Is your company ready for one-to-one marketing?

One-to-one marketing, also known as relationship marketing, promises to increase the value of your customer base by establishing a learning relationship with each customer. The customer tells you of some need, and you customize your product or service to meet it. Every interaction and modification improves your ability to fit your product to the particular customer. Eventually, even if a competitor offers the same type of service, your customer won't be able to enjoy the same level of convenience without taking the time to teach your competitor the lessons your company has already learned. Although the theory behind one-to-one marketing is simple, implementation is complex. Too many companies have jumped on the one-to-one band-wagon without proper preparation--mistakenly understanding it as an excuse to badger customers with excessive telemarketing and direct mail campaigns. The authors offer practical advice for implementing a one-to-one marketing program correctly. They describe four key steps: identifying your customers, differentiating among them, interacting with them, and customizing your product or service to meet each customer's needs. And they provide activities and exercises, to be administered to employees and customers, that will help you identify your company's readiness to launch a one-to-one initiative. Although some managers dismiss the possibility of one-to-one marketing as an unattainable goal, even a modest program can produce substantial benefits. This tool kit will help you determine what type of program your company can implement now, what you need to do to position your company for a large-scale initiative, and how to set priorities.     

Navigating in the Midst of More Uncertainty and Risk

With the steady increase in the variety and scale of uncertainties and risks, the challenges for today's executives have become ever more complex and daunting. One powerful tool for navigating among different risks and uncertainties is scenario planning. From its early days of use within Shell, scenario planning has evolved in ways that make it better suited to the tasks of identifying, analyzing, and managing various financial risks across different industries. During the last ten years, Morgan Stanley has also been using scenario planning to gain a better understanding of key risks and uncertainties facing the financial services industry, ranging from the consequences of possible changes in the dollar to the emergence of hedge funds and the remarkable growth of China and India. In discussing the benefits of scenario planning, the authors note its potential to help management in a number of ways:

• ? By challenging conventional thinking and current assumptions about its industry and world;
• ? By identifying key signals or potential direction changes ahead of time, which is especially important when lead times to invest, hedge, or change assets are limiting factors;
• ? By identifying and assessing the value of strategic or “real” options—options to invest in new opportunities or limit downside risks that may suddenly open up or disappear, and that man‐ agement must be prepared to “exercise” quickly and decisively;
• ? By reinforcing the recognition that value added comes not just from better strategic thinking and planning, but from the role of risk management in helping companies take advantage of new opportunities;
• ? By encouraging more cross‐divisional and firm‐wide conversations about strategic choices and options, thereby creating a shared understanding of and greater consensus about chosen strategies; and
• ? By forcing them to go beyond the limits of typical three‐to‐five year forecasting limitations to think hard about longer‐term strategic choices.

     

You have more capital than you think

Senior executives typically delegate the responsibility for managing a firm's derivatives portfolio to in-house financial experts and the company's financial advisers. That's a strategic blunder, argues this Nobel laureate, because the inventiveness of modern financial markets makes it possible for companies to double or even triple their capacity to invest in their strategic assets and competencies. Risks fall into two categories: either a company adds value by assuming them on behalf of its shareholders or it does not. By hedging or insuring against non-value-adding risks with derivative securities and contracts, thereby removing them from what the author calls the risk balance sheet, managers can release equity capital for assuming more value-adding risk. This is not just a theoretical possibility. One innovation-the interest rate swap, introduced about 20 years ago-has already enabled the banking industry to dramatically increase its capacity for adding value to each dollar of invested equity capital. With the range of derivative instruments growing, there is no reason why other companies could not similarly remove strategic risks, potentially creating billions of dollars in shareholder value. The possibilities are especially important for private companies that have no access to public equity markets and therefore cannot easily increase their equity capital by issuing more shares. The author describes how derivative contracts of various kinds are already being employed strategically to mitigate or eliminate various risks. He also shows how companies can use the risk balance sheet to identify risks they should not bear directly and to determine how much equity capacity they can release for assuming more value-adding risk.     

财产保险公司资产负债管理多维量化评估体系研究

良好的资产负债管理是保险业可持续发展的基石,也是支持保险业在日益复杂的风险环境中保持稳健发展、防范系统性风险的重要保障。近年来,随着我国金融市场发展,业务产品创新加快,保险业在资产端与负债端的业务结构和风险特征出现了新情况、新变化。特别是部分保险公司缺乏有效的治理结构,采取激进经营、激进投资的策略,导致业务快进快出、风险敞口过大以及流动性问题,对保险公司资产负债匹配管理、风险控制提出了挑战。本文介绍了财产保险公司资产负债多维度量化评估规则设计原理、主要评估模型和评估方法,针对财产保险公司的负债特性提出的沉淀资金匹配,在成本收益匹配中有机地将资产投资收益与承保业务综合成本进行匹配,在现金流匹配模式中打破了僵化的匹配模式,解决了长期困扰财产保险公司的资产负债期限不匹配的问题,对财产保险公司资产负债管理具有重要意义。     

Capitalizing on capabilities

By making the most of organizational capabilities--employees' collective skills and fields of expertise--you can dramatically improve your company's market value. Although there is no magic list of proficiencies that every organization needs in order to succeed, the authors identify 11 intangible assets that well-managed companies tend to have: talent, speed, shared mind-set and coherent brand identity, accountability, collaboration, learning, leadership, customer connectivity, strategic unity, innovation, and efficiency. Such companies typically excel in only three of these capabilities while maintaining industry parity in the other areas. Organizations that fall below the norm in any of the 11 are likely candidates for dysfunction and competitive disadvantage. So you can determine how your company fares in these categories (or others, if the generic list doesn't suit your needs), the authors explain how to conduct a "capabilities audit," describing in particular the experiences and findings of two companies that recently performed such audits. In addition to highlighting which intangible assets are most important given the organization's history and strategy, this exercise will gauge how well your company delivers on its capabilities and will guide you in developing an action plan for improvement. A capabilities audit can work for an entire organization, a business unit, or a region--indeed, for any part of a company that has a strategy to generate financial or customer-related results. It enables executives to assess overall company strengths and weaknesses, senior leaders to define strategy, midlevel managers to execute strategy, and frontline leaders to achieve tactical results. In short, it helps turn intangible assets into concrete strengths.     

Coming up short on nonfinancial performance measurement

Companies in increasing numbers are measuring customer loyalty, employee satisfaction, and other nonfinancial areas of performance that they believe affect profitability. But they've failed to relate these measures to their strategic goals or establish a connection between activities undertaken and financial outcomes achieved. Failure to make such connections has led many companies to misdirect their investments and reward ineffective managers. Extensive field research now shows that businesses make some common mistakes when choosing, analyzing, and acting on their nonfinancial measures. Among these mistakes: They set the wrong performance targets because they focus too much on short-term financial results, and they use metrics that lack strong statistical validity and reliability. As a result, the companies can't demonstrate that improvements in nonfinancial measures actually affect their financial results. The authors lay out a series of steps that will allow companies to realize the genuine promise of nonfinancial performance measures. First, develop a model that proposes a causal relationship between the chosen nonfinancial drivers of strategic success and specific outcomes. Next, take careful inventory of all the data within your company. Then use established statistical methods for validating the assumed relationships and continue to test the model as market conditions evolve. Finally, base action plans on analysis of your findings, and determine whether those plans and their investments actually produce the desired results. Nonfinancial measures will offer little guidance unless you use a process for choosing and analyzing them that relies on sophisticated quantitative and qualitative inquiries into the factors actually contributing to economic results.     

Lessons from the Financial Crisis on Risk and Capital Management: The Case of Insurance Companies

This article proposes that risk management be viewed as an integral part of the corporate value‐creation process— one in which the concept of economic capital can provide companies with the financial cushion and confidence to carry out their strategic plans. Using the case of insurance and reinsurance companies, the authors discuss three main ways that the integration of risk and capital management creates value:

• 1 strengthening solvency (by limiting the probability of financial distress);
• 2 increasing prospects for profitable growth (by preserving access to capital during post‐loss periods); and
• 3 improving transparency (by increasing the “information content” or “signaling power” of reported earnings).

Insurers can manage solvency risk by using Enterprise Risk Management (ERM) models to limit the probability of financial distress to levels consistent with the firm's specified risk tolerance. While ERM models are effective in managing “known” risks, we discuss three practices widely used in the insurance industry to manage “unknown” and “unknowable” risks using the logic of real options—slack, mutualization, and incomplete contracts. Second, risk management can create value by securing sources of capital that, like contingent capital, can be used to fund profitable growth opportunities that tend to arise in periods following large losses. Finally, the authors argue that risk management can raise the confidence of investors in their estimates of future growth by removing the “noise” in earnings that comes from bearing non‐core risks, thereby making current earnings a more reliable guide to future earnings. In support of this possibility, the authors provide evidence showing that, for a given level of reported return on equity (ROE), (re)insurers with more stable ROEs have higher price‐to‐book ratios, suggesting investors' willingness to pay a premium for the stability provided by risk management.     

The Theory and Practice of Corporate Risk Management*

The financial crisis of 2008 and the resulting recession caught many companies unprepared and, in so doing, provided a stark reminder of the importance of effective risk management. While academic theory has long touted the benefits of risk management, companies have varied greatly in the ways and extent to which they put theory into practice. Drawing on a global survey of over 300 CFOs of non‐financial companies, the authors report that while most CFOs felt that their risk management programs have significant benefits, the risk management function in general needs more attention. A large percentage of the finance executives surveyed acknowledged that the most important corporate risks extend far beyond the CFO's direct reports, and that risk‐based thinking is not incorporated into everyday business activities or corporate strategies. A large majority of executives also said they were seeking a more widespread understanding of risk throughout their organizations—and many confessed their firms' inability, or lack of interest, in evaluating their own risk management functions. At the same time, the efforts of most companies to develop enterprise‐wide risk management (ERM) programs were said to fall well short of the comprehensive and highly coordinated programs envisioned by the proponents of such programs. Three areas of opportunity were clearly identified as having potential to improve corporate risk management in ways that increase firm value over an entire business cycle:

• ? Incorporate risk management thinking into the strategic planning process. Line executives, and not just technicians, need to be sensitive to risks, thereby building flexibility into the firm's business plan and its execution.
• ? Clearly define the objectives of the risk management function, in part by developing appropriate benchmarks. The risk management process should be subject to the same rigorous evaluation process that is used when measuring risks throughout the business.
• ? Instill a risk management culture throughout the organization. While an effective risk management function is necessary, only when employees at all levels of the company embrace risk management as part of their daily operations will the firm get maximum value from risk management.

     

消费金融资产证券化与系统性风险管理研究

在强大的市场需求和金融科技支持下,消费金融公司自正式试点以来呈现良好的发展态势,其中资产证券化成为消费金融公司的重要融资方式。资产证券化在助力消费金融公司增资扩容、改善流动性和提高运营稳健性的同时,也促使消费金融行业风险高并导致诉讼案件的增加。本文基于捷赢个人消费贷款资产支持证券的经验证据,明确了消费金融创新、消费金融风险与金融市场系统性风险管理之间的内在联系,揭示可以通过大数据精准获客、规范催收行为和智能风险防控等措施为消费金融市场发展保驾护航。因此,针对消费金融资产证券化,政府应制定专门的政策法规以强化风险管理,不断完善消费金融资产的监管机制,借助系统性风险管理来规避套利和资金风险,进而促进消费金融资产证券化的稳健有序发展。     

Profit pools: a fresh look at strategy

In charting strategy, many managers focus on revenue growth, assuming that profits will follow. But that approach is dangerous: today's deep revenue pool may become tomorrow's dry hole. To create strategies that result in profitable growth, managers need to look beyond revenues to see the shape of their industry's profit pool. The authors define an industry's profit pool as the total profits earned at all points along the industry's value chain. Although the concept is simple, the structure of a profit pool is usually quite complex. The pool will be deeper in some segments of the value chain than in others, and depths will vary within an individual segment as well. Segment profitability may, for example, vary widely by customer group, product category, geographic market, and distribution channel. Moreover, the pattern of profit concentration in an industry will often be very different from the pattern of revenue concentration. The authors describe how successful companies have gained competitive advantage by developing sophisticated profit-pool strategies. They explain how U-Haul identified new sources of profit in the consumer-truck-rental industry; how Merck reached beyond its traditional value-chain role to protect its profits in the pharmaceuticals industry; how Dell rebounded from a misguided channel decision by refocusing on its traditional source of profit; and how Anheuser-Busch made a series of astute product, pricing, and operating decisions to dominate the beer industry's profit pool. The companies with the best understanding of their industry's profit pool, the authors argue, will be in the best position to thrive over the long term.     

Charting your company's future

Few companies have a clear strategic vision. The problem, say the authors, stems from the strategic-planning process itself, which usually involves preparing a large document, culled from a mishmash of data provided by people with conflicting agendas. That kind of process almost guarantees an unfocused strategy. Instead, companies should design the strategic-planning process by drawing a picture: a strategy canvas. A strategy canvas shows the strategic profile of your industry by depicting the various factors that affect competition. And it shows the strategic profiles of your current and potential competitors as well as your own company's strategic profile--how it invests in the factors of competition and how it might in the future. The basic component of a strategy canvas--the value curve--is a tool the authors created in their consulting work and have written about in previous HBR articles. This article introduces a four-step process for actually drawing and discussing a strategy canvas. Readers will learn how one European financial services company used this process to create a distinct and easily communicable strategy. The process begins with a visual awakening. Managers compare their business's value curve with competitors' to discover where their strategy needs to change. In the next step--visual exploration--managers do field research on customers and alternative products. At the visual strategy fair, the third step, managers draw new strategic profiles based on field observations and get feedback from customers and peers about these new proposals. Once the best strategy is created from that feedback, it's time for the last step--visual communication. Executives distribute "before" and "after" strategic profiles to the whole company, and only projects that will help move the company closer to the "after" profile are supported.     

Is it real? Can we win? Is it worth doing? Managing risk and reward in an innovation portfolio

Minor innovations make up most of a company's development portfolio, on average, but they never generate the growth companies seek. The solution, says Day--the Geoffrey T. Boisi Professor of Marketing and a codirector of the Mack Center for Technological Innovation at Wharton--is for companies to undertake a systematic, disciplined review of their innovation portfolios and increase the number of major innovations at an acceptable level of risk. Two tools can help them do this. The first, called the risk matrix, graphically reveals the distribution of risk across a company's entire innovation portfolio. The matrix allows companies to estimate each project's probability of success or failure, based on how big a stretch it is for the firm to undertake. The less familiar the product or technology and the intended market, the higher the risk. The second tool, dubbed the R-W-W (real-win-worth it) screen, allows companies to evaluate the risks and potential of individual projects by answering six fundamental questions about each one: Is the market real? Explores customers' needs, their willingness to buy, and the size of the potential market. Is the product real? Looks at the feasibility of producing the innovation. Can the product be competitive? and Can our company be competitive? Investigate how well suited the company's resources and management are to compete in the marketplace with the product. Will the product be profitable at an acceptable risk? Explores the financial analysis needed to assess an innovation's commercial viability. Last, Does launching the product make strategic sense? examines the project's fit with company strategy and whether management supports it.     

Incorporating Strategic Risk into Enterprise Risk Management: A Survey of Current Corporate Practice

Since ERM is a relatively recent activity and has yet to be fully implemented in most companies, there has been little academic research about its accomplishments and about the obstacles to further progress. In particular, very little has been published about corporate attempts to identify and manage corporate strategic risks while integrating them into a corporate‐ wide ERM framework. This article uses responses collected from a survey of 271 risk and financial executives in North American and European companies to address the following questions: What forces are behind this push for a more organized and integrated management of significant risks? What challenges are companies encountering as they implement implement ERM? Once fully in place, how does ERM affect the company's ability to implement its strategy? The primary drivers of ERM are said to be corporate governance requirements and other regulatory pressures, and management and investor demand for greater understanding of strategic and operating risks. The benefits of full ERM implementation are increased management accountability and better governance practices, greater managerial understanding of and consensus about corporate strategy, and, in some cases, higher credit ratings and hence a lower cost of capital. The tools and techniques to measure the impact of strategic risks appear to vary, depending on the stage of ERM implementation. For advanced ERM companies, the most frequently used tools and techniques are key risk indicators, self‐assessments, and scenario analysis.     

UNIVERSITY OF GEORGIA ROUNDTABLE ON: Enterprise‐Wide Risk Management

For many years, MBA students were taught that there was no good reason for companies that hedge large currency or commodity price exposures to have lower costs of capital, or trade at higher P/E multiples, than comparable companies that choose not to hedge such financial price risks. Corporate stockholders, just by holding well‐diversified portfolios, were said to neutralize any effects of currency and commodity price risks on corporate values. And corporate efforts to manage such risks were accordingly viewed as redundant, a waste of corporate resources on a function already performed by investors at far lower cost. But as this discussion makes clear, both the theory and the corporate practice of risk management have moved well beyond this perfect markets framework. The academics and practitioners in this roundtable begin by suggesting that the most important reason to hedge financial risks—and risk management's largest potential contribution to firm value—is to ensure a company's ability to carry out its strategic plan and investment policy. As one widely cited example, Merck's use of FX options to hedge the currency risk associated with its overseas revenues is viewed as limiting management's temptation to cut R&D in response to large currency‐related shortfalls in reported earnings. Nevertheless, one of the clear messages of the roundtable is that effective risk management has little to do with earnings management per se, and that companies that view risk management as primarily a tool for smoothing reported earnings have lost sight of its real economic function: maintaining access to low‐cost capital to fund long‐run investment. And a number of the panelists pointed out that a well‐executed risk management policy can be used to increase corporate debt capacity and, in so doing, reduce the cost of capital. Moreover, in making decisions whether to retain or transfer risks, companies should generally be guided by the principle of comparative advantage. If an outside firm or investor is willing to bear a particular risk at a lower price than the cost to the firm of managing that risk internally, then it makes sense to lay off that risk. Along with the greater efficiency and return on capital promised by such an approach, several panelists also pointed to one less tangible benefit of an enterprise‐wide risk management program—a significant improvement in the internal corporate dialogue, leading to a better understanding of all the company's risks and how they are affected by the interactions among its business units.     

Simple rules for making alliances work

Corporate alliances are growing in number--by about 25% a year--and account for up to a third of revenues and value at many companies. Yet some 60% to 70% of them fail. What is going wrong? Because alliances involve interdependence between companies that may be competitors and may also have vastly different operating styles and cultures, they demand more care and handling than other business arrangements, say Hughes and Weiss, management consultants at Vantage Partners. The authors have developed five principles--based on their two decades of work with alliances -to complement the conventional advice on alliance management: (1) Focus less on defining the business plan and more on how you and your partner will work together. (2) Develop metrics pegged not only to alliance goals but also to performance in working toward them. (3) Instead of trying to eliminate differences, leverage them to create value. (4) Go beyond formal systems and structures to enable and encourage collaborative behavior. (5) Be as diligent in managing your internal stakeholders as you are in managing the relationship with your partner. Companies that have adopted these principles have radically improved their alliance success rate. Schering-Plough, for example, engages in a systematic "alliance relationship launch": four to six weeks of meetings at which the partners explore potential challenges, examine key differences and develop shared protocols for managing them, and establish mechanisms for day-to-day decision making. Blue Cross and Blue Shield of Florida measures the quality of alliance progress through regular surveys of both its own staff and its partners'. These companies have learned that the conventional advice is not so much wrong as incomplete. The five simple rules can help fill in the blanks.     

Hedge funds and financial stability: Regulating prime brokers will mitigate systemic risks

We review key characteristics of the hedge fund industry, and identify conditions under which this sector can pose a threat to financial stability. Direct regulation of hedge funds that increases transparency does not appear feasible, may create a moral-hazard problem, and may reduce market liquidity. Indirect regulation by prime brokers and market discipline by creditors, counterparties, and investors have been effective in limiting the risks from the hedge fund sector. To reduce systemic risks, more regulation of prime brokers is warranted to avoid competitive dynamics from undermining counterparty risk management practices.     

Market risks in asset management companies

This paper shows that revenues from a sample of publicly traded US asset management companies carry substantial market risks. Not only does this challenge the academic risk management literature about the predominance of operative risks in asset management, it is also at odds with current practice in asset management firms. Asset managers do not hedge market risks even though these risks are systematically built into the revenue generation process. This is surprising as shareholders would not optimally choose asset management companies as their source of market beta. They rather prefer to participate in alpha generation and fund gathering expertise of investment managers as financial intermediaries. At the very minimum, asset managers need to monitor their ‘fees at risk’ to understand what impact product design, benchmark choice and fee contract design have on revenue volatility. This calls for a much wider interpretation of the risk management function that too narrowly focuses on client risks.     

Corporate Insurance Strategy: The Case of British Petroleum

The authors provide a fundamental rethinking of how corporations should evaluate various kinds of risks and risk management solutions—a rethinking that leads to a major shift in British Petroleum's approach to insuring property and casualty losses, product liability suits, and other insurable events. Conventional corporate practice—and until the early 1990s (when this article was written) the longstanding policy of BP and most large oil companies—was to insure against large losses while self‐insuring against smaller ones. In this article, the authors explain why BP has chosen to go against the conventional wisdom and instead buy insurance for mainly smaller losses while self‐insuring larger ones. The BP decision came down to factors affecting the market supply of insurance as well as the corporate demand for it. On the demand side, the authors demonstrate that the primary source of demand for insurance by large public companies is not, as standard insurance textbooks assume, to transfer risk away from the corporation's owners. Because corporate stockholders and bondholders effectively manage the effects of such risks by diversifying their own portfolios, the corporate demand for insurance in BP's case stems from the insurers' comparative advantage in evaluating and monitoring BP's smaller risks and in processing claims. On the supply side, the authors explain why the capacity of insurance companies and markets to underwrite very large or highly specialized exposures—when compared to the industry expertise and financial resources of companies like BP—is quite limited, and likely to remain so. Since premiums would be experience‐rated and prior years' losses simply rolled into the following years' premiums, there would be no effective transfer of risk, and so no gain to BP from buying insurance.     

Strategy and your stronger hand

There are two kinds of businesses in the world, says the author. Knowing what they are--and which one your company is--will guide you to the right strategic moves. One kind includes businesses that compete on a complex-systems model. These companies have large enterprises as their primary customers. They seek to grow a customer base in the thousands, with no more than a handful of transactions per customer per year (indeed, in some years there may be none), and the average price per transaction ranges from six to seven figures. In this model, 1,000 enterprises each paying dollar 1 million per year would generate dollar 1 billion in annual revenue. The other kind of business competes on a volume-operations model. Here, vendors seek to acquire millions of customers, with tens or even hundreds of transactions per customer per year, at an average price of relatively few dollars per transaction. Under this model, it would take 10 million customers each spending dollar 8 per month to generate nearly dollar 1 billion in revenue. An examination of both models shows that they could not be further apart in their approach to every step along the classic value chain. The problem, though, is that companies in one camp often attempt to create new value by venturing into the other. In doing so, they fail to realize how their managerial habits have been shaped by the model they've grown up with. By analogy, they have a "handedness"--the equivalent of a person's right- or left-hand dominance--that makes them as adroit in one mode as they are awkward in the other. Unless you are in an industry whose structure forces you to attempt ambidexterity (in which case, special efforts are required to manage the inevitable dropped balls), you'll be far more successful making moves that favor your stronger hand.     

上市公司使用金融衍生品避险动机的实证研究——来自金融保险业的经验证据

以我国2006—2008年金融、保险板块上市公司为研究样本,对我国上市公司使用金融衍生品的避险动机,运用Logstic归进行了研究。结果发现,只有公司规模与金融衍生品需求正相关。表明了我国金融衍生产品市场还处于发展初期,使用金融衍生品的公司参与避险的数量不多,资产规模小的金融机构风险管理经验尤为缺乏。