Increasing clicks and reducing bricks – why Amazon may match Wal-Mart

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As the Internet moves to the next level of adoption I was excited to read that Amazon is going great with it’s non-books/CD’s business.  I was reminded of a recent conversation with a friend who is in the Web Development business who told me that even local businesses are upping their Internet presence as they cut back on “bricks.”

Why are “bricks” difficult to manage and more expensive? Just go into a Wal Mart and you realize the enormous effort it takes to keep the store going. Right from “greeters” to stocking assistants and shop floor associates with “May I help you” aprons gives you a sense of the mammoth tasks involved. Our local Wal-Mart has a re-organized floor space and everyone seems to be asking “where is the … whatever.”  Associates spend enormous time and energy trying to help as best as they can.

On the other hand, just go to the Wal-Mart website and fill the search box with what you are looking for and hey – you got it. You want to check prices- go to Amazon.com or comparison web sites,like Biz Rate, to check the prices. Search and comparison allows consumers to do all the work of deciding and also the labor of checkout online. The firm has to just focus on quality and fulfillment. Think of all the customers who get and buy all they need at Wal-Mart and do the self-checkout.

All in all there are interesting times ahead for all non-perishable items, going forward as more and more consumers decide to shop or at least compare prices online.

Health Care and Patient Information Online

In all the health care debate – the question of  patient information sharing is not getting enough importance. Should it?

Probably yes if you see how doctor's offices and hospitals struggle with trying to keep track of information. Just think how many times you repeat the answer to your allergy question!!

On the provider  side "Defensive medicine" is partly to blame –HIPAA and medical malpractice lawsuits impact the information behavior of the medical establishment. Too many paper records floating around, tests repeated, unnecessary tests and related documentation with attendant costs and inefficiencies are some examples.Coupled with this are different technologies in different doctor offices that do not speak to each other. So frequently you have the ridiculous situation of creating paper from a digital source just because systems do not speak to each other. Firms like Novo Innovations ( now apparently merged with Medicity)  are trying to do just this.

On the patient side, society is changing with social media (Facebook,Twitter) making you share your most mundane activities. The problem is that while  you can have a fancy persona on Facebook but can't really change the numbers on your medical record ….

You cannot leave it to all patients to digitize their records ( Google Health  is trying to do that for the really motivated). For the insured and lucky majority  among us – there is no incentive for health or dental insurance companies to share information ( so you take two sets of X Rays without the benefit of X-Ray comparisons when  you change dentists). In contrast, life insurance companies actively share any medical information they gather from their policy applicants- to appropriately price life insurance risk.

The task in healthcare is mammoth, but probably it should be mandatory to have both insured and un-insured patient data online, as it is created, so that better care and lower costs occur. Or there should be some kind of financial incentive to the medical establishment to post patient data,securely online. It will happen…. but it can't be soon enough.

Where does the employee fit in the value chain?

Ask a random employee to explain her/his role in the organization’s value chain. You’ll find that frequently there is no clear answer ( sample: I don’t know – I am responsible for accounts payable).Apart from raising existential questions (what am I doing here ?) the organization just seems to lose out in the employees huge potential contribution. And without employees on the same page, on the value creating mission,you can be sure that other value chain partners like suppliers and distributors will be equally clueless.

To  remedy this situation organizations have a whole host of HR and Organizational Development programs including annual plans,reviews and so on. Obviously there is little alignment between all these initiatives and is a whole other subject.

A simple start is to identify direct value chain touch points and make sure that these employees understand their roles. Thus a motivated and clear accounts payable person would be able to give a head’s up to a supplier’s accounts receivable person when payments are getting delayed. Imagine how much this would do for your supplier motivation! Once direct value chain touch points start getting the picture leadership should try to get the indirect  value chain touch points ( eg plant maintenance?) to understand their roles in the greater purpose of the organization.

About StratoServe.

Innovation and the recession- store brands gain power

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"Necessity is the mother of innovation"  and the recession has certainly been a situation of extreme need for organizations and individuals alike. Store brands have gained power during the recession.

Consumers are looking to save money and happy to buy store brands not only in the grocery stores for milk  but also in pharmacies for both prescription and OTC (over the counter) products. In the pharma market – the store brand production and marketing is quite straightforward. For an  (OTC) product like the allergy treatment Claritin the store brand ( Equate from Wal-Mart, Rite-Aid or CVS from the pharmacy chains) will be placed next to Claritin and will have the same out of patent ingredient (Loratadin 10 mg). In many cases the packaging or price label will mention "compare with ingredients in Claritin." The consumer understands  easily at the point of purchase and moment of truth! In better economic times, consumers would pay a price premium for a brand. The brand gives more comfort but the consumer becomes a risk taker ( and an innovator for the tough times) by trying out the lower priced store brand.

During recessions, brand marketers realize more sharply than ever, that their competitors are not really other brands but store brands which zoom off the store shelves. Therefore,this is the time to focus on innovation so that as things get better and consumers feel more confident, they'll try new value adding products from established brands. If no new products appear from established brands, many consumers who shifted to store brands during the recession, may not come back in better times.

Just check your local grocery  and pharmacy store shelves to see what I mean.

Strategies in the Age of Turbulence- Dealing with Risk and Uncertainty.

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Just returned from Chicago and the Summer AMA ,which was a great conference. The session chaired by Philip Kotler on Age of Turbulence was great. First there was a presentation by John Caslione on a new book he has co-authored with Philip Kotler called "Chaotics" followed by a talk by  Jag Sheth on his new book Chindia Rising. Here are some interesting things I took away from the presentations.

John Caslione mentioned about how businesss cycles are changing. Although there are signs of a recovery , the business cycles are likely to be come much shorter and unpredictable. In other words, should not expect a sustained recovery of 10-12 years but many sudden peaks and troughs. To deal with thise sudden ups and downs, the Chaotics book offers suggestions to managers. An interesting suggestion is to revive "scenario planning " to have game plans in advance. Also managers should recognize that "risk" can be calculated but "uncertainty" has no precedence and quick reaction to new situations will be a skill that managers have to develop.

Jag Sheth ,as usual,was brilliant. He joked about getting a Jaguar and calling it "Jag's Jag" now that Tata Motors has acquired Jaguar. He talked about how well Lenovo the Chinese company is doing. The "aha" moment  for me was a comment about how the entire academic field including textbooks on international marketing is about developed country companies expanding into developing country markets. Today the world has changed so much that developing country companies are expanding to other developing countries. Jag pointed out the intense activity in Africa by Chinese and Indian companies and generally lower activity by developed country organizations.  More about strategy for this new world in Jag Sheth's book "Chindia Rising."

All in all, the packed  audience did think that this early Sunday morning session was really worth attending!

“Cash for clunkers” great for auto,consumer confidence and green economy

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It turns out that the tackily named "Cash for clunkers" paltry 1B $ (now 3 B $ ) government program is doing more to cheer the American spirit than all the trillions in different types of bailouts.I have been wondering why the "Cash for clunkers"  is creating such excitement. Here are 5 reasons why:

  1. "Cash for clunkers" may sound tacky but is a clear and simple message.If you have a "clunker" you can get cash for it.
  2. Auto dealers are excited. There was an auto dealer on TV who has 61 deals going. For good measure he advised the audience to ask for proof of scrap value of the clunker and seek the credit from any dealer you go to.
  3. This is a great way to boost confidence of the wary consumer who has good credit to step into a auto dealer's show room. Auto dealers had become ghostly in the last few months.
  4. Demand at the dealer means more production at the auto plants and they sure need production. So do the auto ancillaries.
  5. Above all, the cause is to reduce pollution and that sounds like a great cause.

Outliers by Malcolm Gladwell- Three Takeaways

Outliers by Malcolm Gladwell- 3 Takeaways @ StratoServe

Just finished reading “Outliers” by Malcolm Gladwell. Good book.

Gladwell is great at putting his point across. So when I saw the book at my local library on “a fast track 7 day” loan, I picked it up. Also read it over the weekend.

“Success” according to Gladwell is not only a function of one individual’s grit and determination but is related to a whole bunch of “preparation” that goes in by family,culture,history,date of birth and so on. I liked the analysis about math ability and Asian languages where he claims that Asian kids do better in math because the language allows you to deal efficiently with remembering  numbers. Try repeating 2,3,5,6,9,7,1  and if you basically think in English – you might have a hard time. However, thinking in Chinese or East Asian languages should give you a leg up as each number can be pronounced more quickly. Therefore the total word length is shorter and easier to remember in these languages.

I wish Malcolm Gladwell had done more with the takeaways from the book. So here are  my three takeaways:

  • Follow your heart – if you can put 10,000 hours behind something you’ll be an expert. I  now know why academia ensures that you spend more than 10,000 hours between your PhD and getting published from it. Naturally, you need to love what you  do, it’s not really only the 10,000 hours.
  • Understand your own culture better-in the context of the culture you are working in. I now know the speaker in the US is expected to make everything clear and the listener takes what is said, literally. The Gladwell discussion about Korean air crashes and Hofstede is riveting.
  • Embrace who you are -your background ,family history,culture – and success is waiting. The Gladwell discussion of the clothing business  and East European immigrants in New York is fascinating.

About StratoServe.

Billy Mays-Death of a true salesman

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The passing of Michael Jackson had overshadowed all other news but I thought we should not miss out celebrating Billy Mays. I find Arthur Miller’s play somewhat unkind to the sales profession and thus the “true” for Billy Mays. Billy Mays was a true salesman and a great pitchman on TV.

What makes personal selling so effective is that when you speak directly with a prospect,face to face and one to one, it has the biggest impact on closing the sale.To do so via television is very difficult and Billy Mays was very good at it . You wanted to believe him and put out the $20 or so that he suggested you spend to acquire a product that sure looked useful.He did the “convincing that it is useful” really well. To do so for a mass TV audience is a rare and remarkable skill.  My guess is that Billy Mays was not only able to sell the products he pitched but the products “stayed” sold. Probably customers who bought Billy Mays pitches returned less product as he upped the satisfaction levels right at the sell stage.

Here is a clip to celebrate Billy Mays:

http://www.youtube-nocookie.com/v/nkuReA-AGa8&hl=en_US&fs=1&border=1

Five Differences between B2B marketing and supply chain managers

Here are five differences between B2B marketing and sales managers and supply chain managers as a sort of continuation of my earlier post:

  1.  Marketing managers being outward facing are constantly looking for opportunities sometimes without regard to what their organization can really do. Supply Chain managers first look inside before looking outside at suppliers – to ensure a good fit.
  2. Marketing and Sales managers are more social compared to Supply Chain Managers who are more conservative. The former do the chasing of prospects while the latter need to stave off marketing people who are the firm’s upstream suppliers. 
  3. Marketing and Sales people are measured by sales (volume and price) while Supply Managers are assessed first on availability of goods and services required by the firm,  then on cost.
  4. Marketing managers work on an open canvas of the market and prospective customers and use techniques like segmentation,targeting,market research and the 4 P’s. Supply Chain managers also have an open canvas of suppliers but they need to make supplies work in their firms value add process- any snags and they are in the direct line of fire! Supply managers are therefore much more risk averse and deliberative.
  5. On a more fun and more social note you’ll find many more marketing groups on the web and off it than supply chain managers. And when it comes to professional meetings marketing people may have extremes of no food to open bar at a high price ticket. Supply chain meetings will stay steady with modest burgers, pizza, strict cash bars, and a predictable member fee.

Organizations need to understand and mobilize the strengths and traits of these quarter backs of the firm as they grapple with global supply chains at the back end and global markets on the front end. About StratoServe. 

Input-process-output and the supply-firm-marketing chain

The input-process-output ( ICT model) is a way of looking at the firm’s value chain. Supply managers handle the input coming in and the marketing folks handle the output coming out.

Like:

   global suppliers ->supply chain->[firm-]->marketing->global customers

Supply and Marketing folks are people who sit at either end of the firm and look at the world outside in the firm’s value chain. The marketing manager reaches out to customers and supply chain managers reaches out to suppliers and also need to reach “in”to internal firm users.Both off course don’t formally talk to one another – organizations are not set up to encourage the talking.  Unless there are operations review meetings, that can become mindless and boring. ERP systems can help but ERP speaks to only data and not the gut feel of these important folks.

If you look at the firm as just a processor – focused on creating superior value for its customers-you start realizing how much firms miss out in tapping on to the combined knowledge and expertise of their input and output side teams. More on the ICT and input-process-output.

About StratoServe.