Mistakes that failed to kill a classic product

Brands

THE LEVI STORY

Mistakes that failed to kill a classic product

There are not many genuinely classic brands, but Levis have earned themselves a place among the Coca-Colas, Zippos, Bics and 2CVs. Classic brands used continuously and in an unchanged format for 100 years are exceptionally rare in the clothing market, dictated as it is by fickle demands of fashion. Levi Strauss’s achievement is formidable: from a small family firm to a massive international concern.

The years in between have seen not only the evolution of a classic brand but also some massive, equally classic, marketing errors. The 501 initiative is the nearest Levi Strauss has ever come to co-coordinated international marketing, and represents a serious attempt to re-focus the entire company after several disastrous years in international market.

In the early 1960s, Levi Strauss was sky-rocketing. American films and music had spread to Europe and jeans had come to symbolize a new, youth culture. Kids decided that denim would become their uniform, a visible statement of a new, exciting lifestyle. Levi Strauss was still a purely American company, with no overseas operation. Now that a brand new market had presented itself, international expansion had to be looked at.

Initially, the company used local agents to sell the products which were shipped in from the States. Teenagers trekked all over European cities, looking for a retailer who stocked the all-American jeans. There was still no international marketing, let alone international advertising. The whole international success story happened almost by chance and certainly without any co-coordinated effort from San Francisco.

At the same time, in America, Levi Strauss diversified at frenetic pace into all sorts of unrelated areas, including Staprest trousers and Resistol hats. The Levi label was put on all these non-jeans products, and the company grew.

By 1974, now public company, Levi started manufacturing locally throughout Europe. It moved its European advertising account from Young and Rubicam to McCann-Erickson, which took over all the non-American advertising. But Levi Strauss was coming unstuck: nobody knew what the Levi name stood for any more. All the advertising for the different products was saying totally different things about the company and the unrelated products had begun to damage Levi’s volume base – its jeans. What kid, seeing his dad buy Levi polyester trousers, was going to rush out and buy Levi jeans? Levis were old-fashioned, said the consumers.

Something had to be done – and fast. The diversification programme was put into reverse gear, and the Levi name was taken off unrelated products. The company retained the other brands, but distanced them from the jeans products, or made them more jeans-related. Levi Strauss realized that it had to stop trying to drag value out of its most valuable property – its name – and go back to its roots, becoming once again the premier jeans company in the world.

Brands

CONSUMING FASCINATION

by Alison Smith

The global brands is real enough, but what of the global consumer? Nicholas Trivisonno, the chairman and chief executive of AC Nielsen, the US-based international market research company, believes such a character is fictional. “There is no global consumer. Each country and the consumer in each country has different attitudes and different behaviors, tastes, spending patterns”, he says.

Nielsen should be in a position to know. It has a presence in more than 90 countries across three continents, and works for more than 9,000 clients. Its revenue last year was $1.4 billion, out of a $12 billion global market research industry.

Mr. Trivisonno specifically includes teenagers in what he says, though they are often seen by marketing executives as people who have more and more in common worldwide – and to whom some of the leading global brands most appeal.

“We are seeing changes in consumer behavior, but not a convergence of consumer behavior”, he says. He believes the reason for this is that even though a global brand may get similar reactions in very different markets, the consumer will view it against different sets of rivals in the market.

“Take a global brand of soft drink. Acceptance of that product may be the same, but the competitive set in any particular country will be different – it could be mineral water, coffee or other types of soft drinks. You need to look behind not only reaction to the global brand but to competitors` brands.”

Defining the competitive market is critical to marking sensible use of market research information, and boundaries are moving more often.

Mr. Trivisonno gives the example of a breakfast cereal manufacturer. At one time competition for cereal would have been form he brands that it stood alongside on supermarket shelves: these days it may be with other breakfast foods, such as yoghurts. “Now it`s all about share of stomach, share of thirst,” he says.

Advertising

IN PRAISE OF TV COMMERCIALS

by John Hegarty, creative director of Bartle Bogle Hegarty, an advertising agency.

Imagine for a moment you are the marketing and sales director of a large company. Achieving your sales targets is giving you sleepless nights. The company`s share price is under pressure, the board is getting nervous, City institutions are questioning the company`s investment policy.

How can you generate extra sales quickly and effectively though your consumer base, and expand your potential market?

Suddenly, I appear. I have invented a thing called the `television commercial`.

It is a new and unique way of talking to consumers. Between popular programs, I will sell you slots of time – anything up to 60 seconds. I will even negotiate for you the whole break, so on one else can complete with you.

Within this spot you can say whatever you like in whatever form you like. You control the dialogue, presenting your product or service any way you wish.

Of course, the television commercial has been with us since 1955. Since its arrival, it has been one of the most, if not the most, effective creators of brands and wealth. So why is it that you can hardly pick up a marketing magazine without reading about the death of this medium?

Before you rash to the Internet, or search for some fashionable alternative media, look at these facts. The average adult in the UK watches more than 24 hours of TV every wk, 60 percent of children have a TV set in their bedrooms. One in four adults watch the soap opera Coronation Street, even more watch East Enders. So why do we read that the likes of Cadbury, the chocolate manufacturer that sponsors Coronation Street, think most advertising is nothing but froth and are putting more money into programme sponsorship? Why did we read that Heinz was pulling out of TV advertising (it has since gone back)?

Could it be that as the medium has become more competitive some companies have found it harder to create advertising that works? The medium is not a guarantee of success. It has to be used imaginatively. Perhaps this is the heart of the problem – it`s just that some companies find this process difficult to manage.

 

From the Financial Times

 

Advertising

Employment

Bait for the headhunters

That unexpected phone call offering a plum job with another firm isn't always just a matter of chance. Given a little planning, the talent scouts can be directed to your door. Stephanie Jones explains how.

"Naturally, I was headhunted into my present job," a typical City whizz-kid boasts. "Headhunters ring all the time. During Big Bang they phoned us so often that we put their calls over the office loudhailer. Then we'd have a laugh when the headhunter said: “Confidentially, I have a uniquely exciting opportunity that might just interest you Being headhunted is not only for young bloods and famous chief execu­tives. Almost 90 per cent of the top 1,000 companies use executive search consultants to find senior people. In the last few years they have been joined by smaller companies, accounting and law firms, chartered surveyors, architects, private hospitals, the media, and even local authorities and Government depart­ments.

So how do you attract those ego-trip phone calls which spell a new career opportunity?

John Harper, 33, has been headhunt­ed three times. His first job was as a graduate trainee with Procter & Gamble where, after five years, he was a brand manager on Pampers, which he had launched in the UK market.

He was invited to Kenner Parker (the American toy and games manufacturer responsible for Trivial Pursuit, Monopoly and Care Bears) where in five more years he rose to be European marketing and operations director.

Then he was lured away into Avis, the car-hire giant, and two years later head­hunted again into the job he started last week as international marketing director for Reebok, the sportswear company. He won't quote figures, but each time he moved his salary and benefits showed substantial improvement.

Not one of these positions was adver­tised. Indeed, before his latest move he was not considering a career change at all. So his advice to those hoping to hit the headhunt trail is born of experience:

• First, start out with a large interna­tional company. Procter & Gamble, Unilever, Shell, IBM and Mars, for exam­ple, offer not only excellent training but a ready-made network of contacts around the world, arguably more helpful to a career than being a Harvard alumnus.

• Secondly, ensure you are noticed by superiors. Headhunters frequently find people through referrals from a source, usually a more senior person who suggests suitable names. Successful and highly-respected mentors should be cultivated, so that they will think of you when approached.

• Thirdly, make an impression out­side your company. The research depart­ments of search firms take note of execu­tives mentioned in the Press and trade journals.

• You can't be sure exactly which par­ticular self-publicizing effort led to an approach (headhunters rarely reveal how they found you, and it is naive to ask) but developing a profile stands you in good stead. Whenever Kenner Parker was launching another toy or game, John Harper's name repeatedly cropping up in Marketing, Marketing Week and the Financial Times played a useful part in his progress.

• Fourthly, when you want to move - and don't stay in the same job, with the same company, for more than five to seven years - make it known. According to Harper it's rare, and only when you're hitting the big time, that a headhunter will call out of the blue.

Most headhuntees have put out the word that they are looking, and have taken the initiative by sending their CV to selected research consultants. When moving from Kenner Parker to Avis, Harper passed his CV to fifty searchers, identified through friends, contacts and other headhunters.

The likelihood that one of the search firms will be looking for someone just like you is remote, so it's wise to cast your net widely. Harper was headhunted into Avis by Bruce Rowe of Rowe International in Paris - not only one of his targeted search consultants, but a fel­low ex-Procter & Gamble man, which underlines the value of his first piece of advice.

Finally, keep in with headhunters. This includes a willingness to act as a source. Harper admits he would not recommend anyone he was current­ly working with - it would conflict with his allegiance to his employer. But he will mention outstanding people he has worked with in the past.

©The Daily Telegraph

Employment

The mercenary manager

Companies that have warned their workforces to confront the realities of job insecurity and limited careers are finding they have created a new type of mercenary manager prepared to move to the highest bidder, according to a new report. The survey by Ashridge Management Centre says the wave of insecurity that affected managers during the corporate downsizings of the early 1990s was an unpleasant experience for many, but it has taught them to be more self-centered and independent about their careers.

The backlash for companies, according to Laurence Handy, Ashridge's director of research, is that many managers are now more likely to look elsewhere to further their careers if their current employer is not meeting their expectations. “They are saying they want something that's interesting, and they want paying for it. You now have a very hard-nosed group of people who have got the message,” he said.

Nearly three-quarters of the 553 managers who responded to the survey said they felt in control of their jobs. “This is a marked change from previous years” research when the message coming from managers was that they did not feel in control of anything; said Mr. Handy. ‘Life has moved on and now managers are flexing their muscles.' he added. The pressure is moving over to the other side with the laws of supply and demand and now companies are screaming that they are spending a fortune on headhunters.'

Managers are keeping their options open, says the report. More turn to their partners for career advice than to the personnel specialist or to their immediate boss. Trust in senior management also appears to have declined in some companies. Many of the managers interviewed in the survey complained that fear and threats were the prime motivators in their companies.

From the Financial Times

Employment

JOB ADS:

READING BETWEEN THE LINES

Checking out job advertisements is popular with executives worldwide. But though the activity is universal, is the same true of the advertisements? Are executive positions in different countries advertised in the same way? A comparison of the jobs pages of The Times of London, Le Monde of Paris and Germany`s Frankfurter Allgemeine Zeitung suggests not.

First, what UK job seekers consider an essential piece of information – what the post pays – is absent from French and German adverts. It is often left to applicants to raise this themselves. In contrast, most British advertisements mention not only salary, but also other material incentives including a car and fringe benefits. French or German advertisements rarely refer to these.

The attention given to rewards in the UK indicates the importance of the job and its responsibility. In Germany and France, that information is given by the level of experience and qualifications demanded. Salary can be assumed to correspond with this.

If French and German adverts are vague about material rewards, they are precise about qualifications. They usually demand `a degree in…`, not simply `a degree`. In Germany, for example, a technical director for a machine tool company will be expected to have a Dipl.-Ing degree in Mechanical Engineering.

French advertisements go further. They may specify not just the type of grande ecole degree, but sometimes a particular set of institutions (Formation superieure X, Centrale, Mines, HEC, ESSEC), these being the most famous grandes ecoles.

All this contrasts with the vague call for `graduates` (or `graduate preferred`) which is found in the UK. British companies often give the impression that they have a particular type of applicant in mind, but are not sure about the supply and will consider others. Their wording suggests hope and uncertainty, as in this advertisement from The Times: `Whilst educational standarts are obviously important, a large measure of personal oomph* is likely to secure the success of your application`.

In the UK qualifications beyond degree level make employers nervous, but in France or Germany it is difficult to be `overqualified`. Many people on Germany executive boards have doctorates and the French regard five or six years of intensive post- baccalaureat study at a grande ecole as ideal training. British managers are not selected primarily for their intelligence, as managers are in France or for their expert knowledge, as in Germany. Instead the British give importance to social, political and leadership skills.

This difference also shows in the personal qualities mentioned. British advertisements stress energy, ability to communicate and motivate. German advertisements like achievement, but it tends to be less personality-driven German companies want candidates with sound knowledge, experience and competence in their field. They rarely recruit novices as do British employers. French advertisements refer more to intellectual qualities like analytical aptitude and independence.

Even the tone of the job advertisements is different in these three countries. By French and German standards, British advertisements are very racy**. They attract your executives with challenges such as: `Are you reaching your potential?`, whereas French and German advertisements are boringly direct, aiming to give information about the job rather than to sell it.

All this points to three different conceptions management. The French regard it as intellectual complex, the Germans as technically complex, and the British as interpersonally complex. But they agree on one thing: it`s complex.

Jean-Louis Barson

May 1993 INTERNATIONAL MANAGEMENT (adapted)

*oomph = enthusiasm

**racy = bold, audacious

Innovation

Innovation

Getting ideas across

Michael Skapinker

Why can't companies produce_ more innovative ideas. "Because the structure of large organisa­tions is against innovation, and they are too conservative. New ideas also often threaten the profits of existing products and services.

Now, two books* have examined the problems of innovation in large organisations and what companies can do to develop their employees' ideas. There are some depressing stories. Being innovative can damage your career. Of the leaders of 12 innovation projects studied, four resigned from their companies, two threatened to resign and two were dismissed.

Several innovators felt they would be poorly rewarded if they succeeded and criticised if they failed. The origin of a successful breakthrough project is often for­gotten,' one innovator warned, 'but a research and development effort that fails is never forgotten.'

Many innovators are technically minded and find it difficult to explain their ideas in business terms.Many do not even see the business benefits of their ideas until these are pointed out to them.

From the Financial Times

*Richard Leifer et al.: Radical Innovation, Harvard Business School Press, 2001 Michael Schrage: Serious Play, Harvard Business School Press, 1999

 

Money

Money

Funding IT Start-ups

Nick Denton

Venture capitalists (VCs) act as headhunters. An entrepreneur who approaches a VC for finance will not typically have management experience. If you hire a good CEO, the business will take care of itself; but usually an entrepreneur has no network and no idea who to hire,' says Mr. Tim Draper of Draper Fisher Associates. So the venture capitalist usually takes on the role of recruiter, finding the entrepreneur some experienced executives.

Second, VCs provide advice and support. Accel Partners, for instance, gives office space and time to entrepreneurs so that they can develop their business plans. For inexperienced entrepreneurs, VCs are advisers, too. 'We are professional coaches,' says Ms Ann Winblad, co-founder of Hummer Winblad.

Third, an active venture capitalist puts the companies in which it invests in touch with professional services firms such as lawyers and accountants specializing in information technology. Start-ups backed by a well-known venture capital firm can often obtain legal and other professional advice at a lower rate, until they have the revenues to cover full fees.

Fourth, the backing of a leading venture capital firm, which has identified technology trends correctly in the past, brings credibility with commentators and the start-up's potential customers. 'Far from just providing money, the venture industry brings contacts and confidence,' says Mr. Neil Weintraut of 21st Century Venture Partners. 'We create markets as much as we create companies.'

Finally, the most ambitious venture capitalists act as boosters, not just of a few companies, but of the whole category into which an investment falls. They attempt to create excitement around a particular concept, such as the Java computer language, which will make people take it seriously as a business.

From the Financial Times
Money

Ethics

Slavery in shoe factories

Millions of pairs of shoes sold on the UK`s high streets are produced in the Third Word under slave labor conditions, according to a published yesterday.

The research highlights working condition endured by thousands of workers in places such as China, Vietnam and Brazil, where child labor, poverty and health risks are common.

The report – Just How Clean Are Your Shoes? – has been prepared by the catholic aid agency Cafod. It does not, however, want stores to boycott shoe produced in developing countries because this could lead to the closure of some factories, causing further poverty for workers.

Instead, it was retailers to lay down rough rules to ensure overseas suppliers pay sufficient wages to meet basic needs, offer basic employment rights and refuse to use child labor. And it wants companies to employ independent inspectors to make manufacturers keep to their code of conduct.

British consumers spend ₤5 billion a year on 213 million pairs of shoes – and four out of five pairs are imported. Last year, one in every four pairs of shoes sold in the UK was made in China, where shoes can be produced ₤1.77 a pair. It would cost ₤13.95 to make similar shoes in the UK. In some Chinese shoe factories, new workers can be paid 38p for a nine-hour day and up to a third may be deducted for board and lodging. Workers have only one or two rest days a month and three days holiday a year.

In Shenzhen, China`s booming enterprise zone just outside Hong Kong. Cafod found a factory employing children where there were no fire exits or fire extinguishers. Two years ago twenty workers died in a shoe factory in the same region.

Cafod highlights the punishment and humiliation to which some workers are subjected. It was reports of manages punishing workers for slow work by foreign them to kneel with their heads on the floor. In Brazil, women are regularly examined to make sure they are not pregnant when they apply for jobs. In one factory workers were allowed only four minutes a day to use the lavatory. Cafod is also worried about the health risks to workers, especially children, of using industrial glues and solvents without any ventilation or proper protection.

A spokesman for a British retail chain said the company passionately deplored the use of child labor and frequently inspected suppliers’ premises. It was considering toughening the code of conduct.

Ethics

Being ethical

Being ethical can be a clever marketing strategy. Increasingly, consumers are influenced by ‘non-commercial’ factors, such as whether a product harms the environment. Firma such as Ben & Jerry’s, an ice cream maker, and Body Shop International, a cosmetics retailer, have strengthened their brands by publicizing their ethical standards. Cummins Engine, a maker of diesel engines, made its products greener whole lobbying for stricter pollution laws.

But such ethical self-promotion can be dangerous. Body Shop was publicly forced to change a claim that its products were not tested on animals (some of the ingredients in its cosmetics had been tested on animals by other firms in the past). The error led many consumers to question Body Shop’s ethical standards.

Some think that the best way to persuade managers to think more ethically is to take account of stakeholders. Laura Nash of Boston University’s Institute for the Study of Economic Culture argues that managers should see their role in terms of ‘covenants’ with employees, customers, suppliers and so on. Such covenants should have a single goal: to ensure that a business creates long-term value in a way that is acceptable to all these ‘stakeholders’. A manager would view his business in terms of relationship rather than products; and see profit as a result of other goals rather than an objective in itself. But such ideas tend to go against shareholder capitalism.

The best answered may be a simple ones. Ethics rules should be clear (for instants, should an employee pay bribes where this is accepted business practice?) and they should be regularly tested. Some companies are turning to ‘ethical audits’. In its annual report Ben & Jerry’s carries a ‘social performance report’ on the firm’s ethical, environmental and other failings. Carried out by Paul Hawken, a ‘green’ entrepreneur, the audit has sometimes frustrated Ben Cohen and Jerry Greenfield, the company’s founders. So far, however, they have always published it. That may be why Ben & Jerry’s reputation remains good where others fade.

From The Economist

Change

A NEED FOR MORE SPEED

Pearl, which specializes in the low to middle income end of the life assurance market, was in crisis when Richard Surface, an American, arrived from Sun Life. Market share was falling, costs were rising, the product range was too complex. “The best of the sales force were leaving, the worst were hanging around, productivity was dropping and we were selling uneconomically”, he says.

His solutions were radical: completely changing management, cutting back costs and halving the product range. Twelve out of 14 top managers were replaced, with four “outsiders” chosen to provide a broader perspective. The most important reform concerned the sales force. Instead of having one sales agent covering an area, Pearl introduced teams of three – an area manager and two agents – covering a wider area. It was a delicate task, not just because it involved cutting more than 1,000 jobs but because it also meant pay cuts for some who stayed. While some agents were promoted to area managers, the two “supporting” agents had less responsibility.

Mr. Surface insisted on implementing this new structure in a few weeks. He believed the sales force was demoralized and further uncertainty would be bad for the company. “We go fast around here. We don`t plan everything in micro detail. We accept we are going to make mistakes”. He has some blunt advice for companies when it comes to getting staff behind a big upheaval: “Too many companies think you have to communicate with everybody in the same way. You have to segment your staff for the same reasons and in the same way as you segment your customers”.

Mr. Surface identifies three types of employee: high flyers, “anxious” people and “cynics and refuseniks”. Anxious people want certainly and leadership, he argues, while refuseniks are basically lost causes. “Many managements make the huge mistake of trying to convince them and turn them round. We didn`t. we drove round them. We don`t waste time trying to convert the unconvertible”, he says. “You don`t have to bring all staff with you in a major change. You need a coalition. You start with the vital few in key jobs, the anxious will follow, and the cynics will step aside”.

The figures suggest Pearl got it right. Operating costs were £411 million in 1995 but the following year were £265 million. Market share recovered to 2.2 per cent from 1.5 per cent in 1995, but it is still well short of the 6 per cent level achieved in the 1970s.

Change

Change

Change

Strategy

Scenarios

By Tony Jackson

Making up stories about the future might seem a curious occupation for grown-up executives. But there was a time, s in the 1970s and early 1980s, when scenarios were a familiar part of the planning process. They then fell out of fashion for a while, as did strategic planning overall. Now that strategy is making a comeback, so are scenarios. In essence, the scenario technique consists of describing a range of possible futures. Let us suppose that the Chinese economy collapses, or that it flourishes: that the Internet enriches the telephone companies, or drives them out of business. What then?

The aim is not to make predictions, but to provide a framework into which subsequent events can be fitted. If executives have thought out the possible outcomes, they should be quicker to react when one of them arrives. As Arie de Geus, former head of planning at Shell, puts it, they can remember the future.

Since the oil industry undertakes vast single invest­ments such as refineries or petrochemical complexes, scenarios appealed as a form of risk analysis. What would happen if the oil price soared or plummeted? What was the probability of a given host government collapsing, or nationalizing the industry?

Then came the reaction. In a recent book, The Living Company, Mr. de Geus describes how in the 1980s, Shell's senior executives became skeptical. Making up stories, they said, was great fun and good public relations. But how many decisions could be attributed directly to the scenario process?

Over the last 10 years, says Roger Rainbow, Shell's present head of planning, there has been more emphasis on getting the managers involved. The trend has been to get them to bring scenarios into their decision processes,' he says. 'We need to help people make decisions on quite specific issues, down to the level of a specific strategy in a given country, or a specific project.'

At the same time, he reports, there is a rising level of interest outside. 'We get one or two companies a week calling us up to ask our advice on scenarios. If we were a consultancy, we'd be making a lot of money.' There are a number of consultancies doing just that. Northeast Consulting, of Boston, was founded by a group of consultants who had previously done scenario work for IBM.

According to Keith Anderson, senior associate for Northeast Consulting Resources in Europe, the difference in origins is fundamental. Where Shell began with geopolitical change, the computer industry was more concerned with detailed developments in technology.

As Mr. Anderson puts it, the task is not merely to describe possible futures, but to identify the preferred one and work to bring it about. Microsoft, he observes, was dismissive about the Internet at the outset. When it perceived its mistake, it set out not merely to catch up, but to take a lead in determining how the Internet developed.

From the Financial Times

Culture

CORPORATE ROAD WARRIORS

The characteristic that most distinguishes today`s executives is not their technological sophistication but the amount of the time they spend on the move. To observe the real impact of globalization, you only have to walk around an international airport. Among the crowds of tourists, an army of road warriors and corporate executives march red-eyed across the world`s time zones. Global markets mean constant global travel.

Management consultants are among the most frenetic frequent fliers. They routinely cross continents for a face-to-face meeting and then return home. They point to the importance of personal contact. For a profession built on rational analysis, it seems illogical. Face-to-face meeting when one of the parties is exhausted and jet-lagged seem unlikely to benefit anyone. But most consultants act as if e-mail and satellite links had never been invented. For the masters of logic, only the face-to-face experience will do.

The question is why all the technological gadgetry has failed make a dent in the amount of business travel? The answer seems to lie with a simple statistic. More than 90 percent of human communication is non-verbal (some studies put it as high as 93 percent). Facial expressions, body language, eye contact – these are all key conduits. Without them you can`t get past first base. It`s tough to bond over the Internet/ “Most of us still want face-to-face contact”, says Cary Cooper, professor of organizational psychology and health at the University of Manchester Institute of Science and Technology (UMIST). “A lot of people rely on their personalities to persuade others”, he says. “That doesn`t come out in e-mails, and video conferencing is limiting. They may also want to influence people outside of meeting. That`s why eyeball-to-eyeball is so important. We still don`t fully trust the technology even though it`s been around for a while. We prefer to talk behind closed doors”.

We also read body language to pick up the atmosphere, he says, “We walk into a meeting and pick up the feel of what the other people are thinking. We watch how Y reacts to what X is saying. You can`t do that by videoconference. Most of us don`t have the self-confidence to believe we can built the sorts of relationships we need with clients and suppliers down the wire. Business travel won`t decrease for that reason. It`s a shame because at the moment we`re burning out an awful lot of people”.

Culture

Culture

GOOD MANNERS, GOOD BUSINESS

Nobody actually wants to cause offence but, as business becomes ever more international, it is increasingly easy to get it wrong. There may be a single European market but it does not mean that managers behave the same in Greece as they do in Denmark.

In many European countries handshaking is an automatic gesture. In France good manners require on arriving at a business meeting a manager shakes hands with everyone present, this can be a demanding task and, in a crowded room, may require gymnastic ability if the farthest hand is to be reached.

Handshaking is almost as popular in other countries – including Germany, Belgium and Italy. But Northern Europeans, such as the British and Scandinavians, are not quite so fond of physical demonstrations of friendliness.

In Europe the most common challenge is not the content of the food, but the way you behave as you eat. Some things are just not done. In France it is not good manners to raise tricky questions of business over the main course. Business has its place: after the cheese course. Unless you are prepared to eat in silence you have to talk about something – something, that is, other than the business deal which you are continually chewing over in your head.

Italians give similar importance to the whole process of business entertaining. In fact, in Italy the biggest fear, as course after course appears, is that you entirely forget you are there on business. If you have the energy, you can always do the polite thing when the meal finally ends, and offer to pay. Then, after a lively discussion, you must remember the next polite thing to do – let your host pick up the bill.

In Germany, as you walk sadly back to your hotel room, you may wonder why your apparently hosts have not invited you out for the evening. Don`t worry, it is probably nothing personal. Germans do not entertain business people with quite the same enthusiasm as some of their European counterparts.

The Germans are also notable for the amount of formality they bring to business. As an outsider, it is often difficult to know whether colleagues have been working together for 30 years of have just met in the lift. If you are used to calling people by their first names this can be a little strange. To the Germans, titles are important. Forgetting that someone should be called Herr Doctor or Frau Direktorin might cause serious offence. It is equally offensive to call them by a title they do not possess.

In Italy the question of title is further confused by the act that everyone with a university degree can be called Dottore – and engineers, lawyers and architects may also expect to be called by their professional titles.

These cultural challenges exist side by side with the problems of doing business in a foreign language. Language, of course, is full of difficulties – disaster may be only a syllable away. But the more you know of the culture of the country you are dealing with, the less likely you are to get into difficulties. It is worth the effort. It might be rather hard to explain that the reason you lost the contract was not the product or the price, but the fact that you offended your hosts in light-hearted comment over an aperitif. Good manners are admired: they can also make or break the deal.

Culture

Culture

Culture

Leadership

TOUGH LESSONS ON LEADERSHIP

By Herminia Ibarra

It has become generally accepted that our organizations need better leadership if they are to survive and prosper in these difficult times. Well-led companies know that leaders are made, not born, and invest in the development of their future managers. But, in spite of the energy devoted to leadership development, the return on investment rarely comes up to the hopes and expectations of participating executives of company sponsors. As ever, the question is “Can leadership be learned?”

Most of us can agree on basic definitions. Simply stated, leaders are people who:

· Establish a new direction or goal for a group;

· Gain the support, cooperation and commitment of those they need to move in that new direction;

· Motivate them to overcome obstacles in the way of the company`s goals.

Consider the experience of a manager called Anne. After a steady rise through the functional ranks in logistics and distribution, Anne found herself unable to handle a proposal foe a radical reorganization that came from outside her division. Accustomed to planning for annual improvements in her basic business strategy, she failed to notice changing priorities in the wider market.

Although she had built a loyal, high-performing team, she had few networks outside her group to help her anticipate the new demands. Worse, she was assessed by her boss as lacking the broader business picture. Frustrated, Anne thought about leaving.

Let us examine Anne`s situation more closely. No longer able simply to rely on her technical skills, Anne needed to acquire the ability to think creatively and consider a broader range of forces in finding a new strategy for the group. As a leader, she is expected to identify new trends and spot new opportunities in the business environment.

She is also expected to recognize new partners and find new ways of bringing them on board. But, for Anne, working through networks was political activity – in her view, relying on who you know rather than what you know – and she had always rejected “time-washing on politics”. She failed to recognize the importance of building and using networks that cut across managerial levels and divisions.

To be successful at the next level Anne had to change her perspective on what was important and accordingly what she would spend her time doing. Letting go of old ways of thinking can be a terrifying proposition. The leadership transition, therefore, can provoke deep self-questioning: Who am I? Who do I want to become? What do I like t do? Do I have what it takes to learn a different way of operating? Is it me? Is it worth it?

Leadership

She’s the Boss

Business was invented by men and to a certain extent it is still “a boy game”. Less than 20% of the managers in most European companies are women, with fewer still in senior positions.

Yet in Britain one in three new businesses are started up by women and according to John Naisbitt and Patricia Auburdene, authors of ‘Megatrends 2000’, since 1980 the number of self-employed women has increased twice as fast as the number of self-employed men.

The Glass Ceiling Syndrome

Is it just a case of women whose career progress has been blocked by their male colleagues – the so-called ‘glass ceiling syndrome’ – being forced to set up their own businesses? Or do women share specific management qualities which somehow serve them better in self-employment? As many as 40% of start-ups fold within their first two years, but the failure rate of those run by women is substantially lower than that. It’s hardly surprising, therefore, that though male bosses tend to be reluctant to promote women, male bank managers seem only too happy to finance their businesses.

The Roddick Phenomenon

Anita Roddick, founder of the Body Shop Empire, is the perfect example of the female entrepreneur with her company growing from zero to £470 million in its first fifteen years. Perhaps the secret of her success was caution. Rather than push ahead with the purchasing of new shops, Roddick got herself into franchising – the cheapest way to expand a business whilst keeping overheads down. Caution, forward planning and tight budgeting seem to be more female characteristics than male. They are also the blueprint for success when launching a new company.

More Sensitive

When women join an existing company, it’s a different story. Less ruthlessly individualistic in their approach to business, women are more sensitive to the feelings of the group or team in which they work. They are generally more cooperative than competitive, less assertive, less prepared to lead from the front. Though they usually manage their time better than men and may even work harder, they are much less likely than their male counterparts to take risks. And, above all, it is risk-taking that makes corporate high fliers. As one male director put it: “I’m not paid to make the right decisions. I’m just paid to make decisions”.

Better Communicators

It’s an overgeneralization, of course, but it remains true that men will more readily take the initiative than women. The female style of management leans towards consensus and conciliation. Women seem to be better communicators than men – both more articulate and better listeners. And perhaps it is women’s capacity to listen which makes them particularly effective in people-oriented areas of business. In any mixed group of business people the ones doing most of the talking will almost certainly be the men. But perhaps only the women will really be listening.

The New Achievers

And, so companies change from large hierarchical structures to smaller more flexible organizations, the communication skills and supportive approach of women are likely to become more valued. It was predominantly men who profited from ‘the materialistic 80s’, the age of the achiever. But it will be women who achieve the most in ‘the caring 90s’ and beyond.

Employment / Competition

Brands

THE LEVI STORY

Mistakes that failed to kill a classic product

There are not many genuinely classic brands, but Levis have earned themselves a place among the Coca-Colas, Zippos, Bics and 2CVs. Classic brands used continuously and in an unchanged format for 100 years are exceptionally rare in the clothing market, dictated as it is by fickle demands of fashion. Levi Strauss’s achievement is formidable: from a small family firm to a massive international concern.

The years in between have seen not only the evolution of a classic brand but also some massive, equally classic, marketing errors. The 501 initiative is the nearest Levi Strauss has ever come to co-coordinated international marketing, and represents a serious attempt to re-focus the entire company after several disastrous years in international market.

In the early 1960s, Levi Strauss was sky-rocketing. American films and music had spread to Europe and jeans had come to symbolize a new, youth culture. Kids decided that denim would become their uniform, a visible statement of a new, exciting lifestyle. Levi Strauss was still a purely American company, with no overseas operation. Now that a brand new market had presented itself, international expansion had to be looked at.

Initially, the company used local agents to sell the products which were shipped in from the States. Teenagers trekked all over European cities, looking for a retailer who stocked the all-American jeans. There was still no international marketing, let alone international advertising. The whole international success story happened almost by chance and certainly without any co-coordinated effort from San Francisco.

At the same time, in America, Levi Strauss diversified at frenetic pace into all sorts of unrelated areas, including Staprest trousers and Resistol hats. The Levi label was put on all these non-jeans products, and the company grew.

By 1974, now public company, Levi started manufacturing locally throughout Europe. It moved its European advertising account from Young and Rubicam to McCann-Erickson, which took over all the non-American advertising. But Levi Strauss was coming unstuck: nobody knew what the Levi name stood for any more. All the advertising for the different products was saying totally different things about the company and the unrelated products had begun to damage Levi’s volume base – its jeans. What kid, seeing his dad buy Levi polyester trousers, was going to rush out and buy Levi jeans? Levis were old-fashioned, said the consumers.

Something had to be done – and fast. The diversification programme was put into reverse gear, and the Levi name was taken off unrelated products. The company retained the other brands, but distanced them from the jeans products, or made them more jeans-related. Levi Strauss realized that it had to stop trying to drag value out of its most valuable property – its name – and go back to its roots, becoming once again the premier jeans company in the world.

Brands

CONSUMING FASCINATION

by Alison Smith

The global brands is real enough, but what of the global consumer? Nicholas Trivisonno, the chairman and chief executive of AC Nielsen, the US-based international market research company, believes such a character is fictional. “There is no global consumer. Each country and the consumer in each country has different attitudes and different behaviors, tastes, spending patterns”, he says.

Nielsen should be in a position to know. It has a presence in more than 90 countries across three continents, and works for more than 9,000 clients. Its revenue last year was $1.4 billion, out of a $12 billion global market research industry.

Mr. Trivisonno specifically includes teenagers in what he says, though they are often seen by marketing executives as people who have more and more in common worldwide – and to whom some of the leading global brands most appeal.

“We are seeing changes in consumer behavior, but not a convergence of consumer behavior”, he says. He believes the reason for this is that even though a global brand may get similar reactions in very different markets, the consumer will view it against different sets of rivals in the market.

“Take a global brand of soft drink. Acceptance of that product may be the same, but the competitive set in any particular country will be different – it could be mineral water, coffee or other types of soft drinks. You need to look behind not only reaction to the global brand but to competitors` brands.”

Defining the competitive market is critical to marking sensible use of market research information, and boundaries are moving more often.

Mr. Trivisonno gives the example of a breakfast cereal manufacturer. At one time competition for cereal would have been form he brands that it stood alongside on supermarket shelves: these days it may be with other breakfast foods, such as yoghurts. “Now it`s all about share of stomach, share of thirst,” he says.

Advertising

IN PRAISE OF TV COMMERCIALS

by John Hegarty, creative director of Bartle Bogle Hegarty, an advertising agency.

Imagine for a moment you are the marketing and sales director of a large company. Achieving your sales targets is giving you sleepless nights. The company`s share price is under pressure, the board is getting nervous, City institutions are questioning the company`s investment policy.

How can you generate extra sales quickly and effectively though your consumer base, and expand your potential market?

Suddenly, I appear. I have invented a thing called the `television commercial`.

It is a new and unique way of talking to consumers. Between popular programs, I will sell you slots of time – anything up to 60 seconds. I will even negotiate for you the whole break, so on one else can complete with you.

Within this spot you can say whatever you like in whatever form you like. You control the dialogue, presenting your product or service any way you wish.

Of course, the television commercial has been with us since 1955. Since its arrival, it has been one of the most, if not the most, effective creators of brands and wealth. So why is it that you can hardly pick up a marketing magazine without reading about the death of this medium?

Before you rash to the Internet, or search for some fashionable alternative media, look at these facts. The average adult in the UK watches more than 24 hours of TV every wk, 60 percent of children have a TV set in their bedrooms. One in four adults watch the soap opera Coronation Street, even more watch East Enders. So why do we read that the likes of Cadbury, the chocolate manufacturer that sponsors Coronation Street, think most advertising is nothing but froth and are putting more money into programme sponsorship? Why did we read that Heinz was pulling out of TV advertising (it has since gone back)?

Could it be that as the medium has become more competitive some companies have found it harder to create advertising that works? The medium is not a guarantee of success. It has to be used imaginatively. Perhaps this is the heart of the problem – it`s just that some companies find this process difficult to manage.

 

From the Financial Times

 

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