Connecting with China’s Consumers

Western businesses won’t break the Chinese market with ambition alone. It takes patience, research and knowledge of the market’s consumers. Understand the customer and you will know how to position, alter and grow your offering.

To think that China is a homogenous or static market would be a huge mistake. Criticaleye’s Global Conference Call, Understanding China’s Consumer Landscape aimed to drill down into the complexities of consumer behaviour.

Michael Crompton, General Manager for Asia at Criticaleye, said: “Understanding the consumer is so important. The company − its brand, its product or service and everything it stands for − has to match the desires in the marketplace. Work out what people are passionate about and appeal to that. Also consider product differentiation depending on whether you enter a basic, mid-range or premium market.”

Here are some of the key points to emerge from the call:

Foreign vs Home-Grown 

David Comeau, former President for Asia Pacific at Mondelez International, which owns brands, including Oreo, Chips Ahoy! and Belvita, explained that you can’t just export a Western idea and hope that it’ll stick.

“It’s not simply about bringing a product or idea to China, it’s about how we understand what the Chinese want and do it in a way that feels home-grown,” he said.

To tackle this, David gave his Chinese team the freedom to tailor the brand communication and new product pipeline to suit the market. “We gave them ownership, we set them creating messaging around the brand that made sense to the Chinese consumer so it felt home-grown,” he said.

Remember you will be competing against a rising number of domestic brands, many of which are enjoying growing customer loyalty.

Anne Stevens, Criticaleye Board Mentor and Board Trustee for charity Over The Wall, reflected on the market changes that have occurred since she was Vice President for People & Organisation at Rio Tinto Copper, where she led the people strategy and practices across the Americas and Asia Pacific.

“There has been a rapid amount of change in a relatively short space of time; businesses and products are now viewed differently. In particular by millennials and younger Chinese consumers,” she noted.

“Previously, we saw a lean towards Western products, for example Prada and Burberry in luxury fashion, but now there’s a move towards local brands. Leaders need to stay on top of these changes and tune into what the market is telling them.”

Take Advantage of Trends 

A taste for domestic brands is not the only consumer trend in China and understanding more of them helps you position your product or service.

Chris Riquier is Board Director at Foxley, a platform for website design and online marketing; prior to that was CEO for the market research and market information group, TNS Asia Pacific, where he gained insight into the Chinese market.

On the Conference Call Chris noted some trends that Western companies have done well to adapt to; one of which is the growth of domestic tourism, which outdoor clothing company The North Face has taken advantage of. “Previously, their advertising in China was very much directed at Western experiences such as trekking in The Alps, now it’s directed at urban Chinese who want to experience rural China.”

He also explained that uniqueness and self-expression are of growing importance among Chinese consumers. “Individuality is an intoxicating taboo that is growing within the marketplace and according to research, 64 per cent of consumers within Beijing and Shanghai agreed with the statement: ‘I don’t like it when I see others wearing the same clothes as me,” he shared.

Understand the Channels 

According to Iñaki Amate, Group Director for Greater China at Fjord, Western companies often underestimate the power of digital platforms in China, especially those on mobile.

“It’s important to understand why people behave as they do and why people in China consume media in a different way compared to other markets,” he said. “Always test before you enter, and not just segments; create the persona of the different users before you create the products and services. In a market like China, which is so broad, it may sound challenging but you need to go one level deeper.”

Take the pervasive WeChat, for example. While it is similar to an instant messaging platform like WhatsApp, it also has a payments platform, meaning consumers can order food, taxis, manage their money, sort utility payments, pay traffic parking tickets, check the weather – it has a long list of uses and owner Tencent is constantly developing it.

Chris said: “I come back to a Western market and see the messaging apps we have; they seem positively archaic compared to China. Brands have to be aware of this if they are going to connect with consumers.”

When David was at Mondelez he realised the company had to adapt to the rise of ecommerce in China. “We saw other companies [start] on [nothing] and grow unbelievably quickly – for example, we saw a Chinese nut company called Three Squirrels go from zero to more than 200 million sales online. We weren’t growing like that,” he explained.

That’s when Mondelez started partnership discussions with companies, including internet service portal Tencent and the ecommerce company Alibaba, to develop the business’ online mindset.

“That was a huge win for the organisation in terms of incremental growth. A lot of growth will come from those channels as consumers develop stronger online habits; this is happening elsewhere but China’s leading the way,” said David.

Partnering isn’t a Necessary Evil 

There’s often a presumption that China plays by different rules. One of these is that you must join forces with a Chinese entity to get your business off the ground, but this is not always the case.

Chris at Foxley noted that it’s difficult to make a generic statement about partnering and the best course of action, be it a joint venture, M&A, investment or going in alone. “It’s contingent on what market you are going into, your company and products or services,” he said.

“Apple is an example. Where it has strong products it’s going in alone; where it feels less able to compete it’s going down the partnering or investment route – for example, it has invested $1 billion in the app-based taxi company, Didi Chuxing, which is Uber’s main rival.”

If you’re going to form a partnership, be it via a joint venture with a commercial partner or another type, it must deliver discernible value and include clear roles for those involved. “Partnerships in China need to be seen as a good thing. It’s a real chance to create a ‘one plus one equals three’ scenario,” David adds.

Read more from Chris Riquier, or find out how to organise your leadership team in Asia 

Follow Criticaleye on LinkedIn 


The Digital Dilemma for Banks

Comm update_11 June2Empowered customers are demanding a seamless experience across multiple channels. For traditional financial services (FS) providers, this is presenting a number of challenges as they look to create an integrated, flexible offering which caters to online services, apps and utilises data effectively. As ever, this is easier said than done given the changes required, but it’s clear that failure to move with the times is not an option.

Sandra Leonhard, MD of Digital Channels, Personal & Business Banking at Barclays UK Retail and Business Bank, says: “[A cohesive] digital strategy in FS is customer-centric as well as commercial; it will be disruptive and transformational. The digital strategy will go far beyond a distribution channel and will incorporate digital to drive product changes, transform back-end processes and technology, reinventing the customer interface and evolving the underlying core operating model of the business.”

It means making deep rooted, structural changes to an organisation. Stephen Ingledew, Managing Director for Customer and Marketing, at savings and investment business Standard Life, agrees: “It’s not something that stands alone… it’s integral to what the business is trying to achieve with customers and its commercial objectives. It’s not just about the front-end or having an exciting, engaging website or mobile way of engaging customers … it needs to be end-to-end, up front as well as operationally.”

Sandra adds: “The key is to offer channel choice but to be in line with changing customer behaviour. This means if more customers are demanding… sophisticated digital services, then banks need to evolve and rebalance their offering to remain competitive in the market.”

A similar point is made by Neil Jones, Consultancy Partner at business solutions company TCS (Tata Consultancy Services): “It’s really about understanding what your customers want in the future, and then shaping your digital strategy to deliver those needs.”

Cause for disruption
There is much talk and speculation about how digital is going to change retail finance, particularly in terms of personal interaction and customer service. Brian Stevenson, Criticaleye Board Mentor and Non-executive Director of the Agricultural Bank of China (UK), says: “The branch is going to die just like high street retail is going to die and is dying because people don’t need it anymore… there isn’t a really fundamentally important reason for branches to continue. There is still a need for people to have face-to-face interaction but it doesn’t have to be in a branch the way that people think of it today.”

By contrast, others argue that there is a compelling reason why the branch will remain a core feature of the customer experience. Steve Pateman, Head of UK Banking at Santander, says:  “I have no doubt that technology will play a massive part in the retail and corporate and commercial bank of the future. People will want to have the ability to pay-on-the-move and access information wherever they are… But this is not going to replace the relationship managers.

“It will not replace the branch. You can have the best information system, but if your delivery system with people isn’t up to scratch, then it will backfire. Too many people don’t understand that.”

While the degrees of personalisation may be open to debate, advances in the use of data and analytics have certainly made engagement more complex. Stephen comments: “Our traditional approach to financial services has been to push products out… What the data allows us to do is actually know customers better, engage them on a much more personal basis and then apply how we help them and make things easier for them, based on their experience.”

Banks are in a privileged position when it comes to data, with access to customers’ transactional patterns and often the broader financial make-up of their lives, but many are not taking advantage of this due to restrictive legacy systems. According to a report by TCS from 2013, almost 80 per cent of the 300 FS senior executives surveyed said they were losing opportunities to improve the customer journey in real time due to failings in their existing systems and processes.

Brian comments: “They are relying on core systems that don’t actually analyse the data or produce the data in any way, shape or form that’s user-friendly… financial service providers should ultimately know their customers’ needs better. That should avoid things like mis-selling.”

For traditional financial institutions, utilising information across channels can be incredibly challenging. Neil comments: “You can’t easily change your legacy system… what you’ve got to try and do is build something that sits on top. A good example is Barclays’ Pingit, which enables you to use your phone to send money to someone else’s phone.”

As well as legacy issues, the regulatory environment can be seen as another barrier to digital innovation. Neil adds: “It’s a millstone around the neck of every single financial service operator… the barrier is often: A, the quantity of regulation, and B, how many organisations and regulators interpret it. So ensure you comply, but use compliance to change the way you operate and try to innovate.”

Expect a surge in ‘pure-play’ digital financial service providers over the coming years. While they may not have the scale of established institutions, they may bring brand new ways of providing services and engaging with customers which will cause ripples in a sector that has been set in its ways for far too long. “If you are a new player… you don’t have [the] history and you don’t have to migrate old products to new platforms, or old technology to new technology,” says Brian.

There are some real strategic and operational dilemmas for financial service providers if they are to deal with the transition to digital. What is beyond doubt is that while risk, trust and security need to be managed impeccably, change is inevitable because it is all being driven by the customer.

I hope to see you soon.


New Adventures in Partnering

ImageAt a time when business models clearly need to adapt and change, cross-sector partnerships are a great way to experiment and be innovative. Whether it’s financial services, retail or even housing, boards are being far more imaginative in how alliances with businesses outside their industry are formed and the ways in which they can collaborate to reach customers and open up new routes to market.

Professor Dominique Turpin, President of IMD and Criticaleye Thought Leader, says: “Everyone’s on the lookout for new business models and there’s increasing pressure on brands to come up with ever more innovative ideas that can cut costs while at the same time create a differentiated and valuable experience for the consumer. So it’s about being creative and rethinking the rules of the game.”

Take Barclays’ partnership with Asda, which initially saw four bank branches being moved into the supermarket’s stores. Steven Cooper, Head of Personal and Business Banking for the UK Retail & Business Bank at Barclays, describes the “mutual opportunity” for both brands in providing convenience to consumers, with the added potential that some shoppers may be persuaded to switch accounts or their supermarket of choice.

“Not all Barclays’ branches are in high streets where parking is easy, so it’s convenient for customers if they can park in one place and do both their shopping and banking at the same time, and at a time that suits them – Barclays in Asda stores are open seven days a week,” says Steven. “Both Asda and Barclays do and can share customers and we can find cost savings for each other too, so while we contribute towards Asda’s cost base through rent, effectively, we don’t need a Barclays branch nearby, so we save in that way. Ultimately, I hope it will lead to increasing footfall for Asda and increased business for Barclays – and happy customers.”

Another example is Italian food manufacturer Sacla’s proposed venture with housing specialist Unite Students. Jim Waller, Commercial Director at Sacla, sees it as a great opportunity for broader brand exposure.

“We already have good penetration into the student market because something like 80 per cent of students use a pesto product on a regular basis, but we’re now looking to extend our reach and increase longer-term loyalty beyond their student life, when usage traditionally plummets,” he says. “It’s very early days in the discussion but there are some interesting ideas that both parties would like to explore. For example, we produce a cook book and there’s been talk of cooking demonstrations on their premises.”

For Unite, while there will be a financial benefit to such a venture, it’s more that it strikes the right note following a recent rebrand. Richard Smith, Managing Director for Operations at Unite Students, comments: “There’s clear alignment between what both parties want to achieve and we both have similar ambitions with regard to our potential customer base. The benefit to Sacla is to increase their brand exposure and hopefully generate increased sales from that; for Unite, it helps support our wider brand ambitions of promoting life skills and helping students to get more from their time living with us.”

Into the unknown

Of course, commercial arrangements of this kind aren’t necessarily anything new, but they are increasingly seen as a powerful tool to open up different markets. In India, for instance, where joint ventures have traditionally been the preferred choice, the partnership model is flourishing.

Arbinder Chatwal, India Advisory Services Leader at professional services firm BDO, says: “A number of companies we’ve worked with recently are going into the market with a more indirect model, just looking to dip their toe in the water so to speak. So they’re looking at distribution arrangements and outsourcing in order to get a man on the ground who will see what kind of orders are getting placed…

“Certainly, setting up a presence immediately is not necessarily the right answer. It’s a case of testing the market first in order to decide whether it’s going to work well for you.”

Whatever the nature of the partnership, it’s essential that both companies know how they are going to operate together. Neil Ward, VP and General Manager of Business Operations at internet communications platform Skype, comments: “The real nub of the matter is to keep the core of what you want to achieve in your own hands… A good example would be a company called Lithium, which provides our community model. They’ve built the data infrastructure, so the actual platform on which the community lives, while we host the user experience using our own people, policies and procedures.”

It works best when know-how is shared while autonomy is retained. Laura Haynes, Chairman of brand consultancy Appetite, comments: “Partnering can be more attractive than M&A because it enables you to seize a commercial opportunity without losing brand integrity or independence of business operations. That might be to fulfil the needs of customers in particular markets, or trial something that might be appropriate only for a short period of time.”

As with any arrangement, there will be risks that need to be managed. Dominique says: “Either party might have different dreams and not fully understand the other side’s position. Furthermore, you have to understand the long-term consequences of your relationship, because the context will change [over] time and what worked when you set up the agreement might not provide the same benefits to both parties a couple years down the line.”

Laura says: “Don’t underestimate the responsibility that goes with partnering. The reputational risk and commercial risks in terms of delivery are still high because you have very little control over what the other party’s brand is doing outside your arrangement.”

The details of the agreement need to be scrutinised so that both parties are clear about what’s expected. Get that right and there’s no reason why a partnership can’t be the catalyst for some much needed fresh thinking among both sets of management teams.

I hope to see you soon.


Keeping Cool in a Crisis

Wordpress 19.03.14The media wants answers. Self-proclaimed experts are casting judgements on social media. Meanwhile, inside the business, there’s blame, denial and recrimination. When a crisis breaks, the pressure from all sides will be immense unless you’ve taken the time to prepare for the worst and have a team that can calmly manage the various channels and relay the right message while the problem is fixed.

John White, UK Head of Resilience at KPMG, says: “Perspective, and the ability to appreciate how events and actions will be perceived by all stakeholder groups, plays an important role in the decision-making process. Good decisions are based on good information, and an effective crisis team will ensure they have a tried and tested means of gathering, monitoring, sorting and prioritising information from all sources.”

A similar point is made by Steve Cooper, Head of Personal and Business Banking for the UK Retail & Business Bank at Barclays: “At Barclays we have a dedicated person to lead our reputation and crisis committee. I’m not sure you necessarily need to have a board role for that but I do think you need clarity when a crisis occurs as to who is going to coordinate and pull that together.”

When it comes to communicating events to the media, an informed, joined-up response is essential. Professor Dominique Turpin, President of IMD and Criticaleye Thought Leader, says: “Different types of events call for different responses. Not every crisis requires the CEO to go and talk to reporters but, in all cases, the CEO should be kept informed and be kept close to the action, ready to intervene should the crisis deteriorate further.”

Furthermore, communication is only part of a company’s crisis management plan. Sandy Stash, Group Vice President of Safety, Sustainability and External Affairs at Tullow Oil, comments: “If you think back to The Exxon Valdez disaster [the oil tanker which ran aground on a reef off the Alaskan coast], one of the criticisms was that they didn’t get senior people out in front quickly enough. But, in recent times, I think companies need to be careful that the communications bit doesn’t become the tail wagging the dog.

“Rather than focusing exclusively on messaging, management needs to delve into details about the facts of the response and ask the hard questions … are we putting appropriate resources to this and making the right judgements?; are we doing the right things and being transparent?”

Need for Speed

Social media has undoubtedly made the process of managing a crisis more complex. Kevin Murray, Chairman at PR concern The Good Relations Group, comments: “The level of exposure because of social media and the nature of viral communications means that not only will [a potential crisis] be discovered quickly, but it can go global within seconds. How you respond to a crisis with that kind of speed attached to it has really stretched the capabilities of a lot of comms departments and many are no longer fit for purpose in the digital age.”

However, as John points out, the digital revolution has brought its advantages: “Organisations are now able to use social platforms to communicate with their customers and the media; close monitoring of social media activity can provide a good indication of public opinion and, in some cases, even provide an early warning to an organisation that a reputational crisis could be coming.”

Steve comments: “You’ve got to inform all your stakeholders: customers, colleagues, regulators, politicians, consumer groups; using social media to listen to the mood music… then obviously resolve as much as you can as quickly as possible. And if you can’t resolve it then put alternative solutions in place.”

No company is immune to reputational ruin, whether the cause is through flawed products, dishonest acts by staff, boardroom bust-ups, terrorist attacks or natural disasters. “Best practice in crisis management starts well before a crisis situation occurs,” says John. “Organisations must… maintain a chain of custody for known risk scenarios and ensure that an appropriate investment is made in planning to respond and recover.”

The risks are very real so the time and effort put into planning will make all the difference in the long run.

I hope to see you soon.



Big Data’s Place on the Board

Comm update_19 Nov

The volume of information currently available to businesses, and the ways in which this can be analysed to drive insights about performance, customer behaviour and strategy, has moved onto another level. While ‘big data’ in and of itself won’t provide all the answers, board-level executives increasingly need to sit up and take note of how it can benefit the decision-making process.

Retailers are only too aware of the huge influx of information now at their fingertips, but knowing how to utilise it across various business units is another matter entirely. Fiona Briault, People and Service Director at retailer Asda, says: “The challenge is how you bring all the data together through one part of the business to say: ‘That is what the customer thinks and these are the areas we should be focusing on.’

“At the moment there’s a tendency for data to be fragmented into different business areas… the goal is to understand how you link data together in a complex business to create one story.”

Eddie Short, Partner and Lead for Data and Analytics at KPMG in the UK and EMA, says “What we’re seeing with big data is that a silos-based approach is not always that effective. For example, when you look at some of the big retailers, they’re very good on quotes to the customer and particularly in giving you vouchers and new offers, but they struggle to get line of sight of what that actually delivers to the P&L.”

Look closely

It’s a learning process for businesses, but progress is certainly being made. Helen Murray, Chief Customer Solutions Officer at outsourced contact centre company Webhelp TSC, says: “More bits of information, when they’re pieced together effectively, help us to understand the clients, their propensity to buy, the way they make decisions and how they behave, and their likelihood to either want follow-up support or not. That then helps us to make decisions about how we treat each individual.”

For Steve Parkin, CEO of Mayborn Group, which makes baby and child products, there has been a concerted effort to break down the profile of customers in order to gain a better understanding. “You’ve got to build loyalty though an emotional connection and be very clever with your rational call to action to drive purchase behaviour,” he explains.

“We’ve segmented our marketplace down into six different consumer typology groups… [and] with the data that we’re capturing, we can understand the typologies of mums on the database that we’re building.”

Mark Wood, SVP and Managing Director of EMEA for US-based cosmetics firm Revlon, comments: “We’ve invested a lot in terms of mapping where customers go on digital and social media and following that pattern to make sure that our brand is always front of mind and that we’re always in the right places.

“[By engaging on social media] customers see that we’re listening to them, that we’re taking an active part in terms of what they want from the brand, and that we’re delivering against that through the conversations we’re having with them.”

Each customer touch point has to be seen as an opportunity to innovate. Neil Ward, VP and General Manager of Business Operations at internet communications platform Skype, says: “We’re using data to blur the lines between a support interaction and a brand opportunity… Beyond resolving customer service issues faster and more efficiently, we’re now seeing that problem solving is a gateway to taking a user’s insight and up-selling to them or deepening our engagement with them.”

Inevitably, this does entail not being afraid to try something different. At Asda, for example, it was decided to stop using a marketing agency to run social media interaction and instead bring it into the customer contact centres. “By running it in-house we can not only respond on social media for more of the working week, because our contact centres are open longer hours, but it also gives us consistency of approach in how we talk to those customers and the messages with give them,” says Fiona.

Game changers

According to some reports, 90 per cent of the world’s data has been produced in the past two years. There may indeed be elements of marketing hype around ‘big data’, but equally it’s clear the ongoing transition to digital has created a whole new universe of information to be explored.

It’s a somewhat daunting prospect. Research by KPMG International, which involved conducting interviews with 144 CFOs and CIOs from multinational companies with annual revenues of $1 billion or more, found an overwhelming 96 per cent of respondents believe their company is not currently using data and analytics effectively. Eddie comments: “The one singular wrong answer is to do nothing. We don’t all have to be data scientists with PhDs in statistics, but I think everybody has to embrace a more data-driven approach.”

Good decision-making involves understanding what your options are. You assess the information at hand, analysing data, speaking to various stakeholders and thereafter a choice is made. What follows next is called leadership, so that the decision arrived at is acted upon and implemented across an organisation. It’s the latter that many businesses need to start concentrating on if they’re going to capitalise on the information now at their disposal.

When it comes to big data, it’s a case of use it or lose it.

I hope to see you soon.


Brand Champions on the Board


The stock of the CMO is rising as boards realise that you can’t dismiss ‘brand’ as a buzzword. At a time when loyalty is hard to come by, clued-in directors fully appreciate that a strong and trusted brand is the difference between those organisations which have a bond with their customers, shareholders and employees, and those that are marginalised and mired in an identity crisis.

“There is a general awakening to the power of brands across the board level,” says Stephen Smith, Chief Marketing Officer at supermarket chain ASDA. “A transition has taken place from reputation management to brand management, stemming from the many crises of reputation which have damaged or even destroyed companies and their brands.”

Whether you’re B2B or B2C, you need brand champions in the boardroom. Catherine Green, Marketing and Communications Director at international construction and consultancy firm Mace, says: “Really understanding what makes your business different and better from the competition is all wrapped up in your brand strategy. Boards need to be much more fluent in this because employees and consumers are savvy about values and whether they are authentic… What people say about your brand through social media and third-party endorsements is now much more important.”

Nicolas Mamier, Managing Director at brand consultancy Appetite, comments: “Brand is an organising principle not an extension of the marketing department. It’s too important to be left only to the marketeers, however good they might be, because if a trusted brand means a trusted organisation, it simply must command the attention of the C-suite.”

Traditional consumer behaviour has been atomised by the financial crisis and convergence. “Brand loyalty is nowhere near as strong as it used to be because consumer promiscuity is up,” says Steve Parkin, CEO of Mayborn Group, which makes baby and child products. “Boards need to work a lot harder on getting that interface back with their consumer on a one-to-one basis, which means new techniques are needed to build a connection with your consumer and maintain it, so that loyalty is never taken for granted.”

Pam Powell, Non-executive Director at Premier Foods and formerly Group Marketing Strategy and Innovation Director at brewer SABMiller, says: “In this market, you’ve really got to earn your customer loyalty. Strong brands can communicate quality and reliability so there’s a reassurance in the value you’re getting, where as weak brands will be shown up in this respect.”

This goes beyond customers. Ian Wright, Corporate Relations Director at Diageo, which controls some of the biggest alcohol brands including Johnnie Walker and Guinness, says: “Institutional investors are more discerning about where they place their funds and apportion investment… The way you gain the confidence of investors and get them to stick with your business is by having a great brand. It represents a reason for confidence in the management of your business.”

Out with the old

If a brand has lost its allure, or has been compromised, you have to act quickly and decisively, either opting for a substantial rethink about how to establish relevance or axing it completely. Before joining ASDAStephen was tasked with replacing a range of shops called Kash n’ Karry with a new brand, Sweetbay. The former had been in steep decline and, having changed its strategy and leadership team on several occasions, had lost customer loyalty.

“Any transition starts with people offering you a new choice but finishes with taking the old choice away,” says Stephen. “We were very clear that one was gracefully retiring and that there was something brand new sprouting up in its place… 

“When you’re making dramatic changes you are quite dependent on new customers coming in and reappraising you. Of course, you’ll always have some detractors who liked the old store and didn’t want something shiny and new, but the ultimate goal is to have more people coming in than going out. You have to try and stay ahead.”

If a global rebrand is necessary, clarity on what the business stands for is paramount. “The project that we did to refresh the BBC brand was all about understanding how we could make the brand work across all of the countries,” says Peter Horrocks, Director of BBC Global News and World Service. “The challenge is: how do we make it more engaging while still maintaining the authority and trust that there is in the brand?

“When you’re talking about a global organisation with a variety of products, [the brand] needs to be something that is unifying and that hits the sweet spot for multiple countries… if you can get that right it can be tremendously powerful because you’ve got massive scale to work with.”

Companies must always be on the lookout for new ways to get their message across. “A brand is the ultimate differentiator,” says Professor Dominique Turpin, President of IMD and Criticaleye Thought Leader. “Great global brands stand out, and they make our lives easier, better and cheaper. Nobody wrote an e-mail one day to Steve Jobs saying they needed an iPhone or iPad. Very few business leaders ask themselves, ‘What are my customer’s headaches?’ But this is such a good question. Provide a product or service that solves a customer headache and you’re on the right track.”

Steve comments: “In terms of what drives our brand strategy, it’s all about consumer recommendation. If we can get mums talking to other mums positively about their experience with our brand, particularly with the onset of social media and digital, that’s the number one driver that gives us the trust in our brand.”

There is a tendency among underperforming boards to only realise how vital a brand is after a calamity has occurred, or a competitor has stolen a march on them. It takes years of investment and personnel change to try and regain former glories. Some never get it back. 

Don’t be one of those businesses. 

I hope to see you soon.


What’s So Scary About Social Media?

Comm update Faces - 28 august1

Executives have an irrational dread of social media. They instantly go on the defensive as they imagine endless breaches of trust and the horrors of shredded reputations. In most instances, it’s way over the top as none of this is overly complicated or taxing – it’s just another form of communication which needs to be understood and managed like anything else.

It’s about taking an interest and knowing what the boundaries are. Paul McNamara, Managing Director of Insurance and Investments at Barclays, says: “From time to time I will ‘join the conversation’ or share thoughts or ideas I find interesting. These could be on significant topics like retirement, financial planning, use of technology… equally, it could be on a simple observation from during the day.”

For Phil Smith, CEO for UK & Ireland at Cisco Systems, social media is a “useful way of providing a concise and current update to a wide community who can typically receive it in a convenient form, which is usually mobile”.

The value lies in it being quick, easy and direct as opposed to putting out messages through laboured, endlessly re-worked press releases. Adam Bates, UK Head of Foresight and Innovation at KPMG, comments: “Not enough UK board members use social media to interact with customers or to show their own people that they are not boring, grey-suited and dyed-in-the-wool…

“The reality is that if they are sensible, don’t give away market sensitive information and talk in general about things that are happening, they are not going to get into big trouble and it’s a great way of communicating with their different types of stakeholders. People are just too cautious and the risk dial is probably turned up too high.”

Test the Waters

Beyond the more established social media channels like Twitter, Facebook and Linked-In, newcomers like Google+, Pinterest and Instagram are gaining traction among the business community (Snapchat might be a bridge too far).

Helen Murray, Chief Customer Solutions Officer at outsourced contact centre company Webhelp TSC, says: “The more I use social media channels in different ways, I get a better feel for how people respond to the information that’s out there and the speed at which they respond. Very often people will comment on a tweet or Linked-in post in minutes, wanting to get a more in-depth view of our opinion because they can see we have some understanding on the topic and that we can add some value to the discussion.”

It’s a case of experimenting and finding your voiceAndrew Powell, Chief Operations Officer at Colt Technology Services, says: “I started using social media about two years ago when our brand team came to the executives and said: ‘Look, none of you guys are using it and you’re missing a trick because this is where the future employee base will live, breath and operate…’

“It’s been a real watershed for me at Colt and has opened up conversations with people who in the past have been very nervous about hierarchy and reserved about approaching and raising business issues.”

The general view from those who’ve ‘done it’ is that it’s not so scary an endeavour after all. Peter Cheese, CEO at the Chartered Institute of Personnel and Development (CIPD), comments: “There are CEOs I’ve come across who are terrified about how much time it takes. And I must admit, before I crossed the Rubicon and embraced social media that was one of my fears.

“My marketing team were constantly saying you’ve got to get on Twitter and I was saying: ‘Well, I haven’t got time for all that, what with all the emails, articles, blogs and meetings I have to attend to… But it’s not that onerous at all.”

Perhaps one of the biggest risks is discovering whether you’ve actually got anything of interest to say. Andrew comments: “If I just re-tweeted or sent Colt corporate messages onto Twitter all the time, people would soon be turned off. You have to give a little bit of yourself and give a little of what you’re thinking to a much wider audience than your company’s employees.

“I have about 700 followers, only about 150 of which are Colt employees, and to have any credibility in this space you have to show you are a human being by expressing your opinions. It’s not just a corporate messaging system.”

Phil says that statements have to be differentiated from the brand messages or “it can be seen as just marketing” and he’s learned to adapt his approach over time to become “very casual and personal”.

Fine Lines

If there is a danger, it’s being unclear about how those within an organisation are communicating. Helen comments: “We take quite a structured and planned approach. We have customer-facing social media experts who also invest their knowledge internally, to help us understand how to use it.

“We also have people in our comms and marketing teams who see things from the brand perspective. We use them to build a plan around what we want to say and between the three or four of us on the board that use social media, we agree who’s most appropriate to respond… if there’s any ambiguity we’ll have a conversation about it, but we’re keen to each have our voice and our own style.”

Yetunde Hofmann, former Global HR Director at Imperial Tobacco, says: “The risks of social media are the same as any other form of written communication, it’s open to interpretation by the reader and therefore the intention of the writer might be completely misunderstood. It’s fine if you’re just providing links and neutral comments, but the minute you’re starting to give your opinions and commentary on other people’s work or responding to questions, therein lies the danger.”

Like any communication, timing and delivery have to be tailored to the situation. Chris Merry, CEO of accountancy firm RSM Tenon which was taken over last week in a pre-pack by Baker Tilly, was not about to start using Twitter to inform employees and shareholders about what had happened.

“We didn’t use social media,” he says. “Rather, we did the usual RNS [Regulatory News Service] announcement via the London Stock Exchange, then I recorded a video which all staff can watch and then there will be a series of presentations in offices which supports the initial written announcement.”

Common sense plays a part in this, as it does with all internal and external communication. But avoiding social media channels completely, or having a half-hearted approach, will only serve to create a negative view of both yourself and the business you represent.

I hope to see you soon.


Say Hello to the Digital Native

Comm update Face - 6 august

If only sauntering into a board meeting with the latest tablet was enough to make you au fait with the technology revolutionising the business world. To really help bridge the knowledge gap, a growing number of companies are recruiting ‘digital natives’ or have created ‘shadow boards’ and ‘reverse mentoring’ programmes, whereby those who lack seniority but understand digital can teach executives what they need to know.

Debbie Hewitt, Non-executive Chairman of clothing retailer Moss Bros, says: “I’ve seen digital natives appointed and also shadow boards used as a way to supplement a board’s digital skills. Both can work and provide a way of getting all directors up-to-speed on the trends and also in thinking differently about how a business might develop.”

It makes sense to bring in true advocates for harnessing data and using social media. Cath Keers, Non-executive Director for telecommunications concern Telefónica O2 Europe and Home Retail Group, comments: “I would be in favour of anything that would help boards understand the consumers and businesses they serve, whether that’s through using digital natives, shadow boards or just getting people to use it more and putting them in situations where they’re with customers, so they can see how they use it.”

Be that as it may, there is a danger that in some companies these measures could result in a deferral of responsibility, confirming prejudices within the minds of directors that ‘this is just for kids’, and therefore excusing them from their duty to get to grips with the impact of new technology. Peter Horrocks, Director of BBC Global News and World Service, comments: “If boards aren’t fully grasping everything digital, it’s not necessarily a generational issue. I’m in my mid-50s and I’m a digital enthusiast, so I think it’s more about attitude and people’s preparedness to change.”

Bill Payne, General Manager of Customer Experience and Industries for IBM, regards the lack of understanding on many British boards as disturbing when it comes to implementing a multichannel strategy. “Shadow boards, digital natives – for me, these are somewhat ridiculous and obscure distractions,” he says. “It’s another example of leaders living in denial about why they have to be the agents of change. It’s not a generational thing – it’s a vision thing.”

The goal is to link up bricks and mortar, web, mobile, contact centre and social customer contact. If driving such integration is not a boardroom issue, it’s hard to know what is given that it requires investment and a shift in strategy. Peter comments: “It’s slightly unrealistic to say that you could have an alternative management structure. There should always be clear, single accountability at the top of organisations. And for digital to be truly successful it’s got to be integrated into the existing business.”

By way of example, Simon Johnson, Group Managing Director for UK & International at publisher HarperCollins, has recruited individuals who can crunch data around pricing of the company’s e-book catalogue. “I now have a team of PhD mathematicians who put code together, manage big data sets and are engaged with the board – [who] understand the context of the data – and they use that to provide recommendations on how we should price our catalogue on a real-time basis,” he says, adding that so far the results have been powerful but a whole lot more can be done in this area.

Sure, initiatives like shadow boards and reverse mentoring won’t do any harm, but they have to be complementing a more fundamental involvement from directors. According to Jason Keane, CEO of video service delivery company Saffron Digital, “you need a digital tsar who not only understands the digital channel but also the existing channels and where the business today is very successful”.

Without passion, know-how and engagement, a company is going to struggle. Besides, it’s not enough anymore to just have a multichannel presence – that ship sailed long ago. “The skill comes in knowing how to get a return on investment from digital,” says Jason.

For the CEO and chairman, the challenge is to decide exactly how to drive the agenda. It’s a case of looking at the board and themselves to see if everyone is collectively prepared to adapt and become natives in the digital landscape.

If not, then it’s time to look for replacements.

I hope to see you soon.


For a longer version of this article, please click here

The Great Retail Migration

Community Update Faces - 9 July 2013The exam question for traditional retailers is: ‘How do you devise an integrated model that reinvents the customer relationship without destroying the existing one?’ A polite answer might go along the lines of ‘painfully’, as the transition to multichannel requires heavy investment, an unsentimental approach to change and a way of interacting with customers that continues to be swathed in unknowns.

Debbie Hewitt, Non-executive Chairman of UK menswear specialist Moss Bros Group, says that “retail management required single dimension thinking ten years ago and that has changed significantly in recent years; it’s much more multi-faceted now”.

Customers want more than just neatly stacked shelves. John Allan, Chairman of electrical goods chain Dixons Retail, comments that the financial situation has made “customers more price-conscious and that’s probably increased the tendency to do more research, make comparisons and use the internet for purchases”.

Debbie adds: “Successful retailers have to be more analytical and understand consumer buying behaviour, retention and loyalty, alongside price. There are so many different buying channels and the interaction between them all is vital to managing customer satisfaction and customer profitability.”

It’s led to a rethink about bricks and mortar, online, supply chains and brand. Alan Giles, Chairman of clothing brand Fat Face, says: “Most retailers are still struggling to provide a truly seamless experience for customers across multiple channels. The constraints of legacy systems and organisational and cultural barriers are gradually being overcome, but for established retailers there is no instant solution.

“Many retailers have too much physical space, so it is important to engineer more flexibility into leases and find ways of either reducing or making better use of existing space.”

Matt Crosby, Director at global management consultancy Hay Group, says: “What you do with your stores is important because they can quite quickly turn into albatrosses… You have potentially long, expensive leases, ground rent, public opinion about moving into locations, or public objections about leaving an area because of the negative impact it might have locally on a town centre.

“So where should you have a store and what should that store experience be? Will stores become a brand experience, a shop front for what is essentially your e-commerce offer? Or something else – a different retail mix entirely?”

Bricks, clicks and a cuppa

There are plenty of examples of retailers mixing it up, from the way pet-shop chain Pets at Home utilises its space within its stores to include grooming salons, veterinary treatments, health checks and nutritional advice, to the hipster assistants in Apple’s retail stores with their remit to provide detailed product knowledge. Another example of the drive to be different can be seen with pop-up shops, whereby landlords with empty space allow retailers to temporarily move in and try out new ideas.

Naomi Wells, Head of Future Planning and Sustainable Development for the retail chain Waitrose, which is a part of the John Lewis Partnership, says: “We launched a unique membership card last year which recognises and rewards customers with tailored promotions and experiences, including a free coffee or newspaper every time they visit a branch.

“It has been hugely successful in giving customers [an added] reason to visit stores… Consumers are not as brand loyal as they [once] were and retailers are really having to entice, value and… look after [them].”

Rachel Barton, Managing Director of Accenture’s Sales and Customer Services division, says: “There’s an opportunity for stores to go through some kind of reinvention to embrace the latest technology that is available right now, and make stores interesting and exciting places which have seamless integration across channels.”

As can be seen around the UK, if stores are in undesirable locations or simply don’t warrant heavy investment, retailers are exercising break clauses or letting leases run their course. Other alternatives include creating a ‘click-and-collect’ service, sub-letting the space or creating exclusive showrooms. Time will tell whether some of these ideas are borne from inspiration or desperation, but clearly they demonstrate the need for a dramatic flight from the old school of retail.

“The downturn has forced retailers to push on with digital strategies and those retailers who don’t have a well-thought through digital strategy are basically dead in the water,” says David Soskin, Chairman of SEO specialist Smart Traffic and Non-executive Director of price comparison website Mysupermarket.

John says: “It’s learning to live with the internet and seeing it as a positive asset to building a business and a relationship with customers. For the store portfolios, it’s about recognising that because of changing shopping habits – particularly internet shopping – you don’t need as many large stores as would have been the case historically. That, of course, leads to pressure on high streets and some of the weaker shopping parks and centres.”

Retailers are broadly in agreement about where they need to be strategically, it’s how to get there on an operational level that remains a matter of interpretation. What the upheaval has done is remind everyone that unless you focus on the customer, you really don’t stand a chance and that means you have to work feverishly hard at winning their loyalty.

I hope to see you soon.


Five Steps to Achieve High Growth


No-one succeeds in isolation which is why high-growth companies need access to a clear network of support, encouragement and advice. It’s frustrating when you see that a fantastic business with huge potential has faltered in that journey from toddler to titan because management lacked that crucial bit of experience, or didn’t quite know where to turn in order to get the finances right.

It is a risk for the founder of a successful private company, which provides a secure and comfortable lifestyle, to raise the stakes and go for high growth. Here are five of the most common barriers which need to be overcome:

1) Working capital and finance

Richard Barley, Director of Deal Origination at private equity firm LDC, comments: “You don’t want to be overtrading, especially as a business starts to grow quickly. In past recessions, what’s been found is that as economic conditions improve there is a spike of businesses going under because of a lack of working capital.”

It’s easy to be overwhelmed by success. David Soskin, Chairman of SEO specialist Smart Traffic, says: “If sales appear to be going up, then everyone is feeling good and that is a danger because you have to be paranoid when sales are rising quickly. You have to watch your finances even more closely than you would in a company that’s growing stably as obviously there are huge implications on cashflow and, in many cases, the quality of the debtors.”

As important as it is for a growing company to remain agile, it’s easy for CEOs to become distracted and dazzled by opportunities. “It’s tremendously challenging for SMEs to turn down business and this is why overtrading is such a problem,” says John Williams, Head of the Breakthrough programme at Santander.

Terry Stannard, Chairman of interior furnishings group Walker Greenbank, says: “If you’re in a start-up phase and you’ve got some initial funding, even if that’s pretty small, the key thing is to plan ahead with cash in mind. You don’t want to get carried away by all the opportunities… as you need to understand that when that first round of funding is exhausted, you must have a pretty good story to attract some more.”

2) Listening to the customer

Customer-centricity should be a priority for any business, but early-stage companies can be naïve about how vital it is to interact with customers and shape innovation accordingly.

Jay Patel, CEO of mobile data provider IMImobile, says: “The single biggest danger I’ve seen is that people get preoccupied with a product rather than focusing laser-like on what the customer wants. It is something that needs to be watched as the customer needs change and you will never get it right by producing a product in the abstract.”


3) Evolving management & culture

For many CEOs, this is the number one challenge because as a company shifts through the various stages of growth, the skills and expertise required to make the business successful will be different. David says: “The faster a company grows, the more pressure it puts on the top team. There are some people who thrive in a very demanding environment – others don’t.”

Henri Winand, CEO of fuel cell business Intelligent Energy, comments: “When I came in, I set the expectation that every 12 to 18 months we would have a major organisational change. You need to be able to work out how to execute that without breaking the business, because if you change too quickly or too slowly it can [cause problems].

“But you have to constantly think where you are going to be in two years’ time and the reason for that is because any change we implement can take between 12 to 18 months to stick, and then a few more months to basically operate and ripple through the business.”

This is where the CEO and senior management team earn their stripes (and the introduction of experienced non-executives can add significant value) as they address conflict and tension within a changing business. Maria Pinelli, Global Vice Chair for Strategic Growth Markets at professional services firm Ernst & Young, says: “You start out as an entrepreneurial, innovative, fast growth company and you want to sustain that growth, but what’s difficult is that you need to do that while building infrastructure, systems, processes and controls.”

4) The case for partnerships

Joining forces with another company may have its dangers, but it can be an effective way to gain new business. Rob Wirszycz, Non-executive Chairman at technology consultancy Portal, comments: “You’ve got to deconstruct your routes to market through all stages of the buying and selling cycle, and you’ll then be able to work out where you may be able to benefit from a partnership.”

Bill Payne, General Manager of Customer Experience and Industries at IBM, says: “Many business leaders have a sales strategy that overlooks the opportunity to use partners as an indirect sales channel. It’s easy to be overly focused on organic growth from your own direct sales team, but young dynamic businesses cannot afford the luxury of time to grow and so using a partner channel becomes second nature to them. In particular, SMEs have a significant opportunity to expand their selling if they understand how to sell through a larger enterprise or specialist partner.”

5) International expansion

Headaches and heartbreak, that’s what international expansion can bring to a business if done in haste. The added cost, bureaucracy and problems around staff recruitment can be a massive drain on what domestically may be a very successful business.

Terry says: “It’s usually better to establish the business profitably in the UK and start to properly do due diligence and find out the opportunities overseas in terms of the best model for expanding, whether it be agents; distributors; joint ventures; acquisitions – for the very biggest companies; where your priority countries are; what product is likely to succeed; and whereabouts the competition is not so entrenched. But all of that needs to be done at the appropriate stage of growth.”

There has to be significant commitment and planning. Steve Jones, CEO of pharmaceutical company Special Products, says that attention must be given to recruitment and that, although an international strategy is often necessary, you can’t underestimate the time and investment it requires, along with the knowledge that there is no guarantee of success. “It always takes longer than you think it’s going to, so if you’re in any way half-hearted you’ll do your profit lines all kinds of damage.”

However, an international strategy, executed properly, will take a business to the next level. John says: “Fast growth businesses are obviously not all international businesses, but they should be thinking internationally, either in terms of their own growth outwardly or a consciousness that international competitors will be entering this market.”


There will be those who scoff at the idea of year-on-year double-digit growth presenting a “problem”. But it is necessary to have an eco-system whereby real entrepreneurs feel confident about maximising the potential of their business, so they can go on to conduct an IPO, find backing from private equity or some other heavyweight private investors.

Any attempt to back ambitious businesses should be welcomed, such as the recent move by the London Stock Exchange to bring in a High Growth Segment which will help niche companies wishing to transition to the Main Market. “It’s part of a longer term and wider dialogue about how to make equity aspirational for investors and management teams again,” says Marcus Stuttard, Head of UK Primary Markets at the London Stock Exchange.

Whatever the path taken, it’s all about ensuring businesses don’t lose momentum. John says: “If there is a single biggest barrier to growth, it is finding a willingness within the management team to drive for growth as opposed to settling for business as usual.”

And who wants that?

Certainly not Henri at Intelligent Energy: “Without a shadow of a doubt, this is going to be a huge business. The reason for that is we have excellent technology and it is proprietary. This, combined with the demand for [energy] efficiency… all points to our technology being a significant player.”