Archive | June 2012

Coca-Cola says creating brand advocacy on social platforms has overtaken loyalty as the holy grail for brands

Coke CMO slams ‘short-termist’ Facebook critics

Cannes 2012: Coca-Cola’s most senior marketer has delivered a passionate defence of Facebook in the face of recent criticism of the social network, arguing marketers must not underestimate the long-term role that Facebook will play for brands.

 

Coca Cola

Speaking at Cannes Lions Festival of Creativity, Coca-Cola CMO Joseph Tripodi, said that creating brand advocacy on social platforms has overtaken loyalty as the holy grail for brands. He called on the creative and marketing community to come together to develop unique solutions to leverage the Facebook platform to create brand strength.

“When you think of the continuum of a business, you go from local, to multi-country, to international, to global, but the highest order is network and network advantage is about having brand advocates telling stories for us.

“I used to think that loyalty was at the top of the pyramid of classic marketing awareness model, but now it’s advocates. If you can turn people that love your brand from passive loyalists to advocates you create a type of network advantage that means your brand will stay relevant. We all know that losing relevance is the worst thing that can happen to your brand.”

Coca-Cola’s strategy, he says, is to take advantage of “a world where mob rules” and grow it’s network advantage by creating shared value for consumers, employees and shareholders through social media sites such as Facebook.

Tripodi defended the social network against recent criticism that it is not offering marketers enough data to prove return on investment from campaign, adding that Facebook is still in it’s infancy despite having more than 900 million users around the world.

“As a marketing community we have to understand that in Facebook we have a platform like we’ve never seen before. We need to come together to design unique solutions for a unique platform. If we take creative solutions that were developed for a more traditional television world and put them on the social platform, were kidding ourselves. We need to be having new thinking.”

“That platform is at the early stages and we’re still learning how we engage and leverage it, but this hysteria that I’ve seen lately [about Facebook], I think it’s very short-termist and not thinking about the long term implications and the implications of engaging with people on that kind of platform.”

~ Marketing Week, Tue, 19 Jun 2012, by Rosie Baker

 

 

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Consumers spend more on innovation than the private sector?

Estimated total expenditure on Household Innovation GBP 3.2 billion! In contrast, the total Corporate R&D spending on consumer products in the UK in 2007 was about GBP 2.2 billion. This means consumers spent more on innovation than the private sector! 

Phone Survey found that 6.1 percent of adults in the U.K. had created something, or creatively modified something– that’s 2.9 million people! Among the household innovators, on average each of them had created eight innovations in the prior three years, innovations in many different categories.

The study also found that very few of these household innovators attempted to patent their creations. In fact, a large number of them freely shared their ideas.

Everyday Innovation

Have you ever modified something you bought, to make it work better, or to serve your own unique needs? Have you ever created something from scratch to solve a problem?

This is what innovation researchers call “consumer innovation” or “household innovation,” and it turns out it’s surprisingly common. MIT Professor Eric von Hippel, long famous for his studies of user innovation, has just published a fascinating study of household innovation in the United Kingdom.* Hippel and his colleagues did phone interviews with 1,173 adults, and found that 6.1 percent of adults in the U.K. had created something, or creatively modified something–that’s 2.9 million people! Among the household innovators, on average each of them had created eight innovations in the prior three years, innovations in many different categories, like these:

  • Craft and shop tools: “I created a jig to make arrows. The jig holds the arrow in place and turns at the same time…Jigs available on the market do not rotate.”
  • Sports and hobby: “I modified the cricket bat so it improves the play and contact with the ball.”
  • Dwelling related: “I wanted my washing machine to spin only. I modified it…I bridged one of the circuits and inserted a switch.”
  • Child related: “I colored two halves of a clock dial with different colors, so a child can easily see which side is past the hour and which before the hour. I used it to teach my kids to tell time.”
  • Pet related: “My dog was having trouble eating [because the food bowl kept sliding across the floor]. I used a flat piece of laminated wood and put an edge around it like a tray to stop her bowl from moving around the kitchen.”
  • Medical: “Because I have a spinal problem, I built a nearly diagonal slope for my keyboard. It is very handy for people who cannot look down when they are typing.”

Amazing evidence of the potential we all have to be creative!

Then, the researchers asked the innovators how much money they’d spent on their innovations. The average annual investment was 1,098 pounds; if you multiply by the 2.9 million projected consumer innovators, that’s a total expenditure of 3.2 billion pounds! In contrast, the total corporate R&D spending on consumer products in the UK in 2007 was about 2.2 billion. This means consumers spent more on innovation than the private sector! 

The study also found that very few of these household innovators attempted to patent their creations. In fact, a large number of them freely shared their ideas.

What a fascinating study of the importance of every creativity! It should inspire all of us to find our inner creator, and solve our own everyday problems. Do you have a story of household innovation?

*Eric von Hippel, Jeroen P. J. de Jong, Stephen Flowers (2012). “Comparing business and household sector innovation in consumer products: Findings from a representative study in the United Kingdom.” Management Science, Articles in advance (published online ahead of print), pp. 1-13.

 

More than 35% of P&G new products have elements that originated OUTSIDE

Kraft Doubles Down on Open Innovation

Posted by Janelle Noble at 10:31 AM, May 22, 2012 

Krafthomepage

 

Since Henry Chesbrough coined the term in 2003, open innovation has been providing a framework for companies to tap a vast network of customers, experts, and other organizations. Companies such as Kraft, P&G, General Electric (GE), and Bosch have been using open innovation to source and develop outside concepts that spur disruptive innovation and help solve pressing challenges. Undeniably, open innovation has been a powerful tool for companies looking to boost innovation, but a lack in focus can sometimes lead to an overabundance of ideas that lack a connection to current business needs. Focus is certainly key as PG has proven with “…more than 35 percent of new products in market have elements that originated from outside P&G“.

 

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Although open innovation was not a new concept at Kraft Foods, the company was looking to focus their open innovation efforts. Moving from a single private submission form where the public could freely submit any idea on anything with Innovate with Kraft (IWK), to a focused platform, the Kraft Foods Collaboration Kitchen (KFCK) is a major shift in their open innovation strategy. The new portal manages ideas from the public on new products, solutions and technologies with specific topics in mind predetermined internally. With KFCK, the company’s strategy focuses on solving specific needs or questions defined by Kraft employees, known as ‘briefs’, and inviting the public to contribute their ideas on those topics. KFCK is powered by Brightidea software which allows easy management and launch of numerous briefs while facilitating collaboration amongst users in an interactive online community. Kraft is expecting to release well over 70 different briefs over the next year across its different brands.

 

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Big organizational changes have come to Kraft Foods over the past few years. In 2010 the company acquired the British confectionary company Cadbury and recently announced plans to split into two separate businesses, Kraft Foods Groceries and Mondelez International (a name crowdsourced internally in Kraft’s Brightidea-powered Idea Kitchen).Kraft continues its commitment to innovation with the launch of KFCK, which essentially combines Innovate with Kraft(IWK) Open innovation portal together with Cadbury’s Collaboration Factory under one roof.

With names like Oreo, Cadbury, and Jello-O, Kraft Foods houses some of the world’s best-known food brands. Want to bring your own flavor to the products you love? Now is your chance to bring your ideas to Kraft. If you are university student, technology person, innovator, or just someone with great ideas and new products or patents check out the Collaboration Kitchen to get involved!

Treeofbenefits

100 year old print company you’ve never heard of and making it big in global digital

The Biggest Digital Media Company You’ve Never Heard Of

2012 JUNE 6

by Greg
Naspers

America is famous for its media giants.  Facebook, even after the disastrous IPO, is still worth $60 billion. Google already trades at $200 billion.  So called “old media” companies are massive too. Disney is worth $80 Billion; Time Warner about $35 Billion.

And why not?  The US is the world’s biggest media market by far, accounting for about 35% of the world’s ad market.  Make it here and you are a massive player globally.

Not surprisingly, we don’t pay much attention to the rest of the world, but we should. That’s where 95% of people live.  7 billion people with ideas and energy, who are unlocking value where we never thought to look.  Probably the best example is Naspers, a $22 billion South African company that already owns chunks of Facebook and Zynga.

 

Who The Hell is Naspers?

I first wrote about Naspers two years ago in a post about 4 unlikely digital heroes (Full disclosure:  When I was Co-CEO of KP media, we had a an e-commerce joint venture with a Naspers subsidiary).

They aren’t a start-up, but a century old company that was originally a publisher of newspapers and magazines and still derive about a third of their revenues from print. They got into digital in 1997 with the launch of an ISP in their native South Africa and made a smart early investment in China’s Tencent in 2001.

Since then, they have been on a roll snapping up a large stake in Mail.ru in 2007 and Polish auction giant Allegro in 2008, among others, piecing together a true international media empire.

As you can see from the organization chart above, Naspers has developed a significant footprint on every continent except for North America.  Not all of the investments have been winners but, on balance, they’ve gotten in early and done pretty well.

A Simple Strategy

So what’s the secret sauce?  How did this obscure South Africa publisher become a global giant?  On their website, they describe their strategy like this:

If you would take a random sample of media company strategies and combined them, they would probably average out to something very similar.  In other words, there’s no secret sauce, except that they have had the courage to look where no one else has bothered – emerging technologies in emerging markets.

And these guys don’t just swoop in with big egos and fat checkbooks.  They have spent years going to regional conferences, getting to know people and establishing credibility as a value-added investor.  When Naspers invest in you, you are not just getting bought by a big faceless corporation, but joining a community of successful entrepreneurs.

In short, Naspers has been successful not through amazing brilliance, but rather with good sense, shoe leather and a lot of patience (essential in emerging markets).

A Wide Gaping Hole

So here’s the big question.  Where are the American media companies?  Besides the occasional juggernaut like Google or Facebook that achieves significant audience overseas and then opens offices to service and monetize it, US firms are almost non-existent overseas.

I noticed this during my 15 years abroad, but it’s really become apparent in the short time I’ve been home.  US executives not only lack knowledge of the rest of the world, they barely know it exists.  Usually, they assume that it’s pretty much like it is at home, albeit with strange languages, weird food and a bunch of people who are trying to catch up to us.

That’s quite a big oversight.  The rest of the world offers three quarters of the world’s GDP, a lot of really smart, hardworking people with great ideas and an amazing opportunity to learn about and experiment with new business models.

Oh, and about the catching up part, when eBay went into Poland, Naspers’ Allegro unit put them out of business in record time.  Ignorance can cost you.

Take a Look Around

America has no monopoly on skills or innovative spirit.  Asia and Eastern Europe boast some of the world’s best programming talent.  Mobile payments are already old hat in South Korea.  China has a burgeoning mobile digital culture.  Poland’s Gemius has consistently beat out GfK and Nielsen in online audience research.

Make no mistake, reverse innovation is becoming a powerful force.  Multinationals like General Electric and Procter and Gamble have already learned that successful innovations in low-cost countries can be used to disrupt markets back home.  As I’ve written before,variation is a key element of innovation and geographic diversity is an important part of that.

So, what I guess I’m saying is, take a look around.  There’s a big world out there with a lot in it.  US media companies do themselves a disservice by ignoring all that the planet has to offer in talent, perspective and, possibly, the next great business model.

– Greg

~ Digital Tonto, June 7, 2012

 

When retirement is not an option – tectonic shift in the workplace, take note John Key

New Zealand’s Prime Minister John Key refuses to engage with a tectonic shift with major implications – Peter Drucker, one of the great Management Thinkers of the last century, sums it up well.

“Politicians still promise to save the existing pensions system, but they—and their constituents—know perfectly well that in another 25 years people will have to keep working until their mid-70s, health permitting.”

OECD pensions expert Edward Whitehouse said New Zealand’s superannuation policy “stands out” from most other OECD countries. “There are 13 OECD countries going beyond 65: Australia, the United States, Britain and Ireland going to 68; Germany, Spain, Italy and Denmark are linking their pension ages to increases in life expectancy so we project that by 2050 they will have pension ages of 69. “All the other countries are moving upwards and New Zealand is staying at 65. It stands out a bit. More than half of OECD countries are increasing pension ages over the coming decades.”

“Today in New Zealand, for every four people in working age there will be one of pension age, three by the mid 2020s and only 2.4 in 2050.”

In April last year, Treasury warned about the perils of rising pension costs. GST would have to rise to 19 per cent, or personal taxes would have to increase by $30 a week from early next decade – or the Government could slash total spending by about 7.5 per cent from the early 2020s, Treasury deputy chief executive Gabriel Makhlouf told a Wellington audience.

New Zealand’s superannuation bill last year was $8.8 billion. Fastforward four years and this bill will be about $12.3b. Instead of tackling this big rock, the government chooses to focus on much smaller items of expenditure for savings and pledges that economic growth will cover the rising bill (and that’s without getting into the related massive increase in health costs owing to the ageing population). 

So how solid is the promise of economic growth to cover rising costs?

As Labour leader David Shearer pointed out in the Budget debate “The minister of finance promised in 2009 to deliver real GDP growth of 1.5 per cent over the last three years; he delivered 0.6 per cent,” Mr Shearer told Parliament. “In 2010 National projected real GDP growth of 3.1 per cent a year, and it delivered 1.3 per cent.”In 2011 National projected real GDP growth would rise to 4 per cent per year, and it delivered just 1.1 per cent.”

Latest update: subdued investment, slow growth in the working age population, and low labour productivity growth over the last few years have reduced New Zealand’s potential growth rate to about 1.2% a year, said the Reserve Bank in its June Monetary Policy Statement.

We can conclude the following:

1) The government refuses to take on the longer term big issues that need to be addressed sooner rather than later, and has effectively put its head in the sand on the issue of superannuation and an ageing population.

2) A classic example of one of our favourite sayings: “The Definition of Insanity is Doing the Same Thing and Expecting a Different Result!”

3) And “You can’t shrink your way to greatness!”

When Retirement Is Not an Option

 

 

 

Peter Drucker said that in the future, people will have to work well into their 70s. Here’s how the trend might play out. (Baby boomers, take note)

By Rick Wartzman

In 2001, in a series of essays for The Economist, Peter Drucker pointed to a demographic transformation unfolding across the developed world while, poetically, he found himself at the leading edge of the trend.

“The dominant factor in the Next Society will be something to which most people are only just beginning to pay attention: the rapid growth of the older population and the rapid shrinking of the younger generation,” Drucker asserted. “Politicians still promise to save the existing pensions system, but they—and their constituents—know perfectly well that in another 25 years people will have to keep working until their mid-70s, health permitting.”

At the time, Drucker was fast approaching his 92nd birthday and still writing, teaching, and consulting. Only the most blessed among us can hope to be going so strong at that age. But there’s no denying the general phenomenon that Drucker identified as well as the important implications it holds for those leading corporations and nonprofits alike.

“TECTONIC SHIFT”

Indeed, just last month, RAND, a nonprofit research institution in Santa Monica, Calif., issued a study showing that more and more Americans are delaying retirement. The study also predicted that this “tectonic shift” in the workplace is bound “to continue and even accelerate over the next two decades.”

After declining for more than a century, according to RAND, the number of older men and women in the workforce began to rise modestly during the 1990s. While about 17 percent of Americans aged 65 to 75 were employed in 1990, that figure is expected to rise to 25 percent this year. RAND believes the pattern will persist until at least 2030—longer than other experts have forecast.

For government policymakers trying to ensure the health of Social Security and Medicare, the ramifications of this swing are quite substantial. But individual enterprises need to pay close attention, too.

“Employing organizations—and by no means only businesses—should start as soon as possible to experiment with new work relationships with older people and especially with older knowledge workers,” Drucker wrote in his 1999 book, Management Challenges for the 21st Century. “The organization that first succeeds in attracting and holding knowledge workers past traditional retirement age, and makes them fully productive, will have a tremendous competitive advantage.”

“NEW WAYS OF WORKING”

To get there, Drucker said, employers must learn to be more flexible. As baby boomers hit their 50s and 60s, he suggested, many of them are likely to want to serve as part-timers and consultants or to take on special assignments. “New ways of working with people at arm’s length will increasingly become the central management issue” at many different organizations, Drucker wrote.

Compared with their younger colleagues, he added, older workers with sufficient education and talent “will have much more choice and will be able to combine traditional jobs, nonconventional jobs, and leisure in whatever proportion suits them best.”

Part of the reason this group now finds itself in such a strong position boils down to supply and demand. Another recent study, released by the MetLife Foundation and the San Francisco think tank Civic Ventures, predicts that over the next eight years there could be as many as 5 million job vacancies in the U.S.—and workers 55 and older will be crucial to closing the gap.

“Not only will there be jobs for … experienced workers to fill,” says Northeastern University economist Barry Bluestone, the study’s author, “but the nation will absolutely need older workers to step up and take them.”

ACHIEVING SOCIAL PURPOSE

Bluestone projects that nearly half the labor shortages (2.4 million jobs) will be in four fields: education, health care, government, and the nonprofit arena. All of these stand to provide what many baby boomers, in particular, are looking for: a chance not only to stay active but also to make a meaningful contribution.

More than a decade ago, Drucker spotted this growing desire among knowledge workers to achieve some social purpose during the second half of their lives. “These people have substantial skills,” Drucker wrote. “They know how to work. They need a community …. They need the income, too. But above all, they need the challenge.”

To help them along, Civic Ventures launched a program last year in which Silicon Valley executives are given fellowships at area nonprofits. The idea is not only to bring these organizations much-needed expertise in marketing, finance, and human resources, but also to have the executives prepare for their eventual transition to an “encore career” in the social sector.

The irony, of course, is that all this activity and insight by Civic Ventures and RAND comes amid a brutally weak job market, especially for those 55 and older. Last month, the Pew Fiscal Analysis Initiative reported that about 30 percent of those in this age bracket have been unemployed for a year or more. “Another generation of U.S. workers, at least significant numbers of them, [is] being forced into retirement sooner than expected and without ceremony, by the bust,” economics writer David Warsh noted earlier this week.

But smart organizations are aware that every bust is invariably followed by a boom. And the next one could well be a boom driven, in large part, by a bunch of aging boomers.

Rick Wartzman is the executive director of the Drucker Institute at Claremont Graduate University.

~Bloomberg Business Week, NZ Herald, Stuff.co.nz

 

The path of an idea – it’s not what you think

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~ based on a twitter from Babs Rangaiah