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December 2005

This month’s newsletter is from the Philippines.

Location: A remote fishing village in the Luzon province of the Philippines making a subsistence living of fishing.

Project: To increase the income of the village.

Action: To package and transport the fish to urban centers and place the product on supermarket shelves.(The project involved product development and design, packaging, distribution and promotion)

Traditional subsistence fishing model

The traditional model for the village was to catch enough fish to supply the village with its staple form of nutrition, and try to sell the remainder to anybody willing to make the long trek to the remote village. Wholesalers would drop in occasionally to purchase fish at low prices if fish at easier to reach locations was not available. As a result of the subsistence model the village stayed put; and in poverty as no attempt to sell their catch was made as a result of lack of funds and knowledge.

The new model

Enter a consulting team of management consultants, hired by an NGO, which formulated a plan to increase the catch, package and transport the product to metropolitan areas and promote the product in supermarkets.

Food packaging equipment was purchased and donated to the village. A brand name was chosen and artwork was designed and labels printed. A logistics company was hired to have a refrigerated truck make regular stops to the village. Favors were called in and a large supermarket chain agreed to stock the product.

Success

It was a great success. There was instant demand for the product. Seeing that there was increased demand, the fishermen caught more fish, packaged the product and shipped it off to the city. The supermarket promoted the product and made a healthy profit. The village’s income increased multifold and families were able to afford non staple consumer products for the first time in their lives.

Aftermath

After 3 months, the fish deliveries stopped. The supermarket chain ran out of the product.
Supermarket patrons asked for the out of stock product and substituted as a result. The supermarket tried to cajole the fishermen to continue deliveries but was not successful and all forms of communication to the village were cut off. The supermarket complained to the management consultants and a team was sent to the village to investigate.

Post mortem

The team arrived at the fishing village to find it deserted except for the women and children. The men were nowhere in sight and the fishing boats had been pulled inland and were in storage. Fearing for the worst they investigated the situation to find that the fishermen were in a provincial city nearby.

Arriving at the provincial capital, they found the men in a pub. The fishermen were glad to see the team that had provided them the key to prosperity and ordered them a round of drinks (!), and promptly informed them that they were not fishing anymore. They had made more money in three months then they normally made in two years, and had decided not to fish anymore and spend their newly found wealth to party it up for as long as the money held up. They would only go back to fishing whenever there was an absolute need.

The lesson

Only serve the client that needs your help and needs you to create value for them and is willing to pay for it. Unless the client pays you for the value creation, the value created on their behalf is not of value to them.

Merry Christmas and a happy new year.

 

November 2005

Cultural diversity and problem solving in the multi national setting:

A Sexual Harassment Case


We recently came across a situation in a multi national corporation in New York that involved a sexual harassment case. We were not asked to consult in the matter, as it is not our mission to solve such cases, but I felt that it would be a good subject for this month’s newsletter as it reflects the importance of communicating across cultures, and the gaps that exist due to different paradigms.

The Setting
The setting was a multi-national organization; the alleged offender was a gentleman from Kazakhstan, (former Soviet Union republic) who was supervising the alleged victim, a woman of Filipino origin. The organization tried to settle the matter internally before the matter was litigated and a Japanese manager was assigned to arbitrate in the matter.

The abuse was in through a hand gesture, with the Kazakh supervisor criticizing the work of the Filipino employee and making a hand gesture (incidentally the same hand gesture means different things in different countries). The woman protested that she did not deserve such a comment and asked for an apology, and when that was not forth coming, launched a formal complaint.

After the formal complaint, the Japanese manager and the Kazakh supervisor tried to work things out in a number of meetings before things went to a tribunal and failed to do so. The Japanese manager felt abused and threatened by the confrontational and loud communication style of the Kazakh. The Japanese manager henceforth declined to meet the Uzbek supervisor, and refused to take his calls. The Japanese manager then moved to suggest that a tribunal decide on the matter.

Each of the individuals had 10-15 years of work experience, were University graduates and were used to working in multi cultural settings. The outcome of the tribunal is not clear, but what is important in the case is to understand the cultural paradigm’s of the different individuals as one of the reasons why the matter escalated.

Management Science

Hofstede and Trompenaar’s are the two guru’s of cultural diversity and its effects on the workplace. Both have undertaken research in numerous countries of the world. I prefer the work Trompenaars who based his findings on mid level managers. ( Hofstede’s sample consisted of entry level employees)

Trompenaar’s uses 7 different cultural aspects to view the differences between people.
The subject matter is lengthy and deep and this newsletter is not the place to discuss the matter in detail, but the parameters are as follows:

1. Relationships and rules
The universal versus the particular

2. The group and the individual
Concepts of individualism and collectivism

3. Feelings and relationships
Affective versus neutral cultures

4. How far we get involved
Specific versus diffuse cultures

5. How we accord status
Status by ascription or economic development

6. How we manage time
Orientation to past, present or future

7. How we relate to nature
Controlling nature or letting it take its course

The cultural gap and paradigms of individuals of different cultures
The cultural paradigm’s of each of the individuals differs greatly and has to be considered in great detail. Below are some of the characteristics of the different nationalities:

The Kazakh Supervisor:
Kazakhstan is a male dominated culture. Kazakh women are not expected to shake the hands of Kazakh men. Hard talk, gestures, touching and back clapping between men, loud speech, display of manliness in confrontational and direct approaches are the norm. Sexual remarks, cursing and hand signs are not uncommon.

The Philippine assistant
Filipino’s do not like to be confrontational. Messages are given indirectly. Personal space is very small. Touching between genders and amongst themselves is common. Raising ones voice is considered impolite and rude. It is impolite to say ‘no’ to someone. The Filipino will come up with numerous ways to tell you ‘no’ without actually saying ‘no’ directly.

The Japanese manager
Japanese do not like to be confrontational. Direct confrontation is avoided, with messages given indirectly or through use of different means. Dignity and respect are very important.

Perception of the individuals:
- The hand gesture made by the Kazakh was a reflection of the quality of the work performed by the Filipino assistant and was his way of voicing dissatisfaction.

- The way it came across to the Filipino assistant was that she was being intimidated and invited to have sexual intercourse with her supervisor.

- The interaction between the Kazakh supervisor and the Filipino assistant broke down, because the Kazakh could not apologize to a female junior employee, for a comment he made, which he viewed as normal venting of frustration.

- The problematic interaction between the Kazakh supervisor and the Japanese manager was a result of the Kazakh’s demonstration of manliness when in exclusively male settings, confronting the Japanese manager in a direct and loud mode. The Japanese manager felt threatened and intimidated by the Kazakh’s style and felt that he had lost face.

Based on their cultural paradigms, the 3 people involved were not able to communicate and resolve the issue on hand. Multi cultural settings can be most challenging and sometimes frustrating. It takes long years of experience to bridge the cultural gap and manage across paradigms successfully.

October 2005

Marketing ROI

Behind each product and service is a product value space, comprised of the business fundamentals of the company; the respective value chain, cost structure, core competencies, capabilities, strategy, and in some cases competitive advantage.

‘Brands will be the shortcut …, with a trusted brand, the customer can cut through the clutter’
...................................................................... .Carl E. Pascarella

The marketing function of the company is the most important differentiation factor in the value chain, and the part where product/service differentiation in the form of creating brand recognition and brand loyalty can most achieved. The product/service is perceived by the end user first in the form of brand recognition, and if the company is successful may turn into brand loyalty. Achieving brand loyalty to a product/service should be the primary goal of the marketing function.

Effective marketing needs to be strategically aligned to the grand strategy of the firm and has to be measurable in terms of impact on the top and bottom line. Companies can no longer afford to allocate resources in hard-to-assess marketing activities. Your organization must deliver value in the form of products and services that the customers need, communicate the product/service mix and company image to the customer in the most effective way to increase your marketing ROI.

At the independent business unit or firm level, 4 different marketing strategy options prevail. These are:

- Market penetration,
- Market development,
- Product development
- Product & market diversification.

Market Penetration
Strategy based on converting occasional clients to regular clients, and regular
clients into heavy users. Common tools are based on CRM, member’s cards,
volume discounts.

Market Development
Strategy based on market development introduces existing products in
new markets or introduces new brand names in existing markets and will frequently try to win market share by luring away clients from the competition.

Product Development
Strategy based on product development will try to sell new product lines in similar or different categories to existing clients. The new product line can be in the form of accessories, upgrades, or completely new products. Existing communication channels and brand recognition/loyalty is leveraged to minimize cost.

Diversification
Strategy based on diversification is in general the most risky type of strategy.
Beside the risk of entering a new market with a new product, the reputation of the company is at stake, and a mishap in the new launch may affect the core business of the company. The various strategies of entering a new market are as follows:

- Horizontal diversification (new product, current market)
- Vertical diversification (move downstream or upstream)
- Diagonal diversification (new product closely resembling current
..product with new use in new market)
- Lateral diversification (new product in new market)

Recently, a very successful beer brewer launched an instant coffee mix under its own brand name. Yes. The beer and the coffee had the same brand name. The company banked on the fact that brand recognition and loyalty to its beer would automatically generate sales for the new product as happy beer drinkers would also purchase their coffee mix. Unfortunately, the product flopped. The loyal customers of the company, the beer drinkers did not drink enough coffee; the coffee drinking market did not want to be associated with beer drinkers. A small ad campaign with the theme ‘We only make beer’ from a competing player could have been most appropriate and generate maximum marketing ROI at this stage.


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