Marketers seeking to sprint out of the recession need to become multichannel-friendly and completely consumer-focused, and get over themselves. The need to construct data-rich profiles of customers, personalize responses to their needs and smartly play in their social, mobile digital sandbox are themes that resonated in the opening-day keynote addresses and discussions at Forrester Research's annual Consumer Forum in Chicago Tuesday.
"Consumers are focused on their needs, not on your channels," Henry Harteveldt, Forrester vp and principal analyst, warned in the opening keynote.
Basic information, transactions (from signing up for email alerts to buying products), and providing assistance must be interactive and real-time across all possible devices -- from smartphones and other mobile data devices to PCs and televisions.
Sadly, too few companies are embracing multichannel strategies to improve their recession-strained consumer relations and sales, although many say that developing digital channels is a top 2010 investment priority. Less than one-third of companies recently surveyed by Forrester said they want or can provide a consistent cross-channel experience. The other two-thirds cite budget, staff and technology constraints as reasons why they cannot.
But even companies testing the waters are quickly falling behind the 80% of Americans online -- three-quarters of whom have broadband, because they have not added mobile or social network strategies to their marketing mix.
"Mobile will become the center of your digital channel relationships," Harteveldt said, pointing to 36% of smartphone users who access the Web daily from their devices. One in four use the device to research products they will buy either online or offline. The heavy lifting needed to become an effective multichannel marketer often involves eliminating silo operations; aggregating, analyzing and acting on consumer-profile data from across the company; and integrating online and offline consumer marketing, sales and service.
For some, that complete overhaul also means viewing everything about marketing and customer service through the eyes of consumers. Some 13% of consumers surveyed by Forrester say the ads they see are not relevant to their wants and needs.
Some companies have accepted the extensive transformation challenge that can take several years to execute but immediately yield cost savings and increased revenues.
Hewlett-Packard saved $1 billion as a result of a three-year process of aggregating 750 customer databases across all of its international operations. Employees now analyze, share and act on the massive data bank to customize service and products across 2 billion annual customer interactions in 117 countries.
Creating and leveraging functional customer intelligence is the difference between giving customers what you presume they want and what they actually need, explained Hewlett-Packard vp Prasanna Dhore. The company also has extended its "social media 101" efforts to ask consumers to design products.
"Once we know what they want, we can deal with it on their terms," Dhore said.
Bob Kraut, Pizza Hut vp of marketing communications, said the company has tapped the entrepreneurial spirit of its own in-house teams and its agency, imc2, to create progressive interactive mobile applications (such as placing customized pizza orders) and social network participation (with inexpensive professional and consumer-produced viral videos).
In a grab for young male consumers, Pizza Hut is using social media and mobile connected devices to partner with Electronic Arts Sports and other video game companies, fight night and films such as Terminator 4.
Kraut said the company's willingness to experiment has been driven by the fact that its key consumers socialize, play, buy and generally exist online.
Forrester reports that online captured 29% of consumers' reported general merchandise retail spending in the second quarter of 2009. Half of all online Americans participate in social networks, a number that has increased 46% in the past year.
Still missing from the transformation equation are the measurement systems and metrics needed to assess the effectiveness of multichannel approaches. There are no sure ROI formulas for interactive consumer relevance and engagement. Still, it is imperative to "measure customers' total value and profitability -- not just their individual action or transaction," Harteveldt said. "This is all about getting the customer to say yes."
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Thursday, October 29, 2009
Forrester: Mobile Will Become The Hub Of Multichannel Consumer Relationships
Wednesday, October 28, 2009
GSMA Mobile Asia Awards 2009 - Nominees
The nominees for the Asia Mobile Awards 2009
1a - Best Mobile Game
- Bharti Airtel Limited, INDIA for 'Airtel GamesClub'
- Electronic Arts, PEOPLES REP OF CHINA, for 'The SIMS 3'
- Gameloft, TAIWAN, R.O.C. for 'Hero of Sparta'
- Turkcell Iletisim Hizmetleri A.S., TURKEY 'Mobiwar'
1b - Best Mobile Music Service
- Aircel Limited, INDIA for 'Aircel Dialer Tunes Eat-All-You-Can service'
- Bharti Airtel Limited, INDIA for 'Gaana Bolo Hello Tunes Pao'
- China Mobile, PEOPLES REP OF CHINA, for 'New Albums Digital Release'
- Green Tomato Limited and CSL Limited, HONG KONG for 'Musicholic'
- Singapore Telecom Mobile Pte Ltd, SINGAPORE for 'SingTel AMPed'
1c - Best Mobile TV or Video Service
- Hong Kong Telecommunications (HKT) Limited, HONG KONG for 'The Strongest PCCW Mobile Infotainment Platform on uprising Android Platform'
- Hungama Digital Media Entertainment Pvt. Ltd., INDIA for 'Tata Sky Active Mall'
- Mobixell Networks, ISRAEL for 'Mobixell Videon and InfoGin IMP'
- Motorola Inc, HONG KONG for 'Motorola TuVista'
- Telegent Systems, SINGAPORE for 'Telegent Free-to-Air Mobile TV – TLG1120 Mobile TV Receiver'
1d - Best Mobile Advertising or Marketing
Bharti Airtel Limited, INDIA and Onmobile Global Limited for 'Gaana Bolo Hello Tunes Pao'
- InMobi, INDIA for 'Reebok Indian Premier League Campaign'
- Madhouse Inc, PEOPLES REP OF CHINA, for 'HP'
Smart Communications Inc, PHILIPPINES and Unilever - AXE for 'AXE ON PHONE'
Zad Mobile, UNITED STATES and Indosat for 'SC i-klan'
2a - Best Mobile Enterprise Application Product or Service
Aircel Cellular Ltd., UNITED STATES and uReach Technologies, Inc. for 'Aircel mConference Plus'
Aircel Cellular Ltd., UNITED STATES and uReach Technologies, Inc. for 'Aircel mReceptionist'
- Cylande, PEOPLES REP OF CHINA and Terranova for 'Cylande’s StoreAssistant Corner Manager'
- Orascom Telecom Bangladesh Limited, BANGLADESH for 'banglalink jigyasha'
- tenCube Pte Ltd, SINGAPORE and SingTel for 'PHONESafe'
2b - Best Mobile Internet Service
- Aircel Limited INDIA 'Aircel’s Pocket Internet'
- Eterno Infotech Pvt. Ltd, INDIA for 'NewsHunt'
- Geodesic, UNITED STATES for 'Mundu IM'
GyPSii, NETHERLANDS and China Unicom for 'UniSpace'
- KT Corporation, REPUBLIC OF KOREA, for 'SHOW HYUNDAI/ KIA-MOTOR mobile service, SHOW is brandname of KT’s WCDMA service'
2c - Best Mobile Money Service
- Bharti Airtel Limited, INDIA for 'Airtel m-Commerce Service mChek on Airtel on Voice (IVR)'
- Globe Telecom, PHILIPPINES for 'GCASH CLICK'
- SK Telecom, HONG KONG for 'T Cash'
- Smart Communications Inc, PHILIPPINES for 'Smart Money’s expanded mobile-based securityfeature for online purchases'
- Sybase 365, SINGAPORE and Celcom for 'Celcom AirCash'
2d - Mobile Money for the Unbanked Award
Bharti Airtel Limited, INDIA and EKO for 'EKO'
- MPAY SOLUTIONS LIMITED, PHILIPPINES for 'm-bux'
- Smart Communications Inc, PHILIPPINES for 'Smart Islands Activation Program (IAP)'
- WING Cambodia Limited, CAMBODIA, for 'WING'
4 - The Green Mobile Award
Grameenphone Ltd, BANGLADESH and Huawei Technologies Co., Ltd for 'Building a Greener Mobile Network'
- Nokia, INDIA for 'Take-back & Recycling of unwanted devices and accessories in Asian Markets'
- Smart Communications Inc, PHILIPPINES for 'SMART Post-Marketing Waste Management initiative (tarpauliN recycling)'
- StarHub Mobile Pte Ltd, SINGAPORE for 'Green Network- Singapore's first Solar-Powered Mobile Base Station'
- ZTE Corporation, PEOPLES REP OF CHINA, for 'ZTE’s GSM ZXG10 uBSS system'
Best Mobile Broadband Handset/ Device - Judging of the Best Mobile broadband Handset/Device’ category will take place in November, nominees will be announced soon.
Thursday, October 22, 2009
I know times are tough for the music biz, but this is too much...Apology for singing shop worker
Sandra Burt was told she needed a licence to sing in the store
A shop assistant who was told she could not sing while she stacked shelves without a performance licence has been given an apology.
Sandra Burt, 56, who works at A&T Food store in Clackmannanshire, was warned she could be fined for her singing by the Performing Right Society (PRS).
However the organisation that collects royalties on behalf of the music industry has now reversed its stance.
They have sent Mrs Burt a bouquet of flowers and letter of apology.
Mrs Burt, who describes herself as a Rolling Stones fan, said that despite the initial warning from the PRS, she had been unable to stop herself singing at work.
They would need to put a plaster over my mouth to get me to stop, I can't help it
Sandra Burt
Singing shop workerThe village store where Mrs Burt works was contacted by the PRS earlier this year to warn them that a licence was needed to play a radio within earshot of customers.
When the shop owner decided to get rid of the radio as a result, Mrs Burt said she began singing as she worked.
She told the BBC news website: "I would start to sing to myself when I was stacking the shelves just to keep me happy because it was very quiet without the radio.
"When I heard that the PRS said I would be prosecuted for not having a performance licence, I thought it was a joke and started laughing.
"I was then told I could be fined thousands of pounds. But I couldn't stop myself singing.
"They would need to put a plaster over my mouth to get me to stop, I can't help it."
In response to the furore created by their initial hardline, the PRS contacted Mrs Burt to apologise.
In a note attached to a large bouquet of flowers they said: "We're very sorry we made a big mistake.
"We hear you have a lovely singing voice and we wish you good luck."
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Tuesday, October 20, 2009
Good news for mistake-prone me. Getting it Wrong: Surprising Tips on How to Learn
For years, many educators have championed “errorless learning," advising teachers (and students) to create study conditions that do not permit errors. For example, a classroom teacher might drill students repeatedly on the same multiplication problem, with very little delay between the first and second presentations of the problem, ensuring that the student gets the answer correct each time.
The idea embedded in this approach is that if students make errors, they will learn the errors and be prevented (or slowed) in learning the correct information. But research by Nate Kornell, Matthew Hays and Robert Bjork at UCLA that recently appeared in the Journal of Experimental Psychology: Learning, Memory and Cognition reveals that this worry is misplaced. In fact, they found, learning becomes better if conditions are arranged so that students make errors.
People remember things better, longer, if they are given very challenging tests on the material, tests at which they are bound to fail. In a series of experiments, they showed that if students make an unsuccessful attempt to retrieve information before receiving an answer, they remember the information better than in a control condition in which they simply study the information. Trying and failing to retrieve the answer is actually helpful to learning. It’s an idea that has obvious applications for education, but could be useful for anyone who is trying to learn new material of any kind.
In one of their experiments, students were required to learn pairs of “weak associates,” words that are loosely related such as star-night or factory-plant. (If students are given the first word and asked to generate an associate, the probability of generating the target word is only 2 or 3 percent.) In the pretest condition, students were given the first word of the pair (star- ???) and told to try to generate the second member that they would have to later remember. They had 8 seconds to do so. Of course, almost by definition, they nearly always failed to generate the correct answer. They might generate bright in the case of star-???. At that point they were given the target pair (star–night) for 5 seconds. In the control condition, students were given the pair to study for 13 seconds, so in both conditions there were a total of 13 seconds of study time for the pair.
The team found that students remembered the pairs much better when they first tried to retrieve the answer before it was shown to them. In a way this pretesting effect is counterintuitive: Studying a pair for 13 seconds produces worse recall than studying the pair for 5 seconds, if students in the latter condition spent the previous 8 seconds trying to retrieve or guess the answer. But the effect averaged about 10 percent better recall, and occurred both immediately after study and after a delay averaging 38 hours.
Some readers may look askance at the use of word pairs, even though it is a favorite tactic of psychologists. In another article, in the Journal of Experimental Psychology: General, Lindsey Richland, Nate Kornell and Liche Kao asked the same question, but they used more educationally relevant text material (an essay on vision). Students were asked to read the essay and prepare for a test on it. However, in the pretest condition they were asked questions about the passage before reading it such as “What is total color blindness caused by brain damage called?” Asking these kinds of question before reading the passage obviously focuses students’ attention on the critical concepts. To control this “direction of attention” issue, in the control condition students were either given additional time to study, or the researchers focused their attention on the critical passages in one of several ways: by italicizing the critical section, by bolding the key term that would be tested, or by a combination of strategies. However, in all the experiments they found an advantage in having students first guess the answers. The effect was about the same magnitude, around 10 percent, as in the previous set of experiments.
This work has implications beyond the classroom. By challenging ourselves to retrieve or generate answers we can improve our recall. Keep that in mind next time you turn to Google for an answer, and give yourself a little more time to come up with the answer on your own.
Students might consider taking the questions in the back of the textbook chapter and try to answer them before reading the chapter. (If there are no questions, convert the section headings to questions. If the heading is Pavlovian Conditioning, ask yourself What is Pavlovian conditioning?). Then read the chapter and answer the questions while reading it. When the chapter is finished, go back to the questions and try answering them again. For any you miss, restudy that section of the chapter. Then wait a few days and try to answer the questions again (restudying when you need to). Keep this practice up on all the chapters you read before the exam and you will be have learned the material in a durable manner and be able to retrieve it long after you have left the course.
Of course, these are general-purpose strategies and work for any type of material, not just textbooks. And remember, even if you get the questions wrong as you self-test yourself during study the process is still useful, indeed much more useful than just studying. Getting the answer wrong is a great way to learn.
Are you a scientist? Have you recently read a peer-reviewed paper that you want to write about? Then contact Mind Matters co-editor Gareth Cook, a Pulitzer prize-winning journalist at the Boston Globe, where he edits the Sunday Ideas section.
Heard it before, but we ought to hear it again: Creative ad agencies must adapt or die in digital age
Creative advertising agencies are failing to adapt to the new digital landscape and are losing out to media buying agencies in a "Darwinian" ad world, according to a senior agency executive.
The advertising industry is facing a Darwinian era of adapt-or-die, said Damian Blackden, president of Omnicom Media Group, speaking at the MediaGuardian Changing Advertising Summit today.
Blackden added that the fundamental structural shift in consumers, and advertising, to online – exacerbated by the recession – has left many traditional agencies caught out using out-of-date business models.
"We are not going to replace creative agencies," he said, referring to agencies that have traditionally specialised in making TV, press and radio campaigns. "However, many have missed an opportunity by not investing in data capabilities like many media agencies."
Blackden argued that in many cases it has been media buying agencies that have stolen a march by investing in resources to better measure users' habits online and how to target them.
"Those [agencies] who have an advantage now are unlikely to be caught up any time soon," he said. "No one has got it right yet, developed a perfect agency model. The Darwinian conditions are pretty painful for the industry but I am optimistic."
In the same Changing Advertising session Samir Arora, the chief executive of online network Glam Media, highlighted some key differences between how the digital world works and consumer behaviour in the "traditional" world.
Arora said the top 100 websites globally, including Facebook, account for less than 20% of consumers' time spent web surfing.
"That is unbelieveable – this un-monetised web where we spend all this time is nothing like other media," he added, giving another example of how the internet has changed the power of communication. "500 small, tiny Anna Wintours [online] have more power than Anna Wintour will ever have."
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Thursday, October 15, 2009
Another reason why Web & Mobile are the Great Levelers: How C.K. Prahalad's Bottom of the Pyramid Strategies Are Paying Off - Knowledge@Wharton
Five years ago, C.K. Prahalad published a book titled, The Fortune at the Bottom of the Pyramid, in which he argues that multinational companies not only can make money selling to the world's poorest, but also that undertaking such efforts is necessary as a way to close the growing gap between rich and poor countries. Key to his argument for targeting the world's poorest is the sheer size of that market -- an estimated four billion people. How has Prahalad's book -- a revised, fifth-anniversary edition of which has just been published -- affected the behavior of companies and the well-being of consumers in the years since its publication? Knowledge@Wharton checked in with the author for an update, including examples of specific companies that are implementing Bottom of the Pyramid strategies.
Below is an edited transcript of the conversation.
Knowledge@Wharton: In the five years since The Fortune at the Bottom of the Pyramid was published, what impact have your ideas had on companies and on poor consumers?
C.K. Prahalad: The impact has been interesting and profound in many ways -- much more than one could have expected. For example, several of the multi-lateral institutions -- The World Bank, UNDF [United Nations Development Fund], IFC [International Finance Corporation] and USAid -- have fundamentally accepted the idea that involvement of the private sector is critical for development.... I asked 10 CEOs of companies as diverse as Microsoft, ING, DSM, GSK and Thomson Reuters to essentially reflect on whether the book has had some impact on the way they think about the opportunities. Uniformly, everybody -- whether it is Microsoft or GSK -- essentially says not only that it has had some impact, but that it has changed the way they approach innovation and ... new markets.
I also asked people to update the case studies that were in the original book. It was a pleasant surprise for me that almost all of them had grown, improved their offering and were doing quite well in this marketplace. I wrote a new introduction on what the lessons are that we have learned. So while the issue of poverty still remains -- and is not going to be solved in the next 10 years -- the active involvement of the private sector and its role in poverty alleviation ... have been quite surprising. And we shouldn't forget it is just five years old as an idea.
Knowledge@Wharton: We will come back to the major lessons in a minute. But could you share some of the most significant examples of companies that have employed your principles during the past five years?
Prahalad: Take, for example, the whole idea of Netbooks -- a $200 computer that is selling like hotcakes in the United States -- more than two million sold last year. The original idea was to have a suitable, reasonably sophisticated laptop for poor people in countries like India. So that idea not only is going to work in countries like India, it is also traveling back to countries like the United States and having a spectacular success. There are many, many stories like this of innovations coming from BOP ("Bottom of the Pyramid") influencing what is happening here and suddenly influencing BOP market opportunities.
Knowledge@Wharton: Could you now talk about the major lessons companies have learned through serving poor consumers?
Prahalad: I think when the book came out five years ago, there was a fair amount of skepticism -- and rightly so. People could not just dismiss the idea; they knew that it was an interesting and a different one, and they could not walk away from the compelling videos and the stories in the book. Still, there was some skepticism about whether this was going to work. In a very short period of five years, many of the concerns have been put to rest. I can illustrate it with a simple example of one industry, which has broken many of the myths and cleared the way for profound rethinking about the opportunities at the bottom of the pyramid. What I have in mind is the wireless cellular phone industry.
For the first time in human history, four billion people are connected. Now, of course, when you talk about four billion of the total six billion people, it is a large number. Maybe two and a half billion people are BOP consumers as described in the book. So the first thing that has happened is this dramatic shift in the use of cellular phones and the dramatic build-up of subscribers. It is taking place across the world -- sub-Saharan Africa, South Africa, Latin America, India, Southeast Asia, and China. All the companies in every one of these areas -- Celtel, Safaricom, MTN, Airtel, Reliance, Globe -- all of them are making money. So the first lesson here is if you can find the right sweet spot in terms of business models, there is a really huge and very profitable opportunity.
For example, India alone is creating more than 12 million subscribers per month -- not per year but per month.... The second [concern] that people had was, can poor people and possibly illiterate people adopt new technologies? Do they need new technologies? Cell phones have again shown that the rate of adoption of this technology has been spectacular. People just understand how to use it and they are using it to good advantage. Third, in order to participate effectively, fundamentally new ecosystems are being created, including business model changes. For example -- pay per use -- prepaid cards -- has become the norm in most parts of the world. We are moving away from average revenue per user, which has been the core metric of this industry for more than 50 years, to profitability per minute of cell phone time.
We are also moving away from very intensive business call carriers to very low capital intensity to building alliances and partnerships. For example, Airtel in India has outsourced its IT networks to IBM and its capacity to Ericsson and Nokia, and it has built a large number of application developers. So, essentially, if you look at what has happened, Airtel has found a way of converting its fixed costs into variable costs and creating an ecosystem that dramatically reduces capital intensity. The most important of all these is the creation of very large pools of micro-entrepreneurs -- small shops which download minutes to your phone, which allows you to charge your phone. Lots of entrepreneurs are being created.
And, finally, we find that BOP markets can be an extraordinary source of innovation. If I look at Safaricom -- with the M-PESA, which stands for Mobile Cash -- it is allowing poor Kenyans, who do not have access to banks, to transfer money from A to B by text messaging. So you go to an agent. You pay them money and receive e-mobile money or e-money, which you can text to your friend. And he can go with an encrypted message and pass that text and collect real cash. This is not a small business. Seven million consumers are involved. On average, every day, there are a million transactions of $20-$25 per transaction -- a total of $20 million to $25 million every day. This is bypassing banks. In the same way, if I am a Filipino maid working in Singapore, I can send money to my grandmother at home through an SMS message. Fundamental new applications are also being developed so that BOP is not only a source of markets for micro-consumers. There are also lots of innovation opportunities. So just taking one industry, we are now able to see what a profound impact an understanding of ... BOP markets can have.
Knowledge@Wharton: Where do you see this trend of using mobile technology creatively going in which mobile services can be harnessed to serve poor consumers in various ways?
Prahalad: I think mobile is going to be in public health and education -- in managing pandemics like SARS and swine flu. It is going to be in entertainment -- in video games and a wide variety of other things that use the mobile platform. Video gamers are now [asking], "Why can't I download, not necessarily every complex game, but most of them, why can't I create a seamless integration of my play at home in front of a PC and also on the go, where I can play with the mobile platform?" This is becoming a major opportunity for video gamers.
And so it is for education. There is absolutely no reason why we cannot mobilize everything from simple additions to multiplications and so on. [We could] teach children how to learn by themselves on their mobile phone and take tests remotely which are measured. Feedback is given to them, and if they don't pass the test, you start all over again.
I see infinite possibilities, and I believe a lot of these innovations are going to come from BOP markets because there is a necessity there.
Knowledge@Wharton: What major obstacles do companies face when they try to implement BOP strategies?
Prahalad: I think there are three types of problems. The first is mental. If you start by saying, "Poor people don't have money; therefore, they cannot be our consumers," you already have a big impediment. Sometimes it is useful for us to go back to our own history and ask the question. The Singer sewing machine used to cost $100 and the poor in this country could not buy it, so they came out with a $5 a month payment plan. The rest is history. Singer became the first global company out of the United States. The same thing happened with the Model-T automobile. Making a car for $200 enabled farmers to move out of villages and then to travel to small towns and so on. So the first hurdle is mental. It is not how much income people have -- it is how to create a capacity for them to consume. That means we have to change from a mentality of "my current costs plus profit equals the price" to a much more consumer driven "price minus profit must equal cost." That means you start with affordability.
The second impediment is the assumption that we can take existing products and somehow sell them in these markets. [That] is unlikely to work because I think we need to fundamentally understand consumer needs. If you focus on that, many times you can improve upon existing products in the West. Let me give a simple example. GE has been in the game of producing EKG machines for a long time. They sell for about $10,000 in the United States. They are big and clunky -- 60 pounds or so. And they sit in a corner in hospitals.
[GE] asked a simple question [several] years ago: How do we get an EKG machine that doctors can use in rural India? That means it must be battery-operated. It must be light so people can carry it. It must have a printer attached so the doctor or the paramedic can read it on the spot. And it better be connected so that if they are not able to figure out what is going on, somebody remotely in a large hospital can diagnose and give a message on what needs to be done. So they created a product which weighs three pounds. It is networked, has a printer and can travel quite easily since it is battery-operated. It sells for $800 rather than $10,000. It has better, improved functionality; it is an extremely good machine, and it is technically the equivalent of what we have in the U.S. except it has more functionality. So now the FDA has approved it so it will be sold in the U.S. It has already been sold in Europe and is being sold in China. So I find continuously that BOPs not only serve micro-consumers and markets -- it creates micro-producers and, more importantly, it creates opportunities for innovation -- whether it is Tata's Nano or GE's EKG machine or Netbooks. There is a huge opportunity, when you focus on these markets, for making fundamentally interesting innovations.
Knowledge@Wharton: You referred to the development of the GE EKG machine for rural markets. Is there a difference between rural and urban markets at the Bottom of the Pyramid? How does the strategy to reach consumers in each of these markets differ?
Prahalad: I think the Latin American development of poverty is much more urban poverty -- there is some rural poverty -- but it is primarily urban poverty. It is shantytowns in Sao Paolo, Rio and so on -- or Mexico City. In India, you have both -- urban poverty and shantytowns. But also 70% of India still lives in villages. So there is a tremendous amount of rural market opportunity that requires extremely complex distribution from logistics frameworks, which is somewhat different from just being in an urban environment where at least the logistics and distribution are reasonably simple. So there is some difference between how you access rural consumers compared to urban consumers at the BOP level.
Knowledge@Wharton: We were speaking earlier about the obstacles. Could you address some of the cultural and communication barriers that prevent companies from being able to serve consumers at the Bottom of the Pyramid? How can they tackle these barriers?
Prahalad: I think it is reasonably straightforward once senior management recognizes that there is an opportunity to innovate and there is a market to be served. The difficulties of approaching these markets are not intercultural, but the ability to identify and immerse in consumer experience in these markets. Let me give a simple example. If I am Unilever, Nestle or Procter & Gamble, I recognize that emerging markets are going to be significant for me 10 years from now. All three companies will have more than 50% of their revenues coming from emerging markets -- China, India, Brazil, Mexico, Indonesia, Turkey, Russia and so on.
I also recognize a significant portion of these populations will remain in the BOP realm and, therefore, I need to straddle the pyramid. I need to serve the top of the pyramid, but I also have to serve people at the bottom. Therefore, I have to create either a new format ... or new products. In other words, I have to innovate. And I have to keep in mind the 4 As of penetrating these emerging markets like the traditional 4 Ps of marketing (product, price, place and promotion). The 4 As are awareness, access, affordability and availability.
Once you come to that conclusion, then operationalizing it becomes a lot easier than the other question: Are there India-like markets? Can I use India as a source of innovation? Can I use South Africa as a source of innovation? You don't have to participate in innovating for every market in the world. You identify critical markets and then you innovate there and let it flow to other markets with similar characteristics.
Knowledge@Wharton: Have any of your ideas about the Bottom of the Pyramid changed since you wrote the book? What has surprised you most?
Prahalad: I think three things have surprised me most. Even though in the book I said that BOP can be a source of innovation, [I was surprised by] how much of the innovation is happening in the BOP and the rate at which people are moving to innovate -- whether it is Google or Microsoft or Intel or AMD. It is quite amazing how fast it has moved.
The second thing that I think is very interesting is, while I talked about building ecosystems and so on, it is clear today that no company -- however big it is -- can afford to go it alone for cost reasons but, much more importantly, for access reasons. You have to participate with local NGOs. You have to participate with micro-entrepreneurs, small- and medium-sized enterprises, and in many cases with the public sector. So the boundaries of the firms, which are primarily large global companies -- [and the attitude of] "I'm going to do it myself" -- are becoming less and less possible. You have to partner. It is continuously becoming part of an ecosystem and, in many cases, building the ecosystem. That was a second big surprise.
And the third, which I think is very interesting ... is: How you can dramatically build global scale without necessarily making the investment? How do you get 2.2 million farmers to bring milk to 10,000 collection centers so that they become the largest processor of raw milk in the world -- almost 7 million kilograms of milk per day? That is possible because of highly decentralized origination and fairly centralized processing using logistics, cold refrigerated trucks or information technology to make this happen. It is the same thing with ITC -- four or five million subsistence farmers who collect and aggregate all the produce and make it world class. Similarly with Jaipur Rugs, which is a new case introduced in the book: Jaipur Rugs gets all the wool from Australia, New Zealand, Argentina and China and blends it with wool from Rajasthan, produces carpets using weavers who are highly distributed -- 40,000 of them in five states of India -- and then sells all the rugs produced in the United States. So you can even create a global supply chain where raw materials are sourced from around the world and value-added activities are created in a highly decentralized fashion, with significant quality control, and then new products are sold in the United States. So these have been interesting surprises. Even though they were partly mentioned in the first version of the book, the rate at which these models are evolving -- whether it is shipping flowers from Kenya or harvesting soy beans in India -- how you can build virtual scale has been quite interesting.
Knowledge@Wharton: One last question. What are the emerging rules of engagement for serving consumers at the Bottom of the Pyramid?
Prahalad: The rules are fairly straightforward.... The consumer environment is critical. We need to continuously balance global standards of safety, quality and such without any compromise for the Bottom of the Pyramid with a capacity to be locally responsive and, more importantly, to work within the ecosystem and provide affordability. And what you learn must be rapid. You first learn, then invest and scale -- not just invest and hope to learn. So the cycle is experiment at low cost, learn fast and scale rapidly so that you don't make investments hoping to learn. And, finally, don't push business model management practices and, most importantly, products and services that you are used to and accustomed to in the West onto these markets. In fact, the latest Harvard Business Review has a piece where GE is now recognizing that they have to create disruptive management models disrupting itself and its own management models if they want to succeed in countries like India. So the whole idea of building from within, learning rapidly and [having a] willingness to disrupt your own dominant logic is fundamental to succeed here.
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Logging you in...Tuesday, October 13, 2009
From The NYT. The Web’s Inventor Regrets One Small Thing: //
Keystone/Martial Trezzini, via Associated Press Tim Berners-Lee
Any conversation with Tim Berners-Lee, the creator of the Web’s bedrock software standards, tends to be fast-paced and nonlinear. When he worked at the CERN physics laboratory in Geneva, colleagues tried to get him to speak French instead of English, in hopes of slowing him down.
No surprise, then, that a half-hour dialogue with Mr. Berners-Lee, director of the World Wide Web Consortium and these days a professor at M.I.T., at a symposium on the future of technology last Thursday, fit that mold. I started, just for fun, with a historical question. If he were do it over again today, would he do anything differently? Any regrets?
Mr. Berners-Lee smiled and admitted he might make one change — a small one. He would get rid of the double slash “//” after the “http:” in Web addresses.
The double slash, though a programming convention at the time, turned out to not be really necessary, Mr. Berners-Lee explained. Look at all the paper and trees, he said, that could have been saved if people had not had to write or type out those slashes on paper over the years — not to mention the human labor and time spent typing those two keystrokes countless millions of times in browser address boxes. (Today’s browsers, of course, automatically fill in the “http://” preamble when a user types a Web address.)
With history dispatched, Mr. Berners-Lee focused on his current enthusiasm — getting more government data on the Web, in the interest of openness, transparency and efficiency. Mr. Berners-Lee is working with the British government in its efforts to do so, and at the symposium he cited some favorite examples of benefits of simple mash-ups like combining roadway maps with bicycle accident reports. The result, he said, helps bikers know which roads to avoid to reduce their chances of being hit by a car.
In a separate interview at the symposium in Washington, sponsored by the Finnish government and the Technology Academy Foundation, Mr. Berners-Lee said this was the year when governments around the world, led by Britain and the United States, are beginning to put vast amounts of information they collect on the Web. It is often seemingly mundane data in raw form, he said, including traffic, local weather, public safety and health data.
But the lesson of the Web, Mr. Berners-Lee said, is that making information and simple online tools freely available inevitably fuels innovation. If you liberate the data, he asked, who knows what applications people will create?
“Innovation is serendipity, so you don’t know what people will make,” he said. “But the openness, transparency and new uses of the data will make government run better, and that will make business run better as well.”
Great quote:
But the lesson of the Web, Mr. Berners-Lee said, is that making information and simple online tools freely available inevitably fuels innovation. If you liberate the data, he asked, who knows what applications people will create?
“Innovation is serendipity, so you don’t know what people will make,” he said.
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