Gillette Finds Rhyme and Maybe Reason with Reduce-Reuse Message

The shaving brand, Gillette, (Procter & Gamble) has been running a television commercial which shows actor Brandon Quinn in far-flung locations, and claims one ProGlide cartridge blade lasted him 5 weeks on the road.

It is impossible to put a reliable number on how long a shaving blade lasts, not least because all the variables are personal: including skin type, hair type, tolerance for drag, etc.

But the news is that the huge and successful marketing machine behind the Gillette brand has seen *now* as the moment to come forward with a blade longevity number.

On the surface, it’s odd: doesn’t the brand’s performance rely on moving blades off the shelf: that is, the more still-good blades that go into the trash the better? It’s an anomaly.

In standard, quantitative planning, anomalies are “outlier” data points that are by definition of marginal consequence, and are smoothed into an overall consensus projection.

In thinking industry foresight, by contrast, we give extra time to the anomalies: they are often the straw-in-the-wind for major branching points where the future becomes different from the present.

Capsizing

Gillette didn’t get to be where it is by making marketing mistakes. One must assume the company knows what it is doing. But what is it doing? What does this anomaly tell us about the future?

You don’t do good mass marketing by being out of touch with the market. If Gillette is apparently capsizing its billion-dollar business model with a “reduce-reuse” message, then for sure the popular zeitgeist has reached the point where this is a genuinely mainstream platform. It other words, the company’s hand is forced.

Recessions always give reduce-reuse a boost, but the ongoing trend is an inexorable move from throwaway culture, and Gillette is telling us the mass market is truly “there” now.

It’s not an accident that Quinn’s road-trip is global, showing African savannah, Asian waterways, the polar regions, the rainforests, and everything inbetween. “One planet” and “we’re all in this together” associations are manifest.

Industry Leader

Where Gillette has been smart is it has got out in front and led its industry in terms of nominating standards for reuse. Every company and every product in this industry (as in most industries) is going to have to find its reduce-reuse-recycle feet. Industry leadership is a land grab, where often the land is real estate in the mind of the consumer. Can Schick (Wilkinson Sword) now say: “our blades last a month”? Of course not.

In the traditional era—well within living memory—manufactured goods cost relatively more in disposable-income terms, but lasted a longer. Where companies made products that were known to last, that meant “quality,” and they were able to price accordingly.

In the razor blade industry it has surely escaped nobody’s attention that “dad’s” straight retro-blades are very popular among young men, based on durability and (perhaps) their “badass” image. Witness a lively debate on badgerandblade.com.

But straight razors are the past, and aside from niche markets, we never go back to the past. However, as per the Mark Twain quote: while “history doesn’t repeat itself, it does rhyme.”

This appears to be Gillette’s hope: to rhyme with 1960 and sell a modern safety blade that lasts like in the good old days, and which allows commensurate pricing power, just like in the good old days.

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DHL Envisions 2050: A Supreme Waste of Time And Money. Or Maybe Not…

5473290865 fef84733b9 m DHL Envisions 2050: A Supreme Waste of Time And Money. Or Maybe Not...

The logistics firm DHL (Deutsche Post) has just completed and publicized five future scenarios called “Delivering Tomorrow: Logistics 2050.”

In the never-ending mountain of corporate waffle, surely this is the summit? Why spend time and resources on thinking about what might happen 38 years from now when even the 5-year-future is effectively unpredictable?

In an exclusive interview with Forbes, Senior VP for Communications Strategy at Deutsche Post in Germany, and management executive directly responsible for the project, Dr. Jan Müller, said the 2050 scenarios started as “a pure play in communications strategy. It was a thought leadership exercise. We put the scenarios out there to energize the societal debate.”

jan muller140 DHL Envisions 2050: A Supreme Waste of Time And Money. Or Maybe Not...

In other words, this is DHL’s “heads-up” to the big issues driving world change over the next few decades, and its reference document for steering the future away from two bogeys: (1) national trade protectionism and (2) indiscriminate resource use and resulting climate change.

Said Müller: “DHL is well advised to constantly insist on the benefits and relevance of liberal world trade.”

So far, so normal, in using ultra-long term alternative visions of the future to urge the world to become a better place, including for the company concerned, while polishing the public image of the firm and providing something new to show at Davos.

Second Life

What’s particularly interesting about this project, and more-or-less unique in the field of industry foresight, is the scenarios will have what Müller calls a “second life” inside the firm. In something of a tour-de-force in scenario construction, the scenarios appear ingeniously formed to span both their external corporate “save-the-world” function and an internal strategy-formation role.

According to Muller, colleagues in Deutche Post corporate strategy have become active with the scenarios, and the Deutsche Post Management Board recently spent a day analyzing the project’s implications.

The work “has ramifications that reach deeply into the strategic and entrepreneurial thinking of the company,” said Müller.

All the way to 2050? Well, no. “There is a follow-up project trying to calculate development perspectives that are closer than 2050, and derive more concrete options from that exercise,” said Müller.

This version will obviously not be for public consumption.

But even as it stands, the project as applied to internal executive decision making is a challenge to the linear planning culture at Deutsche Post. Presenting the work in-company over the past weeks, Müller has argued to colleagues across the firm that “in the current age of volatility, it is not useful to apply linear prognosis. We have to think in alternatives.”

This was also the tenor of CEO of Deutsche Post DHL Frank Appel’s opening address at project launch in Berlin last month. In an increasingly complex world filled with uncertainties, short-range projections would no longer be of much help in setting the appropriate long-term direction and devising robust strategies, said Appel.

The Deutsche Post DHL 2050 scenarios are:

1. Untamed Economy: untamed growth and unchecked materialism cause a mounting number of natural disasters, putting the world on the brink of a collapse.

2. Mega-efficient Cities: cities emerge as the world’s power centers, with radically altered consumer needs, while an urban low-wage class is entrenched and rural areas stagnate.

3. Customized Lifestyles: individualization and customization shapes people’s everyday lives, requiring decentralized and regional production structures.

4. Paralyzing Protectionism: the world is hobbled by economic hardship, excessive nationalism and trade protectionism.

5. Global Resilience: resilient production and logistics structures gain a higher priority than continued efficiency maximization, after repeated natural disasters and supply chain failures earlier in the century.

 DHL Envisions 2050: A Supreme Waste of Time And Money. Or Maybe Not...
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Chelsea Turkey Shoot Points To Shortening Fail-tolerance for All CEOs

villas boas1 150x150 Chelsea Turkey Shoot Points To Shortening Fail tolerance for All CEOs
Fired – Villas-Boas. Picture: uefa.com

The leadership brouhaha of the week was the sacking of Chelsea Football manager André Villas-Boas after only 8 months in charge. This means the London soccer club is looking for its eighth manager since Russian billionaire Roman Abramovich bought it in 2003.

When not firing managers, Abramovich is famous for, among other things, spending $52,215.34 on a lunch for 6 in at Nello’s in Manhattan.

Villas-Boas’ error, like those fired before him (bar one who quit) is he didn’t win enough fast enough. In his charge the team won three of their last 12 Premier League games, and face exit to SSC Napoli after loosing the first leg of their UEFA Champions League round-of-16 tie.

Villas-Boas’ remuneration for the year, including severance, is around the $20m mark.

In industry foresight, noticing extremes helps us see and interpret less visible changes in the world. Stellar pay and commensurately rapid churn at the top of Chelsea FC clues us in to what is going on in the daily mainstream that we may be too immersed in to register.

High pay is nothing new. Also, evidence of high CEO churn is on the radar. A 2006 University of  Chicago study showed CEO turnover was 17.4% per year 1998-2005, implying average tenure of less than six years. It related CEO longevity to three components of stock performance – performance relative to industry, industry performance relative to the overall market, and the performance of the overall stock market.

More recently, executive search firm Crist|Kolder studied Fortune 500 and S&P 500 companies and found that while average CEO churn dipped during the recession it was back on the way up, hitting 13% in 2011.

“Win Now”

What is less clear at this point is the correlation between higher pay levels and higher churn, that may play out more fully in the future. But if the trend is that CEOs are increasingly paid like sports (or sports management) stars — and they are — it’s reasonable to anticipate that this will be on an ever-increasingly short-fuse “win-now” basis.

If the analogy holds, we can expect chief executives to face shorter and shorter periods to justify their pay; probably the higher the remuneration the shorter the justification period. Where eye-watering sums are changing hands, fingers will be itchy on the trigger.

The poverty of management decision-making here is not just in embracing and fostering short-termism, the cancer of management. It is in prejudging and potentially wasting leadership talent, because short-term data is effectively no data. Put it another way, short-term wins or losses are at the mercy of randomness, such that what looks like good or bad results are almost always part of normal near-term fluctuation spread, as argued by Nassim Taleb in his book “Fooled By Randomness.”

Over the long term, twists of fate, or twists of ankles are ironed out, and quality prevails. Nobody would argue that Steve Jobs was not successful or not worthy of star pay. But Villas-Boas … won championships for Porto FC in 2010 and lost championships for Chelsea FC in 2011, and neither results tell us or Abramovich whether he’s any good or not.

The only thing we can expect with confidence is that where the sports-star model of remuneration migrates, Boards (or shareholders) will be eager to read too much into early data, and prone to make Abramovich-like decisions.

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The Market is a MMORPG. It’s Whip or Be Whipped

mw 150x150 The Market is a MMORPG. Its Whip or Be WhippedFinancial markets are delicately poised at the start of the year, to say the least. A steady low-bubbling stock rise – what the FT calls a “stealth” rally – has left the S&P 500 index at a five-month high and the Dow up 10% in 6 weeks, flying in the face of the 2012 analyst outlook which is on-the-whole bearish amid Eurozone debt and global growth concerns.

Bears are in a surprise squeeze. Not so long ago it was rebound-optimist Jon Corzine of MF Global publicly taking the hit that many others were privately taking too.

It’s certainly not news that markets don’t behave as expected, nor that emotion drives decisions, but Joan Foltz, author of  Market Whipped: And Not By Choice (Alsek, 2012) suggests something further: that we are going through a basic shift in how markets work and therefore how to succeed in them.

She says the financial markets have become a MMORPG, that is, a “massive multiplayer online role-playing game.” In gamer world, a MMORPG is a vast virtual world where an effectively unlimited number of players assume characters and interact with each other in a persistent and ever-evolving “reality.”

The same computation and virtualization platform technologies that have produced game worlds also underpin financial markets, and are therefore unsurprisingly producing similar effects.

Buy a stock and you have entered a virtual arena of realms and battles, with characters taking roles in stories that play out over a known (to insiders) time period. There are masters and magicians and druids and emporers, and who knows what else, all gaming for your money. Play the game right, and you win theirs.

mmorpg The Market is a MMORPG. Its Whip or Be Whipped
picture: mmorpg.com

Says Foltz: “Keep the market in mind as you go through this list of features:

  • a massive base of online players who create a dynamic environment that requires extremely complex strategies and sharp analytical skills.
  • an extensive systems architecture with multiple regions and restricted levels of access, all of which are usually controlled by a Game Master.
  • an online location that blurs the real and virtual worlds, where human and computerized players interact with real money that transfers into virtual currencies.
  • automated programs (bots) that create situations to trig­ger reactions from other players.
  • players who are classified by attributes, powers, and capabilities, which limit their territories.
  • players who can take on multiple characters, each with a unique mission.
  • social interaction that immerses players in role-playing opportunities.”

Who are the characters in the game? High-frequency traders, hedge funds, corporations, pension funds, celebrity investors, the media, the government, to name just the obvious ones.

Into this world walk investors who think the markets are what they used to be, and work how they used to work – that they are understandable through due-diligence in research, and winnable by well-considered valuations or by technical analysis. No surprise that they find themselves surprised. In gamer world, nothing is as it appears and nothing works out as expected.

Game on

Foltz’s argument is that traders of all stripes improve their results by acknowledging market MMORPG and thinking like a gamer. That is, seeking to understand where the battle is at any time; recognizing who battles whom, under what conditions, and for how long; knowing who the strongmen are in their realm and what story is playing out.

Investors should know their own token in the game, its attributes and ammunition, as well as its limitations. This will improve judgment of where to be, when to come and go (market timing), and encourage quick exits from realms that are best left to more powerful, and perhaps, darker forces.

The book itself has a chaotic, breathless, aspect, and is marred by a tendency to conspiracy theory. But it does provide a productive analogy that sheds light on unchartered territory. In other words, it does what “futurists” should do when they do their job right: identify and illuminate a change in the world, and describe why assumptions and practices that worked in the past may fail going forward.

 The Market is a MMORPG. Its Whip or Be Whipped
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IBM100 ‘THINK’ Draws History Lessons For The Future

IBM100 100x150 IBM100 THINK Draws History Lessons For The Future“The most vital, obvious, and underestimated lesson in the 100-year history of IBM is you must keep moving to the future,” said IBM President and CEO Sam Palmisano, opening the company’s recent THINK: A Forum on the Future of Leadership‘ conference at the Lincoln Center in New York.

Further gratifyingly embracing the fundamental identity between leadership and successfully navigating the future, Palmisano continued: “It is so easy to stick with things that have made you a successful company or institution – a winning product, a profitable business model … but one of the core responsibilities of leadership is to understand when it’s time to change.”

And then, applying the mantra of respectable industry foresight analysts and practitioners (there are some): “It’s also particularly important to know what not to change, what must endure. To get that balance right is really, really hard.”

The full address is on Youtube.

The THINK conference is a key plank in IBM’s ongoing centennial year observance. It brought together 700 global leaders and IBM partners and employees, shining a light on leadership as a function that demands active, high-quality forward thinking.

Among the many insight nuggets was Carmen Medina, former Director of the CIA’s Center for the Study of Intelligence, commenting that “observing the present” is the only valid basis of future-exploration (correct); and that this sensemaking function is now being augmented by analytic and computational tools that make far better sense of all types of observed data and behavior, for example, social media behavior.

The old horizon scanning function really has become a much more complex, dynamic, and rewarding activity in the current era. Data visualization was also a key theme at the THINK exhibit.

Among the CEO delegates were Sir Howard Stringer (Sony); Jamie Dimon, (JP Morgan Chase & Co.); Jim McNerney (Boeing); Andrew Liveris (Dow Chemical); Peter Voser (Royal Dutch Shell); and Ellen Kullman, (DuPont.) Filling out Shell’s guest list were Abdullah II, King of Jordan; Felipe Calderón, President of Mexico; Laura Chinchilla-Miranda, President of Costa Rica; WTO Director-General Pascal Lamy; NY Mayor Michael Bloomberg; and media celebrities Charlie Rose and Tom Friedman. Selected video highlights are on the IMB100 site.

 

 

 IBM100 THINK Draws History Lessons For The Future
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Add M&A Headache to World Bank’s Global ‘Multipolarity’ Forecast

multipolarity Add M&A Headache to World Banks Global Multipolarity ForecastThe World Bank on May 18 released a report “Multipolarity: The New Global Economy” with outlook for the geo-financial system to 2025.

“Multipolarity” catches the World Bank up with what has been clear for a long time: an actually, genuinely different global economic order is unfolding as growth moves to emerging economies, with countries such as China, India, South Korea, Russia, and Brazil accounting for the majority of economic growth in the next decade and beyond. And, on the back of this, the dollar will lose its pre-eminence as global reserve currency.

The report is nevertheless important at a meta-level. When the World Bank puts out a perspective, that means the perspective becomes more-or-less institutionalized wisdom. Global financial revolution, effectively, is no longer a theory out there. It is the “official future,” and financial and political institutions are more likely to act in line with it. Therein a reinforcing feedback loop.

Renminbi

A couple of things stand out. Report author Mansoor Dailami says the euro and renminbi will establish themselves on an equal footing to the dollar. This seems plausible, but one is left wondering – given the pace of innovation in finance, and in computing, and in communications and networking, and the 14 years to 2025 – will we still be looking at a system where national or regional currencies are  “dominant?” Could the world financial system not evolve differently, for example away from a global reserve requirement altogether, or towards more multi-currency baskets? (The report does entertain the adoption of the IMF’s Special Drawing Rights system.)

The foresight principle: In looking at the future it’s tempting to see new agents dominating current structures, but often the structures themselves change.

The other point that pops out is an expectation that cross-border M&A deals originating in emerging markets will be an increasing feature of the new corporate landscape.

This is as solid a prediction as one will find. But it surely will not be one way. While cash-flush emerging-market companies will look to diversify into European and American companies, or take them over entirely – particularly ones that have Asian brand recognition and prestige (remember the Japanese corporate shopping trips of 1980s) – developed-world companies will be returning the favor, buying their way into emerging market companies to get a piece of their growth.

And we’re not talking passive investment here. The action will be immersive developed-meets-emerging market M&A (and surely also corporate raiding, hostile takeovers, etc.)

cross border ma Add M&A Headache to World Banks Global Multipolarity Forecast

 

M&A is “speed” for corporate leaders. A big high, often followed by acrash. But if history is any guide, the lure of buying someone else’s growth, not to mention instantly enhancing a company’s industry size-power footprint, is more intoxicating than the sirens of Odysseus, so one can confidently predict it going forward.

Which is to say the spreadsheet-anticipated wins in economies of scale, scope, market synergies, or vertical integration of M&A will be up against the problems of marrying company cultures, systems, products, brand values and business models — a vexing problem that routinely defeats even the best business leaders.

But add to this, here, very significant cross-cultural management and staff issues, problems of distance, and regulatory systems that are often purposed to different ends, and you have a leadership challenge indeed for firms that venture down this path. But venture they must, because companies in low-growth markets can only buy back their shares for so long (aka “we’ve got no ideas about what to do with investor money, so we’re giving it back to you”) — witness GE’s $12bn share buy-back announcement this week.

 

 

 Add M&A Headache to World Banks Global Multipolarity Forecast
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