable. In order for a marketing effort to be successful, a segment should be stable enough for a long enough period of time to be marketed to strategically. For example, lifestyle is often used as a way to segment. But research has found that, internationally, lifestyle is dynamic and constantly evolving. Thus, segmenting based on that variable globally might not be wise.

5) Differentiable. The people (or organizations, in B2B marketing) in a segment should have similar needs that are clearly different from the needs of other people in other segments.

6) Actionable. You have to be able to provide products or services to your segments. One U.S. insurance company, for example, spent a lot of time and money identifying a segment, only to discover that it couldn’t find any customers for its insurance product in that segment, nor was the organization able to design any actions to target them.

Now you can start breaking down segments by who buys, what they buy, and why they buy (or use or view, etc.) it. The pregnancy test interactive above is a great example of how this works…

There are also prominent failures that companies should heed. One of the most infamous is when Bic decided to segment its young female consumers. The “Bic Cristal for Her” writing utensils were thinner, designed with more pastel colors, and priced higher than other pens. Women, in general, were offended, taking to Amazon to write some very creative reviews. The pen market, in other words, was not as heterogeneous along gender lines as Bic had thought.

When thinking about how you segment, John Forsyth has several suggestions. For one, he notes, “focus groups are dead. If you’re still using focus groups, you’re using 30-year-old technology.” A much better way to understand customer needs and behaviors is to spend time with people in their homes, stores, or health clubs. “You watch them, you talk to them while they’re doing the kinds of things we want to be observing.”

This type of qualitative research is all the more important because it showcases real stories that are key to convincing stakeholders. “When we illustrate things with qualitative research, we get CEOs going, ‘Wow, you’re really telling me my marketing strategy is all wrong and I need to change it,’” says Forsyth. “It’s very powerful, and it’s really exploded in the last 10 years.”

Big Data and technology have changed how companies approach segmenting. “The old model, particularly in the market research world was, ‘I understand people’s needs and attitudes, and behaviors will come from that,’” Forsyth explains. “Today, in many situations, [marketers] have flipped it to say, ‘I’m going to do segmentation based on their behaviors, and then I’m going to try to understand the needs that drive behavioral differences.”

He warns, however, that this type of segmentation is “a lot harder to do than people think, and I don’t think we’re anywhere near being good at it yet.”

Forsyth’s also seeing a lot of movement in the area of segmenting emerging markets worldwide, which poses a number of challenges. For one, scales marketers use to measure needs or behaviors in one country may be way off in another due to different cultural norms.

He also notes that “Affordability” is still a Huge-factor in “#DevelopingCountries,” too..whereas it may not be elsewhere — as the $20 pack of digital pregnancy tests demonstrates nicely…!!

“Local Dynamo’s” : How Local Companies in “Emerging-Markets are Winning” at Home | BCG

Emerging markets remain Global Growth-Engines…Although some of these markets are doing better than others, they collectively offer the most promising opportunities for expansion. Yet global companies often struggle to create Successful #BusinessModels in #EmergingMarkets…At the same time, many local companies are thriving—building businesses that attract local customers and defeat both other homegrown companies and multinationals. Understanding the successful practices of these companies can help you win in these markets, too…!!

Several banks, for example, have grown quickly and profitably in emerging markets, even though most consumers frequently have unstable incomes and don’t have even a checking account. In Mexico, Banco Mercantil del Norte, or Banorte, wanted to reach potential customers without constructing expensive bank branches, so it decided to rely on other companies’ bricks and mortar. The bank partnered with Telecomm-Telegrafos, a rural telecom operator with 1,621 retail locations; 7-Eleven, one of the fastest-growing convenience chains in Mexico, with 1,720 contact points; Tiendas Extra, a convenience store with 883 locations; Soriana, a supermarket chain offering 633 points of sale; and Grupo Control, with 75 points of contact as of March 2014. These partnerships aim to offer basic financial products such as deposits, credit cards, remittances, and withdrawals..

exhibit

Across the Pacific Ocean, Bank Rakyat Indonesia (BRI), the nation’s oldest and most profitable bank, serves the street vendors and merchants that power the nation’s local economy. BRI sends employees equipped with handheld devices into 2,300 busy markets and bazaars, which cater to nearly 6 million customers. The bank is experimenting with floating branches to reach remote customers on Indonesia’s more than 900 inhabited islands..

In all industries, Local companies are transforming the constraints of emerging economies into profitable opportunities and becoming thriving commercial enterprises. We have compiled a list of such energetic private-sector companies—or local dynamos—to highlight their accomplishments. Though there are hundreds of dynamos, we focused on just 50 to better see how their practices may be applied more broadly to all companies that want to succeed in these markets. (See Exhibit 1)..

Meet the Local Dynamos : 

The 2014 list reflects the consumer-driven focus of emerging markets as they increasingly start to resemble mature-market economies and move beyond low costs, cheap labor, and other traditional sources of advantage. Many of the local dynamos are competing on innovation rather than cost, for instance: South Africa’s Discovery Health, an insurance administrator, rewards its customers for modifying their lifestyles and habits..

Local dynamos have been growing faster than comparable companies in both emerging and mature economies…From 2009 to 2013, their revenues grew by 28 percent annually…This growth has generated even greater returns for shareholders. During the same period, total shareholder return rose 26 percent annually for the local dynamos, a much steeper rate than those for indices composed of similar companies..

The Secrets of Their Success : 

Each #LocalDynamo, has its own story about how it has won in its home market…At the same time, the 50 companies share six traits that give them an edge. Four of these traits are specific to the business models that they deploy to thrive in emerging markets: catering to customers and local conditions, leveraging digital technologies, operating at warp speed, and adapting to uncertainty and circumstance..

The other TWO Traits—Building Talent Engines and Establishing Functional Excellence—demonstrate the rapid development of these companies as they create world-class strengths and gain skills commonly found in multinational companies. (See Exhibit 2)…

exhibit

Let’s see how they do it….!!

Catering to Customers and Local Conditions – The local dynamos understand their customers intimately and know how to appeal to them. They identify new customer segments, unmet needs, and local habits that other companies do not recognize. Perhaps foremost, they understand the cost-and-quality calculus that will appeal to the growing middle and affluent class in these markets..

Shriram Transport Finance, for example, was founded in India in 1979 to provide financing to owners of small trucks, a segment that financial institutions were largely ignoring. Shriram now boasts more than 600 branches and about a 25 percent share of the pre-owned commercial-vehicle financing market in India. Field officers make monthly visits to borrowers, during which they often collect cash payments..

Leveraging Digital Technologies – By 2018, there will be an additional 1 billion Internet users and more than 5 billion post-PC products—tablets and smartphones—in circulation than there are today. Most will be located in emerging markets..

Although Internet and mobile coverage remains spotty in these markets, innovation is sky high. Without investments in hard infrastructure (such as stores and branches) to protect, many companies are focusing their resources on online and mobile channels..

Xiaomi, for example, forgoes expensive retail outlets and sells mobile phones directly to consumers in China..In 2013, the company sold about 18.7 million smartphones at about half the price of comparable Samsung and Apple phones; Xiaomi already outsells Apple in China. CEO and founder Lei Jun has ambitions to sell 60 million smartphones in 2014. Xiaomi offers batches of 200,000 to 300,000 phones at a time, and they sometimes sell out in minutes..

Xiaomi is also mastering online marketing platforms. Its social-media team is active on WeChat, Baidu, QQ, and other online forums. Lei Jun has 8 million followers on Sina Weibo, currently the most popular social-media platform in China..

Operating at Warp Speed – Local dynamos have built their businesses swiftly and successfully. They add people in large numbers without faltering. They move into new segments and rapidly become market leaders. In markets comprising multiple regions and customer segments, many of the dynamos have created national brands and established a national sales and retail presence…

Brazil’s Magazine Luiza, a retailer with $4.1 billion in sales in 2013, has grown more than 26 percent annually since 2009 by catering to Brazil’s swelling middle class. As a result of several acquisitions, Magazine Luiza has more than tripled the number of its stores over the past ten years. But the company has also grown organically, expanding in important cities such as São Paulo, where it opened 44 stores in a single day in 2008…

Online sales have been growing faster than conventional sales, thanks to innovations such as social-shopping services and strong fulfillment. The company has, for example, created online stores on Facebook and elsewhere that allow consumers to sell goods on commission to friends and family…

Adapting to Uncertainty and Circumstance – Still, the emerging-market environment remains challenging. The supply of electrical service is sometimes uneven. Roads and rail networks, high-speed wireless networks, and ports are works in progress in many locations. Market intelligence is occasionally spotty. But local dynamos have creatively worked through these limitations to meet the needs of their customers…

Equity Bank, one of the largest banks in Kenya, has expanded by providing services to customers previously viewed as “unbankable…” Rather than build local branches for people who live in remote areas, Equity Bank relies on agents to deliver financial services. The agents use their smartphones to accept an application for a new account. The application is then processed centrally, and the applicant receives notification of the status of the application via text messages..

Building Talent Engines – Talent shortages may be acute everywhere, but they are especially severe in emerging markets. Historically, companies have not offered the same level of training and development that schools provide, and schools just can’t keep up with the demand for qualified candidates. Job-hopping is often viewed as the fastest way to advance rapidly in these markets..

Local dynamos successfully overcome these constraints. They hire top local talent and build an engaging and rewarding environment. They also put in place strong people practices so they can identify, train, and promote their best employees and help those who need stronger skills.

HaiDiLao Hotpot, a thriving hot-pot restaurant chain in China, provides a captivating customer experience that would be impossible to pull off without engaged employees. “On special holidays, magicians in colorful, traditional masks perform tricks. Patrons order using iPads. Periodically, a server breaks into the restaurant’s signature Olympic-style ‘noodle dance,’” a Wall Street Journal article observed in 2013.

The company has promoted this environment through careful development and training of its employees. Performance evaluations, for example, are based on customer satisfaction and an employee’s passion for work. And HaiDiLao’s benefits are unmatched in the restaurant industry: the company offers free apartments, with air conditioning and Internet, to employees and helps them solve any difficulties with enrolling their children in school.

Establishing Functional Excellence – One of the ways that many local dynamos distinguish themselves from the rest of the pack is by developing functional capabilities that rival—or even exceed—those of multinational companies. These capabilities include business model innovation, technological innovation, operational excellence, branding and marketing, product offering, and customer service.

Cinépolis excels in many of these areas…The company has grown to become the largest movie operator in Mexico, with 295 cinemas and 136.7 million annual visitors, by offering an unparalleled and innovative theatrical experience. Its theaters have comfortable stadium seating and modern digital technologies.

Heeding the results of market research, Cinépolis developed movie snacks with Mexican flavors, such as popcorn with lemon juice and chili sauce. Customers can enjoy a meal while watching a movie in the VIP room. Some of the theaters are equipped with “4DX” technology, which produces movement, smells, mist, and wind in addition to sound and video. Cinépolis has also developed facilities where children can watch movies while playing in a ball pit…

Shaping Your Response to the Local Dynamos :

How can you compete against these homegrown companies? You need both to emulate them and emphasize your own strengths…Emulating the dynamos will require you to operate with their energy, ambition, and entrepreneurial zeal and to adopt the characteristics that we identified earlier as keys to their success in their home markets..

Ask yourself the following questions –

  • Are your best and brightest employees deployed in emerging markets? If not, you will lose.
  • Are your aspirations bold enough? Unless your aim is to grow twice as fast as the market, your aspirations are too low.
  • Have you created a profitable business model that delivers growth now? You need to deliver something special and specific to each market at an affordable, yet profitable, price.
  • Do you and your senior team spend enough time on the ground? You need to be more than a tourist to succeed against these home-grown companies. You and your team should walk the streets, take public transportation, and visit stores, homes, hospitals, and government offices.
  • Are your initial investments big enough? Money does not buy success in these markets, but it can help to overcome the running start that local dynamos have. You simply cannot make up the lost ground with incremental investments.

Emphasizing your own strengths should be an easier task…You do not have to abandon what worked at home or in other overseas markets. But you do have to figure out how to apply your scale, expertise, brand, R&D capabilities, access to capital—and whatever other strengths you possess—in a different and potentially rewarding setting….!!

“7 Motivational Navy-SEAL Sayings” Will Kick Your Butt Into Gear : “Read this and Get going” | by: Brent Gleeson | Inc

Whether you are an #Entrepreneur, working in Corporate, or Building a #Start-up, it is imperative to continually seek New Ways to stay #Inspired and #Driven“Being a self-starter is a fantastic quality”, but we are all human and get distracted by the minutiae of our day-to-day responsibilities…!!

Here are “SEVEN Navy-SEAL sayings” I keep top of mind while moving toward achieving my Personal and #ProfessionalGoals…

1. The only Easy-day was Yesterday:

This is one of the more well-known sayings of the SEALs. When constantly pushing yourself to excel, there will be challenges that make every day a battle…As an entrepreneur, this concept keeps me motivated, because it puts things into perspective. If you wake up knowing that every day will pose new challenges and that you are ready to face them head-on, you will be well equipped to achieve any goal you set…

2. Get Comfortable being Uncomfortable:

One exercise in SEAL training is “surf torture.” You link arms with your classmates and stand, sit, or lie in the frigid Pacific Ocean until your body reaches the early stages of hypothermia. During the initial phases of training, you do this daily. Then you cover yourself from head to toe in sand and stay that way for the rest of the day. You might follow this with running the obstacle course, weapons training, or classroom time, but you are expected to push the discomfort aside and stay focused on the task at hand.

There have been many times as a business owner that I have been in very uncomfortable situations. That could be a difficult conversation with a team member, a lawsuit, or dealing with a demanding board member. Discomfort comes in many forms. But the more you embrace that as a reality, the wider your comfort zone becomes. This boosts confidence and provides the tools for facing even larger challenges down the road.

3. Don’t Run to your Death:

In SEAL teams, this is not a metaphor. When conducting raids that put you in close-quarters combat scenarios, restraint is often the best approach. Once you breach and gain entry to the target, being slow and methodical often wins the race. Hence the phrase, “Don’t run to your death.”

Knowing “When Not to Act” is as “important as knowing when to Push-forward”…Restraint is crucial for #BusinessLeadership…This is especially important if you are running or managing a rapidly growing business…Growth is fantastic, but smart growth is even better…Have a good plan, slow down, grow intelligently, and never, ever, run to your death.

4. Have a shared sense of purpose:

A shared sense of purpose is hard to continually communicate. The economy changes. New technologies emerge. Employees come and go. There are many moving parts, which is why it’s critical for the leadership to always be communicating the reality of the situation and what the “win” will look like when you get there. And, most important, what everyone’s role is in helping the team achieve that goal.

5. Move, Shoot, Communicate:

As a SEAL, you must be able to perfectly execute these three functions to ensure mission success. Move: You have to be able to work as one well-maintained mechanism with the ability to have constant fluid motion. Shoot: That’s self-explanatory. Communicate: All good teams have frequent, open, transparent communication. When the bullets start flying, everyone needs to know what the next move is.

The same philosophies apply in the fast-paced world of business and entrepreneurship. The team has to have the ability to communicate effectively to adapt to changing environments. Which takes us to the next saying.

6. No plan survives First Contact with the Enemy:

This is from Helmuth von Moltke, a German field marshal from World War I. Similar is this sentiment from Mike Tyson: “Everyone has a plan until they get punched in the face.” That is why preparation and training are even more critical than planning.

When you have a team of the right people doing the right things, they will know how to adapt when the you-know-what hits the fan. And they will adapt with composure, not panic. This is why ongoing training and professional development are so important.

7. All in, All the Time:

I wanted to close with another one of the more well-known SEAL sayings. Just being a good performer won’t cut it to make it into the SEAL teams. You have to give everything you have just to make it to the next day. Just like managing stress, you have to focus on one piece at a time. So don’t worry about the test you have in the afternoon. Your goal is to make it to breakfast. Then lunch, and so on…!!

Whether you are building a start-up, leading a team in a large organization, being an active parent, battling cancer, or training for a triathlon, it’s got to be all or nothing. Mediocrity and moderation won’t get the job done. Give everything you do everything you’ve got.

My heart welled with pride when I heard my 8-year-old son’s flag football coach give the team one last piece of advice in the last couple minutes of its championship Super Bowl game. He said, “Now is the time to dig deep”…

Leave everything you’ve got on that Field…If you do that, “Win or lose”, you will be the champions..” So whether you are 8 or 58, “get Comfortable being Uncomfortable”, get well prepared, and “be all-in, all the time”…!!