Biyernes, Oktubre 28, 2011

How quality can make or break an organization's reputation



The Sanno Institute of Management-Tokyo, Japan

Back in 1991, Gerald Ratner joked that his high street jewellery chain "sold a pair of errings for under a pound, which is cheaper than  a prawn sandwich from Marks & Spencer, but they probably won't last as long". His speech was instantly splashed across the media and wiped an estimated $500m from the value of the company. He followed up by   describing a sherry decanter as cheap because it was "total crap".

Member of the public did not take kindly to being taken for fools and in uproar that ensued they stopped shopping at Ratner's stores. Mr. Ratner left the company and the group, which included H Samuel and Ernest Jones, was eventually rebranded as Signet to further remove the associations of the Ratner's brand. With just a few words, Gerald   Ratner had damaged the reputation of a billion-pound company.

This is an infamous example of the relationship between reputation and quality. An organization's reputation can be both its best friend and its worst enemy. A good reputation can ensure greater customer loyalty , employee engagement and a larger market share, but it can never be taken for granted. In the words of Benjamin Franklin:" It takes many good deeds to build a good reputation , and only one bad one to lose it." Similarly, a reputation for poor quality goods and services can linger for years or even decades , despite an organizaion overcoming its initial flaws.

And it is not simply big brands that need to consider their reputation. Organizations of every size and sector can enjoy the benefits of having good reputation, but will soon feel the effects of any damage sustained, especially in the modern era of social media and user- generated content on the internet. Small businesses, charities and public service providers must all consider how they are being thought of by their stakeholders and, more importantly, can learn a lot about how well they are perceived to be performing.

Quality first
The concept of brand reputation originated in the 14th century, when King Edward 1 ordered the first asay marks to be put on gold bars and silver bars to prove they were of correct purity. David Thorpe, head of Chartered Institute of Marketing's research and information division, explains: "The rudimentary brands were a mark of quality, enabling gold producers to distinguish their product. From then onwards branding has been synonymous with quality; you cannot have a brand unless you have a perception of quality in the public mind."

It is, of course, perception that really lies at the heart of reputation and branding, which is what makes it difficult to quantify and measure. A reputation is built up over time and encompasses perceptions from customer's experiences when interacting with the organization and its suppliers, advertising, press coverage and in more recent years, online commentary.

A brand builds on a company's reputation and is most often described as an individual's gut feeling about a product, which is in turn bound up with cultural influences and personal belief systems. A brand  however, is different from a reputation in that it can be used by organization.  " A brand has three functions: to help customers differentiate betwen similar products or services, to reassure customers of the quality of goods and to engage the customer in the product itself, getting them to want to be associated with it by buying it."

Designer fashion brands are possibly the most prolific, examples of branding, in that their success is entirely tied to an individual's desire to own clothing associated with one particular label over another. However, brands from all other sectors work with the same principles.

"A brand enables your product to stand out from the competition and it communicates the intrinsic quality of your goods and services.". It creates an association between your product and quality. Quality reputation and brand are all entertwined. You cannot attempt to build a brand without having the underlying quality."

Gary Bembridge, Johnson  and Johnson's global vice-president of beauty care marketing and strategy agrees: " Creating a brand is largely down to inspiring trust. Johnson and Johnson became the leading brnad of baby toiletries because people knew the company had very high quality standards and they trusted it. That elevated the brand."

This element of trust is perhaps why organizations' reputation suffer dramatically when a quality failure is reported. In the last 12 months, two cases in particular have caught the public attention-the recall of millions of Toyota cars due to faulty acceleration pedals and the Deepwater Horizon explosion and subsequent oils spill.

In both cases the high profile quality failures received sustained madia coverage , which resulted in substantial damage to the value of both businesses. Toyota lost more than $13bn from  its market value in just one week in 2010 and, after failing to cap the leaking oil well in the Gulf of Mexico, BPs share price dropped by 14% in one day -its biggest fall for 18 years.

But such cases are not new, in 1990 when it was discovered that bottles of Perrier had been contaminated by trace amount of carcinogen, its share price dropped by more than 16% in five days. Less dramatic but equally relevant are the fading popularity brands such as Woolworths and Borders which, ultimately saw both companies fail.

The impact of negative reputation does not only affect big brands delivering products to consumers. Manufacturers, suppliers and subcontractors may not have contacts with the ultimate consumers, but they most certainly have a reputation with their client base. Similarly, for charitable organizations bidding to deliver public services, a positive or negative reputation with the public can impact on whether or not their contact is renewed. Small and medium sized businesses also have to be careful of their reputation, as often the majority of their business comes by word of mouth;one dissatisfied customers have a disproportionately negative impact on their reputation.

Ensuring reputation
For all organizations, at the heart of ensuring their reputation is the concept of quality, as defined by their customers. A research study conducted by TARP in 1999 discovered that on average an unhappy customer will tell 10 people about their experience and then these 10 people will tell further five people. More than a decade on , with the advent of facebook, twitter and blogs, customer can voice their dissatisfaction to hundreds if not thousands of people.

Shaun Sayers, director of Capable People ,thinks that companies are becoming more aware of social media. He says: "Social media has given the customer a louder voice.Three times in the last 12 months I've had a stonewall response overturned after I've posted about my experiences on Twitter. Often someone has come back to me within 30  minutes."

Bearing in mind, the role of the quality professional in the first instance is in ensuring the lowest possible risk of process failures within their organization. This, of course , will mean different things for different companies and may not always be reflected in everyone's perceptions. David Thorpe explains:" Quality is not uniform. You have to look at the context in which the brand exists and at quality in terms of the product's market segment. People like to talk about Ryanair as an example of a business model without quality , but actually it offers a high quality airline product.

" The company guarantees to get travellers from A to B at the lowest possible price. They do it on  modern aircraft with efficient staff , good pilots and have an excellent air safety record. Granted, they could work on customer service , but their fundamental product is spot on."

Whatever an organization's definition of quality, if a failure should occur and a recall is needed or a negative story arises in the press, it is often how a company reacts that has a long term impact on its brand and reputation. Gary explains: " Customer's perception of a business that has made a mistake are dependent on three things: how the company worked in the past, how it handles the mistake and how it moves forward."

" If  organization has a reputation for a quality most people are generally more understanding of a failure. People understand that things can go wrong and what they appreciate in that situation is honesty. If you then deal with a situation quickly and show how you've changes so it won't happen again, then the impact will be short term."

In such situations, it should be the responsibility of the quality function to get to the heart of the problem and rectify it as quickly as possible. Business continuity and product recall plans shuould be in place, ready to be rolled out as soon as a problem is identified. Root cause analysis and investigations need to be carried out as a top priority and the quality department should also work with the organization's communications team to make sure that customer are being kept informed, while taking care to remain as dispassionate as possible.

David says that this is where Toyota's handling of their crisis has triumphed over BPs attempts. He says:"Toyota's didn't try to hide problem. They went public as quickly as they possibly could and they dealt with controlled recall. It was a masterclass in how to deal with a crisis. In comparison BPs handling of Deepwater Horizon was a disaster. Tony Hayward insensitivity moaning that he wanted his life back, forgeting that 11 people had died, is the sort of thing that has a significant impact on public opinion."

Alongside being open with the public, Toyota also responded to its quality crisis by inviting in four independent quality experts to assess the company and advise it on how best to move on from its recall problem. The panel, which included Dr. Noriako Kano, honorary professor at Tokyo University of Science, and Yoshiko Miura, general manager at the Japan Consumers Association, recommended a list of measures which Toyota then published online. Approaching independent experts was agood way of getting another perspective on the company's problems and was a further step in providing to Toyota's customers that the company was serious about tackling its quality problems.

All in all most experts believe that while the recalls have been damaging in the short term, Toyota reputation will recover. Toyota's reputation for quality has been built up over 60 years and while it may have taken a knock, for every customer that was affected by a recall, there are probably a thousand customers who have been perfectly satisfied.

No individual or organization is perfect, mistakes and quality failures are, to a certain extent inevitable. However, the way in which a company's reputation will be affected by such a failure is greatly reliant on the role of quality in the organization's past, present and future. People's relationships with brands are caught up with how they feel about them and a company's emphasis on quality helps to ensure a sense of trust in dealing with a problem. Brands that have come back from a well-publicised issue and taken back their market share, have done so because they've tackled the problem quickly, openly and demonstrated their commitment to quality.

At GA Business and Management Consultancy
"You  get the Best Business results "

Biyernes, Oktubre 21, 2011

Battlefield lessons for business leaders

                                  


Business is not war-but if you are operating in a fiercely competitive marketplace then it can feel like it. Many of the methods we use, particularly in sales and marketing,are like military strategies.We use terms;we talk of marketing campaigns, fighting for market share,defending the brand,and so on. Warfare is one of the man's greater endeavours. Enormous resources,efforts and innovation are applied to it. So what are the real lessons that today's business leaders can learn from history of warfare?Here are some that seem particularly relevant. The examples are drawn mostly from British and European history,but there are similar incidents in the history of any nation. But for our first lesson, let's go to Bible.

David Vs. Goliath-1000BC?
Goliath was a giant and the Philistines' champion at man-to-man combat. David was a young shephered boy. Goliath expected to overwhelm his opponent in a sword fight, but David  chose fight on different terms. He defeated Goliath by using an unusual weapon, the sling with pinpoint accuracy.
Lesson: It is no use going up against someone who has an eight-foot spear. You need a different weapon.If you are smaller you have to be agile and different.If your competitor is the giant in the market you need a radical approach so that you can strike rapidly and accurately.


The Battle of Crecy-1346
The English army of about 14,000 men, led by their King, Edward 111, had ravaged northern France. They were finally confronted on August 26th 1346 by an army of some 40,000 Frenchmen, under King Philip V1. Battles then were normally fought by knights on horseback;the French, with such a numerical advantage, felt confident. But the English had a new and superior technology, the longbow. Their archers were trained in rapid fire, and could sustain a rate of over 10 arrows per minute. Each arrow could penetrate armour. It was the first time that such a mass volley of arrows had been used in warfare.The French attacked in waves, and they were cut down relentlessly by the power, speed and range of the English archers.
Lesson: One of the best ways to beat an established competitor is with a new technology. Innovation can overcome a strong opponent. Focus your firepower on the target. Amazon used internet technology to directly address the needs of book buyers and to run rings around the established high street book shops.

The Battle of Trafalgar-1805
Traditionally, naval battles were foughy by lining up two fleets in parallel line so they could get the maximum firepower form their canons. At the battle of Trafalgar, Villeneuve, the French admiral, formed his fleet of 33 ships into a line. But Nelson, the British admiral, did not line up in parallel. He split his 27 ships into squadrons and attaked at right angles to the French line. In the hectic battle that ensued Nelson died but the British were victorious, and established a naval supremacy that lasted over 100 years.
Lesson: If you do not have a superior force or superior technologies then try a different tactic. Surprise your opponent with a fresh approach.Use surprise tactics to disrupt the existing market leaders.

The First World War-194 to 1918
The scale of the slaughter of soldiers in World War 1 was appalling. Over the eight million soldiers died.The main tactic was to repeatedly attack strong defensive positions with waves of men. They were massacred. it was believed that with sufficient artillery bombardment and just weight of numbers a breakthrough could be achieved.But the way to overcome barbed wire defenses and machine gun posts is not with lines of infantrymen.what was needed was the rapid development and effective deployment of the tank.
Lessons: Effort,courage and hardwork are not enough. If you are competing with well-entrenched opponent who has strong defensive position, then you need a new technology or approach to achieve a breakthrough. A long war of attrition debilitates both sides. Retail banking was a stodgy business until internet banking came along to shake it up and take millions of accounts away from the big players.

The Maginot Line-1940
The British and French high commands assumed that the new war with Germany would be similar to the First World War, with huge static armies facing each other. The French built a massive defensive line along the entire border between France and Germany-the Maginot line-consisting of enormous fortifications. But when the Germans attacked in May 1940 they did  some lateral thinking. They used fast moving armoured divisions and paratroops.They swept through Holland and Belgium and around the Maginot line. The British and French were outmanoeuvred, and French fell in five weeks. Remarkably, the British made a similar mistake in the defense of Singapore in 1942. They assumed that the Malay jungle behind the Singapore was impenetrable, and that attack must come from sea.The Japanese swarmed through the jungle and captured the city.
Lesson: Assumptions are dangerous-in particular, assuming that the new contests will be similar to previous ones can lead to disaster.The best way to combat an opponent who has strong defensive position and barriers to entry in  a market is to go around those barriers and find a new way to the market.

The Battle of Britain-1940
After the fall of France, the British retreated across the Channel leaving most of their equipment behind. The German army, having raced across Europe, was rampant while the British army was demoralized and under-equipped. The German planned an aerial assault followed by an invasion, and many thought that Britain would fall as quickly as France, Holland or Poland.But the British  had some things that the others had not-the Channel, the Spitfire radar and winston Churchill.Churchill gave the people a vision, purpose and belief that enabled them to endure the blitz, oppose the might of Germany and eventually triumph.
Lessons:In tough environments, winning CEO are those who have clear vision, can communicate it to their people and motivate them to achieve the goal. This type of visionary leader will achieve great things for their business.

D-Day-June 6th 1944 (The Allied Invasion of Occupied Europe)
The Germans knew that the Allies would launch an invasion force into northern France, and they knew that the invaders would need a deep water port in which to unload all the supplies necessary to support the invasion force. So they guarded the port heavily.But the British developed a remarkable innovation- afloating harbor known as Mulberry.Two Mulberry harbors, each of 600,000 tons of concrete, were floated across the Channel in sections and assembled off the French coast. One was destroyed but the other played an invaluable role -it landed over 2.5 men and 4 million tons of supplies over the next 10 months.
Lessons: If the conventional way of doing thing is very difficult, find an entirely new way. Test it then implement it. Be ready for failure along the way, and prepared to adapt and develop your innovation.

Defeat of Germany-1945
After his great successes in the early part of the war, the German leader was convinced that he was a military genius and the German Wehrmacht (army) could overcome any obstacle.He attacked Russia in the summer of 1941, and he was confident of victory that there were no plans for a winter campaign; no winter coats for the soldiers and no winter oil for the tanks. He ignored the advice of his generals and pushed his forces down towards Stalingrad, and then refused to allow them to withdraw or regroup when the communication lines became overextended. His arrogance and overconfidence built a barrier to criticism, and meant that he never used the full talents of his team. Eventually,Germany was overwhelmed by the weight of Russian, American and British forces.
Lesson: A narcissist CEO will lead the business to disaster.Plan a fallback scenario.Strong vision and belief are essential, but a leader who blocks constructive criticism,ignores the input of his team and fails to build consensus is doomed.To mention them by name may be libellous, but take your pick from the CEOs who have led mighty companies to disaster in recent times.

Huwebes, Oktubre 13, 2011

Training the Mind......


Sometimes a claim is made about a subject, that it does not appear to have any immediate practical use. (A legendary academic remark is, "Here's to pure mathematics, and may it never be of the slightest use to anyone".) Accountants or engineers for instance rarely justify their courses on such grounds. Their claim is to train accountants or engineers. And they are right. Mathematics does indeed train the mind -to do mathematics. And also mathematics is very useful in many fields , so it also could be said to train for these, to some extent. depending on how much maths is involved.

Mental Muscles
Often the claim is that the chosen subject teaches the student how to think, reason, memorise, solve problems etc. Or it strengthens the "mental muscles", in the sort of way that push-ups strengthen arms. Very often the claim is that a particular subject-Latin, or maths, or whatever, has a special virtue, and is thus the best of all subjects.

The physical analogy is false. The mind is not like a muscle. Indeed the mind is not physical, though it is inseparable from  physical structure, the brain. The mind/brain does benefit, particularly in the course of development, from both physical and intellectual input. A healthy diet, and a stimulating environment, are both necessary. From the educational point of view, this means a range of intellectually interesting and demanding subjects including, but by no means limited to, the conventional school curriculum. Some of these may be more beneficial in general than others, but no one has so far demonstrated this. On the other hand it certainly has been shown that a very restricted inputs harms development. The extreme cases are those unfortunate children who are every now and then discovered, who have spent most of their childhood alone or sometimes with animals. They are always handicapped and in severe cases never recover. Milder cases are those educational diet consists entirely of learning by rote and without understanding, an intellectual impoverished as unjustified as depriving a child of essential  vitamins or proteins.

The question of what psychologists call transfer of training has been investigated experimentally for over a century , and despite the experiments becoming  more thorough and sophisticated, the early findings still broadly stand. If you want to learn something, it is best to tackle directly. It is less successful to learn or practice something else, and hope that it will somehow rub off. The best way to master, say, a tennis serve is by serving, of course with instruction, monitoring and feedback. That's why all top players have full time coaches.

Learning to Think
It is just the same with mental skills, but it is seldom one so systematically. University teachers consistently claim their aim is to improve "critical thinking", or an equivalent phrase. What they turn out to mean is "effective thinking". But when asked how they do this, they can't really answer-often falling back on the idea we started with, that "critical thinking" will result from whatever they are teaching. A student who learns to assess historical, or scientific , or literary, evidence and reaches conclusions can, to some extent, transfer this to other situations. But here are two conditions. First , that each subject has its own style of argument. Other situations may yield other sorts of reasoning. Second , the student needs tutoring in transferring skills;or rather , in seeing what is general in the skills and how they can be applied. This is usually left to chance.

"Critical thinking" can be taught. There is much research showing how to do it. Four elements can be distinguished, all of which need to be specifically developed. One is a readiness to do the hard work that thinking requires (as all skills do). A second is the skills themselves-such things as understanding how cause is determined, recognizing and criticizing assumptions (not taking things for granted), analyzing means-goal relationships, giving reasons to support conclusions, and so on. Third is training and analyzing problems to see their structure, and thus how thinking skills can be applied to them. An fourth is standing back to check  for effectiveness and monitor progress toward a goal. Most high level subjects incorporate some of these to some extent , but not systematically. (There are also numerous pop psychology books claiming to teach one to think , usually with little sound foundation and based on gimmicks.)

The idea that certain subjects "train the mind" almost certainly goes back to medieval higher education. A student's early years were spent on skills that would generally useful. "Grammar" (as in "grammar schools") was Latin, which was necessary for the study of any subject, and indeed for any sort of professional career "Dialectic" was logic and reasoning; "rhetoric" was persuasive communication. These and other skills prepared the student for training in any profession. But in most universities education has become more and more specialized, and we have in a sense come full circle by once again asking what sort of general education we should provide , as well as what specific subjects. "Critical thinking" or "training the mind" might well be part of it.

Biyernes, Oktubre 7, 2011

The Future of Innovation by Jolito Ortizo Padilla- Business Strategist at GA Business and Management Consultancy

                                                 

Innovation can be fragmented. Inside organizations, there is a tradition of different departments working in isolation behind closed doors, with varying degrees of empathy for the needs of their consumers. That kind of scenario is changing fast as the line between consumer and industry blurs. For it to flourish, innovation's future lies in a less disjointed seeing signs of it becoming more collaborative.

A more holistic approach is crucial because it's increasingly difficult to create sustainable advantage without aligning every aspect of a consumer offer. An interestting example is Apple, which is often cited as a world -class product developer. However, Apple's potency is the fruit of its innovative approach to an ecosystem of product and service design, retail, marketing and manufacturing. Apple didn't invent the MP3 player and arguably didn't build the most innovative one. It's dominance is ongoing proof that holistic business ecosystems deliver the greatest competitive advantage.

This holistic perspective also needs a lateral vision. As great ideas can be discovered in diverse and unexpected places, we need to collaborate in new and surprising ways.

At GA Business and Management Consultancy we believe that the best ideas come from crashing , combining and contrasting disciplines and perspectives , and technology is enabling us to do this in very different ways.

We often involve disparate and eclectic networks of consumers and experts in creating and evaluating ideas. The effect is sometimes fusion and sometimes fission, but the results are always fruitful. In particular, it has proved to us a value of seeking the wisdom of the crowd , as well as expert insights. Close collaboration with the consumer can give to remarkably effective and powwerful business models.

Huwebes, Oktubre 6, 2011

How can companies combat increased risk of espionage by Jolito Ortizo Padilla

James Bond, John Le Caree and the cold war are the associations that still most often spring to mind when spies are discussed. But these days it seems as if agents are more commonly to be found snooping around industrial estates and office complexes, hunting out the latest product innovations and befriending those key executives with access to critical information.

Reports that Chinese industrial espionage ring stole details of Renault's electric vehicle technology hit the news at the start of the year. On January 3, the automotive manufacturer suspended three executives on suspicion of involvement in passing on sensitive commercial information. On 13 January the carmaker filed a criminal complaint of "organized industrial espionage, corruption, breach of trust, theft and concealment." As I write the executives have been dismissed from their posts, despite denying any involvement. They now   take Renault to tribunal.

The French media have pointed the finger at China, amid reports alleging that a leading Chinese electricity company paid a large sum of money into accounts held by the accused executives outside France. Meanwhile the French government and Renault are trying to avert a standoff with Beijing, with French finance minister Christine Lagarde insisting that no assumption should be made on how the information was passed on and which country was involved.

This is unsurprising given that China is an important export market for France. As recently, when Chinese President Hu Jintao visited France, President Sarkozy clinched a 16bn Euro deal to sell aircraft and uranium fuel for nuclear power plants to China.

Similarly , with the Chinese market at stake, Renault has also played down its criminal complaint , which did not name the people or organizations accused of spying, talking instead of "persons unknown". Renault followed up a statement saying " to ensure that the judicial procedure is carried out in the calmest possible conditions, Renault will not take part in any controversy".

The case has shaken France. In its wake , a bill has been submitted to parliament to tighten protection of corporate information. This is felt to be long overdue by many , as compared with other industrial powers such as the US and Japan. France has lagged behind in protecting its companies from unwelcome attention of foreign competitors and nations.

We might ask ourselves whether this case is a sign of times and reflects increasing economic competition as business continues to globalise. Speaking to Reuters , Ian Bremmer, president of political risk consultancy Eurasia Group, certainly agrees that the battle is on.

He said:" It's not going to be so much a matter of bombs and missiles as deniable cyber warfare , corporate espionage and economic struggles. That's going to be particularly difficult environment for western corporates."

So how companies combat the increased risk of espionage? Many are turning to the government assistance, as is the case in France , particularly as businesses in emerging economies race to reduce the technology gap between their operations and those of western companies.

After all, huge amounts of money and the future of the organizations in question may be at stake. In the case of Renault and its partner Nissan 4bn Euros are being invested to ensure a place as market leader when electric vehicles become a mass market Allowing the competition to learn technical secrets would mean a huge loss of advantage. And this is even more of an issue in industries with long research and development lead time such as the automotive and pharmacuetical sector.

But aside from legislation, how else can organizations protect themselves from this kind of clandestine activity? One key area where quality professionals may be able to help is information security. Ensuring that a rubost system is in place with good security protocols should help to reduce the chances of a problem. In addition , the creation of a culture where employees feel a loyalty to its organization and its product can help. Ultimately though, there is only so much that companies can do, particularly in this digital age where every mobile phone is potential camera and bugging device.