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125. Retro-Brands
Some brands survive despite the best efforts of their parent companies to kill
them. Fresca, the fastest-growing soft drink in the U.S. in 1992, has been in
perpetual decline since then, entirely unsupported by Coke: Coke now will put a bit of
advertising behind it, because it has surged in some quarters. Ryan Adair maintains
the "Unofficial Fresca Home Page,"
even though Coke doesn't even have Fresca on its corporate home page. Another good
example of a brand that wouldn't die is Krispy Kreme, which poked along for years;
management used to confess that it had a donut so good that its managers couldn't destroy
it "despite their best efforts." See The Wall Street Journal,
September 11, 2001, p. B9C. Now is the time, we think, to search around for old gold
-- that is, ancient brands -- that could be resurrected with proper care and feeding, like
Brooks Brothers.
124. Tesco Arises
Around since 1929, and in deep trouble in 1970, Tesco
(LSE: TSCO) has become the food chain to watch circa 2001. As we have already
mentioned, it actually makes a nickel in its online operations. It has added 60% to
its market share in Britain since 1990, and it is now into nine countries in Europe and
Asia. Sales grew 85% in Asia last year. It also has profitable financial
services. See The Economist, August 11, 2001, p. 53.
123. Adecco Is Everywhere at Once
Adecco is by far the world's largest provider
of temporary services. With an almost $10 billion market value, it is about double TMP Worldwide--number two. It has two
headquarters, Melville, New York and Lausanne, Switzerland, and sports 5,000
offices in 58 countries. John Bowmen, the British chief executive,
lives in California, but is continuously on the road.
122. Media Giant
Who would have thought that one of the best-run newspapers in the United States
would lie in the orbit of Raleigh, North Carolina--a winner because it knows better than
most how to own its own turf? One hot-shot New York money manager who has long
invested in all sorts of media says he likes businesses that own a franchise. Well,
he'd better buy into the Adams family--father and son--who have achieved market
penetration of 112%, the highest of any daily in the nation. (Average market
penetration of all U.S. newspapers runs around 50%.) The front page of the Daily Record is covered with local
news, with the international news summarized inside. And they get all the
local news, right down to the names of all the celebrants at kids' birthday parties.
Instead of adults working out of cars, the Daily Record still has
paperboys, who, we suspect, get the paper farther up the driveway: circulation contests
goad the kids on, with grand prizes ranging up to $1,000. Advertising in this
newspaper can pay off, whereas elsewhere in North Carolina, your best ad is the sign you
hang outside your business, especially if you're located on a main thoroughfare. See
the Wall Street Journal, August 10, 2001, p.1.
121. Napkin Strategy
In January 1994, at Elaine's--a New York restaurant for be-seen types--New York
transit police lieutenant Jack Maple laid out a plan on a napkin to chop New York's crime
in half for William Bratton, New York's new police commissioner. It called for daily
hard data for each precinct, fast response to new patches of crime, and relentless
follow-up and evaluation. It worked, virtually cutting murders in half in three
years. His methodology is now used nationwide. Our conclusion is that all
strategy should be done on a napkin, and it should be based on daily, local data and
fast-response to what the data tells you. See "Guys, Dolls and Winning the War
on Crime," New York Times, August 12, 2001, p. 4W.
120. Sleeman Lager Crosses the Border
Only in business since 1988, Sleeman Breweries
(TSE: ALE) now has revenues of $140 million Canadian, making it Canada's third-biggest
brewery, quite a feat in a market only growing 1% a year. Now it's coming to the
U.S., where craft brews only account for 3% of all beer sold. Nevertheless, Sleeman
has been clever about its distribution agreements and about targeting slightly offbeat
demographic segments. Its "premium beer" strategy probably will get it
decent market share, not unlike the Japanese invasion of our power-tool market, where
invaders successfully focused on neglected professional tools. There's always room
at the neglected high end if you can create a "premium" experience. See The
Wall Street Journal, July 24, 2001, p. B2.
119. Doing a Lot with a Little
Marketing is for people with a lot of money who don't know quite what they're
selling to whom. Linda Pezzano, a New York marketing consultant who died in 1999,
simply should have put "impresario" on her card. She could do a lot with a
little. "For Trivial Pursuit, Ms. Pezzano sent 1800 top buyers who would be
attending the 1983 New York Toy Fair a series of teasing messages in the months before the
event. She also sent the game to Hollywood stars whose names were mentioned in its
trivia questions. ... One virtue of her campaign was that it was cheap."
See New York Times, October 25, 1999, obituaries. Ms. Pezzano, you
see, knew how to create useful buzz.
118. Easyjet Empire
From a Greek shipping formula, Stelios Haji-Ioannou is pulling Richard Branson's
trick in Great Britain. Virgin Group, based on
its airline, has used the brand to build Virgin outfits in everything, including mobile
phones and radio. Now it's even spreading its wings over Asia. Haji-Ioannou's Easyjet, meanwhile, has migrated into car rentals,
internet cafes, etc., having started as a Southwest
Airlines knock-off at Luton Airport thirty miles north of London. One of the new
rules in branding, we think, is to create a hyper-visible brand based on a high
people-contact enterprise (say, an airline) and then to net high service profits from
other high-traffic activities such as rental cars, phones, etc.
117. BP Makes Some Money in Moscow
Is this the Law of Unintended Consequences? BP
put one-half billion into Russia to get at its crude oil. All the oil majors are
having a rough time of it. In fact, Mobil, now part of Exxon, may have gotten on the wrong side of the law,
trying to play in some parts of the former Soviet Union, according to Seymour Hersch in
the New Yorker. Purely by accident, however, BP now has thirty Moscow
stations on which it is making a profit. See New York Times, July 4, 2001,
p. W1.
116. Research in
Motion
This Waterloo, Canada company certainly has been--in motion. See Pui-Wing
Tam, "Small Wonder," Wall Street Journal, June 25, 2001, p. R4.
In 1999, RIM set about 50 "missionaries" to work introducing the BlackBerry to
Fortune 500 companies, with pilot programs at 1,000 companies by the end of the
year. Thereafter, it hit Wall Street firms and media figures, In 2000, even
with little money, it began consumer ads as well as lining up lots of key partners.
It knew from the beginning that it "couldn't afford to embark on a massive
advertising spree." Oh, it's a wireless email device, in case you did not know.
115. Risk Systems
As we've said, the rewards at the moment come from better managing risk rather
than seizing opportunities. Professional money managers are using an array of
systems products to deal with volubility. Providers include KMV (San Francisco), Measurisk
and Risk Metrics (New York), Barra (Berkeley), Algorithmics
(Toronto). Deutsche Bank's db Risk Office is
offered to other asset managers. See Global Finance, July 2001, p. 52.
114. Upheaval in Port
Hutchison Wampoa, the huge Hong
Kong company container-port operator, which now has seized big stakes in Shanghai,
Shenzen, Panama, etc. just won control of container operations in Rotterdam. So far,
Hutchison has gotten its arm around 14% of the world's shipping trade. (See The
Wall Street Journal, July 6, 2001, p. A2.)
Perhaps even more interesting is the increased finesse with
which shipping lines are moving cargo through the ports in record time. See
"Not Sitting on a Dock of the Bay," CIO, July 1, 2001, pp. 108-116.
APL, an old San Francisco line owned by
Singapore's Neptune Orient Line (NOL), doubled its
earnings in 2000 on a "9 percent increase in total revenues." This article
shows how APL maintains real-time data on each container, getting certain cargo to
customers on time even when the ship is late through ports that lack enough capacity.
The article also provides volume data on both the largest ports in the nation and in
the world. Of the world's five largest ports, four are in Asia; only
one--Rotterdam--is located in the West.
113. The Privacy Business
We previously have reported that privacy is turning into big business as
companies try to develop codes and technology to insure that consumer data in their hands
is not misused. Every two weeks C-Span seems to
air a new program relating to privacy, and we all are receiving letters from financial
institutions telling us they are not giving our personal data away. Retired Columbia
professor Alan F. Westin is advising a heap of companies and endless government agencies
on how to keep private private. Author of "Privacy and Freedom," his Center for Social and Legal Research is
in the thick of everything, with some questioning his corporate support, which includes
data collectors, financial institutions, and sundry account firms. See The
Wall Street Journal, June 25, 2001, p. A20. For more on privacy, see CSLR's
newsletter, "Privacy and American Business,"
Big Ideas (item 32) and Agile
Companies (item 89).
112. Rapid Prototyping
Several companies, including 3D Systems, Stratasys, and Z Corporation, now offer 3D printers that
speedily create a prototype of a new product from computer-generated output. See E-CFO,
Summer 2001, p. 17 as well as the Rapid Prototyping Report. The technology
is used for everything from toys to automotive parts.
111. Custom Golf Clubs
Ely Callaway died this week, but his innovative gold club company is up to new
tricks. It announced a "Callaway Custom Fitting Solution." Callaway's custom carts--with a radar gun
and IBM laptop--will record golfers' swinging data and tell them the optimum club they
should use. Pros can also use the swing analysis data to help golfers to whom they
are providing lessons.
Such custom fitting is coming into vogue for all sorts of
companies whose standard products are tapped out and whose sales are flat. Levi and other garment makers, for instance, are gathering
precise body data through computers in order to generate custom clothing speedily at
reasonable cost.
110. Concept of the
Corporation
Drucker did this book when he was still working his way into the pantheon of
geniuses. We wish now he'd do the book over. At this moment, when
"stock-holder capitalism" sits on top of the whole world, persons of good will
are questioning the limited view of capitalism and limited view of the corporation it
entails. It is forgotten now that the "corporation" was originally a
creation of the state, granted special privileges and immunities, because the state and
the nation expected the commonwealth, in turn, to reap a host of benefits. In the
second-quarter 2001 issues of Strategy and Business, pp. 119-26, Booz-Allen and
Hamilton's tomb-like magazine, editor Randall Rothenberg interviews Arie de Geus,
management thinker and retired planning director at Shell. In The Living
Company and elsewhere, de Geus argues that the very purposeful corporation gains
major competitive advantage from its sense of purpose and, in consequence, survives
longer. "Success depends on the ability of its people to learn together and
produce new ideas." In this view, corporate success comes from nurturing human
capital, not catering to financial capital. This is, we think, just one of the ways
in which corporations in it for the long term need a sense of themselves that is larger
than the 24-hour frame of the financial markets.
109. Supply Chain Coordination
Thomas T. Stallkamp, once a prime mover at Chrysler,
now heads MSX International Inc., a provider of auto
industry design and engineering services. Now he wants to become the operating
system for auto-supply alliances, asking groups of suppliers for different parts to
"form a temporary web and cede control of their supply chains to MSXI."
The promise here is that an honest-broker third party can more effectively, more
equitably, and more economically manage a supply chain than an automaker. See Business
Week, June 4, 2001, pp. 30B and 30D.
108. Running the Supply Chain
As The Economist says, there are a bunch of companies (Alibaba in China and Global Sources in Hong Kong) who introduce buyers
and sellers over the Web. But the kingpin is Li and Fung, who introduces and
coordinates. Its army of 3600 roams through 37 countries finding sources but also
making sure they deliver. See The Economist, June 2, 2001. pp. 62-63.
107. Law Networks
Sundry small law firms have now linked together to handle national clients.
"One, the Worklaw Network, links
24 firms from Honolulu to Miami." Increasingly, as we've said, alliances will
become more important than mergers as a means of serving national and global markets.
See The New York Times, June 8, 2001, pp. C1 and C11.
106. FedEx Can Land Them
Despite its profit probelms, born of a lack of a proper ground-delivery system, FedEx proves again and again that it is a hero of the
cargo airways. The FAA has labored for years to give us a new landing system that
will unsnarl air traffic. Clearly FedEx will do it first, since it is now testing a
satellite system with its Boeing 727s that seems to work like a charm. Combining
special radio signals with the Global Positioning System, it is landing its planes on a
dime. See "FedEx Ahead of U.S. in Bid to Improve Airport Landing System," New
York Times, March 21, 2001, A12.
105. Forbes and Strategic Alliances
On May 21, Forbes did a strategic alliance special issue which is not
profound but does contain some provocative tidbits. For instance, in rating the 2000
alliance heavyweights (number of alliances), we find that six of the top ten companies
worldwide are Japanese (the trading companies and the tech companies) while four are
American. Finally, in 2000, alliance-building became as frantic an activity as
mergers and acquisitions. Peter Pekar and John Harbison have co-authored a book, Smart
Alliances, that apparently recognizes that alliances have become a favored tool
for accelerated corporate growth. Forbes claims old-line
industries--financial services, forest products, metals and retailing--don't get it, with
companies in these sections proudly going their own separate ways.
104. Duck Soup
We have always told companies that mottoes and one-liners get you nowhere if you
are trying to show the world who you are. Disney led the way: Pick yourself a
cartoon animal character and people will find their way to you. The latest example
comes from AFLAC, a cancer insurance company from
Georgia, which happens to do the majority of its business in Japan. Its flapping,
quacky, frustrated duck has catapulted the company to national fame in just a year,
helping the firm make a broader dent in accident insurance, where it has opened a strong
front.
103. Denmark Has Wind at Its Back
We call this domain Agile Companies, but it should probably be known as Agile
Nations as well. We have already told you that Singapore is a model for everybody.
Denmark is also cut from the right cloth. For instance, we find that although
the U.S. invented the windpower industry, Denmark ran with the ball and now wind accounts
for an amazing 13% of the nation's power. Danish companies dominate 50% of the $4.5
billion global windmill market. See Business
Week, April 30, 2001, pp. 126B-C. Vestas
(NYSE: VEWI.F) and NEG Micron have seen major stock appreciation, luxuriating in the
30%-plus growth in the windmill market. A smart government has subsidized the
industry in the right ways, paying high prices for actual power rather than tax write-offs
for equipment purchases. Originally, notes Denmark's BTM
Consult, the Danes invested in durable equipment, rather than fragile aerospace
technology.
102. Porter on Japan
Michael Porter, Harvard's apostle of competitive strategy, is out with a book--Can Japan
Compete? (Perseus, 2000)--which largely sums up what we already know.
Japan's stagnation did not just arise from financial excesses but came largely from
structural economic problems, he argues. This is rehashed in CFO Magazine,
May 2001, pp. 60-66. Somewhat more interesting is his notion that "Japanese
companies are weak at strategy. In fact, most companies don't have
strategies. Essentially, they are competing on best practice." Of course,
this happens to be true of most nations. If the nation has a good economic strategy,
then a company often doesn't need one. But if national policy is awry, the corporate
managers suddenly have to become wily strategists.
101. Swarm Intelligence
See Harvard Business Review, May 2001, pp. 107-14. "Social
insects work without supervision. In fact, their team work is largely
self-organized, and coordination arises from the different interactions among individuals
in the colony. ... [T]aken together they result in efficient solutions to
difficult problems. ... Swarm Intelligence is becoming a valuable tool for
optimizing the operations of various businesses."
101a. Update: But Not Groupthink
We have commented widely on swarm intelligence and its potential application to many problems in an increasingly complex world where we are dealing with larger and larger numbers of datapoints. But we have tried to differentiate this from ‘groupthink,” where the outcomes are unreliable and unwanted. With the swarm, members are sent out in different directions and nudge the group by communicating back to the swarm individual discoveries: when group or herd mentality takes over, one or more strong members infects the group with his or her flawed notions. The Yale Alumni Magazine, January-February 2008, pp. 59-61 treats “A Brief History of Groupthink,” pointing out some of its mechanics and perniciousness. William Whyte, a journalist who also wrote about the organization man, coined the phrase in 1952. Yale’s Irving L. Janis did a lot of work on the subject, his book titled Victims of Groupthink. Isolated groups where the membership is very homogeneous and the leadership is very directive tend to wrongheaded conclusions. (4/30/08)
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