Is Ford showing the way out of recession?

A couple of weeks ago, most people were rightly criticizing Ford, Chrysler and GM's CEOs for their arrogance or ignorance in flying to DC in private jets. This week Ford's CEO has been the first to show understanding of what transpired. Ford's answer is not only to rectify a mistake, but also to show forward thinking out of recession.

In refusing the bailout money, Ford is rectifying a really bad marketing and public relations mistake with a real win. Judging by the massive outpouring of goodwill on the web since this step was announced, Ford's future looks rosy once consumers have the money to buy new cars. In fact, in my opinion, as cars are necessary to the bulk of Americans, and as Americans will want to help the US economy, Ford is likely to win market share even in the recession.

Secondly, in refusing bailout money, Ford has separated itself from GM and Chrysler. Ford now looks like a healthier, more forward looking enterprise, and that "feel" will transfer to perception of its cars. It's a shame for Chevrolet (GM) as its marketing of the new Malibu was pretty nice. The rest of GM and Chrysler in toto really don't seem to have done anything for the longest time.

Ford's decision should encourage businesses to look to the future and to recognize the critical importance of its positioning at this juncture. This recession is levelling competition and public relations and marketing coups won through this hardship will be worth double those made in a strong economy. The timing for Ford couldn't be better as Toyota (of Lean Management fame) just posted its first loss in 70 years. If it markets well, and if it ensures a quality product, who knows where Ford may end up in 2 years. Yes, it will still be a challenge for Ford over the next year, but I would be willing to bet it ends 2009 in a much healthier position than GM or Chrysler.

Madoff, Dreier and Marketing

With the Dreier scheme, Stein Bagger and the IT Denmark scandal and the uncovering of what appears to be the biggest Ponzi scheme in history in New York (Madoff), does it get any worse? One thing is clear - that many of the "recognized authorities" were solely convinced with apparent success and greed, rather than sound business review. How could Ernst & Young name Bagger "Entrepreneur of the Year"? How could so many influential investors invest with Madoff?

If we asked 100 people on the street if they believed in guaranteed permanent profits in their investments or guaranteed rises for no work, most would recognize this as impossible. However apart from the human suffering inflicted, this false belief, coupled with ever increasing greed, has led to wanton spending not just in bonuses but also in departments such as marketing.

Recently Casey Jones wrote about this in an interesting article in AdAge (12.18.08). If I were to put a practical spin on it, I would ask questions like this? If a non-profit can achieve national media response with one billboard after just a few days, what do so many companies spend millions blanketing cities with billboards that no-one notices? This true example shows how organizations, that have to take care in spending, can find ways to more success in advertising than the established big spenders.

Perhaps value for money in operations should be a more important issue when considering investment.

Customer Service, Customer Service

It's certainly not new to emphasize customer service. Marketers have pushed that for decades (although it could be said that the last 10 years has seen a move away from this emphasis for short term gain). Here's something to make those think who are perhaps succumbing to panic and throwing out the idea of customer service in favor of short term economics.

At the weekend a family member dropped my digital camera, pushing the zoom lens out of its track. I began to call stores to find out who had onsite repair, and what the charge would be. Most companies do not have onsite repair. However, I called a family business in the process of my search and the gentleman at the other end offered to look at the camera for free, and if possible fix it!! For free!! Needless to say, I went down to the store an hour or so later. While I was waiting to see if he could fix the camera, I began to look at potential replacements, with the idea that I'd find out the info and then probably buy it at a cheaper price online.

The man could not fix my camera onsite, but I was so impressed by his service I began asking questions about the cameras they had. I was then impressed by his knowledge and his honesty in telling me which models were "not really worth" it for me. To cut a long story short, as I had already done some research about price before I went, I was offered a very good deal with an exceptional make of camera.

I left extremely happy, determined to buy a second camera there for my wife and to recommend this store over all the megastores (who have lousy customer service and generally seem to just want to get your money out of you). The price was more than comparable because camera firms are competing in all marketplaces. All I can say is I hope this company takes over from one organization I could mention where I bought my computer. That well known national chain, has arguably the worst and nastiest customer service out there (including a corporate customer "service" person who told me "When you leave the store it's no longer our business" - and that despite the fact I bought an extended warranty). Not only do I never buy anything there anymore, even if it's a little cheaper. I always advise others to avoid this store.

Where will these two organizations be in 2 years time? My guess is that the family business will have survived the recession nicely, while the national chain will have downsized and worsened its reputation. We'll see.

Whopper Virgins - genius or madness?

Is Burger King on the right track? Does it promote or hinder the global village? Does it prove Burger King's burgers are better than...?

Firstly, I think we should congratulate Burger King’s marketers for coming up with an original idea that emphasizes the growing connectedness people are feeling across the world. Secondly, the Whopper Virgins have definitely created more of a stir than normal – something that in its own right proves some sort of success.

However, will the campaign increase sales? While I’m still in suspense as to the response, I suspect it will show Burger King’s burgers in a good light! How many people are as cynical as me? Years ago my brother was stopped on the street to try the “Pepsi Taste Test”. He immediately told them his preference for Coke, which made him the “ideal candidate”.
However, when he flawlessly showed which was Coke (he liked that one) and which was Pepsi (he didn’t), his statistic did not see the light of day. Decades later Pepsi is still number two to Coke.

Lastly, how does Burger King’s ad work in minority communities in the US? Do Chinese viewers like the “ignorant backwoodsy” Chinese people portrayed in the ad? And what about the ads around the world? Do viewers in Singapore see rednecks from Arkansas trying a Rendang Burger? Hmm….

Whopper Virgins - genius or madness?

Is Burger King on the right track? Does it promote or hinder the global village? Does it prove Burger King's burgers are better than...?

Firstly, I think we should congratulate Burger King’s marketers for coming up with an original idea that emphasizes the growing connectedness people are feeling across the world. Secondly, the Whopper Virgins have definitely created more of a stir than normal – something that in its own right proves some sort of success.

However, will the campaign increase sales? While I’m still in suspense as to the response, I suspect it will show Burger King’s burgers in a good light! How many people are as cynical as me? Years ago my brother was stopped on the street to try the “Pepsi Taste Test”. He immediately told them his preference for Coke, which made him the “ideal candidate”.
However, when he flawlessly showed which was Coke (he liked that one) and which was Pepsi (he didn’t), his statistic did not see the light of day. Decades later Pepsi is still number two to Coke.

Lastly, how does Burger King’s ad work in minority communities in the US? Do Chinese viewers like the “ignorant backwoodsy” Chinese people portrayed in the ad? And what about the ads around the world? Do viewers in Singapore see rednecks from Arkansas trying a Rendang Burger? Hmm….

Inbound or Outbound Marketing?

I just heard a very impressive and convincing presentation from a web-marketing expert. His premise was that traditional outbound marketing is on the way out as an increasing number of people have filters in place to prevent it. Simultaneously these same people are becoming increasingly annoyed by intrusions into their space, time and consciousness. An increasingly popular method of marketing nowadays is “Inbound Marketing” - that which offers free valuable service, encouraging connection, interaction and enquiry. The theory is that those who connect due to their own volition will become much more loyal customers at much less a cost. Consequently much time is spent on blogs, websites and various other internet forums. Webinars are posted for education, questions are answered for free and items of interest forwarded.

Is it true though that these forms of marketing are rendering traditional media marketing redundant? I don’t think we can say that, as it relies on a certain degree of web access and web familiarity. For example, while this trend may be true for English-speaking people in the US, it is not true on the same scale with those who only speak Spanish in the US. Those Spanish-speakers who are regular web-users tend to post more than English-speakers, but represent a lesser proportion of the US Latino community. This means that a web-based approach, while looking to the future, does not effectively deal with the present.

The same is true of many countries and cultures around the world. Urban China is very web-savvy, yet there are still sizeable communities in China who are more or less cut off from the rest of the world, who do not speak Mandarin Chinese, and who are unable to use a computer. China is in fact an interesting case because it is at the forefront of blogging, yet this very approach does not reach a significant portion of its own immediate market. Therefore other strategies are necessary.

Inbound marketing is very important, and I believe its principles can be applied with great success to areas such as person to person grass-roots marketing as well. It is clear the web will have an increasingly important role to play worldwide. Yet, if we abandon other forms of marketing at this point, we will take ourselves out of very significant present markets and also become unable to develop a majority of brand new markets internationally.

Keep jobs in the US or not?

This is a touchy subject right now. Recently I was in communication with a CEO from another part of the world about partnerships with the US. Conducting some initial research with companies here in the US, I was struck with a dilemma. Even if I thought it was a good partnership with the foreign company, would there be fallout in the loss of local jobs. If this happened would it hurt the economy and would it worsen the potential prospects of the US workforce?

Many complain about the drain of US jobs to other parts of the world. However the truth is that high quality work is being carried out there more cheaply than in the US. As economics drive companies, they follow the line of most profit. In my view a reactionary isolationism is not going to help anyone. Instead a short-term economic and/or political gain will give way to massive loss in the world marketplace.

Rather, I suggest the US consider models based on those of the Japanese after the 2nd World War. Faced with a country with very little in the way of raw materials, Japan assessed its potential strengths - concentrating on developing industries demanding great skill and brainpower and few raw materials. The US is losing place and influence in the world economy, and while it is still the world’s richest and most influential nation, it must recognize times are changing.

The answer is not going to come in putting up a trade wall, but in identifying and seizing new market opportunities in an increasingly unified world market.

What was the biggest mistake of the "Big 3 in Detroit?"

There has been a lot of talk about the various bailouts. Particular negative attention was given to the recent request by GM, Ford and Chrysler for a bailout as the CEOs arrived in three private planes. Obviously the costs of these flights - approx $20,000 per flight - was not much in light of the multi-million bailout deals they were pleading for. However, this one action has not only jeopardized their requests, but garnered an awful lot of ill will towards their companies as the time they can least afford it.

I wonder how much these CEOs brought in their marketing/public relations experts to help them with their overall strategy. It’s hard to imagine that any of these CEOs was really thinking when they made their decisions to fly separately in private planes. Why didn’t they think? Was it tradition, arrogance, short-sightedness? These discussions with Congress could have turned into a wonderful opportunity to gain funding, increased the number of Americans determined to “buy American” and positioned them at the head of the growing drive to be green.

We don’t know what the result of this big marketing/public relations faux pas is going to be, but we should all beware we lead from the front in the public messages we send out about our companies, if we want to come of this meltdown healthy and growing.

Can branding hurt you?

This week McDonalds hit the headlines again! McDonalds has an unmistakable brand image. That could be said to be a massive advantage. McDonalds has certainly been able to expand internationally but how is it perceived in other countries? I was intrigued by the experiment they’re making in Japan by NOT using their brand. Their publicity machine says it’s so that customers can taste the taste without the image of McDonalds in their minds. The question is, “What makes McDonalds concerned that their image would have a negative impact on the taste buds of the Japanese?”

I remember the first McDonalds in the UK (bad quality), Geneva (better), Moscow (very ironic it was considered a luxury restaurant when Russian restaurants were so much better), outskirts of Jerusalem (really hate seeing those arches before the rest of the city). What image does McDonalds bring to your mind?

Comparing McDonalds to Coke, I realize that Coke has a very neutral to positive image in my mind, no matter what language or culture. When I think of McDonalds I remember how hard it was for me to initially even associate the word “Restaurant” with the type of food on offer. I also remember the negative publicity in the UK (the longest court case on record) for the debatable ethics of their targeted ads to kids. The movie “Supersize Me” hasn’t much helped either. Perhaps this image has prompted McDonalds to try their Japanese experiment. Will it be the precursor to a brand change? Is this McDonald’s first attempt to associate their brand with quality?

Whatever the upshot of this experiment, it certainly reinforces the need to be aware of the development of the brand image. Too little attention can have an impact decades in the future.

Trends through the recession

Ad Age recently published an interesting interview with Samsung CMO Steven Cook. He related some of his observations, which I believe can help many, as we seek ways through the tough times ahead.

Firstly, he mentioned the long-term success of companies that do not restrict marketing in tough times. Of course, inept marketing is not worth the money it takes, but effective marketing in tough times will actually help your company come out ahead of the competion - and faster! Procter & Gamble’s commitment to marketing helps explain its longevity. I recently went to a presentation paralleling the situation in 1929 and today. Companies such as P&G and General Motors actually did very well employing the strategy of consistent and innovative marketing.

Secondly, Mr. Cook shows the “upside” of the tough times for marketing. E.g. if people can afford less to go out to movies, they are more likely to invest in home movie options - including flat screen TVs, the new film downloading technologies and servers etc. This should emphasize the need for all of us to see the markets that will in fact be created by the recession.

Thirdly, Mr. Cook mentions the growing influence of “Green concerns”. He mentions how important it is to remain humble, not promise what you can’t deliver, and then deliver or over-deliver. I also liked his creative thinking when he gave out cellphone recycle envelopes at a recent conference when he was keynote speaker.

All of these examples should encourage us as we look at the ways strong companies are finding to negotiate a challenging time and come out ahead.

Countries to watch?

Jennifer Alsever wrote a thought provoking article on BNET.com suggesting the best countries for small, medium and large companies to look at when it comes to expansion. She agrees that it makes a lot of sense for US companies to look at international expansion, given the state of the US economy right now. I believe it will not only help companies survive the current crisis, but will position them well ahead of the competition when things pick up.

Here is her list of countries:

For large companies she suggests the more obvious choices - India, China and Russia (For me Russia poses some weightier and less obvious challenges than the others but there are obvious benefits to all three).

For medium-size companies she suggests Chile, Singapore and UAE. (I find this an ecclectic and interesting set of choices).

For small companies she suggests Vietnam, Rwanda, Peru and Kazakhstan. (I find this the most interesting set of choices).

I found this article well-written and researched, with a helpful risk index. The entire article is available at http://www.bnet.com/2436-13239_23-198453.html. What do you think?

Public Relations - how not to do it!

I was watching the US Presidential elections, switching between channels to see different perspectives and I came across BBC America (which I watch quite frequently, as it’s the only news station in the US that tells you anything about the rest of the world). BBC America had an MC and four panellists, who switched at various intervals. I happened to tune in at the end of an interview as discussion switched back to the studio. There were two Americans and two Brits on the panel.

The first American to speak gave a classic example of everything not to do while trying to communicate effectively (much I think to the embarassment of the other American present). He started off by telling the MC the reporter should be sacked, and then launched into an unbelievably arrogant dressing down of the BBC and the rest of the world, as if he was the parent and the rest were disobedient children without his insight and knowledge. If ever someone wanted a negative example of a stereotypical American, this was it. Key phrases that really jarred were such as, “You (BBC) are a guest in this country”. He was seemingly oblivious of the fact he was a guest on the BBC!! It is even more ironic that this person was previously an Ambassador! (One does not have to wonder too much to see why there are international public relations issues!)

Am I saying it’s impossible to have very different positions in effective international public relations? Of course not. In fact, I very strongly disagree with some of the BBC’s political reporting. The problem is not having different values, perspectives and positions - the problem occurs when we communicate those in a fashion which bring our character to the fore and not the problem. Some tips to consider when trying to communicate a vastly different position are these:

How does the receiving audience receive such information in their own country and culture in a way that they interact with it?
Have I focused down to my main point? It’s very hard to deal with differences all at once.
How can I communicate in such a way that I appear approachable, teachable and humble.
Will it help to use “third party questions”? (E.g. “How do most people in___ see this issue?”)
These are just a few suggestions. Obviously coming to constructive resolution or a way forward requires some more experience and skill.

Can startups think internationally?

Is it sensible for a startup to think of international markets? The answer of course depends on the startup. However, it certainly should not be ruled out. Increasingly workforces are becoming international and these international employees bring with them a wealth of experience and contacts. While overexpansion will lead to collapse, finding the right market and the right niche can put a company ahead of the curve.

What kind of questions should startups ask themselves?

Have we properly identified which of our employees' experiences and contacts may lead to a worthwhile business decision?
Having recognized these contacts, have we got an approach strategy?
Have we a strategy to prioritize results?
Along with these questions, startups need to examine their resource constraints more closely than established companies. This is where recruiting of the right (usually multiskilled) entrepreneurial and visionary personnel is important. I believe that if a startup is aware of key international developments in their general sphere, the right international link could help them be vastly ahead of the curve in the next decade. If we want to see current examples of such forethought, look at those companies which first foresaw a massive growth in India's IT capabilities.

Customer service gives your new market entry the edge

Seems like I’ve been going on a bit about customer service recently. The other day I called back to a State phoneline to ask why after I had sent a ton of information a month ago, I had just received a letter asking for the same information and this letter had erroneous information about me! When I called, I spoke to an unfriendly and unhelpful representative who told me, “How do we know you are who you say you are?”. At the end of the call I asked if I could highlight my problem and suggestion for improvement with a supervisor. She told me to call my State Representative if I had something to say, she was not interested!

If we go back a few years to the airline crunch, I remember being very loyal to a particular airline and its alliance. Frequent flier miles had netted me a lot of perks more easily than with other airlines. This airline filed for Chapter 11, as did many others, and for the first year plus, I actually bought tickets - eschewing the use of miles - in my personal attempt to help the airline and its employees. After about a year the customer service dived to worse than rock bottom - I would actually say unethical in some of the sudden changes in charges they made after ticket purchase, and regardless of frequent flier status. As a result I quickly used up my 200,000 miles of free tickets and have only used this airline sporadically since.

The trend in the US away from customer service has been exacerbated by concerns over the unstable market. So imagine how great poor customers will feel if you provide an easy to use product or service with excellent follow-up. Customers who are treated like royalty, rewarded for loyalty and helped quickly and effectively with any problems, will notice a very stark difference to the norm. I would suggest your business will very quickly be their partner of choice. The same will be true for any US business seeking to make entrées abroad. Many countries have no customer service tradition, and those previously famous for great customer service are slipping. This crisis is actually a leveler giving you a real chance at large market share.

Be careful though before imagining you customers want what you want them to want! To give great service in a foreign culture, you need to understand what great service is in that culture first.

Investing and dumping.

One of the tragedies of the recent economic downturn is the way investors are withdrawing from entire countries. Hungary is the latest in a line of Eastern European countries to fall into crisis because investors are pulling out. The twin problems are the opportunism of the lender and uncontrolled expenditure by the borrower. This attitude has been lionized in the West for decades - hence the enormous credit card debt, and we should not be surprised at its internationalization.

The shame is that this crisis is in my view unnecessary. Investing partnerships with planned spend and return limits would significantly have mitigated the situation. Investors would not have then pushed themselves to the edge of their capability, and spenders would more quickly realize return, stability and growth.

When it comes to international expansion it’s easy to fall into the trap of dreaming big without fully realizing how much energy and resources growing dreams eat up. There’s nothing more discouraging than a flash in the pan, when short-lived euphoria gives way to sadness and demise.

I believe the current situation should be a wake-up call for us to partner internationally in a controlled growth model. Exceptional marketing can lead to great exposure in a new market, but if, for example, supply chains are not up to demand that publicity will quickly turn negative. On the other hand, well-planned holistic approaches will enjoy long-term growth. Then we’ll really be able to celebrate.

Marketing with personality internationally

Personalizing brand is a well-beaten path in the West. Who can ignore the geico gecko? (I’m partial because he’s got a London accent). Not sure exactly the the geico cavemen are all about - oh I forgot, “So easy a caveman can do it.” Whatever your thoughts about these two geico creations, it’s not every day that Hollywood attempts to make a series about an advertising idea. (OK, it failed, but still, it’s pretty impressive to get that far.)

Whatever you think about the effectiveness of these brand personalities for improving geico’s sales, these figures have certainly created an impression. What happens though if geico tries to go international? WIll the geico gecko actually translate in London? How will Londoners perceive geico as a result? I guarantee our friend the gecko will not be in the same light as Americans. How will that affect the perception of the geico brand? Now let’s go one step further. How will it be perceived in a country where geckos are ubiquitous? Are geckos seen as pests? Are they seen as food? Are they seen as dirty? Do they have religious significance? What’s the image of a reptile talking to a man? Can a male gecko talk to a woman? Then let’s take the cavemen. Does the perception of a caveman look anything like the same in other cultures?

These are just a few of the questions that should be considered when developing an international personality for a brand. Is it too complex? Not really. Coca cola has successfully made its personality known around the world without even a creature to head it up!

Is Satellite important in the Majority World?

While many may feel the Majority World is not a real market for their products and services, mobile phone and electronics companies who are ahead of the game, have long realized its potential. I remember a friend of mine who visited rural Uzbekistan. He told me that possession of a mobile phone was more important than proper flooring or an inside bathroom to the locals there.

The mobile phone connects people across distances that are hard to travel with little infrastructure. Satellites offer the capability of connecting workforces and markets at comparitively little cost. The same is true of several other methods of communication.

The question now is how to best use technological advance to promote true market growth? We need to assess:
1) What technology is available at present in a country or market?
2) What technology could be available in the near future at affordable rates?
3) How this technology is applied in communication in our target market(s)?
4) How it could be applied in communication in our target market(s)?

The exciting thing about this kind of entrepreneurial marketing is that the future is limitless.

Volatility, Sensitivity and Sense

One by-product of the volatility of the stock market and the uncertainty of the economic situation is an increased sense of insecurity. Where there is insecurity there is greater emotion and sensitivity to real and perceived mistakes. This makes the job of marketing in unfamiliar communities and countries more complex.

All of us recognize in daily life how relationships suffer because of stress. Successful marketing is in many ways successful relationship-building, and understanding how to deal with the heightened reactions stress brings, will help us emerge ahead of the curve.

There are many aspects to this dilemma and here are a few questions that I suggest be researched and answered to do with one aspect as we go along this path of development:
We know of the well-known faux-pas of the Nova car model in Mexico, as well as the riots that broke out in Bangladesh because of the Bata shoe logo, and we are consequently anxious to avoid falling into the same trap. But how will we know?
1) Do we have any locals to help advise us?
2) Do these locals have any partisan tribe, people, language, social status that could give them blindspots?
3) Will they tell us the hard truth or does their culture or their need require they tell us what we want to hear?
4) How will we discern the answer to 3)?

These are just a sample of some questions that we need to address. It's worth remembering that getting the answers wrong in a time of heightened stress will likely lead to more extreme consequences. I'd be interested to hear of the approaches of others in this process.

Customer service - the old new way

I spent two and a half hours on the phone today with a State service. Probably 45-60 minutes of that time was waiting for someone to pick up the phone. The first time someone picked up the phone they were impolite, aggressive, patronizing and generally unpleasant, unknowledgeable and unhelpful. When I asked to speak to their supervisor they hung up on me without a word. This surprised me as the previous week I had spoken to someone who was very helpful in the same department. I called back, initially to complain - something I do only extremely rarely. This time I spoke to someone whose manner was very helpful and warm. They put me through to a supervisor, who then advised me to speak to another department. I called the other department and was told I needed to speak to the first department again. I called the first department and was told it was actually the second department but I needed a supervisor to sort out the mess. I called the second department, got a supervisor who told me I needed a third department. I called the third department and two and a half hours later talked to someone who knew the big picture, had power and understood my questions.

I have to ask myself - “Why didn’t all the people have the education to understand the big picture?” I also have to ask myself, “Why could only one department out of three deal with the issue they were all set up to deal with?” I know who I’ll call in the future. I also know who I’ll avoid at all costs. If this were a commercial enterprise, it would go bankrupt very quickly. It’s amazing to me that after a century of technology, we still cannot organize a more “user friendly” society.

Right now the economic situation has caused great tension. Can you imagine the gains that could be made by a friendly, customer-centric model in this environment? My experience today reinforced my determination as a marketer to see things from the client’s point of view. The relief I felt talking to a knowledgeable and friendly person who had the power to follow through was physically palpable. How can we create this physical and mental relief for our clients?

Is Inaction the Best Way Forward?

The US economic meltdown has most companies so unsure of the future they don't know what to do next. The fact is that today's professionals haven't dealt with such an uncertain situation. One of the key questions is, "Should we wait to see, or should we do whatever we think is the best way forward?" The following question is, "If we do something, what happens if it proves to be the wrong thing? What happens if things change again?" That can often lead back to inaction.

I suggest that while precipitous action may be a bad idea, inaction is not going to help. We can either become pawns at the whim of a storm, or we can try to make a new future. We're not all powerful. We can't be flawless. We will have ups and downs, but we can also be creative and insightful. I think this could be the key time to build ethical and productive international business models for the future. Europe had a meltdown in the 20s along with the US a few years later, yet the respective economies ultimately recovered and boomed with a model of better macro-oversight.

Francis Schaeffer, the philosopher, once wrote a book, "Small is beautiful". I think this a great motif for a new international expansion model. Typically most multi-nationals have become multi-national by buying companies, not by expanding from the ground up. In my view the company that understands how to build from the ground up internationally will be the company that becomes strongest in the next few decades. How can we build from the ground up? Do you agree?

No need to panic? (3)

OK - it’s not really a surprise Wall Street had another turbulent day. I believe it’s time to comprehend a key idea - “We need others“. Isolation and belief in one’s own invincibility are recipes for disaster. Accepting this, the next item on the agenda is developing solid adaptable plans to build revenue by expanding into new markets internationally. In the current economic situation, partnerships need to be strategic. If we are too powerful in the partnership, then we have to ensure we neither become a feudal lord, nor a charity. If we are too weak in a partnership, we have to ensure our partner does not become feudal lord or charity. We need to accurately assess our real or potential strength as well as that of our potential partner. For example, after World War II Japan assessed it had no significant supplies of raw materials. As a result it decided to concentrate on developing industries that needed significant intelligence and little in the way of raw materials.

If we are going to partner internationally I believe one area to investigate in potential partner countries and communities is their potential. Potential is a lot easier to identify the more creative and holistic our vision. One example would be communication or marketing methods. The West is very dependent on its technology, but in Majority World countries, primary social communication structures are still paramount. This heightens the importance of understanding those structures; how they could relate to marketing in the partner country as well as how they may help marketing in our own countries. Secondly it heightens the importance of building flexible, strong, forward looking, intercultural relationships with the people that will be important in a partner country's societal structure. These people are sometimes very apparent, but oftentimes undiscovered as the traditional unicultural mindset has to think counterintuitively to locate them.

No need to panic? (2)

Today there was good news on Wall Street, but the jury is still out as to the long-term effect of the bail-out package through 2009. Macro-answers are needed to macro-problems for a quick fix, but long-term health is going to depend on other criteria, one of which is international relationships. Nowadays there is discussion as to whether increased international connectivity lessens or heightens the risk of global financial collapse. I suggest it could do both.

It should be no surprise that certain large multi-nationals attempted to profit off the least advantaged in the US. After all, western multi-nationals have been using the same tactics for years in other countries. Consequently, no outcry was made when these same policies were put to work in the US. Previously, the countries of origin of such multi-nationals, were able to keep the unhealthy economies abroad at arm’s length, even profit from the situation by demands for excessive interest and the like. The plight of citizens abroad did not concern such companies, and apparently the plight of the least advantaged in the US did not concern them either. Perhaps it had to hit home for executives to realize the real impact of their actions.

We have to hope this lesson is learned, because now increasing connectivity means no-one can ’seal off’ a market or country in crisis. Even if we wanted to return to the past, we cannot do so. International connectivity is only going to increase with technological advance. Consequently, we have to plan for the future, ensuring the long term health of countries and markets in which we do business. The maxim, “Do to others as you would have done to you”, seems to apply well. Just consider the potential. If a very poor community or country is introduced to growth opportunity, its purchasing power will also increase dramatically. If you exploit that country or hold large interest payments over its head, it will never achieve such power. The greater number of stable markets and economies in the world, the better the world will be able to withstand the collapse of one.

I believe the best hope for the US economy in the 21st century, is to invest in international markets - and particularly in Majority World countries. I’ll develop this more tomorrow.

No need to panic?

Rapid changes in the world require even greater adaptability and foresight than before. But that’s all. OK, the economy is currently in a mess, but to me it’s surprising that it’s only with hindsight everyone is castigating those who tried to bring in quick and large profits by exploiting those whose economic situation was the most unstable. I agree, it should never have been allowed. In my view it’s unethical and, frankly, nonsensical as the premise was never based on reality. The question is, why is it only now that establishment figures are condemning these practices? That is the “surprising” element. I suggest it is because they were neither concerned with lack of ethics nor with unrealistic theory that promised wealth until the effects of these practices hit their companies and their own wealth. Now they are stuck in a bad situation, and their own planning and adapability are being brought into question.

The speed of this collapse is staggering, but today the world changes at a very rapid rate. Most analysts agree nowadays, that to meet these changes, business plans must be adapted every 90 days or so. This is where it definitely helps to “be ahead of the curve”. Wealth is ultimately a relatively fixed commodity - it’s the distribution of wealth that changes. This means Wall Street rumor, fiction and forecast based investment are speculative and not “real”, so this is where future plans need especially to be foresightful and adaptable to stand a realistic chance of success.

There is hope for the future. People still have the same abilities, the same raw materials, the same learning and the same capacity to develop. The current crisis should just warn us how to develop, and I suggest it warns us that ethics and realism are terms we should pay more attention to in building a long-term sound economic future.

Next week we’ll look at how this might affect development of “poorer” communities both at home and abroad.

Why companies do not go abroad

The world is more accessible today than 20 years ago and the US economy is in an unhealthy state. Given the above situation, it seems highly desirable to decrease vulnerability by developing healthy foreign markets. What stops companies from taking this step of growth? I suggest some of the following may be high on the list:
1) Lack of vision - it never crossed their mind.
2) Fear of the unknown.
3) Too many choices of country and city end up leading to inaction due to lack of focus.
4) Lack of knowledge as to how.
5) Previous bad experience(s).
6) Not sure how to match the company’s products or services with the foreign culture.
7) Afraid of the potential cost.

While other reasons may exist to be resolved, these can be answered fairly easily. What the company needs is a person or a service that makes the unknown knowable and understandable. The company also needs a person or a service who can create opportunities for minimal output. Lastly, the company needs a person or service who is astute in matching local cultures with the company’s products and services, thus foreseeing opportunities for great market growth. Imagine what could happen if your company had the capacity to bridge the language and culture gap, develop markets for little cost, learn quickly from previous mistakes and repeat the process. This can be your reality.

Wall Street Crash - Why look abroad?

The uncertain state of the US market has caused most businesses that are healthy to act very cautiously. Businesses in precarious situations are already trying to cut costs. Caution is prudent, and cost-cutting may well be necessary. However, both of these approaches need to be balanced by forward thinking action. Insightful action now can bring not only survival but healthy growth.

Those who capitalize on markets first are those who foresee opportunity and act before it becomes openly evident to all. This requires a certain amount of "prophetic" thought and action. This is true of international markets as well as national markets. Decisions made today make their effects felt years into the future.

What are the advantages of looking abroad?
1) Very often this can be done at considerably lower cost than in the US. This advantage is doubled if the US market is scared because of the state of the US economy.
2) Many countries have nationals looking to bridge partnerships with the US. Finding the right person or people, can provide immediately accessible markets.
3) You have the opportunity to be the FIRST company in your niche, and therefore to become THE name associated with that particular service and product.

With all these advantages, why do companies fail to make this expansion? We'll look at that tomorrow.

To homogenize or not to homogenize - that is the question.

Today many companies "expand" internationally simply by buying foreign companies. The foreign company is seen as a good strategic investment, either for its success, or for its potential. These mergers and buyouts happen in corporate boardrooms. Only afterwards is serious thought given as to how the buying company "brings the new products into its fold". Many times the foreign companies purchased produce similar products to the buying company. In this way the buying company reduces foreign competition and gains a readymade foothold into a new foreign market. Typically the new multinational seeks to homogenize its branding and products, but much confusion exists as to what limits, if any, should be established for this homogenization process.

Here are just some of the issues:
1) The indigenous brand is recognized and associated with a certain quality image. To what extent is the new overseas brand recognized and appreciated? Very often Western companies imagine that foreign nationals perceive the company with the same admiration as the Multi-National's Chief Marketing Officer. Furthermore, Western companies in particular are liable to forget that in a foreign national's mind, the Multinational's country of origin and its history of interaction are closely linked with the brand image itself.
2) Homogenizing publicity sounds great as it might reduce overall marketing costs, but do you know for sure that all the material is as desirable, as effective or even as acceptable in the new country?
3) Any homogenization process essentially imports significant amounts of the buying company's culture onto the brand image in the new country. To what extent may you lose national brand loyalty and identity in this process? This may also affect planned expansions into new same/similar language countries.
4) What are the differences between the buying country's products and the new country's products. Should they be kept distinct? If they are unified will a significant functionality be lost? Could that functionality be added to the buying company's product?

With these and many other questions, companies often purchase and act, then seek to "clean up". How much time, money and energy could be saved if some of these questions were answered before going ahead with operational decisions?

Reasons why Internationalization Fails - 3 (Focus)

One reason internationalization often fails is lack of focus. This can take two major forms: lack of definition of intent in the new country and overexpansion to too many countries too soon.

It seems like a great idea to internationalize, but does our new market really need what we have to offer? Several decades ago one notorious European company persuaded large numbers of African women that its powdered milk was much better for their babies than breast milk. This company exploited people with little, tried to create demand where there was no need, and their product actually had a comparitively negative affect on the health of the children. For long-lasting growth we need to identify a real need and meet it before anyone else does. This kind of entrepreneurial marketing is fundamental to real market growth in the future. Richer economies have one set of market needs while poorer countries have others. Some obvious current examples of market needs for poorer countries are products and services that create greater wealth and the capacity to expand business. In richer countries entrepreneurial marketers may need to listen for specific adaptations of existing products and services that will give them the edge. Obtaining this information is key, and requires both great cultural insight as well as great instinct to see niches that even the host country may not yet have seen. Once identified the key is to focus narrowly on promotion of this one product or service. Diffusion of focus results in unclear messaging and often failure.

In the same way, the rate of international expansion needs to be focused and planned. Companies contemplating their first international expansion will do well to select only one country and one target market at first. Some companies may consider it best to try a “familiar” country such as Canada to the US, the Republic of Ireland to the UK, Belgium to Holland or Luxembourg to France. It is likely nationals already exist in the company structure and it is easy to communicate and learn lessons. Other companies may see a niche in the former Eastern Bloc countries, or in the Majority World. In both cases good research should select one country to start with. I would argue that even within one country the focus be narrowed down to a true geographic center. This way as the inevitable lessons are learned they can be learned and put towards future expansions with minimum cost.

Expansions take an incrementally increasing amount of resources. What looks like little output to start with can quickly become major output, unless the new international structure produces returns quickly. This will be the subject of tomorrow’s blog.

Reasons Why Internationalization Fails - 2 (Use and Abuse)

Looking at our motivation is important, because it sends very clear signals to those in our new “partner” country. In the 20th century many Western multinationals seemed to have the main goal of “taking the maximum” and “giving the minimum”. Some examples of this trend would be an American rutile mining company and a Swiss aluminium mining company in Sierra Leone, who managed to ravage areas of arable land while reducing workers’ wages. The Swiss company reported on a UK television program in 1989/90 that they “had” to put workers’ wages down to 25 cents a day plus a bowl of rice. Other examples are such as well-known US entertainment company and the cheap T-Shirt-making labor they recruited in Haiti. In each case the mark-ups on the cost for these materials were several thousand percent, and the “partner” country saw next to nothing. (In fact in countries where corruption was rife, often deals were “made with the devil”, profiting a dictator at the expense of the people).

This might sound like a study on ethics, but there is also a very pragmatic and selfish business observation to be made from these practices. In each of these cases, the end result is antagonism to the Western country(ies) involved and therefore no loyalty to build the business. While a company may make a short-term gain (in the past this could be a decade or two), it will ultimately lead to collapse, reprisal and an enormous international marketing obstacle to overcome. This “take what we can” mentality is therefore very short-sighted. While it may have pleased shareholders for as much as a decade or even two in the past, it will not please those shareholders’ children. As the world changes today at a much faster pace, future “gains” through the “take it all method” are likely to be very short-lived.

What is the answer? The same as fruitful marketing in one’s own country. Give great service. Build brand loyalty and goodwill. Have your workers be enthusiastic marketers for your organization. Give them ownership and access to higher levels of authority. Recognize the skillsets and experience they bring while bringing yours to them. Some companies are beginning to initiate training in very underdeveloped areas of the world. Those that successfully meet standards are able to create wealth that improves the whole family and community. The message given to the new internationals is, “You are valuable. If you give your best, we will give you ours”. This kind of mass loyalty growth will give companies stability in unstable areas of the world. This kind of international partnership will produce the next “mega-companies.”

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Reasons why Internationalization Fails - 1 (Introduction)

"Let's build internationally!" It sounds like a great idea, but not all companies report the same success 10 years after trying. Why do some succeed and grow, while others fail? Even more perplexing, why do some appear to grow rapidly for a couple of years and then fail? I believe many try to expand to "use" others, and this motivation becomes clear in any number of ways. Secondly, we often underestimate the impact and the cost of effective internationalization. However, if we do this right, we can experience healthy growth at a very encouraging rate, along with much international goodwill.

We can start by asking, "Why do we want to build internationally?"
There are many answers, and some are the following:
1) We can get cheaper labor
2) We will have cheaper raw materials
3) We will have a new market
4) We could build our market while building another country's infrastructure
5) We could gain influence in a country
6) We need the experience workers in that country provide

Now let's look at another question. "What price am I prepared to pay to make this a success?"
This is more tricky to answer as many organizations have never considered some of the costs they will have to pay to make international expansion permanent and healthy growth.

Here is a list of some of the costs that many organizations have not previously considered. I believe each of these items must be considered seriously to ensure success:
1) Motivation. All for "me", all for "them" or a partnership?
2) To what extent will I allow "foreign influence" into my leadership structure?
3) To what extent do "they" need to "adapt" to our existing organization?
4) What resources will I deploy to help "them" communicate with "us"?
5) What resources will I deploy to help "us" communicate with "them"?
6) To what extent will I "lead by example"?
7) What metrics will tell me if we're succeeding?

I'll discuss these questions in future blog posts. Please email with any additional experiences, observations and questions.

Intonation - Deal Clincher or Deal Breaker?

Not many of us think of the intonation we use when conversing in our native language. We take it for granted that our sentences are understood the way we want them to be. Those who have studied psychology and communication recognize that even in our native language our communication can be received very differently than the way we intended. That’s why a basic maxim in sales is to ensure the person to whom we are talking has really understood the content and intent of what we are saying. Similarly, we need to be careful to truly understand what our client is saying to us.

While emotions and personality change with every individual, culture can also create big misunderstandings. Even within one country, there are “generic” culture differences. A person from one culture which is direct and emotional may be perceived very badly by a person from a culture which is reticent, and in which any show of emotion is considered negative.

This challenge is greatly exaggerated when communicating in different cultures. For example, a study was done in the UK about 20 years ago interviewing natives from the Indian subcontinent, living in a part of London, and “ethnically English” inhabitants of the same suburb. Several bank workers of Indian origin said that the “English” customers were impolite and very abrupt with them. Ironically the “English clients” said they found the native Hindi, Urdu and Punjabi speakers very disrespectful with them. The study finally showed that intonation and literal translation were to blame for this damaging situation. The Hindi speakers were speaking their English sentence exactly as they would have spoken it in Hindi. In Hindi they were using the most respectful and friendly greeting possible with the most polite and respectful intonation. Unfortunately direct translation sounded somewhat direct and impolite in English. For their part those “English” clients who were upset, did not once seek to communicate further to understand the the real intent of their bank clerk. They chose to immediately react as if mortally affronted. This left the bank clerk wondering what on earth they had done to deserve such a reaction.

The lesson from this short example is to never act on first impressions. If we sense distance, upset or anger, first take the time to understand the person more. Ask questions. Be humble. Ask how communication works in that culture. Ask if there’s any “golden rules” to know. Should I be direct? Should I be indirect? Should I ask a lot of questions? Should I take the initiative? Should I wait to respond? Should I look serious? Should I put a smile in my voice? Those of other cultures are more than happy to come at least 50% of the way towards us. It’s good to make sure we are willing to go at least 50% of the way towards them.

The "Bail Out Plan" and Me

There's a lot of hype about the state of the economy and the impact or non-impact of the 'Bail Out Deal'. We all have our political ideas, and most people's default reaction is to focus on "the ones to blame". The truth however, even if we get to it, and even if we correctly ascribe blame, only leads to lessons learned for the future. It doesn't help us personally in the short-term; we need some personal plan of action.

We can also question the extent to which individuals will benefit from the 'Bail Out Deal'. While it is evident some major action is necessary, bailing out a ship does not make it more seaworthy if it still has holes. And sitting back and hoping our future will automatically improve because others make decisions for us, is not going to help anyone in the long-term.

So what can we do to help ourselves? I believe the answer is to ask what can we do to help others. Ethically I prefer this model anyway, but even if we are completely selfish, we'll still find it's the best way to benefit ourselves. 'Others' are potential partners, resources, entrepreneurs and clients. Wealth still exists, even if its location changes. This is the time to look for new strategies, new frontiers and new business models. More importantly, I believe this is the time for new partnerships. The only way to 'think outside the box', is to connect with those whose worldviews are different - those who come from different communities and from different countries. Those who seize the opportunity first, will be those who gain most. This crisis should force us to be more forward-thinking. It could even turn out to be the starting point for the greatest progress yet.

To find out more about connecting with internationals and new markets, or to discuss further, email me.

Jonathan Bernd - Developing New Markets.

Why dream big, when you can dream small and get bigger?

The break-up of the former Soviet Union and the Eastern Block saw a rush of Western organizations eager to capitalize on new markets. Many were less than ethical. Others were unable to work successfully in a "foreign cultural environment". Many were ready to invest considerable sums of money hoping for massive return, but then got entangled in the messy politics, organized crime and lack of infrastructure which the previous system spawned. Most of these initiatives were designed to increase profit in the West and not to increase quality of life in the new host countries. The end result is a lack of sustainability and goodwill for future growth.

What is the answer? As with any issue there is more than one answer, but one answer with incredible potential is micro-enterprise or micro-finance. This sphere of business shot to prominence with the award of the Nobel Peace Prize to Muhammad Yunus of Grameen Bank in 2006. But the larger organizations had been practicing this discipline for a couple of decades. CCT in the Philippines developed from a small micro-finance organization to a juggernaut. It has provided sustainable profitable growth affecting thousands of previously extremely poor Philippinos, transforming society. Now thousands have income, health insurance and pensions. CCT has also founded a Costco-type wholesale franchise, a hospital system, an education system and a charity dedicated to street people - and this is a "For-Profit".

If you like the idea of tapping into an incredible growth market, while at the same time enabling lasting beneficial change in societies across the globe, perhaps micro-enterprise and micro-finance are fields for you to explore.

Please connect to know more if you are interested.

What does your company need when facing a recession?

The news isn't good in the US. How does your company survive and thrive when faced with problems in one country? The answer is simple - internationalize your market, without threatening domestic success or survival. The internet in particular has brought the countries of the world closer together. International conference calls are free. Webcams allow us to see one another. Graphic design can be drafted on one continent and completed on another - all within 24 hours if necessary.

But much as technology has brought us together, ease of connection has caused many to blunder into new communities and countries, often worsening their image and ultimately failing in their designs for expansion. There is no substitute for understanding. Technology cannot transmit the life experience and filters of those who grow up in different cultures and countries.

Here are some short tips on understanding a new culture:
1) Tell yourself you don't understand at the outset.
2) Identify community figures to interview. (E.g. the leader, the gatekeeper, the rebel, the "average joe" etc.)
3) Remember they are your teacher. You are not their teacher.
4) Don't try to put their descriptions into your cultural box for judgment. Instead try to get inside "their cultural judgment box". (This is the essence of being bilingual and bicultural).
5) One two week trip will make you more liable to jump to conclusions than no visit - especially with little experience.
6) Start by interviewing nationals from your "target community" who live in your country.
7) Reflect conclusions back to interviewees for review.