Critical Insights Vol. 1 Issue 11

ECONOMICS & MACRO MARKET

On June 2010, the U.S. Census Bureau released the latest retail sales figures. It shows that retail sales have been declining since March this year. But the figures were up compared with the same period 2009. This mixed picture is in line with weak consumer price index, indicating that consumer spending, which account for 70% of the economy, is yet to enter the positive spiral to drive a sustainable economic growth. Consequently, stock market has been extraordinarily volatile since we forecasted that the Dow Jones Industry Average will approach 6,500 a few weeks ago. The upcoming trough of the DJIA will be around 9,300.

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STRATEGY & MARKETING

Targeting Different Markets with Different Products: Starbucks Rebranded Seattle's Best Coffee

Prudent marketers understand that customers have diverse needs and wants and, therefore, products have to be positioned to target selected customer segment(s). What if a business wants to take market share beyond its target segment(s)? Starbucks has saturated the market that it currently occupies, showing stagnant demand. In an attempt to drive future growth, the company is brewing a fresh image for Seattle’s Best Coffee, a specialty brand it acquired in 2003. The coffee giant last month kicked off a rebranding effort, which includes a simpler, more contemporary logo and design. It hopes to grow Seattle’s Best into a billion-dollar business by expanding it to fast-food channels, convenience stores, drive-through restaurants and even vending machines this fall. Rebranded Seattle’s Best Coffee is positioned as a premium set of products, which will be complementary to and not competing against the low-cost coffee products currently carried by those marketing channels…

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Know Your Target Customers: Subaru Thrives with Great Profit in Great Recession

Positioning a product to target certain market requires a great deal of diligence. A marketer starts by selecting a market as her target, taking into consideration of the company’s vision, product fit, competitive landscape and its winning roadmap. Once the target market is decided, the marketer examines the needs, wants and demands of the target customers at multiple dimensions and decides how it creates, communicates and delivers value to its target customers. By courting financially solid buyers with a taste for the quirky, tiny Subaru of America sped through 2009, logging record sales and market share along the way. Last year Subaru became the 11th most popular U.S. auto brand, up from No. 19 just a year earlier. Record sales in cities like Los Angeles, Atlanta, Dallas, and Orlando helped make Subaru the fastest-growing mass-market car brand in the U.S. for the last two years. It's the growth leader again so far in 2010 — up 41 percent through April. For the first time, its unit sales exceed those of such better-known brands as BMW, Lexus, Mazda, and Volkswagen…

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Product Renewal: Apple’s Jobs Unveils New IPhone to Dial Back Android Rivalry

Product lifecycle management is one of the key elements of marketing. As technology evolves rapidly today, tech products’ lifecycles become increasingly short and, therefore, renewal of product vitality becomes critically important. Apple inc.’s Steve Jobs has been extremely successful in bringing into the market very cool products such as iPhone and iPad. Marketers have a lot to gain by following his product lifecycle management strategies, with one being tapping into the enormous resources of third party applications developers and the other being introducing to the market the new versions of the products. The company now has more than 225,000 tools, games and other applications available for downloading. That compares with about 50,000 for Android. Recent research shows that more than 5 billion programs have been downloaded from Apple’s App Store. On the other hand, Steve Jobs showed to the market ra week ago a thinner iPhone with a sharper screen and video-chat features, delivering a refashioned chassis and 100 new features…

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INNOVATION IN BUSINESS & TECHNOLOGY

What Chief Executive Really Want? Creativity as the Most Important Leadership Competency

A survey from IBM's Institute for Business Value shows that CEOs value one leadership competency above all others. Can you guess what it is? What do chief executive officers really want? The answer bears important consequences for management as well as companies' customers and shareholders. The qualities that a CEO values most in the company team set a standard that affects everything from product development and sales to the long-term success of an enterprise. There is compelling new evidence that CEOs' priorities in this area are changing in important ways. According to a new survey of 1,500 chief executives conducted by IBM's Institute for Business Value (IBM), CEOs identify "creativity" as the most important leadership competency for the successful enterprise of the future…

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Idea Generation: Individual and Group Contemplation

In a wide variety of organizational settings, teams generate a number of possible solutions to a problem, and then select a few for further investigation. Researchers at Wharton examines the effectiveness of two creative problem solving processes for such tasks— one, where the group works together as a team (the team process), and the other where individuals first work alone and then work together (the hybrid process). The effectiveness of the approaches is defined as the quality of the best ideas identified by the group and the theory relates group behavior to four different variables that characterize the creative problem solving process: (1) the average quality of ideas generated, (2) the number of ideas generated, (3) the variance in the quality of ideas generated, and (4) the ability of the group to discern the quality of the ideas. Prior research defines effectiveness as the quality of the average idea, ignoring any differences in variance and in the ability to discern the best ideas. In an experimental set-up, the researchers find that groups employing the hybrid process are able to generate more ideas, to generate better ideas, and to better discern their best ideas compared to teams that rely purely on group work. Moreover, they find that the frequently recommended brainstorming technique of building on each other’s ideas is counter-productive: teams exhibiting such build-up neither create more ideas nor are the ideas that build on previous ideas better…

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The Power of Innovation: The Seed Makers Who Don't Pray for Rain

Global warming does not only cause higher temperature that could result in sea-level rise and coastal flooding, but also drive weather in roller coaster fashion – flood and draught. Scientists have been working very hard to stay ahead of the game. Market leaders such as DuPont, Monsanto and Syngenta has come up with drought-tolerant corn, allowing farmers like Lance Russell in Hays, Kan. to grow corn in the areas, which are traditionally considered too dry and hot for corn. The technology could change the economics of farming by reducing the need for irrigation, lowering crop insurance premiums, and boosting land values in water-starved regions. With agriculture accounting for 70% of global freshwater use, "The biggest single issue in farming going forward is...water availability," says Monsanto CEO Hugh Grant…

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LEADERSHIP & ORGANIZATION

Learning to Use Regret: Studies in the Negative Emotions and How to Use Them

Researchers at Kellogg examine the so called negative emotions: anger, anxiety, boredom, disappointment, fear, guilt, jealousy, and sadness. They wanted to find out whether people believed the negative emotions were beneficial, damaging, or somewhere in between. The team found that regret, like several other negative emotions, was viewed both favorably and unfavorably. People rated regret more favorably than unfavorably. Only jealousy was considered unambiguously negative. Their work shows that regret is a powerful force in human life. Far from being negative, regret is actually recognized by human brains as a positive influence on future behavior. Regret’s important messages can be applied in everything from marketing to decision-making for the future. The respondents stated that regret helped them make future decisions more than other negative emotions. Regret scored the highest of all negative emotions in the five functions of emotion—to help in making sense of the world, avoid future behaviors, gain insight, achieve social harmony, and improve approach. The team examined eleven other studies regarding regret, in which people ranked the parts of life they regret the most. Education was the biggest inducer of regret, followed by career, romance, parenting, the self, and leisure. The rankings turned out to be remarkably consistent across studies of people in different age groups and locations…

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Is Your Company As Customer-Focused As You Think?

Many executives are frustrated by the fact that their products’ market performance keeps falling below their competitors’, even though they have a great talent pool and enormous resources that make them the envy of their industries. Things can go wrong in more than one area in the process of creating, communicating and delivering value, calling a systematic approach to dealing with the issue. Researchers at MIT Sloan School of Management suggest that executives should make sure that they get the following five key questions answered: (1) Can middle managers accurately describe your customer promise? (2) Can all members of your senior executive team name the three things that most undermine trust among your existing customers? (3) Is your brand really the best option for customers? Will it continue to be next month and next year? (4) Have you embraced any novel ideas that have produced significant innovations beyond the familiar during the past year? (5) Have front-line staff posed any uncomfortable questions or suggested any important improvements to your offering during the last three months?

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Organization Change Case Study: Bringing Lloyd’s of London into the 21st Century

Visionary executives see areas for major improvement before others do. But getting colleagues and subordinates to change their long-entrenched ways may not be so easy. You often hear this: “Don’t fix it if it’s not broken.” As Richard Ward took over the job of CEO at Lloyd’s of London, he realized that the company had a problem with its claims processing, which was still stuck, in a sense, in the 17th century. To get started without clash with those who resisted the change, Ward sought out those member companies which were dissatisfied with the status quo. Together they worked out a system that would allow the electronic processing of claims that were held in a central repository. By getting internal movers and shakers on board early, Ward was able to get about 30% of claims processed electronically. He then switched gears, developing a "naming and praising" exercise in which he made a list of the top 10 performers in terms of using the new system. It worked: more took the challenge and came on board. In addition to carrots, Ward used sticks, too. Those who were slow to use the high-tech system were asked to invest more capital to cover their underwriting risks. Finally, he launched a communication campaign that had him visiting the CEOs of all the member companies. He knew that becoming personally involved and explaining the benefits to hesitant member-company leaders would help him meet his goals. They had to know it would "assist them in their business…rather than be a threat to them," Ward says…

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Critical Insights Vol. 1 Issue 10

ECONOMICS & MACRO MARKET

Dow Jones Industry Average has been very volatile recently. Although it may come back and test the recent high at 11308.95 as its intra-day high set on April 26, it is on its journey to the previous bottom around 6,500. From longer term point of view, we are yet to finish cycle beginning in 1987 follow the crash in July that year.

While Import Price index – both including and excluding fuel price – has been on the rise, Consumer Price Index excluding fuel and food has been in decline in the past year, reflecting weak demand in marketplace. The current concern should not be inflation. It should be deflation instead. Should the deflation accelerate, it is possible that the economy will enter a round of negative spiral.



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STRATEGY & MARKETING

Can You Describe Your Business in a Few Words?

If you ask people what their businesses are or sit in a presentation, you will likely to find that many companies have hard time to describe their business. People often try to cover every area of their businesses’ expertise, all of their industry experience and each qualification they have attained in an effort to paint the full picture of what makes them stand out. Consequently, the messages are diluted, sounding like everyone else, and audience is confused. A process of distilling the essence of your business from various aspects is mind-wrenching. What you gain from going through the process, however, are a crystal-clear understanding of the business in your own mind and clean, exciting message in the minds of your customers and staff. Meredith Vaughan, president of Vladimir Jones, introduces her agency as “an agency of exciting minds.”

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Giving Customers License to Enjoy Luxury

Many consumers hesitate when it comes to spending money on luxury items. The feeling of guilt, conscience and sub-conscience, plays a significant role in purchasing decision-making. Furthermore, the financial crisis and economic downturn transformed consumers’ mindsets and in the process of turning luxuries into socially discouraged opulence. Research at MIT suggests that people will spend more freely if you first help them feel more virtuous…

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Google Fails to Revolutionize the Cellphone Market

Business model is one of the critical elements in business success. An effective business model is dictated not only by the grand strategy of the business but also by the key attributes of the product and the key preferences of the target customers. Google’s decision to bring an end to its online sales of its Nexus One handset shows how a poorly-configured business model led to a failure in marketplace…

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INNOVATION IN BUSINESS & TECHNOLOGY

Do You Have to Ask Your Customers to Pay for Your Products and Services?

One of my former students is in a process of building a new online business. When it comes to the question of business model, I suggested that she validate her assumption that the online users will indeed be willing to pay for her services. If her customers are not willing to pay for the services, she does not have to squeeze money out of their wallets. Innovation in business models has made it possible to separate the users and payers, allowing the users to enjoy the services for free, the advertisers to reach their target audience and service providers get paid through ad revenues. Horizon Air started to provide ad-support foods to its passengers now…

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Is Your Advertising Not Working? Try Games

Traditionally, sellers push their advertising messages to customers. The problem with this approach is that people don’t want to be sold to and they usually resist the selling unless the offerings are overwhelmingly attractive. Consequently, messages of many good products fail to get across. If people instead pull bits of information into their lives through a game, they are more likely to feel a sense of ownership. And, if the game is cool enough, it can bring you the viral success like the ones achieved in social media…

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Is Rheumatoid Arthritis Linked to Mutation of Genes?

Researchers conducted studies involving thousands of patients in Europe and North America and the results show that mutation occurred in at least 10 genes leads to higher risk of rheumatoid arthritis…

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LEADERSHIP & ORGANIZATION

Giving a High Performer Productive Feedback

Giving feedback, particularly constructive feedback, is often a stressful task. As counterintuitive as it may seem, giving feedback to a top performer can be even tougher. Top performers may not have obvious development needs and in identifying those needs, you can sometimes feel like you're being nitpicky or over-demanding. In addition, top performers may not be used to hearing constructive feedback and may rankle at the slightest hint that they're not perfect. Amy Gallo, who writes at Harvard Business Review, suggests that, to high performance producers, managers should give both positive and constructive feedback on regular basis, identify development areas, even if there are only a few, and focus on the future and ask about motivations and goals. The expert also advice managers not to presume that a start has reached the limits of her performance, leave the top performers alone, or assume that they know how appreciated they are. ..

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Learning When to Stop Momentum

In May 2000, events overwhelmed a fire crew working to burn out an overgrown 300-acre area at the Bandelier National Monument in New Mexico. A tiny patch of flame, which kept flaring up every time firefighters thought they had put it out, eventually escaped and grew into the Cerro Grande wildfire, one of the most devastating in our nation’s history and the cause of $1 billion in damages to the city of Los Alamos and the adjacent Los Alamos National Laboratories. Eighteen thousand people were evacuated; and two weeks later, by the time the fire was finally stopped, some 47,000 acres had been consumed and 300 homes and laboratory buildings destroyed. Michelle A. Barton and Kathleen M. Sutcliffe at MIT call this failure “dysfunctional momentum,” which occurs when people continue to work toward an original goal without pausing to recalibrate or reexamine their processes, even in the face of cues that suggest they should change course. They suggest that managers who had experienced projects spiraled out of control to look back and ask questions: How did we get there? How did we miss the cues that might have signaled huge problems ahead? Or, if we did see the cues: Why didn’t we change the course?

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Five Key Strategies for Making Metrics

Innovation has become increasingly important in terms of competitive advantage. Initiatives to encourage innovation won’t be effective unless they are operationalized. Operational success, on the other hand, depends largely on implementing appropriate metrics. Dev Patnaik, who writes at Business Week, lists five key strategies for developing useful metrics: 1) use people, product, and process metrics; 2) connect the metric to the rhetoric; 3) start with incentives instead of control; 4) set up multiple tracks; 5) beware of false precision.

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Critical Insights Vol. 1 Issue 9

ECONOMICS & MACRO MARKET
In the week just past, the Dow Jones Industry Average (DJIA) dropped over 1,000 points during the trading session. The decline indicates a significant profit taking, which could no longer be compensated by the new entrants. The lack of significant improvement in unemployment figure and the news about street battles by those who should have been working on the credit issue of their nation triggered the free fall of the price. The profit taking does not seem to be finished and any negative news in the future could lead to further decline of stock prices, sending DJIA back down to 6,500.

STRATEGY & MARKETING

Back to the City

Business success depends highly on discovering and seizing opportunities. Opportunities, on the other hand, are associated with events, changes and trends. If someone tells you that he is going to move to an urban area, it is not an isolated incident (event); it actually represents a change in mentality and a trend of urbanism. Young workers and retiring Boomers are actively seeking to live in densely packed, mixed-use communities that don’t require cars – that is, cities or revitalized outskirts in where residences, shops, schools, parks, and other amenities exist close together. Prudent executives are adjusting their strategies and market focuses accordingly…

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Why Consumers Spend Their Precious Resources on Lavish Purchases during Recession?

Feeling powerless is an aversive psychological state that people try to eliminate or diminish. Behaviors such as associating oneself with figures of power, wealth and fame and emulating what they do are driven by the desire to build status and compensate their feeling of lack of power, although they usually leads to decline in self-confidence. Researchers found that, in a time of economic downturn, consumers are more likely to feel powerlessness and, therefore, spend beyond their means to purchase status-related items. Their experiments showed that subjects who experience a sense of low power 1) were willing to pay a higher price to acquire status-oriented items, like silk ties and fur coats, but not regular products like minivans and dryers; 2) expressed increased willingness to pay for a picture of Northwestern University, but only when it was portrayed as an exclusive item providing high status, rather than a mass-produced item available to anyone; 3) were more likely to perceive status-oriented products as providing a sense of power. As marketers determine target market segment and develop persona, they need to take the compensatory consumption into consideration…

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Five Steps for Consumer Brands to Earn Social Currency

Consumer brands can earn social currency. Launching promotional campaign using social media is, however, just the beginning. Effective social media campaigns are achieved by acting upon five key fundamental themes: 1) advocates trump followers – building promotions around turning real people into online celebrities and then endorsers; 2) the social context during consumption matters – creating relevance in consumer's daily life; 3) not every brand should be social – distinguishing those which can have upside in social currency, 4) social tools are a means, not an end – converting viewers into evangelists; and 5) gimmicks marginalize trust – focusing on present true values to consumers…

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INNOVATION IN BUSINESS & TECHNOLOGY

Intel launches First Smartphone Chip

Recently, Intel announced its long-awaited entry into the smartphone market with the launch of the Atom Z6xx series processor – codenamed Mooretown – which is the first Intel processor low-power enough to be used in handheld devices. While innovative products such as iPhone, Android and iPad are selling well, people are wondering whether we really should have multiple devices. Intel’s Atom Z6xx can turn smartphones into mini PCs, potentially eliminating the needs for PCs – you can have a docking station and external monitor at home and work…

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iPad DJ Rana Sobhany Gets in Touch with Music’s Future

iPad is cool, Right? Take a look at this video. The touch screen of the tablet allows you to do way more than you could imagine…

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New Blood Tests for Early Diagnosis of Osteoarthritis

Arthritis is a common category of diseases. In some cases, chronic joint inflammation may lead to destruction of the structure and crippling. Scientists at King’s College London discovered biomarkers associated with osteoarthritis, allowing early diagnosis and monitoring the progress of the condition…

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LEADERSHIP & ORGANIZATION

Empowering Your Employees to Empower Themselves

Many executives are used to provide directions or instructions to his or her subordinates. Research shows that executives’ opinions are not all right. Even the opinions that are right on are not all worth it. More importantly, employees follow executives in details, they become passive. Here are the things that leaders can do to build an environment that empowers people: 1) give power to those who have demonstrated the capacity to handle the responsibility; 2) create a favorable environment in which people are encouraged to grow their skills; 3) don’t second-guess others’ decisions and ideas unless it’s necessary; 4) give people discretion and autonomy over their tasks and resources…

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Discover Your Leadership Blind Spots

When I read a research article published several decades ago, I found interesting observations that worth to mention here. Researchers conducted a survey among managers of organizations to uncover motivational factors relevant to the performance of R&D employees. In this survey, the respondents rated the importance of relations with subordinates at 2.7 while that of relations with superiors at 3.7 (maximum score at 5.0), indicating that managers tend to put more weight on their relations with their superiors and fail to see their subordinates’ desire to build good relations with them. Too often, leaders demonstrate behavior that sabotages their success and undermines both their team and their organization. To succeed as a manager, an author suggests, you need to learn how to recognize your blind spots and overcome them…

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Pimco’s Battling Brains

Mutual fund giant Pacific Investment Management Co. has $1 trillion under management. The company credits its outstanding performance to an environment where its staff is constantly expected to challenge each other's investment ideas and assumptions. This article highlights how you regularly need to evaluate and challenge business assumptions to ensure their continued relevance and to force the necessary discussions around them. You better be philosophical and have a thick face…

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Critical Insights Vol.1 Issue 8

ECONOMICS & MACRO MARKET
CEO confidence decreased slightly in the first quarter of 2010. The measure declined to 62, down from 64 last quarter (a reading of more than 50 points reflects more positive than negative responses).

Consumer confidence index arrived at 57.9 (1985=100), up from 52.3 in March and 46.4 in February. Economists watch the number closely because consumer spending accounts for about 70 percent of U.S. economic activity. However, April's reading is still far from what's considered healthy. A reading above 90 indicates the economy is on solid footing; above 100 signals strong growth.

If consumer spending continues its uptrend, business executives will likely to have greater confidence in economic growth and increase capital spending and hiring more employees, which will in turn boost consumer confidence.

The recovery of the Dow Jones Industry Average seems to lose its steam and the price target is now adjusted to 11,286.

STRATEGY & MARKETING

Peering Clearly at the Future

Venture capitalists and entrepreneurs are in the business of predicting the future. In order for young companies to grow and thrive, they must develop the products and services that meet the needs of future customers in markets that change over time. While some entrepreneurs are enormously successful based on luck, starting the perfect product at the right time based on a hunch, others are more scientific about how they predict market dynamics and plan new product offerings. For venture capitalists, whose objective is to regularly finance successful emerging businesses and to minimize business failures, a thorough and replicable forecasting methodology is a powerful tool…

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Developing a Social Media Strategy: 6 Lessons from Kodak

Consumers are talking about your brand in social media channels, and you need a strategy to engage in these conversations. Ignoring them – or jumping in without a plan – is a missed opportunity. Kodak, whose direct sales and online share-of-voice are on an upward trend, learnt 6 lessons: 1) listen before you speak; 2) add value when joining the conversations; 3) don’t be intrusive; 4) use real people behind the brand; 5) treat consumer and business customers differently; 6) transparency is paramount…

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Apple Unveils Ad Platform and Phone Software

To better cultivate its apps ecosystem, Apple demonstrated its iAd which places ads on applications so that the third-party apps developers do not have to worry about building advertising components in their applications and placing ads themselves. Mr. Jobs says. “We have figured out how to do interactive video content without ever taking you out of the app… We think people are going to be a lot more interested in clicking on these things.” Apple will host the ads and give developers 60 percent of the ad revenues, keeping 40 percent…

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INNOVATION IN BUSINESS & TECHNOLOGY

Facebook Makes It Easier for Users to Share Interests across Web

Recently, Facebook unveiled a platform that will make it easier for users to share their interests with friends on other sites across the internet. Once signed in to Facebook, users visiting other websites can view modules displaying their friends' likes and comments about that site's content. For example, a user on Pandora, the music site, will see which artists and songs their Facebook friends like – without having to return to Facebook…

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The Tea Thieves: How a Drink Shaped an Empire

By the mid-19th century, Britain was an almost unchallenged empire. It controlled about a fifth of the world's surface, and yet its weakness had everything to do with tiny leaves soaked in hot water. By 1800, tea was easily the most popular drink in the country. The problem? All the tea in the world came from China, and Britain couldn't control the quality or the price. So around 1850, a group of British businessmen set out to steal tea seeds and trade secrets from China and create a tea industry in a place they did control: India…

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Why Businesses Don’t Experiment

Several years ago, I was involved in developing a video on demand business in hospitality industry in China. After months of research, simulation and deliberation, we came up with the business strategy and a set of business models. While we were excited about the future of the business based upon the business plan that we had developed, we wanted to validate our ideas and tested in three hotels. Only after the ideas proved to be effective, we set out to raise investment fund and spin the unit off from its parent company. Many companies, however, don’t experiment. The article published at Harvard Business Review describes an failed case of experiment and discusses about the reasons that some companies avoid experiment…

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LEADERSHIP & ORGANIZATION

When You Think the Strategy Is Wrong

Development of corporate strategy is not merely a process of logical thinking; it is full of emotional attachment. When people come to realize that the strategy of the organization is wrong and certain changes are necessary, one needs to know how to take the initiative in an artful way. This article published on Harvard Business Review provides the basic principles to remember. The dos: 1) understand the root cause of your concerns; 2) research the inputs and assumptions underlying the strategy; 3) express your concerns to your immediate boss first. The don’ts: 1) insist that your concerns be heeded; 2) assume you know the assumptions or reasoning behind the strategy; 3) question the strategy in a public setting…

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Why Asking “Any Questions?” Doesn’t Generate Any Questions?

Why do you often hear silence during the question-and-answer session of a meeting? The author at Harvard Business Review blog listed two possible reasons: 1) nobody wants to risk asking a "dumb" question and 2) nobody wants to look like a troublemaker. Speakers and managers: you really should ask questions of yourself and rephrasing questions so that you can increase the likelihood of having a real discussion…

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Why Marine Corps General Said “PowerPoint Makes Us Stupid?”

PowerPoint is a very useful tool for communication. When it is used rigidly and consumes a great deal of time for preparation, however, utilization of the tool stifles discussion, critical thinking and thoughtful decision-making, according to generals in battlefields…

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Critical Insights Vol. 1 Issue 7

ECONOMICS & MACRO MARKET

Consumer Confidence Index stands at 52.5 (1985=100), up from 46.4 in February. The Present Situation Index increased to 26.0 from 21.7. The Expectations Index improved to 70.2 from 62.9 last month. The rise of confidence index might be supported by improving job market. The Conference Board Employment Trends Index™ (ETI) rose in March for the seventh consecutive month. The index now stands at 94.4, up from February's revised figure of 93.7. The index is up 5.5 percent from a year ago. Over the past three months, all of the index's eight components have been improving.

On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1% in March. The U.S. Import Price Index rose 0.7 percent in March. The increase was attributable to higher prices for both fuel and nonfuel imports and followed a 0.2 percent decline in February. Export prices also rose 0.7 percent in March after declining 0.4 percent the previous month.

Dow Jones Industry Average has been climbing since we forecasted its continued rise when it was at 10,566.02 on March 9, 2010. While economic situation is improving, the market is yet to see signs of sustainable growth, leading to a volatile path in the foreseeable future.

STRATEGY & MARKETING

CVS Goes Upmarket

As businesses reach a plateau, firms often conduct out-of-box thinking and look for more growth opportunities. One of the common choices is switch to more profitable market segments. By moving from “Always Low Price” to “Save Money Live Better,” Walmart Stores, Inc. seems to have difficulties in its journey for its upmarket repositioning and the company has a lot to learn from Target Corp. Incidentally, drug store CVS was also on the journey to go upmarket. After failed to lure the makers of pricey cosmetics, skin care, and fragrances to offer their products to the drugstore giant, CVS decided to create a brand new retail environment that would be adjacent to its core pharmacies yet offer a totally different shopping experience - Dubbed Beauty 360…

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Why Internet Retailers Should Pay Attention to Where Potential Customers Live

While the Internet holds immense promise for reaching retail customers far beyond traditional trading areas, new Wharton research indicates that customers discover online retailers by offline word-of-mouth, online word-of-mouth, online search and magazine advertising. Old world dynamics, such as neighbors sharing word-of-mouth recommendations, therefore, can still have powerful effects on Internet sales. In another case, researchers investigate people whose shopping needs might be different than most of the people in their geographic area – preference minority. For example, young parents living in a zip code populated mostly by elderly people would find fewer offerings in local stores because the retailers need to devote the bulk of their shelf space and inventory to meeting the demands of the majority of their customers. Preference minority customers are more likely to purchase online for niche brands and less price sensitive…

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They Key Pillars of Business Model

All successful business ventures need a clear business model and experienced investors will want to see it before making an investment. Business model tells us how a business makes money. The key pillars of business model are 1) customer value proposition – how your product or service helps to solve a problem or provide a benefit; 2) a foothold – where is the niche customer segment of early adopters; 3) differentiation – how your customers view your offers as meaningfully different; 4) pricing…

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INNOVATION IN BUSINESS & TECHNOLOGY

Monsanto: Winning the Ground War

While products of disruptive innovation may lead to great business opportunities, market acceptance and readiness could be a life-or-death challenge. When Hugh Grant took the top job at Monsanto (MON) in May, 2003, the company's nickname in some quarters was "Mutanto." A growing chorus of critics warned that Monsanto's genetically modified plant seeds would wipe out the monarch butterfly, give people virulent new allergies, and reduce the planet's agricultural diversity. During the 12 months preceding Grant's elevation, Monsanto's stock price fell nearly 50% to $8 a share. In fiscal year 2002, the company lost $1.7 billion. Fewer than five years later, Monsanto is thriving. The company’s net income leaped 44% last year, to $993 million, on $8.5 billion in revenue. Monsanto shares, which closed at $104.81 on Dec. 5, have risen more than 1,000% during Grant's tenure. At 58.6, the company's price-to-earnings ratio is about two points higher than Google's (GOOG). Here is a fascinating story showing how Monsanto capture stakeholders’ needs and concerns and came up with its product mix and marketing strategy to attain market acceptance…

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Are You a Walt Disney or a Roy Disney?

Everybody knows Disney. The next time you are marveling at the wonders of Disney, make sure you remember Roy. While Walt was dreaming about his Magic Kingdom and making a mouse talk, his brother Roy was actually making sure that Walt's dreams would come true. Roy was the operational genius; a yin for Walt's yang …

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Co-Creation: Not Just Another Focus Group

Several years ago, I conducted simulation for product innovation at City University’s MBA classes for future concepts of iPot. Students were divided into competing groups. They are required to view themselves as and communicate with teenagers – typical iPot users, gather and prioritize the requirements of the target customers, and develop future concepts of the products. As they saw how similar the features of new iPot and eventually the iPhone are to the concepts that they had developed, they were very excited. This approach of getting customers involved in product innovation has been named as co-creation and become increasingly popular in industries. This article talks about how this approach has been successfully adopted by companies like Unilever…

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LEADERSHIP & ORGANIZATION

Beware the Siren’s Song - Maintain Self-Control by Avoiding Temptation

Homer wrote of Odysseus that he was so worried about the allure of the siren’s song, he put wax in his shipmates’ ears and had himself tied to his ship’s mast and, furthermore, erroneous beliefs about one’s capacity for exercising restraint can lead to maladaptive self-control strategies. Unlike that hero of mythology, though, most people overestimate their capacity to control their impulses, according to a researcher at the Kellogg School of Management. His four fascinating studies show that people in a cold, non-impulsive state will overestimate their impulse-control capacity; people in a hot, impulsive state will have a more realistic view of their capacity for impulse control; and people who perceive that they have a high capacity for impulse control will expose themselves to more temptation and will ultimately exhibit more impulsive behavior...

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Why Business Leaders Should Act More Like Artists

If you are a manager, especially a manager with technology and engineering background, please take your managerial palettes out and copy the creative class. Artists are more inspired communicators, as they are always trying to inspire a response through their art, and they also collaborate and learn together better than their more numerically-inclined, left-brained brethren…

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How the Mighty Fall: A Primer on the Warning Signs

The author of Good to Great, Jim Collins, on how to spot the subtle signs that your successful company is actually on course to sputter—and how to reverse the slide before it's too late…

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Critical Insights Vol. 1 Issue 6

ECONOMICS & MACRO MARKET

According to the Conference Board, economic indicators have improved in February with both leading and coincident indices increased 0.1% and lagging index increased 0.3%. Although the Consumer Price Index published by the U.S. Bureau of Labor Statistics stays unchanged for All Urban Consumers in February, the prices of goods and services consumed showed some increase given the fact that the prices of foods and energy dropped in February. The data indicate that the economic recovery is pretty bumpy and fragile at best.

The recovery of the Dow Jones Industrial Average has come close to the 11,000 mark and its short-term advance seems to be unsustainable. From long-term point of view, the stock market is expected to be volatile in 2010.

STRATEGY & MARKETING

iPad for Enterprise?

My students at University of Washington are fascinated by customer perception. If customer perception is more or less mysterious to you as well, take a look at that of iPad. It is supposed to be about web surfing, email and photo and movie watching experience for consumers, according to Apple’s promotion campaign. Customers, however, want a stretch – taking it into an enterprise product category. With over 150,000 applications already produced and much more on the way, customers’ “wrong” perception has a pretty good chance to be proven right…

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Wal-Mart, Deviating from Its Fundamental Strategy, Suffered Negative Same-Store Growth

Wal-Mart, the world's largest retailer, has seen better days. Yes, profits rose 22%, to $4.63 billion, in the fourth quarter of '09. Even coming out of the Great Recession, many consumers are trading down to shop at the discount superstore. However, for the third straight quarter the store saw negative same-store sales growth; during the last three months of 2009, same-store sales dropped 2%. Overall traffic in Wal-Mart stores was down too…

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Microsoft Office for Free?

Two years ago, I wrote to a Microsoft executive, urging the company to offer Microsoft Office for free. The idea is to deliver an online version of Office and provide links to highly relevant online information on the interface using user’s context for automatic search. Given customers’ concern with privacy, the most likely early adopters would be enterprise users who need to gather information from intranet. According to an IDC report, Microsoft has made a progress in this regard and the company is going to offer to corporate customers web-based versions of Word, Excel and PowerPoint for free early this year...

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INNOVATION IN BUSINESS & TECHNOLOGY

Innovation and Air Sandwich

Chances are, you're already familiar with the concept of the Air Sandwich, if not the term itself. An Air Sandwich is what happens when the leadership within an organization issues orders from 80,000 feet and lobs them down to the folks at 20,000 feet. A former Autodesk employee talks about how air sandwich prevented vision from being realized…

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The Fundamentals of Innovation

As the economic environment stabilizes, there's a temptation for executives to return to business as usual. And although much about the future of the economy is uncertain, an expert says that a return to the recent status quo would be a colossal mistake…

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Chips with “Designer Salt”

PepsiCo will soon introduce a secret new ingredient that improves the healthfulness in its Lay's potato chips: "designer salt" whose crystals are shaped and sized to reduce the sodium intake consumers ingest with each chip. Pepsi recently pledged to reduce the average sodium per serving in its products by 25% over the next five years. As consumer and government pressure for healthier food products mounts, PepsiCo's move attempts to get ahead of the curve of potential demand shifts or new regulations…

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LEADERSHIP & ORGANIZATION

How to Survive in an Unhappy Workplace

When you don't like your job, going to work every day can be a challenge. Your problem might be with a bad manager, that you constantly feel stretched to the breaking point, or that you are resentful about taking a pay cut. Or, the whole environment may just feel toxic. You might need to stay in your job because it provides health benefits, or maybe you're only staying while you look for another position. Whatever your reasons for being unhappy, you need to maintain your professionalism and prevent a bad attitude from sabotaging you. The principles you need to remember: 1. Differentiate between what you can change and what you can't. 2. Take responsibility for making a change. 3. Focus on making the best of a bad situation. 4. Don’t assume nothing will ever change. 2. Don’t allow negative thoughts to rule you. 3. Don’t go it alone…

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What Makes Us Happy?

What makes the human heart sing? It is not about great wealth, good education, or high IQ, It is about strong ties to friends and family and commitment to spending time with them. There are three components of happiness: pleasure ("the smiley-face piece"), engagement (the depth of involvement with one's family, work, romance and hobbies) and meaning (using personal strengths to serve some larger end)…

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Does Your Passion Match Your Aspiration?

Leaders who create extraordinary new possibilities are passionate about their mission and tenacious in pursuit of it. Many people have good ideas, but many fewer are willing to put themselves on the line for them. Passion separates good intentions and opportunism from real accomplishments…

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Critical Insights Vol. 1 Issue 5

ECONOMICS & MACRO MARKET

According to the Conference Board, its Employment Trends Index rose in February for the sixth consecutive month and now stands at 93.5. Furthermore, US Net Employment Outlook has turned to positive (8%) for Q2 2010. The rising indicators show that job growth is about to begin.

Dow Jones Industry Average closed at 10,566.02 today. It has gained 4,009 points since its 7,600+ point fall to 6547.06 on March 9, 2009. This recovery is not yet finished; it is likely to approach 12,500 before another major correction.

STRATEGY & MARKETING

Choosing a Marketing Plan: Traditional or Social Media?

Social media has been increasingly considered as a media for marketing promotion. Marketers are eager to learn whether it actually works. EPC Cigar Company decided to promote its brand using social media, which allow the company to communicate directly with cigar buyers, retailers, tobacco growers and others with whom it does business. “To have a lot of people talk about the limited-edition cigar after only a few months, in a market that’s challenged, in an industry that’s not really growing, is very exciting,” The head of the ad agency said…

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Trading Places: A Smart Way to Change Your Mind

Placing ourselves in other’s shoes is an approach which smart professionals often take in their business practice. The common problem, however, is that we often got it wrong when it comes to take others’ perspectives. Maxine Clark, founder and CEO of Build-a-Bear Workshop, switched companies for a day with Kip Tindell, cofounder and CEO of the Container Store. Both outfits are big, fast-growing, passion brands in the ultra-competitive world of retail — although they have little in common in terms of target customers, in-store zeitgeist, or corporate missions. Take a look at what they had gained from the switch…

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The Devil Is in the Detailing

Executives who strive to improve the effectiveness and lower the costs of their businesses are often frustrated by the fact that they have run out of ideas. In fact, opportunities can often be uncovered by diving down to the details. In pharmaceutical industry, for instance, marketing efforts usually focus on physicians who prescribe higher volumes of drugs. However, an analysis of prescription data suggests pharmaceutical companies should focus on a more refined target: heavy prescribers who treat higher percentages of new patients, since patients are seldom switched to a different drug within a specific drug class, even if they switch doctors and the likelihood that a physician will choose the last drug prescribed for a patient is greater than 90%...

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INNOVATION IN BUSINESS & TECHNOLOGY

‘Natural’ UI Will Be the Wave of the Future

There's a new computing revolution coming and it's not based on a keyboard and a mouse. Instead, it will be based on touch, gestures, spoken language, and even painting -- what is becoming known as "natural user interface" or NUI…

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Nike: Alive and Kicking

Nike has a research & development process that is very well aligned with marketing objectives. It hopes that the two-pronged approach – the detail of product innovation and "premium club" feel of online – will give the global sports company the edge when it comes to its titanic battle with the two other sports behemoths – Adidas and Puma – for supremacy in the sportswear and leisure market…

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New York Isn’t Silicon Valley. That’s Why They Like It.

When it comes to selecting a place for innovation, people usually think of Silicon Valley. However, New York has become a hotbed of innovation, with great infrastructure, tech customers in backyard and sources of financing right in town…

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LEADERSHIP & ORGANIZATION

Why We Don’t Always Choose Our Favorite Option

If you are like many people, you enjoy chocolate and eat it frequently. That’s okay, you might think. After all, chocolate has antioxidants and it boosts your mood. Although this may be true, it is not the real reason why you eat chocolate: it is just a line of reasoning you follow to feel less guilty about eating something high in fat and sugar. People often rationalize in this way, telling themselves stories of sometimes dubious merit to justify their behavior. A research at Northwest University shows how rationalization—once studied mainly in psychology—impacts choices and can help economists understand why people make decisions that violate standard economic theories…

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Toyota's culture faulted in recall crisis

Toyota has not been very effective in terms of responding to safety and quality problems. Expert observations show that some of the dysfunction at Toyota that has come to light as part of the company's recall crisis is caused by culture...

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Confronting the Problem Personality

As a manager, you are responsible for your team members’ performance and their job satisfaction and yet you don’t always have the power to choose the ones whom you work with – you may get stuck with someone who has nasty personality. In this article, an expert shows you how to turning a managerial liability into an effective and empathic leader…

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