4 Ways Open Innovation Can Drive Your Business Forward

Ever since General Electric built the first industrial lab in 1900, research and development
has been a highly secretive affair. Security protocols have been regarded almost important
as scientific ones to stay ahead of the competition.

More recently, Apple, arguably the world’s most innovative company, has become
renowned for keeping its cards close to the vest and even “don’t be evil” Google has
launched its own super-secret research center.

However, amidst the cloak and dagger a new open innovation trend has begun to take hold.
The turning point was Henry Chesbrough’s 2003 book, Open Innovation, which coined the
term and laid down basic principles. Since then the idea has gained steam and it’s
becoming clear that open innovation initiatives are key to staying competitive. Here’s how
to make it work.

1. Making Breakthroughs When You’re Are Stuck

In Thomas Kuhn’s breakthrough 1962 work, The Structure of Scientific Revolutions, he

noted that normally science moves forward under fairly strict paradigms based on what is
known at the time. Eventually though, things run their course and science becomes stuck
until a paradigm shift (a term Kuhn coined) enables a new wave of advancement.

Businesses who seek to innovate run into the same problem. They tend to work in silos,
hiring engineers to work on engineering problems, chemists to work on chemistry problems
and so on. That works well enough most of the time, but much like Kuhn’s scientists, after
a certain point they get stuck on a particular problem and find it difficult to advance.

That’s when open innovation can be really helpful because it allows you to synthesize
knowledge across domains. Platforms like Innocentive allow you to expose thorny
problems to a more diverse skill set. Often, an unusual issue for chemists is a typical
problem in a different field (like, physics for example.

2. Don’t Build A Brand, Build A Platform

When Microsoft launched Kinect for the Xbox in 2010, it quickly became the hottest
consumer device ever, selling 8 million units in just the first two months. Even better,
being the first company to launch a gesture interface helped rejuvenate the company’s
image in the tech world. Microsoft became cool again (well… almost).

The device attracted a lot of attention and not just from consumers. Almost as soon as it
was launched, hackers started fiddling with it, altering its capabilities to do things that
Microsoft never intended. Historically, Microsoft could have been expected to get their
lawyers cranking out cease and desist orders.
But they didn’t. In fact, they embraced the hackers, altering the USB cable to allow for
more developmental flexibility and releasing a software development kit (SDK) in order to
help them along. This was a surprising shift from what we had come to expect.

And Microsoft is not alone. Everywhere you look, brands have become less corporate
assets to be leveraged and more platforms for innovation. What would the iPhone be
without apps? Or Facebook for that matter? Or YouTube without private channels. These
days, it’s not so much what you can create as much as it’s what you can co-create.

3. Create An Accelerator Program

Simply encouraging collaboration is not enough, however. Smart companies are also
investing in accelerator programs to provide seed money for young entrepreneurs.
Microsoft has one for Kinect, shoe maker Nike created one to encourage innovation in its
Nike Fuel ecosystem and even the stodgy New York Times launched an incubator.

And you can see why. For a company of any scale, providing start-ups with seed money is
pocket change. Microsoft offers start-ups $20,000 dollars, probably less than they spend on
coffee. The NY Times simply offers office space.

Meanwhile, they get the most dedicated employees in the world: entrepreneurs chasing
their own dreams. If things go well, the small initial investment is likely to be augmented
by venture capitalists who are willing to fund new ideas that are likely to fail in the hopes
that a few home runs will make it all worth it.

For particularly promising ideas, firms can acquire not only the company, but the talent as
well. It’s an incredibly efficient way to innovate.

4. Test and Learn Programs

For a long time, marketing was a fairly sleepy affair. You had big agencies who would
negotiate with big TV stations and deliver big campaigns. A lot of thought would go into
strategy and tactics, but very little into partners of media channels.

Technology has changed all that. These days, new platforms such as Instagram and
Pinterest can emerge at lightning speed and that presents a problem. If you jump at every
new opportunity, you won’t have time to do much else and lose focus , but if you wait for
nascent technologies to reach scale, your competitors will run circles around you.

Many marketers are adapting by running ongoing test and learn programs where 5-10 pilot
programs are run each year. Most prove to be ineffective, but the low risk (usually less
than 1% of the marketing budget is dedicated to the program) and high reward makes it
worthwhile.
Most of all, test and learn programs focus young, entrepreneurial companies who are on the
cutting edge, rather than big established players who are invested in old solutions. The
constant influx of new thinking helps drive innovation forward.

The Brand as an Open API

Brands, much like technology, have historically been considered proprietary assets to be
leveraged. An organization’s identity was carefully cultivated and interlopers were not
only discouraged, but often subjected to legal action.

These days, a brand’s power comes not from its marketing budget, but in its power to
inspire collaboration and co-creation. As Bill Joy once pointed out, “No matter who you
are, most of the smartest people work for someone else.”

Your power to innovate and succeed is no longer merely a matter of research and
development, or even attracting the smartest and most capable employees, but who you can
inspire to join your cause. The new economy is a passion economy, where the function of
organizations is no longer to direct work, but to focus purpose.

READING 1 2 3?

Too much of a good thing

Leaders need to learn to beware of their strengths

IT IS only natural for leaders to try to make the most of their strengths. The theory of
comparative advantage directs people, as well as countries and firms, to focus on what they
are good at. Management experts have tended to concur: one of the bestselling business
books of recent years is called “Now Discover Your Strengths”, by Marcus Buckingham
and Donald Clifton. When business schools profile bosses, they often assume that more is
better. But is this right? Three more recent books express some doubts. In “Fear Your
Strengths”, Robert Kaplan and Robert Kaiser argue that “what you are best at could be your
biggest problem.” Forcefulness can become bullying; decisiveness can turn into
pigheadedness; niceness can develop into indecision.

Managers who rely too much on their strengths may become hammers that see every
problem as a nail. Over-forceful bosses can turn their subordinates into patsies; consensus-
obsessed bosses can institutionalise dithering. It is not difficult to find examples of
strengths-turned-weaknesses in politics. Barack Obama’s talent for lofty rhetoric has
distracted him from the nuts and bolts of policymaking. François Hollande’s passion for
being Mr Normal has rendered him too small for his grand office.
As they rise in an organisation, people often become comfortable practising the skills that
have got them thus far, and fail to ask how useful these are when working at a higher level.
Thomas DeLong of Harvard Business School and his daughter Sara DeLong, a psychiatrist,
dub this “the paradox of excellence” in a 2011 article. One result is that leaders end up
micromanaging their subordinates (particularly those doing the job that they used to do)
and neglecting the big picture. It often makes bosses choose to do the wrong thing well
rather than the right thing poorly. One reason for the 2007-08 financial crisis was that the
heads of big investment banks and brokers had often made their reputations as traders,
rewarded for taking big risks rather than managing for the long term. Examples include
Dick Fuld of Lehman Brothers and Jimmy Cayne of Bear Stearns.

Among the solutions offered by Messrs Kaplan and Kaiser is for bosses to create feedback
mechanisms that tell them when they are going over the top (one “over-talker” got a friend
to hold up a sheriff’s badge if he was talking too much in business meetings). They have
also designed a Leadership Versatility Index that assesses whether leaders are overplaying
their strengths.

In “From Smart to Wise”, Prasad Kaipa and Navi Radjou argue that the strengths that
today’s leaders are most likely to overuse are what Americans called “smarts”. These are
the sort of skills managers pick up studying at business school or working in consultancies,
such as the ability to spot patterns in a mass of data, or to use sophisticated financial
instruments.

Messrs Kaipa and Radjou point out that some of the worst business scandals of recent years
have involved some of the smartest people. Jeffrey Skilling put so much emphasis on
smarts when he was boss of Enron that he ignored good character and common sense. Rajit
Gupta’s obsession with showing how clever and well-connected he was led him into
trading inside information. In his younger, pre-philanthropic incarnation, Bill Gates was
bent on displaying his IQ, and did his company no favours by coming across as arrogant
and condescending during Microsoft’s antitrust trial in 1998-2001.

In “Tipping Sacred Cows”, Jake Breeden goes further, arguing that many so-called
management virtues are just as likely to be vices in disguise. Consultants encourage leaders
to create a culture of organisational excellence. But today innovation often depends on
rapid prototyping and “good enough” innovations, so those taking the consultants’ advice
risk letting the best be the enemy of the good. (625)

Debunking the debunkers

These three books are all valuable exercises in iconoclasm. But the trouble with iconoclasm
when you apply it to the analysis of leadership is that you can go on for ever. Many
successful leaders are successful precisely because they push their strengths to the limit.
Richard Branson has turned Virgin into a global brand by relentlessly exploiting his two
biggest strengths: his ability to take on “big bad wolves”—firms that are overcharging and
underserving the public—and his talent for infusing Virgin with a counter-cultural
personality. The very over-the-topness of his stunts, whether it is crossing the Atlantic in a
power boat or parading around in drag, is vital to his success.

Leadership skills are context-dependent. Margaret Thatcher was undoubtedly a nightmare

to work for. In 1981 her closest advisers were so exasperated with her that they produced a
memo that criticised her for breaking “every rule of good man-management”, including
bullying her weaker brethren, criticising her colleagues in front of officials and refusing to
give praise or credit. It warned her that she was “likely to become another failed Tory
prime minister sitting with [Edward] Heath”. But her abrasive style was exactly what
Britain needed in the 1980s.

The word that is too often missing from leadership studies is “judgment”. Everybody
involved in the business is desperate to appear scientific: academics because they want to
get research grants and consultants because they want to prove that they are selling
something more than just instinct. But judgment is what matters most, and it is hard to
measure. It takes judgment to resist getting carried away with one quality (such as
decisiveness) or one measure of success (such as the share price). It takes judgment to
know when to modulate your virtues and when to pull out all the stops. Unfortunately
judgment is in rather shorter supply than leadership versatility indices.

China's Tianhe-2 retakes fastest supercomputer crown

A China-based supercomputer has leapfrogged rivals to be named the world's most
powerful system.

Tianhe-2, developed by the government-run National University of Defence Technology,

topped the latest list of the fastest 500 supercomputers, by a team of international
researchers. They said the news was a "surprise" since the system had not been expected to
be ready until 2015. China last held the top rank between November 2010 and June 2011.
According to the list, the US has the world's second and third fastest supercomputers, Titan
and Sequoia, while Japan's K computer drops to fourth spot. The latest version of the twice-
yearly list - which is overseen by Hans Meuer, professor of computer science at the
University of Mannheim - was published to coincide with the International Supercomputing
Conference in Leipzig, Germany.

Unique features

According to the Linpack benchmark, Tianhe-2 - meaning Milky Way-2 - operates at 33.86
petaflop/sec, the equivalent of 33,860 trillion calculations per second. The benchmark
measures real-world performance - but in theory the machine can boost that to a "peak
performance" of 54.9 petaflop/sec. The project was sponsored by the Chinese government's
863 High Technology Programme - an effort to make the country's hi-tech industries more
competitive and less dependent on overseas rivals. It has said it intends to install the
equipment at the National Supercomputer Centre in Guangzhou, based in the country's
south-eastern Guandong province, where it will be offered as a "research and education"
resource to southern China. The machine uses a total of 3.12 million processor cores, using
Intel's Ivy Bridge and Xeon Phi chips to carry out its calculations.

However, the University of Tennessee's Jack Dongarra - a member of the Top 500 list team
who visited the project in May - noted that many of its features were developed in China
and are unique. These include:

 A custom-built interconnection network, which routes data across the system

 The inclusion of 4,096 Galaxy FT-1500 CPUs (central processing units) designed by the
university - these have been installed to handle specific weather-forecasting and national-
defence applications and are not included in the headline performance figures
 The use of the Kylin operating system - this Linux-based OS is named after a mythical beast
known as the "Chinese unicorn", and was designed by the university to be a high-security
option for users in government, defence, energy, aerospace and other critical industries

On paper the Tianhe-2's performance is nearly double that of the next computer on the list.
Titan, at Oak Ridge National Laboratory in Tennessee, clocks 17.59 petaflop/sec of
performance, according to the Linpack benchmark, and a theoretical peak of 27.11
petaflop/sec. Mr Dongarra noted that the US government is not expected to acquire another
supercomputer until 2015. Japan's Fujitsu-built K computer - which displaced China's
Tianhe-1 as the world's fastest supercomputer - now comes in fourth on the Top 500 list
with a Linpack benchmark performance of 10.51 petaflop/sec.

According to the survey's editors, China now accounts for 66 of the list's fastest computers,
which is actually a fall from six months ago when it had 72 in the list. The US dominates
the survey with 252 systems, Japan has 30, the UK has 29, France has 23 and Germany has
19.

Geneva motor show: New car marque unveiled(661)

By Jorn Madslien Business reporter, BBC News, Geneva motor show

A carmaker that has never before seen the light of day has emerged at the Geneva motor
show. With one production model and two concepts for future cars on display, Qoros hit
the ground running, preparing for expansion even before having sold a single car.
Launching the new marque in Geneva, at the most important annual industry event in
Europe, is central to the company's strategy. But not for any obvious reasons, such as a
desire to win over European customers. Instead, some sort of convoluted, roundabout logic
is at play here. "Our main target is the Chinese market," explains the company's head of
sales, marketing and product strategy, Italian Stefano Villanti. "But Chinese consumers like
buying European products." The cars carrying the Qoros badge - indeed, even the badge
itself - have been designed by Gerd Volker Hildebrand. "In car styling terms, he's a rock
star," according to Just-Auto's Mark Bursa, who describes Mr Hildebrand's Mini design as
"one of the biggest hits of recent times". Mr Hildebrand is part of a European team of
motoring executives and experts with extensive experience from mainstream brands,
including Volker Steinwascher, who used to be in charge of Volkswagen in North America
and is now the vice president of Qoros. Between them, the company's engineers and
designers have come up with the Qoros 3, their launch product at the Geneva show, which
will go on sale later this year in the market segment where the Volkswagen Golf is the
leader. And it doesn't stop there. There are also two concept cars offering a vision of what
will come next, as Qoros prepares to launch a new car every six months for the foreseeable
future. The cars will be based on a modular platform that makes it relatively easy for the
carmaker to vary its model offering, and they will all come with an extensive range of
luxurious features as standard - including an infotainment system developed in-house.
"They're all European products," says Mr Villanti. "The company has European
management and European engineers." Creating a new brand with no obvious 'Chineseness'
gets around the perception problem that Chinese brands are low-cost brands” So is Qoros a
European carmaker? The answer is not clear. The company is owned jointly by the
industrial investor Israel Corporation and the Chinese carmaker Chery Automotive, whose
chief operating officer serves as Qoros president. And its cars will be made in Changshu in
China, in a new factory that will initially have enough capacity to produce 150,000 cars
each year, with the possibility to expand to 250,000 and then extend the building to raise
capacity to 450,000. In other words, there are no plans to produce the cars in Europe. Nor
will the company offer right-hand drive vehicles for the UK market, at least not yet, and it
is not planning to make cars with diesel engines. "China doesn't like diesel," says Mr
Volker, while Mr Villanti acknowledges that "without diesel, the market in Europe is very
small". European sales should account for about 10% of production, he predicts. Low
European sales volumes are not deemed a problem, however, as Qoros sets out to establish
itself well above the budget brands currently selling well in austerity-hit Europe. The Qoros
3 will cost between 16,000 euros ($20,881; £13,826) and 20,000 euros. "We're not on the
same page as the cheapest marques," says Mr Volker. At some point, the company even
considered acquiring a so-called "European heritage brand" used on cars that have long
since disappeared from the market. But they decided against it as, in the words of Mr
Villanti, "it doesn't make sense to develop a car for modern, metropolitan consumers with a
brand from World War I". "Creating a new brand with no obvious 'Chineseness' gets
around the perception problem that Chinese brands are low-cost brands," says Mr Bursa.
But whether that is enough to convince Chinese car buyers that Qoros is in fact European
remains to be seen.

Uniting CRM, Sales and Social Media

June 7, 2013 By Drew Robb

Just as CRM providers were beginning to more closely align software with sales
processes, social media entered the picture. The new challenge is how to unite sales,
CRM and social media.

For over a decade there has been talk about bringing together sales processes and CRM.
While progress has been made, informally ask half a dozen sales people how they like their
CRM app and you'll soon understand that there is still a long way to go in aligning these
systems to how people actually sell.

The picture has been made more complex, of course, by the emergence of social media.
Just as positive results were beginning to appear in bringing together sales and CRM, the
problem widened to how to unify sales, CRM and social media.

Gartner believes, however, that there are a handful of companies on the cusp of bringing
together all three in a way that will significantly impact revenue. This includes CRM giant
Salesforce.com and smaller specialists Artesian Solutions, Ni3, Messagemind and Hubbard
One.

Connect Tablets to Social Sales Strategy

The social CRM trend dovetails with the growing enterprise demand for tablets, especially
for on-the-go professionals like sales people. According to Gartner, 30 percent of sales
organizations will issue tablets to their teams by the end of 2013. And while 80 percent of
sales people will use social networks by the end of 2014, only 2 percent will be using social
CRM tools.

The analyst firm recommends, therefore, that organizations don't just look at iPads as
laptop replacements, but instead seek new ways to use them to differentiate selling
processes and to harness Big Data in a sales setting. This is one of the best ways to see
immediate returns from technology that can be expensive to deploy, Gartner says.

Gartner also found that Facebook, Twitter, LinkedIn and other social sites have failed to
drive sales opportunities, leads or transactions, but are mainly being harnessed to build
brand awareness and develop community loyalty. While these sites help sales organizations
get to know their customers better and understand their needs, there remains a disconnect --
and this is where better tools are required.

"Social media, combined with CRM, will eventually help drive opportunities and sales
revenue through harnessing the power of social media word of mouth and the insights it can
provide on customers and prospects," said Patrick Stakenas, an analyst at Gartner.

Social CRM: New Breed of Apps

Just what will these new breed of apps be like? Manish Sood, CEO and founder of
Messagemind, noted that valuable intelligence about contacts and business relationships
often gets lost in a sea of corporate email, instant messaging, transactional systems and
social media chatter.

"Data, both structured and unstructured, is scattered across a growing number of IT systems
and external social networks," said Sood. "Although existing communication and
collaboration systems, CRM and social media tools may work well within their own
respective silos, they don't unify 'collective social intelligence' of the enterprise due to the
sheer volume and variety of data sources."

Messagemind aims to close the gap by mapping these elements into a collective whole. It
finds information buried in mailboxes and social media systems, adds data from third-party
sources including social networks such as LinkedIn, and integrates it with systems such as
Salesforce.com and SharePoint. The goal is a more holistic view of customers. Further,
Messagemind ranks relationships to make it easier to uncover the most useful connections.

The software from Messagemind can be implemented on premise or in a private cloud. It

does not require any data input from end users. It is sold on an annual subscription basis.

Artesian Solutions is another player at the nexus of social media, CRM and the sales
process. Using natural language processing to deal with the complexities of managing
social data, Artesian delivers insights about customers' or prospects' opinions which can be
used to shape conversations and help businesses build deeper relationships.

Because it is delivered via a software-as-a-service (SaaS) model, it can be accessed through

the Internet and is quick to set up. The platform can be run independently, embedded with
other software through email and mobile applications and/or integrated with Salesforce and
Microsoft Dynamics.

Artesian seeks to bridge the chasm between the potential of new technologies (social
media, in particular) and existing processes so sales people can listen to their customers
effectively and better understand where the opportunities or issues exist.

"The shortcoming for many tools is the capability to identify the context and relevance of
information so that businesses can filter through the Big Data being generated and harvest it
for business use," said Andrew Yates, CEO and founder of Artesian Solutions.
"Organizations need smarter business intelligence strategies that combine Big Data with
social, mobile and cloud so that firms can develop processes designed to access new
streams of data that have previously been inaccessible and unexplored."

He added that Artesian personalizes the output to each business user. "By monitoring over
6 million websites a day and sampling the Web every 60 seconds, this means that sales
teams can cover all the bases for thousands of customers by only serving the sales
intelligence that is needed to find and close the next deal," Yates said.

What 10-Foot Noodles Have to Do with Competitive

Advantage
By Scott Anthony - Jun 12, 2013 1:00 PM GMT-0300

"A properly integrated business model forms the essence of a company's competitive
advantage," my colleague Mark Johnson advises. That quote ran through my head as I
watched a young man in a track suit prance around my table twirling a 10-foot noodle.
I was in one of the Shanghai locations of a chain of hot pot restaurants called Hai Di Lao. If
anything deserves to be commoditized, it would be a hot pot restaurant. The essence of the
meal is cooking food yourself in close-to-boiling broth. The popularity of that cooking style
in many parts of China means many nondescript restaurants compete ferociously for
customers. Somehow in this crowded field, Hai Di Lao commands fierce loyalty; has
expanded to 75 locations across China, Singapore, and soon the U.S.; and generates about
$500 million a year in revenue.

On weekends, locals told me, the wait approaches two hours, and it's easy to see why.
Going to Hai Di Lao is a unique experience from start to finish. A couple of weeks ago I
went there on a Tuesday night with a client team. Even as we approached the building, wait
staff ran up to us to make sure we found our way in. Once we sat down, I was given a towel
to wipe down my glasses, a plastic case so my cellphone wouldn't get splattered, an apron
to protect my shirt, and even plastic arm bands if I wanted to protect my sleeves (I
declined).

There wasn't a wait on this mid-week night, but if we had had to, we could have played
board games or gotten our nails manicured. About halfway through our meal, the noodle-
swinging specialist appeared. He asked me to "help" him and my team members, and the
client dutifully took pictures of me making a fool of myself before the specialist
demonstrated his skills (noodle masters train for up to six months before they appear before
customers).

The quality of the raw ingredients we put in our sauce seemed reasonable, and the
restaurant provided a customized spicy broth and a bar where you could make your own
dipping sauce out of about 30 different ingredients. But it isn't the quality of the food that
makes the difference — Hai Di Lao creates value for customers by providing good enough,
affordable food (our dinner for 11 in a ritzy part of Shanghai was less than $200) as part of
a truly distinctive experience. That experience is what packs the house every night.

The way value is created, captured, and delivered links together smartly. Coupling a steady
volume of revenue with affordable raw materials gives the business room to invest in its
staff. One of the client team members explained that Hai Di Lao pays above-market wages
and provides them with high-quality living accommodations, with amenities like WiFi and
laundry.

It's generally hard to copy this kind of interdependent innovation. One thing can be copied
easily; systems prove much more difficult. Interconnections between revenue model, cost
structure, supply chain, operations, and employee selection and training typically emerge
out of a fairly lengthy process of trial-and-error experimentation and are invisible from the
outside. In a way, Hai Di Lao is like IKEA. That company has built its business model
around providing affordable assemble-it-yourself furniture. Like Hai Di Lao, it has built an
integrated, end-to-end system, featuring a unique retail store format, product selection,
packaging, and supply chain. IKEA has followed the same model in essence for more than
50 years, and no one has replicated it.
To find some measure of lasting advantage in today's markets requires companies to look
for non-obvious ways to innovate. Competitive advantage from devising products and
services that have more features or do more things fades seemingly overnight. Companies
need, instead, to be on the lookout for innovative ways to wrap services around products,
deliver unique customer experiences, or devise entirely new ways to deliver value. The
client team I was with was so inspired by Hai Di Lao that they used it the next day as a
metaphor for a more customer-focused approach for one of the high-end medical devices in
the company's portfolio of products.

I learned, when I returned to Singapore, that the first restaurant Hai Di Lao had opened here
is just across the street from our offices. If you are in town, check it out. Not only will you
have an enjoyable meal, but you might get inspiration for the next innovation that can
transform your company. (747)

Transforming Compliance into a Competitive Advantage

By Keith Theisen, Wells Fargo, and Jonathan Eber, ACI Worldwide

Wells Fargo worked extensively with ACI Worldwide on simplifying and consolidating processes to
comply with Dodd-Frank 1073, but the investment created new efficiencies that they believe offer
an edge over the competition.

June 17, 2013

Regulatory compliance is costly for financial organizations. It requires significant levels of

effort, time, staffing and investment. When all is said and done, becoming fully compliant
with the latest regulations just preserves the ability to perform business as usual; it offers
very little immediate return. Right?

Not exactly! In our bid to comply with the sweeping mandates of Section 1073 of the recent
Dodd-Frank legislation, compliance teams at both Wells Fargo and ACI Worldwide ended
up revising and maybe reinventing the compliance process. Working closely together, we
built repeatable processes and procedures and were able to meet the requirements of the
regulation. While the requisite investments were not small, neither were the returns.
Working together both organizations have developed the playbook for regulatory
excellence. It is one which enables us to meet the challenges of future mandates
confidently, efficiently and with an eye toward better positioning us both to seize future
opportunities.

Our success was due to a fairly straightforward strategy that could be replicated by any
interested party. The conclusion we drew is that by treating compliance as a differentiator
not only simplifies and streamlines the compliance process it can put us ahead of the
competition in terms of overall efficiencies and even time to market with new products.

Both ACI and Wells Fargo attribute our success in developing a differentiating center of
excellence to three distinct factors. First, we made a conscious effort to transform
compliance from a reactive task to a proactive repeatable business process. Rather than
waiting until the last minute, Wells Fargo set the plan in motion more than a year ago.
While Wells Fargo has its own internal compliance team, it became clear early on that the
complexity and pervasiveness of Dodd-Frank required additional bandwidth and expertise.

Second, we ensured our team composition truly mirrored the importance of the initiative to
the business as a whole. The combined team from both Wells Fargo and ACI has a high
level of regulation expertise and are adept at building, testing and modifying key banking
and software systems. Not only are these people experts, but they are all fully focused on
compliance. While both parties realized the need to keep the initiative as cost-effective as
possible, we also realized that having the right type of team was the one area that we could
not compromise. It’s better to spend on expertise up front than waste time, and money,
fixing rookie mistakes down the road.

Finally, our focus on communications ensured the two teams worked seamlessly as one.
We designated certain ACI team members to work closely with Wells Fargo, and
implemented weekly status meetings for the combined team. We also opened up the lines
of communications between senior managers at both Wells Fargo and ACI. This ensured
that while primary staffers were focused on specific tasks within the project, upper
management stayed in the loop and could reiterate goals and provide direction as needed.

Compliance is not an effort that you can delegate and forget. True success requires top-to-
bottom engagement.

While complying with Dodd-Frank requires hours of application and process testing,
remediation and proof of compliance, our head start, breadth of expertise and senior
management buy-in gave us substantial advantages. It enabled both of us to confidently
devise a plan of action, implement an iterative testing and certification process, and quickly
overcome any obstacles along the way. Our process ensured an efficient well-managed
project that ably contributed to both firms’ current and future financial well-being.

As the business of financial institutions grows increasingly complex, due to globalization,

mobility, automation and more, so too do the regulations that govern them. This complex
compliance climate is already the new normal, a state where tracking and ensuring
compliance is just another accepted cost of doing business. Like any cost of doing business,
however, the more efficiently it’s managed the better off the business is as a whole.

Nestlé Is Releasing "Premium" Water For The "Stylish

Woman"
Are you a stylish, trendy and affluent woman?

If so, there’s a new water brand in town, just for you.

posted on June 11, 2013 at 4:42pm EDT

While sharing quinoa with your girlfriends outside on the porch, watching your kids paddle
in the pool outside, you’ve probably berated supermarkets for never stocking water that’s
suitable for you. I mean, Evian. What’s with that stuff?

Don’t fret though, you can finally stop worrying as Nestlé is releasing a new brand of
water, Resource, especially for you. Larry Cooper, the brand’s marketing manager said that
the water is for “a woman who is a little more on the trendy side and higher-income side,
and the bull’s-eye is 35 years old.” Cheers all around, as you no longer have to buy the
same water that men drink. Your water will taste better, and Cooper hopes that you’ll start
thinking of it as a “bottled water accessory”. So next time you go out, leave your
Abercrombie & Fitch jumper at home and buy a Resource instead.

It’s pretty clear, then. By drinking this specialised gendered water, not only will everyone
around you vanish but you’ll also be faced with a bunch of people you’ve never met forcing
you to do acrobatic stunts. Sweet.

Organisational Culture: When the Culture Needs to Change

Thursday, June 06, 2013

by Jim Riley

At what stage does organisational culture need to fundamentally change?

When Kazou Hirai took over as CEO of Sony he made it clear that cultural change was top
of his strategic agenda. “Sony must change. Sony will change” said Hirai speaking in
Tokyo as he took over the CEO role.

Cultural change was just one part of Hirai’s strategic agenda, alongside some tough
decisions about the scope of Sony’s broad business activities. But, at the heart of the
challenge facing Hirai is a culture at Sony that has led to the business losing its market-
leading reputation for innovation. Not for nothing is Sony often referred to as the “Apple
of the 80’s”!

Back in the City of London, Antony Jenkins began his tenure as CEO of Barclays in 2012
with a similar statement of intent in response to the scandals that has rocked the financial
services industry in general and Barclays in particular. “Clean-up or clear off” was the
message as Jenkins launched Project Transform – a significant corporate change
management strategy designed to restore Barclays’ reputation which has been so badly
damaged though unethical and plain illegal actions.

Like many CEOs before him, Jenkins has recognised that in order to achieve broader
strategic change, the culture of the business needs to be addressed. In a clear statement to
Barclays staff who might not support the five new core values, Jenkins said: “My message
to those people is simple: Barclays is not the place for you. The rules have changed. You
won’t feel comfortable at Barclays and, to be frank, we won’t feel comfortable with you as
colleagues”.

Sony and Barclays are two excellent examples of where the introduction of new
leadership has prompted a change in strategic direction in which organisational culture
change is seen as a key part of the process.

The linking of new leadership with attempted cultural change is not surprising when you
consider that leadership and culture are essentially two sides of the same coin. A new CEO
(or an existing one) can delegate many tasks, but the task of setting the culture cannot be
delegated. Why? Because there is compelling evidence that business performance and
culture are closely linked. If the CEO wants the business to achieve its corporate objectives,
then the culture has to be right. In a major research programme, Harvard professors John
Kotter and James Heskett found consistent correlation between robust, engaged cultures
and high-performance business results. (405)

As Steve Ballmer, CEO of Microsoft has said: “Everything I do is a reinforcement or not of

what we want to have happen culturally."

However, new leadership isn't the only cause of attempted culture change. It can be a
symptom of other strategic issues which an organisation is trying to address. These can be
grouped into two broad categories:

Culture change to improve business performance:

· Declining profits & revenues

· Inadequate returns on investment

· Low quality or standards of customer service

Culture change in response to changes in the external environment:

· Market changes – e.g. new competitors, impact of new technology

· Political & legal environment

· Change of ownership (e.g. takeover or merger)

· Economic conditions

Let’s look at a couple more examples:

Transformation at the Royal Mail (366)

Why Moya Greene took over as the CEO of Royal Mail Group in July 201, she inherited
the leadership of a troubled business. The Royal Mail faced a rapid decline in revenue from
letters, a huge pension deficit; union opposition to government plans for privatisation; and
an unworkable regulatory framework that discouraged the business from introducing new
products and prevented it from setting its own prices. Royal Mail was also trying to
compete in the faster-growing parcels business against global operators such as DHL and
TNT which enjoyed greater efficiency due to their scale.

The previous leadership team of Allan Leighton, chairman, and Adam Crozier, chief
executive, had made some progress in modernising Royal Mail but was dogged by difficult
industrial relations, making fundamental culture change very difficult.

Looking at the list of causes of culture change above, you can see that Royal Mail featured
several of them – suggesting that the case for corporate culture change was pretty
compelling!

In less than three years, Greene appears to have succeeded in achieving much of the
necessary change in Royal Mail as it tries to improve its financial performance ahead of
privatisation. According to one industry analyst this is because Greene has “succeeded by
focusing on improving industrial relations, ensuring political will for privatisation and
improving profit margins”.

There can be no doubt that Greene has led the Royal Mail through one of the most complex
organisational change programmes in UK business history. Much of the change has been
driven by a programme of modernisation which has clearly posed both technological and
HRM issues.

Greene has attributed much of the success of the organisational change achieved so far to
an emphasis on strong, constant communication within the business as it has undergone
the change. In a recent interview, Moya Greene said:

“Make sure you are up for it. This is not a 50-hour-a-week job. Try to get your arms
around the full parameters of what you have to deal with as quickly as possible. Talk to lots
of people. Go up. Go down. Go out. Go see as many of your own people. Go talk to them in
small groups, in big groups.”

Kodak – A “Culture of Complacency” (390)

In the case of Royal Mail, the need for cultural change alongside broader organisational
change was well recognised.

Another business that (finally) recognised the need for organisational culture change was
Kodak. But in Kodak’s case, the change came too late!

Kodak is a great example of a business that was essentially destroyed by its culture,
although it was the rapid advance of digital photo technology that is commonly blamed for
Kodak's demise. But, was it the technological advances that were the cause, or Kodak's
failure to respond to them?

Kodak actually built one of the first digital cameras in 1975. But, it was that technology,
followed by the development of smartphones that double as cameras, that battered Kodak's
old film- and camera-making business to death. Why didn't Kodak respond to the
significant changes in its external environment? Was culture to blame?

What had gone wrong? By 1976 Kodak accounted for 90% of film and 85% of camera
sales in America. Until the 1990s it was regularly rated one of the world's five most
valuable brands. Kodak's revenues peaked at nearly $16 billion in 1996 and its profits at
$2.5 billion in 1999, at which time it employed over 145,000 workers worldwide Kodak
was known as the "Google" of its time with a strong reputation for product innovation.

The Economist laid much of the blame at Kodak's culture, linking it to the fact that it
enjoyed a near monopoly position in the key US market:

"Its culture did not help. Despite its strengths—hefty investment in research, a rigorous
approach to manufacturing and good relations with its local community—Kodak had
become a complacent monopolist"

According to Ross Kanter of Harvard Business School, another reason why Kodak was
slow to change was that its executives “suffered from a mentality of perfect products,
rather than the high-tech mindset of make it, launch it, fix it,”. That suggests a culture that
was poorly suited to the rapid pace of change in Kodak's markets.

Strategy and culture expert John Kotter famously described the deep-rooted source of
Kodak's problems as a "culture of complacency".

"The organisation overflowed with complacency. Kodak was failing to keep up even before
the digital revolution when Fuji started doing a better job with the old technology, the roll-
film business. With the complacency so rock-solid, no one at the top devoted their priorities
toward turning that problem into a huge urgency around a huge opportunity. All the people
buried in the hierarchy who saw the oncoming problems and had ideas for solutions made
no progress. Their bosses and peers ignored them."

Lego's profits rise as it thinks pink (415)

'Stephanie's cool convertible' and 'Butterfly Beauty Shop' available alongside usual Lego
policemen, helicopters and dustbin lorries

Lego has introduced ranges featuring pinks and purples

Toymaker Lego has been thinking pink for the first time – and new product ranges have
helped the plastic brick firm improve profits and sales as it launched its first successful
product for young girls since its inception in 1934.

Drew Brazer, Lego's director for the UK and Ireland, said the company had tried on
previous occasions to come up with something specifically aimed at girls, but nothing had
worked. Now, alongside the usual policemen, helicopters and dustbin lorries is "Stephanie's
cool convertible" – a purple car with pink accessories – and the "Butterfly Beauty Shop",
complete with lipsticks.

Brazer said: "After four years of research involving mums and daughters, we've come up
with something called Lego Friends that is selling extremely well; it will help drive growth
in 2012."

Lego Friends, aimed at six to 12-year-olds and launched on Boxing Day, is centred around
five characters: Olivia, Emma, Stephanie, Mia and Andrea. Girls can build a cafe,
veterinary hospital or tree house with bricks that include six new colours, mostly pastels,
yellow and purple.

Brazer said: "Boys and girls have always been attracted to Lego, but the girls have tended
to drift off at around the age of seven. Now we have in place the key elements to make a
girls' product a success."

Lego's figures for 2011 show global sales soaring by 17% to nearly £2.2bn while operating
profit jumped from £573m to £660m.

Models licensed from popular film franchises like Star Wars, Pirates of the Caribbean and
Harry Potter were among the star peformers, together with the new Ninjago line and the
City series for five-to-10-year-olds.

Brazer said Lego had prospered because of "product innovation and the tendency of
consumers to fall back on trusted brands during hard times".

The children's building toy was not long ago in danger of looking outdated and obsolete
among PlayStations, remote-controlled cars and interactive robotic film characters. Today,
it is the third most popular toy brand in Britain after Hasbro and Mattel.

However, Lego cancelled development of its online Universe game, which was launched in
late 2010, after a disappointing reception.

Jørgen Vig Knudstorp, Lego's group chief executive, said: "It is a highly satisfactory result
reflecting a solid growth in profit. Growth in the north American market continued
undiminished, and also in most European and Asian markets we were able to report double-
digit increases in sales."
Lego said it expected continued growth but that the "economic crisis in certain European
markets will mean slower growth during the coming year".

Chocolate firms Nestle and Mars accused of price-fixing

Mars and Nestle have been charged with alleged price-fixing in Canada

Authorities in Canada have charged the food giants Nestle and Mars, together with a
network of independent wholesale distributors, in an alleged conspiracy to fix prices of
chocolates.

The Competition Bureau in the capital Ottawa said it has uncovered "evidence" suggesting
price-fixing.

Nestle Canada, Mars Canada, and the distributors ITWAL have been charged.

The Bureau said the Canadian division of the US confectionery company Hershey co-
operated with its investigation.

Officials said Hershey Canada, an alleged co-conspirator, is expected to plead guilty at a

hearing later this month in exchange for leniency.

"We are fully committed to pursuing those who engage in egregious anti-competitive
behaviour that harms Canadian consumers," said John Pecman, Interim Commissioner of
Competition.

"Price-fixing is a serious criminal offence and today's charges demonstrate the Competition
Bureau's resolve to stop cartel activity in Canada," he added.

'Vigorous defence'

Three individuals have also been charged as part of the investigation.

They are former Nestle Canada president Robert Leonidas; Sandra Martinez, former
president of confectionery for Nestle Canada; and David Glenn Stevens, president and chief
executive of ITWAL.

Mars, Nestle and ATWAL vowed to fight the charges

Mars Canada said in a statement: "Mars Canada intends to vigorously defend itself against
these allegations.

"It is Mars Canada's policy not to comment on pending litigation and we are therefore
unable to make any additional comments in relation to this matter, which is now before the
court."
But Hershey said it would plead guilty to one count of price fixing, dating from 2007,
blaming previous management.

"The current Hershey Canada senior management team as well as the Hershey company
and its management had no involvement in this conduct," it said.

Kidding around in luxury hotels

By Helen Soteriou London

VIK cards give The Ritz a competitive edge

Forget about black or platinum charge cards; at The Ritz, an ultra-luxurious hotel in
London, the card to have is exclusive for Very Important Kids. Under-16s staying at the
hotel are kitted out with small-sized bathrobes, slippers and toiletries, and they have access
to the hotel's Teen Concierge. Flash the VIK-card at the attentive staff and they will give
you a goodie bag on arrival, feed you ice cream until you can eat no more, then serve you
milk and biscuits at bedtime. It is all part of a growing realisation within The Ritz that the
kiddie market is both fast-growing and increasingly important. Other hotels, such as Ritz
Carlton, Omni, and Trump, have also woken up and smelt the coffee. They all have their
own individualised programmes in place.

Bonding experience

A move beyond more traditional attractions such as a butler service and complimentary
shoe cleaning has proven popular at The Ritz. Families are particularly chuffed, frequently
opting for the £600 a night Kidz @ The Ritz family bundle, with everyone sharing a small
suite or two interconnected rooms.

The special treatment makes both current and future paying customers happy

Alternatives include the Princess for a Day programme at The Ritz Salon, priced at £225,
and marketed as "quality mother and daughter girl-time". The programme includes a
haircut and style for two, followed by a manicure for little princesses and a pedicure for
mothers, followed by champagne or a Shirley Temple fruit cocktail in The Rivoli Bar. Or
they will get all dolled-up to have afternoon tea with the grown-ups in the Palm Court,
where a formal dress code is observed. A father and son programme incorporating The
Ritz's Rolls-Royce Phantom will soon be offered both as a day programme for non-
residents and as part of an overnight stay. It is all designed to appeal to parents looking to
bond with their children. Though rather than them getting down on their knees to play Lego
with the little ones, or any other activity done on the children's terms, this is all about
giving the young a glimpse into the lifestyle enjoyed by their parents.

Tailored itinerary
Down the road from The Ritz lies The Athenaeum, a family-run luxury hotel that sees more
than 1,000 children pass through its doors each summer.With its 111 bedrooms, 12 suites
and 18 apartments, The Athenaeum was awarded the title of Best Family Hotel (UK) in the
2011 Junior Magazine Design Awards.

The Athenaeum's children's concierge serves young guests exactly what they like

The atmosphere here is very different from that at The Ritz. Here, the children are treated
just like any other child. Sort of. Unlike most children, those visiting The Athenaeum are
not even required to point to get what they want during their stay. That is because
everything has been made ready for them before they even set foot inside the hotel. A
dedicated concierge, Serena Zandegu, will send out family questionnaires to get to know
children before they arrive with their parents. Based on the answers, she will make sure the
children's favourite drinks, snacks, magazines, and music await them. Every family is
offered a bespoke itinerary, complete with offers of flying a kite, going for a bike ride or
feeding the birds in nearby Green Park.

Returning customers

To Simon Wakefield, the general manager of The Athenaeum, the efforts are worthwhile,
as they tend to please both the hotel's current and future customers. "There are lots of lovely
stories of people who stay in wonderful hotels as a kid, and then always go back there as an
adult, so you are nurturing your business of the future," he says.

Wealthy grandparents often foot the bill when families indulge

"But it is more than that. It is about really caring, allowing the family, the parents, not to
have to stress about what their kids are going to do." Mr Wakefield believes that one of the
reasons why their children's programme is successful, is that that they listen and value the
opinions of their young guests. 'They tell you what they really want to do and what they
want to see, and as long as we listen to them and take that on-board, it is going to make the
parents lives easier as well," he says. "And then they want to come back."

Multi-generation travel

But if parents and children are pleased, there is a third group of customers that is even
happier with the way some luxury hotels look after their needs. Grandparents are often the
ones who foot the bill, as a way of spending time with their offspring without having to
sacrifice comfort, according to Euromonitor, a market research and analysis firm. "The
trend of multi-generation travel indicates that families need a place to go which will cater to
all members of the family, including, grandparents, parents and kids," says research analyst
Janaki Padmanabhan. "More and more hotels are realising that they improve occupancy
rates by catering to families. "Apart from having a competitive pricing, extra facilities will
play a key role when parents [or grandparents] are looking to include children and have a
luxurious holiday."
Pampered or spoilt?

Child friendly facilities such as a step in a family bathroom that helps children reach the
basin, or a couple of plastic cups rather than glasses, are helpful for families staying in
hotels, according to mummy blogger Linda Aitchison, founder and editor of
havealovelytime.com and mother of teenage twins, Emily and Melissa. "And my children
would definitely enjoy pretending to be grown-up," she says, so some aspects of the luxury
services on offer might please them. "But I think a lot of the adult-based pampering such as
spa and treatments is totally unnecessary," she continues. "The pampering is there to relax
you. Children don't need this, and I don't see the point of it. "Also, I don't want my children
to think adults should wait on them hand and foot. They already think that's what parents
are for."

Sun Tzu and Niccolo Machiavelli’s Lessons on Leadership (324)

by Leo Sun

Whether assuming control of a company or simply becoming a middle manager, employees

often find the transition from follower to leader a difficult one. Great leaders are rarely
born, rather they are created through rigorous trial and error. Great leaders grow into their
roles and remain dedicated to their mission, regardless of the personal costs.

Sun Tzu and Machiavelli were the masters of leadership, and their philosophies, through
their respective masterworks – The Art of War and The Prince, have taught generations of
leaders the basics of being an effective leader, and their philosophies still hold true today in
today’s cutthroat top-tier corporate environment. Of their lessons, several are of paramount
importance to today’s aspiring leader.

First and foremost, consistency is the key to all leadership decisions. Setting the rules and
abiding by them to the letter is the primary foundation for establishing an effective, time-
tested leadership. Many managers have failed by either failing to abide by their own rules
or by turning a blind eye on the indiscretions of favored employees. Once the rules are set,
they must be enforced unflinchingly and with an iron fist. When consistency in
punishments vanishes, then the credibility of the leader is compromised, and his or her
effectiveness as a leader declines. When employees realize that even the leader is subject to
the rules, then they will fall in line.

Machiavelli’s immortal (and often reviled) phrase, “It is better to be feared than loved”, is
another pillar of effective leadership. While it is often the easier path to be friends with
employees, it is hardly ever the effective path. Mixing personal relationships with
leadership roles is often a fatal mistake that leaders make, and serve only to cloud judgment
when an important decision – such as shedding inefficient employees – needs to be made.
Managers who wish to avoid confrontations will also “butter up” their employees by
downplaying transgressions, a poor leadership choice which often compromises the
leader’s managing power.

Strategic Leadership for Executives (609)

by Ryan May

How effective are you at managing change? In the modern business landscape, the process
of successfully navigating change – whether it’s organizational or related to products and
services – is one of the most highly-valued skills for the entrepreneur.

And to manage change successfully, an executive must possess the skills and tools for
strategy formulation as well as implementation. The combination of these two elements has
come to be known as strategic leadership, providing the vision and direction for the growth
and success of an organization.

A Snapshot of the Strategic Leader

In general, strategic leaders can be found at the head of large organizations, influencing
thousands to hundreds of thousands of employees and external support personnel. Within
this role, they are tasked with establishing organizational structure, allocating funding and
other resources and effectively defining and communicating the strategic vision for the
company as a whole to employees and investors alike. (150)

Common traits often include:

 Ability to operate in an uncertain environment where complex problems and external

events may impact the success of the venture
 Make decisions by processing information quickly and assessing alternatives (often based
on incomplete data), the consequences of which impact a wider range of people and
resources than a standard organizational leader
 Often will not see the fruit of their labor come to light during their tenure, planning
instead for initiatives that will take place years later and possibly even after the leader has
left the job (93)

Two Different Approaches (160)

As with just about anything in a large organization, the process of strategic leadership
begins with people. Managing change through uncertainty requires strategic leaders who
possess and communicate a clear path of direction, fostering ownership and alignment
within their workgroups to achieve the desired outcomes.

In addition, these leaders are keenly aware of the delicate balance between the analytical
and human components present within their organization, which is why many who’ve
successfully employed this system have been shown to rely on strong second-tier leaders,
enabling them to exert their influence primarily through subordinates while focusing on the
larger issues that impact the organization as a whole.

However, depending on the strengths and individual personality of each executive, many
corporate leaders opt to focus on the human component more than the analytical, as seen in
the modern employee-centered organization, or vice versa on analytical, as seen in
organizations based on a more traditional model that center primarily on a bottom line.

How to Select the Style That’s Right for You (195)

Strategic leadership is an ongoing process. And when trying to decide how to conceptualize
your role as a strategic leader, you must first decide how you see yourself participating as
the process moves forward. Is it your goal to provide bold, analytical leadership and
establish yourself as “hero” among employees and stockholders? Or do you envision
yourself serving as a benevolent and humane coach, enabling those under you to realize
their own full potential and stand in the limelight?

An analytical leader desires to personally come up with the right answer. Leading from the
front, these individuals tackle strategic issues by drawing primarily upon their own
experience and insight, attempting to single-handedly outsmart the competition and
establish dominance within the marketplace.

In contrast, the leader focused on the human branch of strategic leadership believes their
organization’s strategy is only as strong as the breadth and depth of the understanding and
commitment it attracts. As such, the development of strategy is carefully coordinated but
widely disseminated throughout the organization. In doing so, this type of leader is able to
guide and respond to directional elements while fostering commitment and encouraging
empowerment among employees at all levels.

What Motivates True Leaders?

by Ryan May

The term “leader” has been used almost to the point of over-saturation, now branding
anyone who serves in a leadership role. But there is far more involved in being a leader
than simply holding a title.

The varied examples of leadership are many, ranging from the Fortune 500 to Fortune’s
100 Best Companies to Work For. Though both lists contain highly successful companies,
there is a often a noticeable difference in the way they’re run, with one focused on a more
traditional model of profitability (driven toward the bottom line) while the other seeks to
provide a more modern approach to business, with leaders that strive to bring out the best in
their employees, a process that in turn enables those people to contribute to the organization
more creatively – contributions that in themselves drive the success of the venture.

And this process starts at the top.

Defining a Leader

There are a limitless number of ways to describe the attributes of a true leader. However,
taking into account the new focus on employee-centric companies mentioned above,
leaders in these organizations are driven by what they can do for other people and, as such,
often possess the following traits:

 Readily willing to listen and make decisions based on a diverse range of views
 Acts as a guide or a coach, as opposed to those who dictate
 Provides credit for success to subordinates (rather than accepting it for themselves)
 Enables and empowers by providing free reign on business functions
 Enlightens people through development and education, whether based on the leader’s
personal experience or outside resources
 Inspires others through a level of personal belief in the business venture
 Motivates people through positive reinforcement and rewards
 Leads by example
 Serves people, looking out for their best interest

Serving Others Through Empowerment

The above mentioned traits have one thing at their center: people. And it’s this focus on
people that seems to motivate many of the most successful leaders, from athletic coaches to
business entrepreneurs. Often possessing an innate ability to see in others what those people
may not see in themselves, the true leader cultivates the best in people and genuinely wants
to see them succeed.

Also viewed as a mentor, the true leader delivers empowerment by providing resources,
enabling others to realize options and possibilities they hadn’t thought of through exposure
to external or internal education and development. Within this scenario, the leader is
motivated to liberate subordinates rather than control them, thereby generating a more
collaborative environment that leads to innovation, competitive edge and overall success.

Though this approach is impractical for military or law enforcement, where following the
orders of an authoritarian leader is necessary due to the often confidential nature of
information, on the whole, true leaders in the civilian world strive to help others learn, grow
and develop by freeing them from the limitations that hold them back. In doing so, these
individuals inspire a natural state of loyalty that, as seen in the 100 Best Companies to
Work For cited above, leads to unquestionable success.

Email Tips To Help Close A Deal

When it comes to converting a warm lead to a done deal, email is a crucial tool. While there
are plenty of technology tools for salespeople to use – mobile apps, Twitter, LinkedIn and
so on – email remains the most effective way to maintain and build a personal dialog with
prospects.

It’s an ideal channel for sending a very personal message, without length requirements, that
can be forwarded, tracked, and measured for effectiveness. And it’s a great platform for
building a long-term, ongoing relationship; something all salespeople know is critical for
closing deals.

Here are some best practices to keep a conversation going using email – and how to get
your message noticed to close that important sale:

1.) Be personal and relevant. From sending the very first email to each ongoing message
to your prospect, every email must be personal and show that you’ve done your homework.
The days of the generic email blast are gone. You need to stand above the dozens of
irrelevant emails your contacts are receiving on a daily basis that head right to their delete
folder.

Think about how you can impact your prospect’s life. What kernel of information, what
research, what industry news is going to matter to them and make their job easier, and
demonstrate that you’ve thought about an issue from their perspective.

2.) Never “just check in.” When you follow-up with your prospect via email you should
never just be “checking in.” First of all, you are too busy to have time to “just check in.”
Second of all, it does not bring any value to your prospect. Each and every point of contact
should offer some new data point and bring more value to your prospect. It should not
appear as if you’re just following up to make your number.

Ask for their feedback or commentary to the information, or their thoughts or experience on
the issue so you can initiate a response and keep that dialog going.

3.) Fridays and weekends are still prime time. In this age of mobile devices, when
people are reading email 24/7, it turns out that Monday through Friday, 9-5 isn’t necessarily
the best time to have your email read. Earlier this year, my company released the results of
an email study we did to give salespeople advice on ways to increase open email rates.
Turns out that email open rates are slightly higher over the weekend.

So saving emails for the end of the week may be the best way to actually catch the attention
of your busy prospect.

4.) As they say, timing is everything. You need to be immediately responsive when you
get a reply. That sounds obvious, but it’s always surprising to me how long some emails
will sit in a salesperson’s inbox before he or she responds to it. If you get a message from
your prospect you need to reply right away, while you’re at the top of their mind. If you’re
on the road, or in the middle of pressing deadlines, you can and should still respond.
Let them know, for example, that you are traveling or in a meeting, and that you will get
back to them this evening with a more thoughtful reply to their question. With Blackberrys,
iPhones, Droids, and iPads, and WiFi just about everywhere you go, clients and prospects
expect very quick responses on email. Don’t worry about seeming too available, this is the
message you want your prospect to have, that you are easily reachable and responsive to all
of their questions and needs.

5.) You can go above, but don’t go around. I often get asked, is it ok to cc the person’s
manager, if I don’t get a reply from my point of contact, especially if I’ve met that person.
This is a tricky subject, but my response is generally yes. This is an ok thing to do, but keep
your point of contact copied and never throw him or her under the bus. In other words don’t
say, “Jim isn’t getting back to me, so I wanted to get in touch with you.”

Instead say, “Hi Tom, I know you were also interested in XXX, so I wanted to send you
this new research that my company just published. I hope you and Jim both find it
interesting.” Ask for their feedback and suggest next steps of setting up a call that week to
show them the latest version of your product, or meeting up at a conference you are all
attending.

6.) Silence is death. So, what do you do when you don’t hear back….at all. How many
times is ok to keep emailing a contact with interesting tidbits of information? I say about 5-
6 times, assuming that each email you’ve sent is relevant, personal and adds value as
mentioned above.

After the last email with no response, I advise one more message with the very short
subject line entitled, “Too busy or not interested?” Perhaps they just haven’t had time to
respond, and you’re giving them one last chance with a very brief message to get back to
you. Another option is to try switching channels — go to voice, go to social media, try
setting up an in-person visit. If your contact really isn’t an email person, maybe they will be
more responsive on a different medium.

When it comes to sales today, I always remind people that they should have a long-term
vision. They can’t only be focused on hitting their numbers, and closing short-term sales. If
salespeople want ongoing business, referrals to new business, and cross-selling
opportunities, it’s all about the bigger picture and developing a deeper relationship.

Email is one of the most effective tools for staying in touch with prospects, and continuing
to send out personal, relevant, and useful information. Keep in mind the email etiquette
and mechanics mentioned above to ensure your email will stand out and support your
efforts to build that longterm relationship.

Retail sales unexpectedly rose in April, pointing to underlying strength in

the economy and leading forecasters to bump up second-quarter growth
estimates.
The surprise gain in retail sales, which account for about 30 percent of consumer spending,
was the latest sign of resilience in an economy that has been hit by belt-tightening in
Washington as the government tries to cut its budget deficit.

"It's more indication that our economy is growing. It's not growing as rapidly as a lot of
people would like, but things are improving," said Tom Hall, an economics professor at
Miami University's Farmer School of Business in Oxford, Ohio.

Retail sales edged up 0.1 percent after a 0.5 percent drop in March as households bought
automobiles, building materials and a range of other goods, the Commerce Department said
on Monday. Economists had expected a decrease of 0.3 percent.

So-called core sales, which strip out automobiles, gasoline and building materials and
correspond most closely with the consumer spending component of the government's
measure of gross domestic product, increased 0.5 percent after an upwardly revised 0.1
percent gain in March. February's core sales were revised higher as well.

Coming on the heels of data showing relatively sturdy job growth over the last three
months, the increase in core sales helped to allay fears of an abrupt slowdown in the
economy.

The dollar rose against the euro and the yen, while prices for U.S. Treasury debt moved
lower. Stocks on Wall Street retreated from recent record highs, but the data helped to limit
losses.

Several economists raised second-quarter growth estimates on the fairly strong core sales
number. Goldman Sachs lifted its forecast by three tenths of a percentage point to a 2.1
percent annual rate, while JPMorgan pushed up its estimate by half a point to 2 percent.

The positive revisions to the core sales data for February and March initially led economists
to anticipate that the government would revise higher its initial 2.5 percent estimate for
first-quarter GDP growth.

However, a second report from the Commerce Department showed business inventories
were flat in March for a second month, suggesting restocking was probably not as big a
boost to growth in the first three months of the year as initially thought.

Even so, economists said the government's initial estimate would likely hold, given that
core retail sales for February and March were stronger than earlier believed.

In addition, the lack of inventory accumulation should be a boon to second-quarter growth

as businesses will likely have to stock up to meet steady demand from households.

FALLING GAS PRICES HELPING

Growth is being crimped by the end of a 2 percent payroll tax cut and higher tax rates for
wealthy Americans, which kicked in on January 1. Across-the-board government spending
cuts worth about $85 billion are also weighing.

But declining gasoline prices, which fell 14 cents in April, are helping to offset some of the
drag on household income, freeing up money for discretionary spending.

Economists say the Federal Reserve's campaign to keep interest rates low is also helping
households, in part by pushing up share prices and home values.

"Those who doubt that the Federal Reserve is making an impact just need to look at debt
restructuring and wealth effects on spending," said Diane Swonk, chief economist at
Mesirow Financial in Chicago. "There is no way the consumer would be holding up so well
without the support of lower interest rates."

The tone of the retail sales report was mostly firm. Receipts at auto dealerships rose 1.0
percent after falling 0.6 percent in March. Though falling gasoline prices pushed down
receipts at gasoline stations, sales excluding gasoline recorded their largest increase since
December.

Stripping out gasoline and autos, sales rose 0.6 percent.

Sales of building materials and garden equipment supplies rose, posting their largest rise
since September, a reflection of the housing market's recovery.

Receipts at clothing stores recorded their biggest increase since February last year. There
were also increases in sales at sporting goods, hobby, book and music stores, and
electronics and appliances stores.

Consumers also spent more at restaurants and bars.

But furniture store sales were flat and receipts at grocery stores fel

Customers Don't Want Ads, They Want A Conversation

Marketing is rapidly transforming into a dialogue between buyers and sellers or

collaborative marketing. Crowdtap CEO Brandon Evans on the five trends driving the shift.

It is becoming clear that the future of social marketing, and marketing in general, will be
built around collaboration. Social technology has already evolved from a focus on
consumer listening to broader social management platforms that help brands build and
communicate with their consumers. Now, the stage is set for social tech to begin creating
real value for companies through deep collaboration with consumers.

Collaborative marketing will mean that marketers truly shift from marketing “at”
consumers to marketing “with” consumers. We have reached a tipping point where a
penalty will be paid by those companies who simply view social as a mass communication
channel for blasting out messages to a mass audience.

Today, the companies that win are closest to those who buy, use, and advocate for their
products. Five trends demonstrating a shift to collaborative marketing will create the
biggest changes and ultimately offer the most significant rewards for marketers:

1. Democratized product development

New models and technologies continue to make it easier and quicker for upstart companies
to create and market products. Brands must keep pace with the speed and crowdsourced
brainpower this technology enables, including:

Funding: Crowdsourced funding platforms like Kickstarter and Indiegogo make it easy for
anyone with a good idea to raise millions to build a product with little risk.

Distribution: Quirky democratizes invention to anyone with an idea, and Etsy provides a
global marketplace for designers and artists to sell their goods.

Production: 3-D printers like Makerbot and Cubify look to revolutionize how prototypes
and products are produced via their low-cost devices.

2. Close, continuous customer relationships

IBM’s Global CEO Study found that 88% of CEOs said “getting closer to customers” was
the top priority for their business over the next five years. Brands that have a genuine, real-
time dialogue with consumers will be well-positioned in a world of evolving and
increasingly niche markets.

Krister Zackari, president of Gum and Candy at Mondelez International, has employed a
strategy built around ongoing optimization for its Twist brand[/url] to ensure it offers
teenagers exactly what they want from a snack brand. He states: "Because we’re working
with teens on the strategy, we’re developing it as we go along. It means that we’ve had to
change how we would normally go about planning the marketing for a brand. We don’t
know what we’ll do next with Twist because we want to evolve naturally as a result of our
work with teens.”

With this approach, it’s easy to see how Mondelez will keep pace with changing consumer
tastes.

3. Open organizations

Businesses in the past succeeded with secrecy. Keeping technology, formulas, and
processes under wraps often led to a competitive advantage. Today, competitive innovation
stems from open information.
One recent example of a consumer crowdsourcing project is Coca Cola’s newly launched
Facebook app that asks its 50 million fans to suggest ideas to make the world a happier
place. The winning idea will be funded by Coca-Cola and launched in 2013.

4. Peer-powered media

One recent example of a consumer crowdsourcing project is Coca Cola’s newly launched
Facebook app that asks its 50 million fans to suggest ideas to make the world a happier
place. The winning idea will be funded by Coca-Cola and launched in 2013.

5. Measurement of Influence not Impressions

Impressions provided a simple metric for a mass-marketed world. Success today, however,
is not based solely on quantity; quality of the engagement with a message must be factored
in as well. In order to measure the quality of any customer communication, Crowdtap
developed the Brand Influence Metric, along with Joanna Seddon, the former CEO of
Millward Brown Optimor.

Brand Influence looks at both quantity and quality of impressions. Marketers should look to
implement a measurement system similar to the Brand Influence Formula in order to begin
optimizing the quality of their communications in addition to reach and frequency.

What the future holds

Collaborative marketing will bring much greater change than enabling consumers to
comment, like, or retweet posts. Collaborative marketing will mean that the current barriers
between companies and their consumers will be removed. Successful brands will create and
improve their products and messaging continually with their consumers. Likewise,
consumers will influence and take co-ownership of their favorite brands.

The collaborative marketing future has arrived, and it’s going to be a fun ride.

Karma Chakhs were successfully funded on German crowdfunding platform StartNext in January
2013. Le Van Bo-Mentzel, a Laotian-German furniture designer, started the project as a result of
his disappointment at Nike's purchase of Converse, as now the brand's iconic Chuck Tailor
sneakers are produced by a large multinational with 'bad karma'. Instead, Karma Chakhs will be
produced by Fair Trade-certified manufacturers. Nearly 400 people PREchased the shoes (at cost
price only), enabling production to start. The shoes are due for delivery in July 2013

CUSTOMER-MADE: “The phenomenon of corporations creating goods, services and

experiences in close cooperation with experienced and creative consumers, tapping
into their intellectual capital, and in exchange giving them a direct say in (and
rewarding them for) what actually gets produced, manufactured, developed, designed,
serviced, or processed.”
Consider any or all of the following:

 Status: people love to be seen, love to show off their creative skills and thinking.
 Bespoke lifestyle: something consumers have been personally involved in should
guarantee goods, services and experiences that are tailored to their needs.
 Cold hard cash: getting a well deserved reward or even a profit cut for helping a company
develop The Next Big Thing is irresistible.
 Employment: in an almost ironic twist, CUSTOMER-MADE is turning out to be a great
vehicle for finding employment, as it helps companies recruit their next in-house designer,
guerrilla advertising agency or brilliant strategist.
 Fun and involvement: there's pleasure and satisfaction to be derived from making and
creating, especially if co-creating with brands one loves, likes or at least feels empathy for?

It’s NOT plain feedback without an answer, it's not Do-It-Yourself, it's not customization,
it's not even personalization, as all of these actions take place after companies have decided
what the basics are, which products and services and experiences they're willing to hand
over to consumers. Case in point: consumer voting campaigns like
onvotetouspourdanette.com or straightupflavor.com. Sure, they're fun, but at the same time
have a hopelessly tired feel to them. Once true CUSTOMER-MADE becomes the norm, it
should be the companies voting for whatever consumers choose to submit!

For decades, consumers have been saving up their insights and rants about the stuff they
consume, simply because they didn't have adequate means to interact with companies, or
with other consumers for that matter. No longer. These fickle, wired, empowered,
infolusty, opinionated and experienced holders of a MC (Master of Consumerism) are
getting used to 'having it their way', in ANY way imaginable, which includes wanting to
have direct influence on what companies develop and produce for them.

It certainly helps that these same consumers are also part of GENERATION C: they're
creative and increasingly have access to professional hardware, software, and online
distribution channels to show (and dictate) companies what it is they expect from them,
using text, sound, picture and video in ever more powerful ways. Add to GEN C the
millions of lead users, early adopters, brilliant business professionals dying to give you a
piece of their mind, and you’ll end up with THE GLOBAL BRAIN, waiting for you to tap
into its experiences and skills. More on THE GLOBAL BRAIN in a future Briefing, but
you probably get the picture: your brand's Next Great Idea could come from Sao Paulo or
Singapore, if you open up your corporate fortress to smart individuals from around the
world. If you don't, someone else surely will.
Virtually every brand these days seems to be inviting their customers to contribute to their
next advertising campaign. If you believe that this is proof that co-creation is in fact an
established trend, think again.

Sure, recent examples like L’Oreal’s You Make The Commercial, FireFox’s Flicks,
MasterCard’s Write a Priceless Ad, JetBlue’s Travel Stories and McDonalds’ Global
Casting are good fun (hell, if consumers really like your brand, they don’t even need a
contest, as illustrated by these cool, unofficial American Apparel ads), but while getting
some of your customers involved at a tactical marketing level is better than nothing, it
doesn’t touch upon the truly massive opportunities that the CUSTOMER-MADE trend has
to offer when you move beyond advertising: from product development to open-
conversation feedback schemes:

The easiest way for brands to dip their toes into CUSTOMER-MADE and tap THE
GLOBAL BRAIN is to announce product or service development contests, open to
consumers from around the world.

Let’s start with some CUSTOMER-MADE contests held since our last update: they go
beyond the usual ‘send-us-your-product-idea-and-win-a-voucher-for-a-free-ice-cream-
and-don’t-expect-us-to-actually-do-something-with-it’:

China's Credit Crunch Signals How Serious

Beijing Is About Reform (589)

So what to make of China’s June credit crunch, the worst in at least a decade, which saw
interbank lending rates reach a new high? On June 20, the overnight repurchase rate set a
record at 13.91 percent, before the People’s Bank of China, China’s central bank, injected
funds, driving rates into their its biggest fall since 2007.
Despite spooking global markets and no doubt causing consternation among Chinese
banks and borrowers, the whole episode is a positive sign for some. It shows China’s top
leaders are still serious about broader economic restructuring and that they mean business
when it comes to cleaning up some of the frothiness in the banking sector. It also shows
Beijing is willing to hang tough even when things get a little scary.

“This actually played out much further than anyone expected,” says Leland R. Miller,
president of China Beige Book International, which carries out a quarterly survey of the
Chinese economy. “At the end of day they are not looking for their system to collapse. But
the message is unmistakable—things are tightening, we want them tightened, and we are
serious. The PBOC is saying: We are going to force banks to be more responsible.”

More responsible means reining in some of the rapid lending that has helped drive growth.
In a worrying sign, such lending has recently become less effective at doing so—likely
because more and more new credit has gone toward paying off interest on outstanding
loans (and is probably helping hide a growing bad-debt problem, too). Financing has been
“going to firms that were rolling over their loans, and that is not causing an expansion of
the economy,” says Miller.

Total credit in the economy grew 22 percent in May, year on year, and “is on course to hit
200% of GDP at the end of Q2, up from 130% in 2008,” points out London-based Capital
Economics economist Mark Williams in a June 20 note. The People’s Bank of China “is
worried by the unsustainable growth rate of credit and is sending a message that market
participants should not take for granted that they will always have access to cheap
interbank loans,” wrote Williams.

Beijing’s brinksmanship is also likely aimed at cleaning up some of the riskier practices in
China’s banking sector, which have helped contribute to a serious problem with local debt.
By a broad measure, China’s shadow bankingmay have already almost doubled since 2010
and could amount to as much as 36 trillion yuan, or 69 percent of the economy.

“We think the [central bank] is right in trying to rein in credit growth and warn banks to
properly consider liquidity and counter-party risks,” wrote Tao Wang, chief China
economist at UBS Securities in Hong Kong, in a June 18 note. “We also think the
regulators would be right in cracking down on reckless interbank and other type of
regulatory arbitrage through which banks increase leverage, hide loans, bad assets and
risks.”

“It underscores that at the moment the government is not interested in accommodating
calls for stimulus—they will hold the line on the need for reform,” says Louis Kuijs, chief
China economist at the Royal Bank of Scotland (RBS) in Hong Kong, citing premier Li
Keqiang’s calls for fiscal and land reforms to support urbanization, and a reduction in red
tape to encourage the growth of private business, aimed in part at easing the transition to a
more domestic consumption-driven economy. “It still remains to be seen exactly how bold
the reform agenda will be, however.”

China's Next Crisis Lurks in Shadow Banking

China’s growing reliance on shadow banking is contributing to its debt problem. Since 2010 the
value of the unregulated loans, investments, and other financial products of this sector has almost
doubled, to as much as 36 trillion yuan ($5.86 trillion). That’s equal to 69 percent of gross
domestic product, says Haibin Zhu, chief China economist at JPMorgan Chase (JPM) in Hong Kong.
“Shadow banking poses systemic risks,” warned Moody’s (MCO) in a May 13 report.

The question is how much of this capital carries an implicit guarantee that the national
government must cover. “It is our belief that at some point the central government will have
to take responsibility for local debt,” says Derek Ovington, head of regional banks in Asia
at CLSA Asia-Pacific Markets. The official debt burden of central and local government,
which does not take the localities’ shadow banking activities into account, is just below
30 percent of GDP, Moody’s says. In contrast, Ovington estimates that shadow banking
liabilities and consumer, corporate, and government debt are now more than 200 percent of
GDP. “The longer the government takes to address this, the bigger the problem becomes.”

In the shadow sector all manner of players, from securities firms to pawnshops, cater to the
borrowing and investment needs of those who want to bypass loan quotas, interest rate
caps, and other restrictions. Both banks and nonbank institutions have created wealth-
management products such as trusts, in which affluent Chinese invest. A trust may lend the
money at well above the official rate to companies struggling to stay afloat.

Developers and local governments have tapped shadow finance to work around restrictions
on property development, bank lending, and infrastructure projects. The money can flow to
questionable investments that may not quickly provide returns, says JPMorgan’s Zhu.
Local governments are sitting on 12.8 trillion yuan in debt, according to Fitch Ratings. Add
in loans from the shadow banks and the total could be closer to 18 trillion yuan, Fitch says.
Although trust assets, a major part of shadow banking, grew 65 percent in the first quarter,
the economy isn’t expanding any faster. Companies and local governments are simply
using the new credit to service earlier loans. “This is not going into the real economy,” says
Chen Xingdong, chief China economist at BNP Paribas (BNP) in Beijing.

Chen points out that local governments have land and companies they could liquidate to
pay liabilities. Beijing could inject cash into banks, if necessary. The central government
has ordered banks to limit the size of their wealth-management products and monitor loans
to local governments more closely. Despite the risks, the shadow banks perform a service
by channeling capital to cash-strapped private enterprises and local governments. That’s
why a broader clampdown on shadow finance seems unlikely: Beijing wants to tame
shadow banking, not kill it. Only major reform can change this precarious situation.

Hollande in Qatar for talks on Syria, economy

Hollande in Qatar for talks on Syria, economyDOHA: French President Francois Hollande arrived
on Saturday in Qatar for talks on the deadly Syrian conflict and economic ties with the gas-rich Gulf
state.

Hollande landed in Qatar as a "Friend of Syria" meeting in Doha earlier Saturday agreed to offer
military aid to rebels in the war-hit country.

Ministers from Britain, Egypt, France, Germany, Italy, Jordan, Qatar, Saudi Arabia, Turkey, the
United Arab Emirates and the United States attended the talks.

They agreed to "provide urgently all the necessary materiel and equipment to the opposition on the
ground, each country in its own way in order to enable them to counter brutal attacks by the regime
and its allies and protect the Syrian people."

Yet even as they prepared to step up their own involvement in a war that has killed nearly 100,000
people, they demanded that Iran and Lebanese Hezbollah stop supporting President Bashar al-
Assad's regime.

Britain and France have recently pushed for providing weapons to Syrian rebels but have
underscored that this must be done in a responsible manner to avoid the kind of anarchy that took
place in Libya after the fall of dictator Moamer Kadhafi.

During his talks with Qatar's Emir Sheikh Hamad bin Khalifa al-Thani, Hollande will highlight the
"need for trust, clarity and coordination" in backing the rebels as Qatar is accused of "supporting
Syrian opposition groups it does not know," according to a French diplomatic source.
The visit is also important economically, as a large delegation of business executives from major
French companies are accompanying Hollande who will speak at the Franco-Qatari Economic
Forum in Doha on Sunday.

But the matter of "strategic importance" to France, according to the president's entourage, is its
Rafale fighter jets which it is trying to sell to Qatar.

The emir of Qatar is preparing to hand control of the gas-rich Gulf state to his son Crown Prince
Sheikh Tamim bin Hamad al-Thani, according to Qatari diplomats and officials.

Hollande will dine with Sheikh Hamad and the crown prince on Saturday evening and on Sunday he
travels to Jordan for talks with King Abdullah II.

Last year 12m people in the world had $1m or more in investible assets. That is 1m
more “high-net-worth individuals” than in 2011. After falling in two of the previous five
years, their combined wealth increased by 10% in 2012 to a record $46.2 trillion.
America, home to 3.4m very rich folk, Japan (1.9m) and Germany (over 1m) account
for more than half of the world’s wealthy. Of the 12 countries with the most super-rich
people, only Brazil failed to swell its numbers last year, as its economy slowed. North
America reclaimed its position from Asia-Pacific as home to more extremely wealthy
people than any other region, but its lead is unlikely to last, as Asia has many of the
fastest-growing economies.

The Economist explains

Why is the yuan so strong? (469)
Jun 20th 2013, 23:50 by S.C. | HONG KONG
EARLIER this month eight American senators proposed a law to punish China and other
countries for keeping their currencies artificially cheap. Two of the bill’s sponsors—Lindsey
Graham, a Republican, and Chuck Schumer, a Democrat—have been complaining about
China’s weak currency for a decade: they wrote an angry letter on the subject to America’s
treasury secretary back in July 2003. But although their criticisms have not changed over the
past ten years, China’s currency, the yuan, has changed a lot. Long criticised for its
cheapness, weakness and competitiveness, China’s currency is now looking uncomfortably
strong. Some economists even wonder if its overvalued. Why?

Back in 2003, you could buy 8.28 yuan for a dollar, making China’s currency worth only about
12 cents. American politicians argued that the yuan’s cheapness made Chinese goods overly
competitive in America’s market, and American exports unattractive to Chinese buyers. The
natural result was a big trade deficit with China. Since then, China’s authorities have allowed
the yuan to rise against the dollar by about 35%.

But this is not the only, or the best, way to look at China’s exchange rate. For one thing, China
does not trade with America alone. If you compare the yuan to a basket of other currencies,
weighted by their trade with China, its recent rise is far more striking. China’s trade-weighted
exchange rate has strengthened by 12.7% since 2010, according to the Bank for International
Settlements, faster than the exchange rates of the other 60 economies it tracks. Yet the price
of China’s currency is not the only thing that determines the competitiveness of its goods. To
an American buyer, the cost of a Chinese good is a combination of two things: the price of the
yuan in dollars and the price in yuan of whatever it is that the American wants to buy. If the
good’s price falls, then it will remain competitive, even if the yuan itself rises. Prices and
currencies can thus offset each other.

But their movements can also reinforce each other. Over the past ten years China’s prices
have risen faster than America’s, even as its currency has strengthened. One price in particular
has stood out: the price of workers. Unit labour costs in Chinese industry have risen by 41%
since the first quarter of 2003, according to calculations by The Economist, much faster than
their rise in American, European or Japanese manufacturing. We have calculated an
alternative measure of China’s exchange rate, which takes account of the change in unit labour
costs in all four economies. By this measure, China’s exchange rate has risen by almost 50%
since 2003. That is one reason why China’s exports have slowed recently, increasing by only
1% in the year to May. And it is the principal reason why the yuan now looks uncomfortably
strong.

Virgin America triumphant(374)

CONSUMER REPORTS, a magazine that ranks various products, published since the
1930s by Consumers Union, a non-profit consumer advocacy group, has just named
Virgin America the best airline in the States, beating JetBlue, Southwest, and all the
big full-service airlines. Virgin, which started flying in 2007, has consistently ranked
near the top of "best airline" lists. But the carrier (which is separate from its cousin
Virgin Atlantic) has never made an annual profit; it lost $145 million in 2012.
(CAPA-Center for Aviation calls this Virgin's "perpetual paradox".)

In a survey of 16,663 Consumer Reports readers, Virgin received 89 out of a possible

100 points, four more than Southwest and JetBlue, which tied for second place. The
airline "got a clear thumbs-up from readers in our latest survey, with some of the
highest scores we’ve seen in years," the magazine wrote. Virgin received top scores in
check-in ease, cabin-crew service, cabin cleanliness, baggage handling and in-flight
entertainment. Even its less-than-perfect seating comfort score was still better than all
other airlines except JetBlue, with which it tied.

So what does this mean for Virgin? Consumer Reports has over 7m subscribers, so at
the margins, some of those people will definitely give the airline another look next time
they are booking a flight. But although Virgin has been topping these sorts of lists for
years, it doesn't seem to have made much difference to the company's bottom line.
Still, Virgin maintains that its finances are looking better—and it is considering an initial
public offering (IPO) in late 2014 or early 2015 says David Cush, its chief executive.
To become profitable, Virgin will have to rework its debt. The airline took a big step
recently when it converted $290m of debt (mostly owed to Richard Branson's Virgin
Group) into conditional equity that the debt-holders will own after an IPO, providing the
stock hits predetermined targets. (The Cranky Flier has more on this.) But unless
Virgin proves that it can translate customer praise into dollars, that IPO may never
happen. I don't shed any tears for failed airlines, but the failure of such a highly-rated
carrier would send a sad message to the rest of the industry. Let's hope Virgin figures
out how to make its business work.

Collaboration: Apps that work alone to come together

By Ian HardyBBC News, New York
Alone in a crowd: Letting people work alone using cloud tools can sometimes help them collaborate
better than if they are forced to work together, says Evernote's Phil Libin

Working together as a team at different times, in different locations, on

different bits of digital kit - a trend that has gathered momentum
particularly in the last couple of years.

This is thanks in no small part to more capable smart devices and faster
internet access in a greater number of places.
But while the rest of the software industry strives to make products from the
ground up that cater specifically to groups, Evernote's chief executive Phil
Liben is sticking to his guns - making great note organisation software for
individuals and letting nature take its course.

"In general I think we have a pretty different take with Evernote Business on
what collaboration should be like," he says.

"We think most business software is fundamentally about collaboration…

and we are not. We start from a totally different point. Evernote is for
yourself. The collaboration should come automatically as a result of that."

Stick out from the crowd

That philosophy seems to be shared by a handful of the top players in the
"solo" app space.

The better the individual experience and the more people who use it, the
greater chance there is that it will become a collaborative tool by default.

Evernote is for yourself. The collaboration should come automatically as

a result of that”
Phil LibinEvernote

Dropbox is another example of a company that created a rock steady

personal cloud storage product (harder to do than it appears!), redefined
simplicity along the way, and slapped on a logo that came to represent a
gold standard.

These services have one thing in common. Millions of people use them at
home, on the road and of course bring them into work.

Ilya Fushman, responsible for corporate and business development at

Dropbox, came to the company two years ago when the service started
outgrowing its consumer-biased origins.

"We were trying to solve the problem of a proliferation of devices - having an

iPad, having an iPhone and having a PC at work and needing to access data
from all of those endpoints," he says.

"We are now used in about two million businesses and 95% of Fortune 500
companies."
Whenever people start using productivity apps, they are usually using them
for themselves, not to satisfy a company edict. And that's the key according
to Mr Liben.

"The more you start thinking about how to explicitly exchange information
the less actual information ends up getting exchanged.

"You end up going down these endless rat holes of setting up groups,
arguing about procedure…. it's like a water cooler situation with undirected
conversations.

"Whereas if you just focus on whatever you need to do to accomplish your

job and you really try to collaborate almost as little as possible, I think
paradoxically you get really high quality collaboration."

Computer says no
One early challenge for these apps and others is that once they appeared
unannounced in the workplace, information technology types started to
worry about their carefully crafted company infrastructure.

Initially corporations tried to keep hardware like the iPhone and software like
Dropbox away from the office cubicle. That didn't work.

Dropbox has taken advantage of this and reached out to IT departments,

trying to help them integrate Dropbox into official workflows, with a new
product called Dropbox for Business (previously Dropbox for Teams).

"Our users brought Dropbox to work," says Ilya Fushman.

"But to help them be productive at work we also needed to satisfy the

requirements of IT. And these really have to do with being easily able to
provision accounts to everybody in the company, having control over who
has access to what data, being able to manage accounts when employees
leave.

"These set of features are not there in the consumer product and so we had
to add them to the business product."

Dropbox admits that its future roadmap for IT development is aggressive.

That's already reflected by new features that include "Single Sign-on" which
gives the host company control over sign in authentication, and an admin
console and sharing controls.
Whilst IT departments may not welcome "outside" apps with open arms,
corporate executives realise that unlike other work-related software, there is
almost no training needed, because people have used the software in their
personal lives.

And that saves money - lots of it.

Hacked off
Collaboration only happens of course if all parties trust the platform they
work on.

Both Dropbox and Evernote are prime targets for hackers because they
house so much personal and work-related information.

So far their subscriber numbers have not been hit by the inevitable bad
press that follows a security breach or password scare, like the one that
happened to Evernote recently. Phil Liben says his company anticipates
such situations.

"It was very expensive because of the way we handled it. We immediately
did the most we could do," he says.

"A full password reset for 50 million users is a very expensive thing to do -
just the support costs were huge for us. But we had to over-react in this kind
of situation and in the near future we're adding two factor authentication. The
response from businesses has been very positive."

One obvious area ripe for collaboration is design, graphics and photography.

Adobe has chosen to stop selling a lot of its marquee software such as
Photoshop in retail boxes, opting instead for an online subscription service
called Creative Cloud.

There have been outcries from individuals who may have to pay more over
time to gain access than they did before.

But the appeal of a cloud service that features up-to-date software that can
be utilised by groups, including clients, is likely to be irresistible to the
graphics industry.

Not that Adobe had a choice really, as more and more designers started
using the likes of Dropbox to house their projects for collaboration purposes.
Adobe's Heidi Voltmer, says there is no question that their Creative Cloud
solution has mass appeal.

"I would say that almost all our users are doing some kind of collaboration.
Even individual designers are usually working for a customer or one other
person. In the new version of Photoshop CC you'll be able to share directly
out to our Behance.net website."

Traditionally a lot of graphics work gets passed around via email. Evernote
has already begun working on a way to cut out email exchanges altogether.

The Evernote partner product Skitch makes annotating art, PDFs and other
documents very easy, and takes away the need for any email interaction.

Collaborators can share one Evernote Skitch note and add arrows,
comments highlight and approval stamps until the project is finished.

Crowdsourcing: Inventing the question to fit your answer

By Fiona GrahamTechnology of business reporter, BBC News

"Invention, my dear friends, is 93% perspiration, 6% electricity, 4%

evaporation, and 2% butterscotch ripple."

So says Gene Wilder's Willy Wonka, in the 1971 film of Roald Dahl's classic
children's book, Charlie and the Chocolate factory.

Unfortunately, few of us are lucky enough to have a chocolate factory full of

non-union Oompa Loompas (Wonka seems to play fast and loose with anti-
human trafficking laws) to help you get your idea to market.

But, what you do have that dubious employers like Mr Wonka don't, is the
power of the internet. And fewer trips to the dentist.

Electrifying idea
Jake Zien is a 24-year-old designer from Milwaukee who now lives in New
York, where he works for a tech start-up.
He is also a successful inventor. His product, the Pivot Power, is a strip plug
that bends. He had help from over 700 other people - many of whom were
strangers - who all get some share in the profits.

Jake Zien: The idea was the direct result of annoyance and frustration, I'd simply spent one too
many minutes crouched under my desk, fiddling with my power strip, rearranging plugs in the vain
hope that they'd all fit

He is just one of a community of people who are part of Quirky - a platform

where people collaborate to produce new products that the company
manufactures and sells.

"I joined Quirky back in 2010 after a family friend told me he'd read about the
company in an in-flight magazine," says Mr Zien.

"The friend, an intellectual property lawyer, had been consulting with me for
some time about developing my idea for a flexible power strip.

"He mentioned that Quirky purported to do exactly what I needed - to be the

missing piece that's needed to turn a nascent idea into a commercially
available product. I joined the site and submitted my idea a week later."

He believes being able to work on his idea with others made it a commercial
success.

"It was Quirky that did the overwhelming majority of the work, and I see the
product's success as a "perfect storm" combination of factors, such as my
timing in submitting the idea, rather than a complete testament to the quality
of the submission."

The company has been operating for four years, and now has a community
of around 400,000 people.

"We can get anything from bar napkin sketches to patented and prototyped
ideas," says Quirky's Bret Kovacs.

The community gives feedback on the idea, then every Thursday the Quirky
team have a meeting which is streamed live, where they decide on which
ideas to take forward.

The community and the company then work together to make the products a
reality.

The inventor and those who have influenced development get a share of
30% of sales from the Quirky website, or 10% from items sold elsewhere.
But the company has bigger ambitions.

What's really important about patents is they are meant to inspire”

Bret KovacsQuirky

They are in the process of launching a new partnership with US mega-

corporation GE, which they hope will change the way patents are used.

GE is giving the Quirky community access to patents and technologies with

the express purpose of letting people tinker with them and find innovative
new uses.

"Just for too long, patents have been misused and really misunderstood, the
only places you really hear about patents today are in the court of law," says
Mr Kovacs.

"Our goal with partnering with GE on this front is really to bring patents back
to their original intended use. Certainly they are meant to protect the
inventor, but what's really important about patents is they are meant to
inspire."

Patently necessary
Quirky is not alone in wanting to bring patents full circle. They were originally
intended not only to stop ideas being stolen, but also to foster
innovation and help others improve on existing technology.

The patent process was a sort of a quid pro quo because to get protection
for your idea you had to be transparent about the details.

Those following the latest Apple/Samsung court battle, or the

infamouspatent trolls that have sprung up in recent years, could be forgiven
for thinking it was about stifling innovation instead.

Marblar co-founders Mehmet Fidanboylu, Gabriel Mecklenburg and Daniel Perez

Marblar is a new UK start-up founded by three PhD students busy dusting

off unused patents held by universities and other institutions and finding new
uses for them. In other words, it finds problems that fit solutions that already
exist.

Rather than Quirky's consumer focus, this is about hard science.

"As scientists we saw that a huge amount of science never gets
commercialised," says chief executive Daniel Perez.

"Often this is because the application might not be obvious. Imagine if you're
in the Oxford physics department, and you develop a cool new laser. Your
intention was to use it in satellites, but when you're done the gold standard
happens to be much better.

All the ideas are out there in public so people come in and build upon
people's ideas”
Daniel PerezMarblar

"The technology's already patented, it's been published, but you know other
people aren't incentivised to take a look at this laser and to think of new
ways it could be used," he says.

Building a crowdsourcing platform seemed an obvious way to find new

ideas, according to Mr Perez.

The team take an existing patent and break it down.

"We don't just post the patents because certainly a life science researcher
couldn't understand laser physics [for example] anyway. We ask people from
a variety of different backgrounds very simple questions - what would you do
with this technology?"

Each project is run as a competition. About two-thirds of the way through, a

short-list of finalists is drawn up. At the end there is a winner, chosen by the
patent-holder, as well as a winner chosen by the crowd.

Prizes ranging from $1,000 up to $25,000 are awarded as well as

community points, called marbles.

A recent project took a small laser - or spectrophotometer - designed to be

used on a Mars rover - and found a new use for it as a breath
analyser that could diagnose and track people with liver disease based on
levels of ammonia found in their breath.

So is cash enough of an incentive?

"What we've found is that the prize money isn't the biggest motivator for
people," says Mr Perez.
What's the question? Members of the Marblar community work together as well as competing to win
a cash prize

"They're in it because they want to chew on interesting technology and they

want to see something get realised."

Nevertheless, although the company is less than a year old, they have plans
to make participation worth potentially much more.

"We're actually going to be putting seed [funding] rounds around some of the
concepts that are moving through Marblar," he says.

This would be good news for the competition winner as well as Marblar.
They will both have an equity stake in the new company, says Mr Perez.

"Without having put any money in, from having an idea about how to use
someone else's technology, it's a quick way to own a piece of the next big
thing."

Social media is not the magic bullet for job seekers

Elizabeth Garone

(iStockphoto)

It is a universal question for job hunters, especially in recent lean jobs years:
“Where should I be investing my time?"

Is social media — especially LinkedIn — the end-all-be-all? Or should I

spend my time at networking events?

While social media networks may be the current darling of the job search
space, they are not the magic bullet for landing a new job. Human resources
consulting firm CareerXRoad’s 2013 Source of Hire Report showed that only
2.9% of hires could be directly attributed to social media. If anything, today’s
job searches are more multifaceted than ever and constantly evolving.
Networks like LinkedIn — the world’s largest online business social network
— are valuable tools. But an effective job finding strategy should tie together
a three-pronged attack.

Work your profile

For most job searches today, you cannot underestimate the importance of
having some presence on a business social network, and in the US that
means LinkedIn and in Europe, LinkedIn and XING or Viadeo. But not every
profile is equal. It is important to hone in on exactly what hiring managers
see when they check you out on LinkedIn. Some 65% considered
experience the profile’s most important element while 38% cited educational
background and 37% chose references, according to a recent survey of
United Kingdom-based hiring directors by recruitment firm Robert Half UK.
Make sure your experience section is thorough and that you list key
responsibilities and accomplishments -- including data to show them -- for
current and past roles, said Phil Sheridan, managing director of Robert Half
UK.

Job seekers should think of LinkedIn as a “launching point”, said Atlanta-

based Miriam Salpeter, career coach and author of Social Networking for
Career Success. Use it to demonstrate expertise via items posted through
updates, grow a professional network, and get found, said Salpeter. Then,
use those connections to expand in-person and other job-seeking efforts by
finding online places where people share information about in-person
events. Meetup.com groups, for example, are great for networking, said
Salpeter, if you join local groups that relate to your professional interests.
There are 1.3 million members worldwide with groups meeting in 196
countries.

Candidates with employee referrals are three to four times more likely to be hired
“Keep an eye on how often (your) profile is viewed” on Linked in said
Salpeter. “If it's not too often, it is a good idea to re-evaluate keywords to try
to come up more often in search.”

Pound the pavement

Michael B Junge, a former Google recruiter and author of Purple Squirrel:

Stand Out, Land Interviews, and Master the Modern Job Market, said that
LinkedIn may be poised to have a bigger impact on hiring globally in the
near future. But, he said, there are other activities that “are proving to
produce a large number of results right now”.

Relationships — in most every job market — are at the top of the list, said
Junge. Focus on friends, family, past colleagues, old bosses, recruitersand
other industry connections. “Higher quality relationships generally produce
higher quality leads, so start with people you really know and trust,” said
Junge. “Ask for ideas, introductions and support.”

CareerXRoad estimates that candidates with employee referrals are three to

four times more likely to be hired. It doesn’t matter so much how high up in
the company the referring person is but how strong and long your
relationship with them is, said Mark Mehler, CareerXRoad’s co-founder. The
better the relationship, the more enthusiastically they will refer you.

Online redux

Internal company career sites have done more in the way of helping a
candidate land a job recently than in the past, moving applying for jobs
online way up on Junge’s list of avenues worth time commitment from
jobseekers. Younger workers tend to favour corporate career sites for
information, according to Potentialpark, a recruitment market research firm in
Sweden. And as global companies build out those websites, they are also
getting savvier about identifying the “perfect” recruits in the online application
process. That has elevated the role of the corporate careers site.

It is also important to build and update CV profiles on traditional job boards

such as Monster.com and CareerBuilder.com, Junge said. These sites, and
others, including industry-specific ones like Dice.com for technology, also
have a presence across the globe and are still a source of talent for
recruiters. A significant number of recruiters and companies still start their
searches outside of LinkedIn, so you want to have a presence in as many
relevant places as possible.

“In combination, these strategies increase your total market reach and
improve the probability of a speedy and productive job search,” said Junge.

Career Coach is a twice-monthly column on BBC Capital in which we

consider the career turning points and questions many professionals face.
We welcome questions from readers at careercoach@bbc.com

When texting goes corporate, skip the 'LOL' (1050)

California State Assemblyman Dan Logue rarely begins his day without reading a text. It is how
his staff sends Logue his schedule, and then they update him all day, every day, on what he
has coming up next.

If you think all that texting is because Logue is some tablet-generation tech Savvy
Silicon valley lawmaker, think again. Logue is 62-years-old, lives in the un-hip
northern California town of Chico – and is decidedly old-school.

“It’s not a normal way to communicate for me,” he said of texting. “Usually it’s a
handshake and a face to face talk.”
After Logue was first elected to the state assembly in 2008, his mostly young staff
began texting him updates on bills and on his schedule. He resisted at first. But the
texts, which were easier than a phone call and quicker than email, grew on him. “It
has been a great tool for multi-tasking,” he said. (152)

Text messaging took off a decade ago in Europe, where cellular calls cost more
than they did in the United States, and quickly worked their way into use in politics
and business. German Chancellor Angela Merkel, for instance, is regularly seen
texting and once told a German television show that she didn’t have a voicemail
box because listening to messages took too long and texting was the most efficient
way of communicating with staff. The European Union’s Competition
Commissioner, Joaquin Almunia recently told the New York Times that texting was
one of the channels of communication he keeps open all the time — including his
own texts with Google chief executive Eric Schmidt.

Texting in the States has gone from a workplace taboo to a fledgling contender for
one of the business world’s favourite ways to keep in touch.
But in the United States, texting as a professional communication tool has been
slower to take off. In a short span, texting in the States has gone from a workplace
taboo to a fledgling contender for one of the business world’s favourite ways to
keep in touch.

“It’s seductive in all kinds of ways,” said Daniel Post Sennings of the Emily Post
Institute – a seminal source on etiquette – in Vermont. Sennings teaches business
seminars on how to communicate in the workplace more efficiently and is the
author of an upcoming book, Emily Post Manners in a Digital World.

But that evolution toward workplace texting is creating a new set of problems for
managers and employees navigating a form of communication that lacks
permanence and has few defined rules.

The texting revolution

One reason texting professionally came late to the US is the relative cheapness of
texts made it a more common form of communication and, in turn, a more
acceptable way to do business in Europe. But cellular companies only began
lowering the cost of texts in the US in 2006.

In 2012, Americans sent and received 2.19 trillion texts, according to CTIA-The
Wireless Association. That number was down slightly from the year before, thanks
largely to new messaging apps, but overall, Americans are sending more and more
messages a day on their phones. Indeed, a third of all Americans now prefer
texting to phone calls, a 2012 Time magazine poll found

Sennings said that as texts-for-work communication becomes more accepted in

the United States and elsewhere, companies need to develop standards on how
and when to text. While many companies frown upon personal texting at work or
have policies forbidding employees from texting while driving, experts say few firms
have rules that govern what ought to be sent in a text.

Employees may be allowed to text each other updates about changes in meeting
times, for instance, but more important communication ought to go through email,
Sennings said. That is crucial so that there is a record of the communication in the
company’s email system in case the employee leaves the company or if there is a
lawsuit related to the messages.(232)

Work texting 101

Rules on when, what and how to text for work won’t likely be one-size-fits-all for
companies. Logue, for instance, forbids his staff from reading or writing texts while
they are in assembly committee meetings. He also cautions them against work-
related texts becoming a distraction while they are in another conversation or doing
something that ought to have their full attention.

Logue’s rules against texting in meetings may seem antiquated in businesses

where immediate responses are important. But Sennings said more important than
an immediate response is staying in the moment and being engaged in the task at
hand, rather than a new issue that has come up in a text.

Employees also need to know that the language of texting – the abbreviations and
lack of punctuation – isn’t a professional way to communicate. Sending texts to co-
workers or to clients ought to maintain the same standards as a written letter,
Sennings advised. In addition to avoiding abbreviations, that means adding
salutations and using full sentences and punctuation.

Even for a generation raised on grammar shortcuts who may never have been
schooled in formal writing, “it is still important to have a standard, and that standard
ought to be professional,” Sennings said.

Employees also need to recognize that texts can be intrusive, more so than an
email or even a phone call. Managers need to have rules to protect against this
intrusion, which starts with asking employees if it’s OK to text to their personal
phones if they aren’t company-issued devices, said Susan Heathfield, an HR
consultant in Michigan. And more importantly, those texts ought to go out only
during business hours.

The results of doing otherwise can cost a manager a job. One of Heathfield’s
former mid-level managers at a computer software company she owns with her
husband demanded his employees turn over their personal cell phone numbers.
He then began texting employees at night, early in the morning and on weekends.
“He couldn’t see that texting would be unwanted after hours,” she said. She fired
him after just two weekfs.
Once the rules — or at least guidelines — are hammered out, training ought to
accompany any new texting policy, said Heathfield.

If your office allows work-related texting but does not have a set of rules or policies,
consider creating your own guidelines for when to send a text – so you don’t
become the office’s hated texter.

READING 2

Degrees matter when hunting for a job (757)

Going to university is no small investment in time and, for most people, money. Given the
recent high levels of unemployment worldwide, students leaving high school may think
going directly to work makes more financial sense than going to college.

Yet the global financial crisis has widened the employment and earnings gap between
college-educated workers and those with only a secondary education. People with less
education have found themselves more likely to be unemployed and have more difficulty
landing a job, a review of unemployment data from countries around the globe shows. “We
have no reason to assume that this is likely to change any time soon,” said Andreas
Schleicher of the Paris-based think tank Organization for Economic Cooperation and
Development (OECD).

Consider the latest unemployment figures from the United States. In May, 7.4 % of high
school graduates were unemployed, while just 3.8% of university graduates were without a
job, according to seasonally adjusted data from the US Bureau of Labor Statistics (BLS).
That trend — of double the unemployment rate for high school grads compared with
college grads — has largely held steady even amid the US recession.

The value of a university degree, at least when it comes to finding a job, is not unique to
the US. The correlation can also be seen around the world, said Daniel Hamermesh, an
international labour economist at the University of Texas in Austin.

Exactly how much university credentials pay off differs from country to country.

A university education, for instance, offers Europeans a significant boost. In 2012, the 27
countries in the Euro zone had a total unemployment rate of about 10%, according to data
from Eurostat, the EU agency that tracks statistical data for member states located in
Luxembourg. Yet for college graduates, unemployment was about one-third lower, at 6%.

Younger workers disadvantaged

A degree has been far more valuable for older college-educated workers in Europe. It is
still quite difficult for young European college graduates to find a job. The unemployment
rate for workers under age 25 is 2.6 times that of the total jobless rate, according to
Eurostat.
In Spain, where unemployment is expected to stay above 25% through 2016, university
graduates have an advantage, with a jobless rate of 17%. But digging into the data reveals
age disparities. Today in Spain, 45% of university graduates aged 16 to 24 are
unemployed, according to the country’s national statistical office, far higher than the overall
unemployment rate for university graduates. Those who are working in Spain are also
likely toiling at jobs far below their expertise level. “Many university graduates are working
in jobs that in other places would only need vocational training,” said Marcel Jansen, a
professor of economics at Madrid’s Autónoma University.

The struggle for new graduates to find work is not unique to Europe. In China, college
graduates under age 25 had the highest unemployment rate in the country at 16.4%,
worse than even high school graduates, according to a 2012 household survey by
researchers at Texas A&M University and Southwestern University of Finance and
Economics in Chengdu, China. But for China’s population as a whole, however, college
graduates are the group with the lowest unemployment — just 3.6% compared to 10% for
high school graduates.

Exceptions

There are exceptions to the overall utility of a college degree when it comes to
joblessness, particularly in countries where educational systems are particularly strong, or
where economies are booming. In these cases, university graduates barely get an edge in
employment rates.

In Japan, for instance, where high school is expected to prepare some students for a
career, the added value of a university education may be more limited. Government
initiatives also help to keep unemployment across the country artificially low. And in a red-
hot economy such as Germany’s, managers are hungry to hire any workers, regardless of
their education level.

For most places in the developed world, however, the reality remains: a college degree is
practically the new minimum requirement for even the lowest-level jobs at many
companies, despite the employment woes of younger university graduates.

There is also evidence that having the degree is likely to pay off down the road for younger
graduates, offering hope to jobless young graduates across Europe. OECD research
found, for instance, that in Brazil, having a tertiary education offered workers a 200%
premium in lifetime earnings compared to those who hadn’t finished high school. In
Greece, Korea, and Turkey, the premium gap was 70%. That premium will likely only go
up as the economy improves.

Talenti Gelato's Clear Packaging Advantage (640)

Devin Liddell gets uncomfortable in the freezer aisle. A brand strategist at Teague, the Seattle-
based design firm that came up with the Pringle’s can, Liddell says he gets overwhelmed by all the
busy, brightly colored cardboard containers advertising bizarre flavors. “Most people associate ice
cream with a calm, indulgent moment,” he says, but “its packaging is very often rowdy.” So when
Liddell recently stumbled across a pint of Talenti Gelato’s Belgian milk chocolate gelato packaged
in a clear plastic container, he had to buy it. “It is almost a kind of quiet branding,” he says. “It has
a totally different, more confident posture that grabs your attention by saying less.”

Ten-year-old Talenti, based in Minneapolis, is a case study in how packaging can propel a
small brand to the top. According to Nielsen data, Talenti is the best-selling gelato brand in
the U.S. and third in the $290 million premium ice cream category, behind Ben & Jerry’s
and Häagen-Dazs The gelato, which comes in 21 flavors, including Tahitian vanilla bean
and southern butter pecan, sells for an average of $4.60 a pint —about 15 percent more than
competitors. Since 2008, when Talenti was confined mostly to small outlets in the
midwestern U.S., sales have jumped from $1 million to a projected $100 million for 2013.
Talenti is now available at more than 30,000 stores nationwide, including Whole Foods
Market and Wal-Mart Stores.

Like Liddell, many consumers give Talenti a try because of how it looks, customer surveys
and focus groups have shown. The company’s rapid growth reinforces an open secret in
retail marketing: Clear is good. A 2012 study by Clemson University that tracked purchases
of household items such as men’s razors and air fresheners found that people bought
products in transparent packages about four times more often than those in traditional
cardboard packaging. “Not only do we have nothing to hide, the brand stands for
authenticity,” says Dean Phillips, Talenti’s chairman.

Talenti founder Josh Hochschuler became smitten with gelato in the late 1990s while
working as a bank analyst in Argentina. Most gelaterias mix and display their goods in a
clear tray for customers who buy it by the scoop. By packaging his product in plastic jars,
Hochschuler aimed to reproduce what he calls the “rainbow effect” inside the freezer case.

Hochschuler, Phillips, and Talenti Chief Executive Officer Steve Gill now manage the
brand through a holding company, David & Goliath. Gill and Phillips’s father, Eddie,
bought 80 percent of the original business in 2008 after recognizing the growth potential of
the clear package concept. “Packaging is analogous to a person’s clothing. It sends an
immediate message of style and substance,” says Phillips, who joined the company last
year after his dad died.

The Phillips family and Gill hail from the spirits industry and helped establish premium
vodka in the U.S. in the 1990s with the introduction of Belvedere, a Polish brand they
negotiated the international distribution rights for and eventually purchased outright. They
revamped Belvedere’s look to make it stand apart from Absolut, the market leader at the
time. While Absolut’s squat, screw-top bottle is minimally designed in keeping with its
Swedish heritage, Belvedere’s tall, sleek bottle features an intricate drawing of the
presidential palace in Warsaw, plus a cork. According to Phillips, Belvedere grossed more
than $1 billion from 1995 to 2005, when it was sold to Louis Vuitton Moët Hennessy for an
undisclosed sum.
Talenti’s sales rose 86 percent in the six months through mid-May compared with the same
period last year. To keep the hot streak going, Phillips says the company is launching a
gelato pop this month. In a riff on the transparency theme, the chocolate-dipped, oval-
shaped confections will be sold in a three-pack with a clear plastic sleeve rather than the
more traditional white rectangular package.

The bottom line: Talenti gelato has ascended to No. 3 in the premium ice cream category,
partly on the strength of its packaging.

Student Debt Puts Young Entrepreneurs on Hold

Dr. Steve Sherick wants to build out the emergency-care business he started two years ago,
but the $300,000 in student loans he and his wife carry makes it difficult. The 36-year-old
physician’s team of seven doctors works under contract at a local hospital in Trinidad,
Colo., about 200 miles south of Denver. Sherick would like to hire a full-time office
administrator and offer more competitive salaries to entice doctors to work in the rural
community. “It deters an entrepreneurial spirit when you already start four steps behind the
starting line,” he says. “The student debt increases the risk for an entrepreneur like me and
makes it harder to expand a new business, get loans, and hire new people.”

The $1 trillion in educational loans is dampening the entrepreneurial drive of U.S. college
graduates. In a recent survey of 9,500 debtors by Young Invincibles, a youth advocacy
group, almost 23 percent said they had put off starting a business because of monthly
student debt payments. Data compiled by the Small Business Administration show that
while self-employment among those 65 and older increased 24 percent in 2010 compared
with 2005, it fell 19 percent among individuals 25 and under in the same period. “With
more student debt and stricter bank lending, it really hinders the ability of students to take
risks, start a company,” says Dane Stangler, director of research and policy at the Kauffman
Foundation, an organization dedicated to supporting entrepreneurship.

The share of 25-year-olds with student debt increased to 43 percent last year from
25 percent in 2003, according to the Federal Reserve Bank of New York. At the same time,
the average education loan balance among that age group grew by 91 percent, to $20,326
from $10,649. The debt burden is suppressing risk-taking and hindering the formation of
new businesses, says a May 8 report from the Consumer Financial Protection Bureau
(CFPB). “For many young entrepreneurs, it’s critical to invest capital to develop ideas,
market products, and hire employees,” says the agency’s report. “Student debt burdens
require these individuals to divert cash away from their businesses so they can make
monthly student loan payments.”

Katie VanDyk, 26, started an online business in 2011 for sorority recruitment with her
younger brother Wes. Yet because of the $180,000 in student loans she accumulated, the
Tulane University Law School grad took a job as a lawyer in Austin rather than devote
herself to her startup. “It’s intimidating, because it’s going to be about 20 years before I pay
it off,” she says.

While a bankruptcy can clear away housing and credit-card debt, there’s no forgiveness on
student loans. Since a 2005 change in bankruptcy laws, student debt can’t be discharged,
barring reasons such as severe and permanent disability. Lenders can garnish income tax
refunds, wages, and even Social Security checks to get repayment. “The consequences of
not meeting those loan obligations are very severe,” says Rohit Chopra, the CFPB’s student
loan ombudsman. “Once they become late or delinquent or in default, that makes it more
challenging for them to access personal credit in order to build their businesses.”

In an April letter to the CFPB, the Main Street Alliance, an organization with some 1,200
small business owners, argued that rising levels of debt are also causing graduates to walk
away from jobs at small companies. “Student debt burdens may cause valued employees to
leave the ‘family’ atmosphere of a small business by seeking opportunities with larger
businesses with more lucrative benefits,” the group wrote.

Sherick says that’s an issue he’s encountered in his own business. “Because of student
loans, doctors want to cluster around the urban area where they can make more money,” the
Colorado physician says. “It’s hard for me to pay them more.” (625)

Adapted from “The Wall Street Journal Guide to Management” by Alan Murray, published
by Harper Business.
Leadership is less about your needs, and more about the needs of the people and the
organization you are leading. Leadership styles are not something to be tried on like so
many suits, to see which fits. Rather, they should be adapted to the particular demands of
the situation, the particular requirements of the people involved and the particular
challenges facing the organization.

In the book “Primal Leadership,” Daniel Goleman, who popularized the notion of
“Emotional Intelligence,” describes six different styles of leadership. The most effective
leaders can move among these styles, adopting the one that meets the needs of the moment.
They can all become part of the leader’s repertoire.

Visionary. This style is most appropriate when an organization needs a new direction. Its
goal is to move people towards a new set of shared dreams. “Visionary leaders articulate
where a group is going, but not how it will get there – setting people free to innovate,
experiment, take calculated risks,” write Mr. Goleman and his coauthors.

Coaching. This one-on-one style focuses on developing individuals, showing them how to
improve their performance, and helping to connect their goals to the goals of the
organization. Coaching works best, Mr. Goleman writes, “with employees who show
initiative and want more professional development.” But it can backfire if it’s perceived as
“micromanaging” an employee, and undermines his or her self-confidence.

Affiliative. This style emphasizes the importance of team work, and creates harmony in a
group by connecting people to each other. Mr. Goleman argues this approach is particularly
valuable “when trying to heighten team harmony, increase morale, improve communication
or repair broken trust in an organization.” But he warns against using it alone, since its
emphasis on group praise can allow poor performance to go uncorrected. “Employees may
perceive,” he writes, “that mediocrity is tolerated.”

Democratic. This style draws on people’s knowledge and skills, and creates a group
commitment to the resulting goals. It works best when the direction the organization should
take is unclear, and the leader needs to tap the collective wisdom of the group. Mr.
Goleman warns that this consensus-building approach can be disastrous in times of crisis,
when urgent events demand quick decisions.

Pacesetting. In this style, the leader sets high standards for performance. He or she is
“obsessive about doing things better and faster, and asks the same of everyone.” But Mr.
Goleman warns this style should be used sparingly, because it can undercut morale and
make people feel as if they are failing. “Our data shows that, more often than not,
pacesetting poisons the climate,” he writes.

Commanding. This is classic model of “military” style leadership – probably the most
often used, but the least often effective. Because it rarely involves praise and frequently
employs criticism, it undercuts morale and job satisfaction. Mr. Goleman argues it is only
effective in a crisis, when an urgent turnaround is needed. Even the modern military has
come to recognize its limited usefulness.
What are the common mistakes of new
managers? 625
Good management has been thoroughly studied and is widely understood, but it is still
more honored in its breach than in its practice. Most new managers, in particular, get it
wrong.

Harvard Business School Professor Linda Hill studies those who become managers for the
first time, and writes perceptively about some of the common myths and misperceptions
that lead to mistakes in their early days. Among them:

Myth 1: Managers wield significant authority.

New managers were often standouts in their previous jobs, and as such, enjoyed a fair
degree of independence and autonomy of action. With a new job and title, they expect to
feel more authority.

Well, surprise! Most new managers report they are shocked by how constrained they feel.

“They are enmeshed in a web of relationships,” writes Ms. Hill in a 2007 Harvard Business
article called “Becoming the Boss.” “Not only with subordinates, but also with bosses,
peers, and others inside and outside the organization, all of whom make relentless and often
conflicting demands on them. The resulting daily routine is pressured, hectic and
fragmented.”

She quotes one new leader saying: “Becoming a manager is not about becoming a boss. It’s
about becoming a hostage.”

Until new managers give up on the myth of authority, and recognize the need to negotiate
their way through a web of interdependencies, they are likely to face frustration and failure.

Myth 2: Authority flows from the manager’s position.

New managers frequently think that what authority they have is conferred by their title. But
in fact, writes Ms. Hill, “new managers soon learn that when direct reports are told to do
something, they don’t necessarily respond. In fact, the more talented the subordinate, the
less likely she is to simply follow orders.”

Over time, good managers find they must earn their subordinates’ respect and trust in order
to exercise significant authority. They need to demonstrate to subordinates their own
character, their competence, and their ability to get things done before those subordinates
are likely to follow their lead.

Myth 3: Managers must control their direct reports.

New managers, insecure in their roles, often seek absolute compliance to orders from their
subordinates, particularly in their early days.

But what they learn over time is that “compliance” is not the same as “commitment.”

“If people aren’t committed, they don’t take the initiative,” writes Ms. Hill. “And if
subordinates aren’t taking the initiative, the manager can’t delegate effectively.

The challenge for managers is to nurture a strong sense of common commitment to shared
goals – rather than one of blind allegiance to the managers’ dictates.

Myth 4: Managers must focus on forging good individual relationships.

Ms. Hill says managers need to focus not on friendship, but on building a team.

“When new managers focus solely on one-on-one relationships, they neglect a fundamental
aspect of effective leadership: harness the collective power of the group to improve
individual performance and commitment,” she writes. “By shaping team culture – the
group’s norms and values – a leader can unleash the problem-solving prowess of the
diverse talents that make up the team.”

Myth 5: The manager’s job is to ensure things run smoothly.

Keeping an operation running smoothly is a difficult task, and can absorb all of a new
manager’s time and energy. But if that’s all the manager does, writes Ms. Hill, he or she is
making a big mistake.

“New managers also need to realize they are responsible for recommending and initiating
changes that will enhance their groups’ performance,” she writes. “Often – and it comes as
a surprise to most – this means challenging organizational processes or structures that exist
above and beyond their area of formal authority. Only when they understand this part of the
job will they begin to address seriously their leadership responsibilities.”

The Leadership Pipeline Model

Developing Your Organization's Future Leaders
Develop a "pipeline" of future leaders for your organization.

© iStockphoto/ssuaphoto

Imagine that several mid-level managers in your organization are planning to retire in the
next few months, and, as a result, you're facing a serious staffing problem.

Do you start searching outside your organization, or should you focus on finding people
from within the company, so that you can quickly train them for these positions?

Many organizations spend a lot of time searching for good people for their leadership
teams. It's often most efficient to promote from within, as internal people are "known
quantities," and are already familiar with how the company works.

However, many organizations don't have a process in place for "growing their own
leaders," so they need to search for outside talent to bring in.

In this article, we'll look at the Leadership Pipeline Model, a tool that helps you plan for
internal leadership development. We'll then look at how you can apply this model to your
organization.

About the Model

Ram Charan, Stephen Drotter, and James Noel developed the Leadership Pipeline Model,
based on 30 years of consulting work with Fortune 500 companies. They published the
model in their 2000 book, "The Leadership Pipeline," which they revised in 2011.

The model helps organizations grow leaders internally at every level, from entry level team
leaders to senior managers. It provides a framework that you can use to identify future
leaders, assess their competence, plan their development, and measure results. Put simply,
you can use the model to think about how you'll train your people to take the next step up
the leadership ladder.
According to the model's developers, leaders progress through six key transitions, or
"passages," in order to succeed. These six leadership transitions are show in Figure 1,
below.

Figure 1 – The Leadership Pipeline Model

Each leadership stage needs different skill-sets and values, and, at each transition, leaders
have to develop these in order to lead successfully.

According to the model, senior leaders in the organization should mentor more junior
managers through each leadership transition, to ensure that they're using the appropriate
skills for their current level. Staying "stuck" without the right skills, even if the manager
progresses upward, can cause leaders to stagnate, become ineffective, and, ultimately, fail.

Uses of the Model

There are several benefits of using the Leadership Pipeline Model.

First, promoting leaders from within is better than searching for outside talent. These
outside leadership stars often flit from one organization to the next, looking for the best
opportunities, and leaving the organizations they have finished with to fill the gaps. The
model's "pipeline" ensures that organizations have a steady stream of internal candidates
qualified for open leadership roles.

The Leadership Pipeline encourages leaders to develop new skills and mind-sets for leading
at the next level, rather than reverting to those used at the previous level, and this increases
their flexibility and effectiveness.

If an organization's culture focuses on developing existing employees, this can raise the
morale of the entire workforce. When people see opportunities to advance, staff turnover
goes down and productivity and engagement go up. Furthermore, the investment in
development pays off, because professionals stay with the organization longer.

As well as being useful for organizations that want to develop the next generation of
leaders internally, this model is also helpful for planning your own career trajectory.
Because you can identify the skills and approaches that you'll need for each transition, you
can start to prepare yourself for your next promotion.

Applying the Model

Let's look at the six transitions in the Leadership Pipeline Model, and discuss how you can
prepare people to make these transitions successfully.

1. From Managing Self to Managing Others

When someone is transitioning from working independently to managing others, a

significant change in attitude and skill set must take place. The new leader is now
responsible for getting work done through others – a drastically different style of working.

To manage others successfully, these leaders must share information, offer autonomy, be
aware of people's needs, and provide direction.

Navigating This Transition

Organizations need to make sure that first-time managers understand what's required of
them.

New leaders need to focus on their communications skills, and communicate effectively
with their teams. Partly, this involves communicating clearly in writing, but it can also be
as simple as making time for subordinates to discuss their concerns. They need to know
how to plan short- and long-term goals, define work objectives, and manage conflicting
priorities.

New managers must also focus on their team members' needs. Coach new managers to
practice Management by Wandering Around, which helps them stay in touch with their
people. Encourage them to provide feedback, so that everyone on the team can improve.

It's important for new managers to know how to delegate effectively. At this level they're
responsible for other people, and, if they can't delegate, they'll be harried, overworked, and
stressed. This will also harm your organization's ability to get work done quickly.

Last, if you're coaching new managers through this transition, make sure that you monitor
their progress to help them navigate the process successfully. Sit in on their interactions
with direct reports, consider using 360° feedback to see how others view their abilities as a
manager, and help them address any issues that arise.
2. From Managing Others to Managing Managers

This transition often presents a dramatic jump in the number of hands-on professionals that
the manager is responsible for, which means that a number of new skills and working
values are needed.

Navigating This Transition

First, new managers at this level need to know how to hold level one managers
accountable. This might include becoming a coach or mentor to help them develop, and
providing appropriate training. Managers in level two are also responsible for training the
managers in level one, so make sure that they're aware of available training resources, and
ensure that they know how to develop effective training sessions.

At level one, new managers might know how to get people to work together to accomplish
a goal. But, at level two, managers must have the knowledge and skills needed to build an
effective team.

Finally, these managers need to know how to allocate resources to the people and teams
below them. These resources could be money, technology, time, or support staff, and they
need to know how to budget effectively. They must know how to identify teams or units
that are wasting resources, as well as knowing where to apply additional resources to
improve performance.

3. From Managing Managers to Functional Manager

Functional managers often report to the business's general manager, and they are
responsible for entire departments, such as manufacturing or IT. Making a transition to this
level requires a great deal of maturity, and the ability to build connections with other
departments.

Navigating This Transition

Functional managers must learn how to think strategically and manage with the entire
department, or function, in mind.

Leaders at this level must know how to think over the long-term, as they'll need to plan for
the medium-term future. They must also understand the organization's long-term goals, so
that their functional strategy aligns with these aims.

Coach new functional managers to stay up-to-date on industry trends, so that they can take
advantage of new advances: managers who are aware of technology and trends can adjust
their strategy to better contribute to the organization's competitive advantage.

Although all managers need to be good listeners, this skill is particularly important at
functional manager level. Teach your functional managers how to use active listening
skills. They also need to be skilled at reading body language, so that they can avoid
misinterpretation and spot untruths.

4. From Functional Manager to Business Manager

This transition may be the most challenging of the six leadership passages, because these
professionals have to change the way that they think. When you're managing a business,
complexity is high, the position is very visible, and many business managers receive little
guidance from senior leaders.

Business managers oversee all of the functions of a business, not just one, and this requires
a shift in values and perception.

Navigating This Transition

New business managers have to adjust their thinking to focus on future growth in all areas
of the organization. They need to understand each function of the organization and know
how these functions interrelate. Without this understanding, business managers will likely
only focus on one or two functions, which could damage the organization's growth.

Encourage new business managers to get to know their functional managers well – for
example, by talking with them and taking them on important trips; this will allow them to
get to know the decision makers in each function and help them understand each function's
value to the organization.

This group needs to know about the organization's core business processes, and understand
where the profit lies within these processes. Without this knowledge, business managers
can make costly strategic mistakes.

Last, and this isn't as trivial as it may seem, business managers need excellent time
management skills. Managers who lack these skills won't spend enough time on key
projects or with key people, so make sure that this group knows how to focus on important,
not just urgent, tasks.

5. From Business Manager to Group Manager

To be a successful group manager, another subtle shift in skills must take place. At this
level, managers are responsible for individual businesses which are often dispersed around
the world. They must have the ability to get these businesses working together to
accomplish the broader organization's long-term goals and objectives.

Navigating This Transition

Group managers need the ability to value others' success, and they must be humble enough
to help others succeed. They need to learn how to critique the business managers' strategy-
formulation, and provide effective feedback.
Group managers should know how to create the right mix of investments in their businesses
to help the organization succeed. Resource allocation, market prediction and segmentation,
and global business etiquette are all important skills here.

They also need to stay on top of all of their businesses to ensure that they're obeying the
law, sticking to corporate policy, acting in a way that's consistent with corporate strategy,
enhancing the global brand, and making a robust profit.

The businesses in their group that show the most promise in all these areas are the ones that
will be fully funded. So, group managers must know how to maintain good relationships
with businesses, even if they aren't getting the funding they want. They also need analytical
skills in order to balance what's good for their businesses, versus what's good for the
organization.

6. From Group Manager to Enterprise Manager

The enterprise manager, or CEO, is on the final rung of the career ladder for managers.
This is the most visible position in the company; after all, if the CEO fails, it influences
how people perceive the organization.

Navigating This Transition

Future CEOs need to understand that once they ascend to this level, they're responsible for
a number of different stakeholder groups and organizations, such as the board, financial
analysts, investors, partners, the workforce, direct reports, and local communities. Failing
any of these groups means a loss of credibility.

By the time that managers reach this stage, they should already have developed many of the
leadership skills mentioned in this article. However, there are several ways in which they
can develop further. Our article on Level 5 Leadership teaches good leaders how to become
great leaders by developing humility.

Often, CEOs, because of their number of responsibilities, have to make good decisions
under an incredible amount of pressure. Make sure that potential leaders are familiar with a
wide range of decision-making techniques, and know how to think on their feet.

Last, risk taking is a given at this level, but future CEOs need the courage to take calculated
risks, even when they face opposition from others. This requires character, integrity,
decisiveness, and inner strength.

1. Small Business >

2. Business Technology & Customer Support >
3. Business Internet Advantages
The Advantages & Disadvantages of Advertising on the Internet
by David Ingram, Demand Media

The Internet takes advertising global.

Related Articles

 The Advantages of Advertising on the Internet

 Advantages & Disadvantages of Web Advertising
 Advantages & Disadvantages of Advertising for Small Businesses
 Advantages & Disadvantages of Using the Internet for Employee Recruitment
 Advantages and Disadvantages of Full Service Advertising Agencies
 Advantages & Disadvantages of Yellow Pages Advertising

Advertising is the branch of marketing that deals with communicating to customers about
products, brands, services and companies. The Internet, as a global communications
medium, provides advertisers with unique and often cost-effective ways of reaching
advertising audiences. As with all media, however, advertising on the Internet has unique
advantages and disadvantages.

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Significance

Advertising on the Internet is almost a necessity for modern businesses, especially those
that do business outside of their local community. Consumers use the Internet for more than
simply entertainment or information, as they do with radio, television, magazines and
newspapers. Consumers use the Internet to assist them in nearly every aspect of life,
creating countless opportunities to place relevant, targeted ad messages.

Advantages

The Internet's vast reach can allow advertisers to reach significantly more people than
traditional advertising media at a fraction of the cost. Internet advertising is ideal for
businesses with a national or international target market and large-scale distribution
capabilities. As a rule, the more people your business serves, the most cost-efficient internet
advertising can be. Internet advertising can also be more targeted than some traditional
media, ensuring that your messages are seen by the most relevant audiences.

Disadvantages

One disadvantage of advertising on the Internet is that your marketing materials are
automatically available for anyone in the world to copy, regardless of the legal
ramifications. Logos, images and trademarks can be copied and used for commercial
purposes, or even to slander or mock your company. This is not the case with television and
magazine advertising, wherein images must be replicated rather than simply copied
electronically. Another disadvantage is the fact that the Internet-advertising gold rush has
begun to introduce ad clutter to the Web. Web users are so inundated with banner ads and
spam email that they have begun to ignore internet advertising just as much as ads on
traditional media.

Considerations

In addition to advertising, the Web offers high-impact opportunities to leverage word-of-

mouth marketing and generate buzz about your company. Product review websites and
social media outlets, among other web communities, allow customers to praise or condemn
your company based on their personal experiences. Thus, the Internet ties the customer
service component directly to advertising.
Future

The Internet is likely to continue to play a large role in individuals' lives in the foreseeable
future. Whether personal computers remain the dominant method of accessing the Internet,
some form of global communication network will likely be a reality for many generations,
creating effective avenues of sending advertising messages to consumers in the community
and around the world.

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Vast majority of smartphone shoppers encounter problems

30% of these consumers will never return to a problematic retail site,
Harris finds.

71% of U.S. smartphone owners say they use their devices to shop, and among smartphone
shoppers, 88% have experienced negative issues, a new survey of 2,085 U.S. smartphone
users from Harris Interactive says.

What’s even more alarming for retailers, 30% of smartphone shoppers who have
experienced negative issues say they will never return to that retailer’s site, finds the
survey, which Harris conducted on behalf of mobile commerce technology provider Skava.
Furthermore, 29% of smartphone owners who experienced problems claimed it would be
six months or more before giving a retailer’s web site a second chance on mobile, while
33% would immediately defect to a competitor and 36% would abandon the purchase
altogether after a sub-optimal experience, Harris finds.

What could be driving at least part of the problem is retailers that do not offer m-commerce
sites or responsive web design sites that tailor content the purchase process to smartphones.
Trying to shop a full-blown e-commerce web site on the tiny screen of a smartphone is
difficult at best. 64% of the merchants in the Internet Retailer Top 500 Guide offer m-
commerce sites and/or apps, and 39% of the merchants in the Internet Retailer Second 500
Guide offer m-commerce sites and/or apps.

51% of smartphone owners who’ve experienced negative issues say retailers’ sites are
harder to navigate and use on a mobile device than on a desktop, the survey says. Other
difficulties these consumers cite include:

 Product images are too small to make a buying decision (46%).

 Concerns over security on their smartphone (41%).
 Checkout process is painful (26%).
Survey respondents could select “Other” and fill in a negative issue they experienced while
shopping on their smartphones. A sampling of these findings reveals concerns over data
usage costs, difficulties in adding coupon codes, and slow site speed.

“The sudden rise in the number of visitors accessing retailers’ web sites from mobile took
many retailers by surprise and they quickly created a mobile web site as a first response,
but the initial bounce rates were high and conversion rates low, leaving many retailers
thinking that people didn’t have an appetite to buy from mobile,” says Arish Ali, Skava co-
founder and president. “It isn’t just about putting a mobile web site out there—it is about
building an experience that is easy for customers to use and takes into consideration the
unique attributes of mobile devices. Achieving significant conversion rates on mobile is
possible. Amazon, a constant threat to traditional retailers, generated $4 billion in sales
through mobile last year.”

The results of this national survey show many retailers are still failing to meet their
customers’ mobile commerce expectations, Ali says, and this creates a real threat of losing
customers and market share to competitors who make it easy to shop on mobile devices.

French retailers keep adding to their e-commerce staffs

The number of e-retail employees in the country increased 13% in 2012
and will grow 10% this year, according to a new report from the Fevad
trade group. French e-retailers especially need web developers.
Don Davis

Although France is officially in an economic recession, retailers and travel companies are
continuing to hire e-commerce personnel, and in some cases having a tough time filling
vacancies, according to Fevad, the French trade group of direct-to-consumer merchants.

Salaried e-commerce employees in France increased 13% to 75,000 in 2012, as web teams
added about 9,000 staffers, Fevad says. The report projects 10% growth in e-commerce
staffs in 2012. 44% of companies surveyed say they expect to increase their e-commerce
team a little, 29% a lot, and 27% expect their web team will remain at its current size. None
of the 50 online retailers surveyed projected a decrease in staffing, Fevad says.

Web developers are the most sought-after, cited by 54% of those surveyed, followed by
analytics personnel and customer relationship staffers, at 46% each. 40% of respondents
say they are having trouble recruiting personnel, with those based outside of major cities
having the most difficulty, Fevad says.

The survey was conducted for Fevad by the CCM Benchmark Institute, part of online
publisher CCM Benchmark Group. Among the retailers surveyed were Vente-privee.com,
No. 11 in the recently published Internet Retailer Europe 500, the PriceMinister unit of
Rakuten Inc. (No. 31), Rue du Commerce (No. 56), and BazarChic (No. 144.

E-commerce sales in France totaled $32 billion in 2012, says research firm eMarketer. That
represented 6% of the country’s total retail sales, according to Euromonitor data.

Department store, apparel, movies, comparison shopping and books are the retail categories
with the most mobile commerce shoppers in April 2013, new research from web and
mobile measurement firm comScore finds. Music, toys, shopping malls,
flowers/gifts/greetings and fragrances/cosmetics have the least mobile shoppers.

To gauge which categories are more mobile-oriented than others, comScore has created a
new index. It examines each category by dividing the total number of U.S. consumers who
shop that category on mobile devices by the number who shop that category on computers.
Then comScore adjusts the result for each category to take into account that more
consumers shop on PCs than mobile devices—although not by much. In April, comScore
says, 85.4 million consumers visited retail sites from computers and 80.7 million, only 6%
less, via mobile devices.

The resulting index sets all retail to 100, then provides the score for each category in
relation to that norm. Categories with scores above 100 do better in mobile than on PCs,
while categories with scores below 100 do worse in mobile.

Categories with the highest mobile scores are food (234), books (210), movies (151),
fragrances/cosmetics (146) and health care (135), comScore says. Categories with the
lowest mobile scores are computer software (45), computer hardware (63), sporting goods
(73), comparison shopping (75) and toys (91).

“Food is driven by mobile ordering through pizza delivery apps and apps for businesses
including GrubHub, Seamless and Peapod,” says Andrew Lipsman, vice president of
industry analysis at comScore. “This category is not very high on the web, but there is great
mobile utility for it. That’s why it earns such a high score.”

Books, movies and music have high mobile scores because they are forms of content that
are heavily used on mobile devices, Lipsman says. And Walgreen Co. and CVS Caremark
Corp. are driving the health care category with their popular mobile prescription refills, he
adds.

“Computer software and hardware both score low because they are things that are tied to
desktop computers, not tablets and smartphones,” Lipsman says. “Comparison shopping
has a low mobile score because it ranks so high on PCs that it’s a high bar for mobile to hit.
Plus, people are more likely to comparison shop through the Amazon.com and eBay apps
rather than download comparison shopping apps.”
The comScore index does not measure sales on PCs or mobile devices, only visits to retail
sites.

Following are the retail categories, mobile index score, April 2013 monthly unique mobile
U.S. visitors in millions, and percentage all U.S. mobile shoppers who shopped that
category in April 2013, according to comScore. They are listed by score in order from most
mobile-oriented to least mobile-oriented: (444)

Facebook revamps its ad units

The social network offers more tools for one type of ad and eliminates
another.
Zak Stambor

Facebook Inc. is wasting little time in its drive, announced earlier this month, to simplify its
advertising formats.

The social network yesterday said it would make changes to its Page Post Link ads—those
are ads in the news feed that, when clicked, drive consumers off of Facebook—to make
them easier to use and customize. The news feed is the first page a user sees when logging
on to the social network.

Facebook increased the size of the ads, including the clickable area, while also enabling
advertisers to upload any images to the ads. Facebook previously automatically featured a
thumbnail image from the page the ad linked to. With the change, an advertiser whose ad
links to a category page featuring dozens of T-shirts now can feature one particular T-shirt
and also test several different images to see which produce the best results.

Because marketers often want to tailor messages to specific groups of consumers, rather
than having a Page Post Link ad appear to everyone who Likes their pages, the social
network also added ad-creation tools to make that type of targeting easier, Facebook says.
A marketer can create different ads for different segments. Previously an advertiser buying
a Page Post Link ad had to select one of its existing posts to promote to a set number of
consumers, based on its ad spend.

The goal, Facebook says, is to drive more off-site conversions and sales.

The social network also plans next month to eliminate Sponsored Results, its first foray into
search ads. The ads, which enabled marketers to target consumers using Facebook’s search
tool, appeared only in desktop search results pages, not on mobile search results.

“We've seen that most marketers were buying Sponsored Results to advertise their apps and
games, and we already offer App Install ads and Page Post Link ads on desktop to achieve
these same goals,” says a Facebook spokesman.
Shop Direct makes up for lost time online
After a slow start, one of the U.K.’s oldest catalogers embraces e-
commerce.
Mark Brohan

Shop Direct Group wasn’t the biggest or fastest-growing web merchant from the United
Kingdom ranked in the 2013 Europe 500. But it’s a prime example of a retailer that was
late to e-commerce and is now investing heavily in catching up.

Many of its rivals have already bet heavily on the web. The United Kingdom remains
Europe’s single biggest, most mature and most competitive e-commerce market. In 2012,
the 161 U.K. web merchants ranked in the 2013 Europe 500 generated combined web sales
of $35.24 billion, up 16.7% from $30.20 billion in 2011. Overall online retail sales in the
United Kingdom grew year over year about 13.5% to $52.59 billion from $46.35 billion,
says Forrester Research.

With the market growing rapidly, Shop Direct (No. 9) sees itself in a race against time to
build an e-commerce base that will sustain the 90-year-old direct marketer of apparel,
accessories and home furnishings for the foreseeable future, says director of e-commerce
Jonathan Wall. Shop Direct is one of the U.K.’s oldest catalog companies, with brands such
as Littlewoods that began when company founder John Moores and his brother Cecil
launched the brand in 1923. But as recently as six years ago, only about 20% of the
company’s revenue came from e-commerce. “We initially moved much slower with e-
commerce,” Wall says.

That’s changed. The web now accounts for 75% of sales, and will hit 80% soon, Wall says.
In 2012, Shop Direct, which sells online at Littlewoods.com, Very.co.uk,
Woolworths.co.uk and Isme.com, generated web sales of $1.93 billion, up 5.5% from $1.83
billion in 2011.

To continue to build up its e-commerce base, Shop Direct is counting heavily on a big push
into mobile commerce and updated e-commerce technology. Shop Direct launched mobile
commerce in 2010 and today sales through mobile devices account for about 20%, or $382
million, of all e-commerce sales.

Shop Direct’s next goal is making mobile account for at least one-third of all e-commerce
sales. To achieve that goal Shop Direct has updated its mobile commerce sites with easier
navigation that features more prominent department listings and daily deals. Mobile
product pages also feature larger product photos, customer reviews and videos. Mobile
commerce sites optimized for tablets now display new features such as product zoom.
“We’ve been doing a lot of testing and learning,” Wall says.

Shop Direct also is in the final stages of installing a new e-commerce technology platform
from Oracle Corp., which should be in place this summer. Shop Direct first installed an
Oracle platform in 2006 and spent a considerable amount of time and money integrating a
series of older legacy applications onto the new platform to create a comprehensive e-
commerce system, Wall says. “Early on we had a lot of spaghetti junction,” Wall says.

With a new and completely updated e-commerce platform, Shop Direct will be able to
update its e-commerce sites with more sophisticated features and functions such as a
product recommendations tool that will serve up product suggestions based on the visitor’s
previous shopping history and personal profile.

More importantly, better technology and a more aggressive approach to e-commerce will
help Shop Direct keep pace with bigger U.K. chain retailers and web merchants such as
Amazon.com (No. 1), which posted a year-over-year increase in U.K. web sales of 21.2%
to $6.47 billion in 2012, and Tesco Stores (No. 5). Tesco’s web sales totaled $3.80 billion
in 2012, up about 4.4% from $3.64 billion in 2011. “We were once behind the market and
now we want to overtake it,” Wall says. (586

Get your global groove on

E-Commerce Observer 0 comments

Benjamin B. Sargent

Senior Analyst, Common Sense Advisory

How many of your web site visitors each month come

from other countries? The global customer experience
(CX) starts with a visitor from a different country, often
speaking another language – with the "foreign" visitor on
the outside, looking in. If it's successful, global CX
quickly brings them inside, enjoying content in the
comfort of their own language and currency. If it fails,
you can say "goodbye" (or auf Wiedersehen or sayonara) Benjamin B. Sargent,
to that visitor. Why? Your foreign visitors won't find their Senior Analyst,
way to the content you want them to see. Research by Common Sense Advisory
Econsultancy.com on Reducing Customer Struggle pegged "bad navigation" as the most
commonly identified and most serious CX issue for web sites. But navigation doesn't have
to be the stumbling block that leads to a flawed or failed experience.

How can ecommerce web sites attract, convert, and retain more customers? For many
global brands, the most sought-after consumer demographics involve people who travel
(they spend money, right?). Providing a seamless global CX will improve your conversion
and retention rates across all countries and demographics. How should you go about doing
that? Look to the companies that do it well for some guidance.
In recent Common Sense Advisory research comparing over 2,000 web sites, Booking.com
scored higher than any other site except Facebook and its Russian look-alike vk.com. We
found that Booking.com provides the best example of a retail-oriented site that does global
CX right. Booking.com is not a client and I've never spoken to them about their site. We
picked them as a best practices use case from among the 2,400 prominent web sites we
examined for globalization.

Booking.com Offers Separate Settings for Country Logic and Language Interface Source:
Common Sense Advisory, Inc. and Booking.com

First off, the company does a great job of getting people to its site. Are you a German
looking for a trip? How about Booking.de? Or Booking.co.jp for its Japanese visitors. What
Booking.com did right was register many country-specific top-level domains, such
as .de, .co.jp, and many others. However, these domains redirect to the all-on-one global
web property at the .com address. This domain strategy works best to reduce confusion for
all visitors.

The second thing that Booking.com does right is limit the effort it takes to get to the right
place. It automatically brings visitors to the appropriate starting place using two zero-click
techniques: Content negotiation, parses the browser's page request string to identify the
visitor's preferred language, and geolocation, performs a lookup on the IP address of the
requesting device to determine the visitor's country.
The third thing that Booking.com got right was an understanding of its cosmopolitan
customer base – anyone visiting the site can choose his or her CX attributes. Because the
site serves all languages and countries from the one domain, its visitors can mix and match
languages and countries in any combination. This is the ideal situation for international
visitors. A Japanese speaker accessing the web site from France may initially be given a
Japanese language interface with Euros as the currency, but can easily switch to Yen or
some other currency if that is his or her preference for comparing prices or completing a
transaction. The pull-down menus controlling the language and country settings are
persistent elements that appear on all content pages on the site – that is another best
practice. The menus appear at the top of the screen where they can be seen without
scrolling.

That's three best practices that make Booking.com a delight for the foreign-language
speaker. The combination of all-on-one domain strategy, zero-click techniques, and pull-
down menus that appear on every page make Booking.com a great example of how to
eliminate barriers in the global CX. The best thing of all is that the site avoids the common
mistake of equating country with language. Not every person speaking Japanese lives in
Japan, nor does every American speak English. It shouldn't be a surprise to you, but except
for North Korea, there is no country that is purely monolingual.

Other retailers should follow the example global CX found on Booking.com: simplify the
domain strategy, use both zero-click options, and provide manual override on every page
for easy switching of country, currency, and language settings. Do these things and you'll
improve your conversion rates and get more repeat visits from global visitors.

What can Booking.com do better in 2013? There are several areas where improvements
could be made. First up, further reduce clicks. The manual navigation override for language
and currency are properly placed at the top of each screen. However, the pull-down menus
should open "on hover" as the mouse passes over them, rather than requiring a click to
open. This would speed up the task and change a two-click process to a single click, the
best practice for menu-driven navigation.

Second, the site needs to add more video. The web is a visual medium. Many users prefer
learning about a new service by seeing how others are using it. Booking.com currently
offers one video, but only on the US English web site. Also, the video is more like a
television commercial and does not provide useful information about how other travelers
are using the site. Global sites need video because when being introduced to new products
and services, people learn about novel concepts fastest with video.

Finally, Booking.com must go local with social. Today, all their social links lead to
English-only corporate accounts. Global social is achieved through local social. To see a
different site that does this right, see the various international editions of The Huffington
Post like www.huffingtonpost.es/, where the links for Twitter and Facebook lead visitors to
country- and language-specific accounts, and where clicking the Facebook Like button
increments likes on the local accounts, like the Spanish-language "El Huffington Post."
Wowing tablet shoppers
Retailers with standout tablet apps and sites catch consumers with clever
features and smooth designs.
Bill Siwicki

Sephora USA Inc. decided in early 2011 to offer women coming to the beauty products
retailer on an iPad tablet computer a shopping platform befitting the device. The strategy
behind the resulting iPad app, the retailer says, was to wow iPad shoppers so they would
regularly use it.

One of the many features in Sephora's app, the Virtual Mirror enables a consumer to load a
how-to makeup video into the tablet screen's bottom half. She gathers her cosmetics in front
of the tablet and follows the video instructions. How can she tell if she's doing it right? The
iPad camera streams a live video of her face on the screen's top half.

"The iPads we have in stores at our Beauty Studios showcase looks you can achieve in 10
minutes—the iPad app is the play-at-home version," says Bridget Dolan, vice president of
digital marketing at Sephora.

Today, 40% of Sephora web traffic comes from smartphones and tablets; it declines to
report figures for each device. 90% of its tablet traffic stems from iPads. Consumers
accessing Sephora with a tablet spend more time with Sephora than customers on desktops
or smartphones, and tablet shoppers register the highest average order value among all
devices, Sephora says. The e-retailer declines to reveal the number of app downloads but
says revenue from the app has been significantly higher than it expected.

Retailers like Sephora are responding to the growing number of consumers who own tablets
and use them to shop. U.S. consumers bought 37.9 million tablets in 2012, will buy another
46.6 million this year and 53.2 million next year, Forrester Research Inc. says. By 2015,
105.1 million U.S. consumers will own a tablet, Forrester predicts. That's roughly one in
three Americans.

And those consumers shop with tablets, far more than they do from mobile phones. Of the
$38.40 billion in mobile sales predicted for 2013, $24.00 billion, or 62.5%, will come from
tablets, research firm eMarketer Inc. forecasts.

What's more, tablet users love apps. Apple Inc.'s App Store offers more than 850,000 apps
—350,000 for the iPad—and its apps have been downloaded 45 billion times. Google Play,
the official store for Android apps, has more than 750,000 apps that have been downloaded
more than 25 billion times. Google Inc. doesn't break out the total number of apps for
tablets.

To tap into this demand retailers need to create tablet experiences that meet consumers'
high expectations, fueled by the entertainment and information sites and apps they visit on
their tablets. They seek sleek, cool and efficient designs that make full use of the tablet's
functionality. That includes the touchscreen, camera, GPS and accelerometer, the
technology that senses when a mobile device is moving.

Retailers that understand mobile consumers are experimenting in their tablet apps and sites,
creating things like makeup mirrors, swipe-friendly sections featuring 3-D stores and drag-
and-drop shopping carts. But at the same time, a retailer must make sure its tablet presence
is easy to use. Sharp tablet sites and apps don't necessarily require an enormous investment.
But they may require help from a creative vendor with mobile smarts and a different point
of view.

"A well-designed user experience is about the shortest line between two points—where the
user is and where the user wants to be," says Andrew Borg, research director, enterprise
mobility and collaboration, at technology research firm Aberdeen Group Inc., a Harte-
Hanks company. "It needs to provide an efficient workflow, offer a clear presentation of
options and be touch-centric. Apps need to be simple, delightful and fun."

While smartphone apps should be bite-sized and task-oriented, tablet sites and apps should
be graphically rich and engaging experiences that can draw in a user for 30 minutes, says
David Eads, CEO of mobile commerce consulting firm Mobile Strategy Partners LLC.

"The key ingredients for a tablet site or app include making full use of tablets' larger form
factor and high-resolution screen," Eads says. "Design should enable quick, task-oriented
workflows, but also include longer-form experiences that let users lean back and explore
what you have to offer."

Sephora had all these things in mind when creating its tablet app. But when it started work
on the app, it didn't realize how important the tablet would become. "The tablet app started
out as, 'Wouldn't it be fun if we did this?'" Dolan says. "And somewhere along the line it
turned into a real business."

CVS Caremark Corp. already had more than 1 million customers visiting CVS.com via
tablets each month when it decided last year to create a dazzling 3-D recreation of a bricks-
and-mortar CVS store as an iPad app.

CVS came up with the concept of a 3-D store iPad app based on research it conducted
centering on how customers like to shop across channels. Research showed that CVS
customers are used to being in a store and increasingly looking to mobile devices to
supplement store shopping.

"We asked through research what would be the most intuitive way to shop in a digital realm
for a customer used to a physical realm, and the concept of a store tested very well and
proved very intuitive to them," says Brian Tilzer, senior vice president and chief digital
officer for CVS. "To be able to enter the store on their device and have that as the path to
get things done made a lot of sense."
App users browse the 3-D store, touching icons that mark departments and products by
category.

"Our mission is to provide incredible customer utility through our mobile programs," Tilzer
says. "The objective was to have something really useful while taking advantage of the
capabilities of the tablet device, and it evolved in a way that was really cool." (625)

An online connection
Web-enabled tablets and kiosks help sales associates do what they do
best—sell.
Zak Stambor

Luxury watch retailer Tourneau is a case in point. Since the retailer began rolling out
iPads to its 38 stores last August, it has required associates attend webinars and in-store
training sessions to learn to use the software from Micros Systems Inc. loaded onto the
tablet to help associates sell more, says Scott Wasserman, the retailer's director of e-
commerce.

"There's a learning curve on what the application can do," he says. The retailer's lessons
range from how to use the application to look up inventory that isn't in stock in the store to
how to access customers' previous orders.

The application features news and product updates about each of the nearly 90 brands and
roughly 9,000 products the retailer carries, and sales training information, Wasserman says.

The tablets are one piece in the larger transformation of Tourneau's stores. In 2011 the
retailer began redesigning its stores, moving associates out from behind its glass cases to
more easily interact with shoppers.

"It's a different way of thinking," Wasserman says. The retailer emphasizes that shift both
in the associates it hires, their initial training and the ongoing coaching they receive from
managers and the retailer's training team throughout their careers.

"We want our staff to think of their role as being a collaborator helping their customers
shop," he says. "The tablets play a big role in that."
Store associates can use the iPads to look up an individual customer's preferences and
purchasing history because the tablets connect to the retailer's web site, inventory
management system and customer database.

With the retailer offering roughly 150,000 certified pre-owned watches, many of which can
be hard to find, the tablets also help associates assist shoppers who might have seen a
particular model online that isn't in the store. For example, once the associate locates a
product, he can use the tablet to set up an appointment to see the item when it arrives at the
store. Or he can search for similar products. Shoppers can also make an appointment
online, or if they made the appointment in a store, see the appointment they've already
made.

Tourneau says that early testing of stores with tablets showed eight times the normal
conversion rate and a 24% lift in average order value, both based on sales from in-store
appointments set up via the online appointment tool.

The tablets also help associates drum up business. When the store isn't busy, they use the
iPads to follow up on appointments, answer product inquiries and handle special requests.
Those tasks used to tie an associate to a computer behind the jewelry cases.Now tablets
enable associates to complete those tasks from anywhere in the store, he says. That's
helping associates be more efficient and effective.

When a shopper considers spending thousands of dollars on a watch, she expects a certain level of
service—like the kind that greets her at Tourneau.com. The home page typically features a
dominant image of a timepiece, while also emphasizing service via buttons on the side of the page.
Those buttons offer shoppers several ways to navigate Tourneau: shop by brand, style, function,
gender or price; place watches into a virtual tray and click to call an expert or schedule an in-store
appointment; and view demonstrations of how watches are constructed and serviced. Not
surprisingly, customers who shop the site before coming into a store convert at an “exponentially
higher” rate than store-only shoppers, says senior vice president Don McNichol.