Selling the brand inside

When you think of marketing, chances are your mind goes right to your customers--how can you persuade more people to buy whatever it is you sell? But there's another "market" that's equally important: your employees. Author Colin Mitchell argues that executives by and large ignore this critical internal audience when developing and executing branding campaigns. As a result, employees end up undermining the expectations set by the company's advertising--either because they don't understand what the ads have promised or because they don't believe in the brand and feel disengaged or, worse, hostile toward the company. Mitchell offers three principles for executing internal branding campaigns--techniques executives can use to make sure employees understand, embrace, and "live" the brand vision companies are selling to the public. First, he says, companies need to market to employees at times when the company is experiencing a fundamental challenge or change, times when employees are seeking direction and are relatively receptive to new initiatives. Second, companies must link their internal and external marketing campaigns; employees should hear the same messages that are being sent to the market-place. And third, internal branding campaigns should bring the brand alive for employees, creating an emotional connection to the company that transcends any one experience. Internal campaigns should introduce and explain the brand messages in new and attention-grabbing ways and then reinforce those messages by weaving them into the fabric of the company. It is a fact of business, writes Mitchell, that if employees do not care about or understand their company's brands, they will ultimately weaken their organizations. It's up to top executives, he says, to give them a reason to care.     

Lead for loyalty.

The greater the loyalty a company engenders among its customers, employees, suppliers, and shareholders, the greater the profits it reaps. Frederick Reichheld, a director emeritus of Bain & Company, offers advice on improving loyalty that is based on more than a decade of research. Primarily, he says, outstanding loyalty is the direct result of the decisions and practices of committed top executives with personal integrity. The "loyalty leader" companies--those with the most impressive loyalty credentials--are a diverse group, ranging from Vanguard and Northwestern Mutual to Chick-fil-A, Harley-Davidson, Intuit, and Enterprise Rent-A-Car. But beneath their surface variations lie six strikingly similar relationship strategies: 1. Preach what you practice. Executives must preach the importance of loyalty in clear, precise, powerful terms. 2. Play to win-win. It's not enough that your competitors lose; your partners must win. There's a clear connection, for instance, between a company's treatment of its employees and its attitude toward customers. 3. Be picky. A truly humble company knows it can satisfy only certain customers, and it goes all out to keep them happy. Careful selection of employees also plays an important role. 4. Keep it simple. Great leaders understand that they must simplify rules for decision making. 5. Reward the right results. Many companies reward employees who grab short-term profits and short-change those who build long-term value and customer loyalty. 6. Listen hard, talk straight. Long-term relationships require honest, two-way communication and learning. Exemplary leaders break through the cynicism of the times by showing they believe that an organization thrives when its partners and customers do.     

The ethical mind. A conversation with psychologist Howard Gardner

Business leadership has become synonymous in the public eye with unethical behavior. Widespread scandals, massive layoffs, and inflated executive pay packages have led many to believe that corporate wrongdoing is the status quo. That's why it's more important than ever that those at the top mend relationships with customers, employees, and other stakeholders. Professor Gardner has spent many years studying the relationship between psychology and ethics at Harvard's Graduate School of Education. In this interview with HBR senior editor Bronwyn Fryer, Gardner talks about what he calls the ethical mind, which helps individuals aspire to do good work that matters to their colleagues, companies, and society in general. In an era when workers are overwhelmed by too much information and feel pressured to win at all costs, Gardner believes, it's easy to lose one's way. What's more, employees look to leaders for cues as to what's appropriate and what's not. So if you're a leader, what's the best way to stand up to ethical pressures and set a good example? First and foremost, says Gardner, you must believe that retaining an ethical compass is essential to the health of your organization. Then you must state your ethical beliefs and stick to them. You should also test yourself rigorously to make sure you're adhering to your values, take time to reflect on your beliefs, find multiple mentors who aren't afraid to speak truth to your power, and confront others' egregious behavior as soon as it arises. In the end, Gardner believes, the world hangs in the balance between right and wrong, good and bad, success and disaster. "You need to decide which side you're on:" he concludes, "and do the right thing."     

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.     

AIDS is your business

If your company operates in a developing country, AIDS is your business. While Africa has received the most attention, AIDS is also spreading swiftly in other parts of the world. Russia and Ukraine had the fastest-growing epidemics last year, and many experts believe China and India will suffer the next tidal wave of infection. Why should executives be concerned about AIDS? Because it is destroying the twin rationales of globalization strategy-cheap labor and fast-growing markets--in countries where people are heavily affected by the epidemic. Fortunately, investments in programs that prevent infection and provide treatment for employees who have HIV/AIDS are profitable for many businesses--that is, they lead to savings that outweigh the programs' costs. Due to the long latency period between HIV infection and the onset of AIDS symptoms, a company is not likely to see any of the costs of HIV/AIDS until five to ten years after an employee is infected. But executives can calculate the present value of epidemic-related costs by using the discount rate to weigh each cost according to its expected timing. That allows companies to think about expenses on HIV/AIDS prevention and treatment programs as investments rather than merely as costs. The authors found that the annual cost of AIDS to six corporations in South Africa and Botswana ranged from 0.4% to 5.9% of the wage bill. All six companies would have earned positive returns on their investments if they had provided employees with free treatment for HIV/AIDS in the form of highly active antiretroviral therapy (HAART), according to the mathematical model the authors used. The annual reduction in the AIDS "tax" would have been as much as 40.4%. The authors' conclusion? Fighting AIDS not only helps those infected; it also makes good business sense.     

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.     

How to invest in social capital.

Business runs better when people within a company have close ties and trust one another. But the relationships that make organizations work effectively are under assault for several reasons. Building such "social capital" is difficult in volatile times. Disruptive technologies spawn new markets daily, and organizations respond with constantly changing structures. The problem is worsened by the virtuality of many of today's workplaces, with employees working off-site or on their own. What's more, few managers know how to invest in such social capital. The authors describe how managers can help their organizations thrive by making effective investments in social capital. For instance, companies that value social capital demonstrate a commitment to retention as a way of limiting workplace volatility. The authors cite SAS's extensive efforts to signal to employees that it sees them as human beings, not just workers. Managers can build trust by showing trust themselves, as well as by rewarding trust and sending clear signals to employees. They can foster cooperation by giving employees a common sense of purpose through good strategic communication and inspirational leadership. Johnson & Johnson's well-known credo, which says the company's first responsibility is to the people who use its products, has helped the company in time of adversity, as in 1982 when cyanide in Tylenol capsules killed seven people. Other methods of fostering cooperation include rewarding the behavior with cash and establishing rules that get people into the habit of cooperating. Social capital, once a given in organizations, is now rare and endangered. By investing in it, companies will be better positioned to seize the opportunities in today's volatile, virtual business environment.     

How we went digital without a strategy

Once you say what business you're in, you put your employees into a mental straitjacket and hand them a ready-made excuse for ignoring new opportunities. So rather than dictate his company's identity, Ricardo Semler--the majority owner of Semco in S?o Paulo, Brazil--lets his employees shape it through their individual efforts and interests. "I don't know what Semco is," he writes in this first-person account of his company's expansion from manufacturing to Internet services. "Nor do I want to know." Ten years ago, Semco employees who were selling cooling towers to owners of large commercial buildings heard customers complain about the high cost of maintaining the towers. The salespeople proposed a new business in cooling-tower maintenance, and the venture is now a $30 million property-management business. That initiative led to the creation, with Semco's support, of an on-line exchange to facilitate the management of commercial construction projects. The exchange is revolutionizing the construction process in Brazil and has become a springboard for further Web initiatives such as virtual trade shows. The author shares some of the lessons he has learned along the way: Forget about the top line. Never stop being a start-up. Don't be a nanny (treat your employees like adults). Let talent find its place. Make decisions quickly and openly when it comes to reviewing proposals for new businesses. And partner promiscuously: "Our partners," Semler says, "are as much a part of our company as our employees."     

从老爱立信到当代爱立信

<正> 在瑞典韦姆兰教区一座教堂的庭院内竖立着一座庄严朴素的纪念碑,碑文简洁明晰:“瑞典电话业亲眼目睹了他的成就。”他,就是爱立信公司的创始人——拉·马·爱立信。爱立信公司自1876年创立以来,千千万万的杰出人土为它能成为世界同行业的佼佼者做出了自己的贡献。然而,创始人拉·马·爱立借对公司的影响始终是最为深远的。直到今天,爱立信的企业文化和经营理念还带有很强的老爱立信的思想印记。     

A buyer's guide to the innovation bazaar

Companies seeking new ideas or product concepts from outside sources may find the "innovation bazaar," with its wide array of choices and methods of acquiring them, a confusing, chaotic place. Nambisan and Sawhney have crafted a conceptual guide for managers who understand the importance of going outside their firms for innovation but are uncertain about how to do it. The authors' "external sourcing continuum" shows at a glance how shopping for, say, raw ideas compares with shopping for market-ready products in terms of cost, risk, multiplicity of options, and speed of commercialization. Raw ideas, whether acquired directly from the inventor or through a patent broker, licensing agent, or some other intermediary, tend to be low cost but high risk and take a long time to bring to market. Market-ready products, often acquired as stand-alone businesses through a venture capitalist or business incubator, are more expensive and narrow one's choices, but they can be launched quickly and with less risk. Between these two approaches lies a third, facilitated by the "innovation capitalist." This new kind of intermediary provides client companies with access to a broad range of innovative product or technology ideas that are nearly market ready, thereby mitigating early-stage risks and lowering the time to market without significantly increasing acquisition costs. The authors compare the advantages and disadvantages of using intermediaries associated with the three approaches and provide a checklist of factors to consider when placing your company on the external sourcing continuum. If you've been oriented toward one end of the continuum or the other, you can increase your options and your flexibility by expanding into the middle.     

The half-truth of first-mover advantage

Many executives take for granted that the first company in a new product category gets an unbeatable head start and reaps long-lasting benefits. But that doesn't always happen. The authors of this article discovered that much depends on the pace at which the category's technology is changing and the speed at which the market is evolving. By analyzing these two factors, companies can improve their odds of succeeding as first movers with the resources they possess. Gradual evolution in both the technology and the market provides a first mover with the best conditions for creating a dominant position that is long lasting (Hoover in the vacuum cleaner industry is a good example). In such calm waters, a company can defend its advantages even without exceptional skills or extensive financial resources. When the market is changing rapidly and the product isn't, a first entrant with extensive resources can obtain a long-lasting advantage (as Sony did with its Walkman personal stereo); a company with only limited resources probably must settle for a short-term benefit. When the market is static but the product is changing constantly, first-mover advantages of either kind--durable or short-lived--are unlikely. Only companies with very deep pockets can survive (think of Sony and the digital cameras it pioneered). Rapid churn in both the technology and the market creates the worst conditions. But if companies have an acute sense of when to exit-as Netscape demonstrated when it agreed to be acquired by AOL-a worthwhile short-term gain is possible. Before venturing into a newly forming market, you need to analyze the environment, assess your resources, then determine which type offirst-mover advantage is most achievable. Once you've gone into the water, you have no choice but to swim.     

The 2003 HBR list. Breakthrough ideas for tomorrow's business agenda

International conflict. Bear markets. Corporate scandals. The events of this past year have prompted intense soul-searching in many quarters and led us, in this year's list of the best business ideas, to reassess some of the most basic assumptions about strategy, organizations, and leadership. We began by reconsidering the role of the leader. Whether the boss is a hero or villain, discussions of leadership focus almost exclusively on the CEO. But attention also needs to be paid to the other people who make organizations work, not only to the corporate boards that oversee CEOs but to the followers--to their responsibilities, their power, and their obligation not to follow flawed leaders. And we considered the fate of soft issues, like emotional intelligence, in hard times. It's tempting to dismiss them when your employees will do anything just to keep their jobs. But hard times are good times to employ such tools on yourself. They can arm you with the self-awareness you need to understand, anticipate, and outwit your enemies. Where tools may fail, an attitude adjustment may be what's needed. Despite valiant efforts to lead change and eliminate inefficiencies, organizations stay messy. Perhaps it's better to learn to live with messiness and even focus on its benefits, one of which may be growth. Not the meteoric, effortless illusion we indulged in during the 1990s, but significant gains nonetheless. These can come when managers embrace messiness not just within their organizations but along the boundaries of the firm, blurring the line between their own core assets and functions and those of other companies. There's growth potential, too, in considering the company as a portfolio of opportunities--but only if managers can sell off poorly performing business units as easily as they've been shedding ailing stocks of late.     

Opening the books

For years, small companies have experimented with forms of open-book management. Open-book systems have smoothed change efforts by giving workers the why instead of just the how of initiatives; they have enabled employees to think like owners. Now divisions of large organizations such as R.R. Donnelley & Sons and Amoco Canada are finding opening the books can work for them, too. It isn't easy, and companies must adapt the principles to their own situations. AES Corporation, for example, found that it had to declare all its employees "insiders" when it went public. One of the reasons for large companies' interest in open-book management is the success of a role-model company, Missouri-based Springfield ReManufacturing. Leaders of divisions of large companies have been able to visit and ask questions. Other early adopters are also showing competitive advantages. Among them are Wabash National, now the nation's leading truck and tractor manufacturer, and Physician Sales & Service, a distributor of supplies to doctors' office. Open-book principles are the same whether a company is large or small: every employee must receive all relevant financial information and be taught to understand it; managers must hold employees accountable for making their unit's goals; and the compensation system must reward everyone for the overall success of the business. Hexacomb Corporation is one large organization that has done well. Workers at the company's seven plants are inspired by a system of splitting profits over budget fifty-fifty: half goes to the company and half to the bonus pool. Such companies are learning the benefits of having everyone work to push the numbers in the right direction.     

Who owns the long term? Perspectives from global business leaders

Day-to-day management is challenging enough for CEOs. How do they manage for the long term as well? We posed that question to four top executives of global companies. According to Maurice Levy, chairman and CEO of Publicis Groupe, building the future is really about building the present and keeping close to the front line--those who deal with your customers and markets. He also attributes his company's success in large part to knowing when to take action: In a market where clients' needs steer your long-term future, timing is everything. UPS Chairman and CEO Mike Eskew emphasizes staying true to your vision and values over the long run, despite meeting obstacles along the way. It took more than 20 years, and many lessons learned, to produce consistent profits in what is today the company's fastest-growing and most profitable business: international small packages. Wulf H. Bernotat, CEO of E.ON, examines the challenges facing business leaders and politicians as they try to balance energy needs against potential environmental damage. He calls for educating people about consumption and waste, and he maintains that a diverse and reliable mix of energy sources is the only way to ensure a secure supply while protecting our environment. Finally, Marianne Barner, the director of corporate communications and ombudsman for children's issues at IKEA, discusses how the company is taking steps to improve the environment and be otherwise socially responsible. For example, it's partnering with NGOs to address child labor issues and, on its own, is working to help mitigate climate change. IKEA's goals include using renewable sources for 100% of its energy needs and cutting its overall energy consumption by 25%.     

Finding your next core business

How do you know when your core needs to change? And how do you determine what should replace it? From an in-depth study of 25 companies, the author, a strategy consultant, has discovered that it's possible to measure the vitality of a business's core. If it needs reinvention, he says, the best course is to mine hidden assets. Some of the 25 companies were in deep crisis when they began the process of redefining themselves. But, says Zook, management teams can learn to recognize early signs of erosion. He offers five diagnostic questions with which to evaluate the customers, key sources of differentiation, profit pools, capabilities, and organizational culture of your core business. The next step is strategic regeneration. In four-fifths of the companies Zook examined, a hidden asset was the centerpiece of the new strategy. He provides a map for identifying the hidden assets in your midst, which tend to fall into three categories: undervalued business platforms, untapped insights into customers, and underexploited capabilities. The Swedish company Dometic, for example, was manufacturing small absorption refrigerators for boats and RVs when it discovered a hidden asset: its understanding of, and access to, customers in the RV market. The company took advantage of a boom in that market to refocus on complete systems for live-in vehicles. The Danish company Novozymes, which produced relatively low-tech commodity enzymes such as those used in detergents, realized that its underutilized biochemical capability in genetic and protein engineering was a hidden asset and successfully refocused on creating bioengineered specialty enzymes. Your next core business is not likely to announce itself with fanfare. Use the author's tools to conduct an internal audit of possibilities and pinpoint your new focus.     

Competing on talent analytics

Do investments in your employees actually affect workforce performance? Who are your top performers? How can you empower and motivate other employees to excel? Leading-edge companies such as Google, Best Buy, Procter & Gamble, and Sysco use sophisticated data-collection technology and analysis to answer these questions, leveraging a range of analytics to improve the way they attract and retain talent, connect their employee data to business performance, differentiate themselves from competitors, and more. The authors present the six key ways in which companies track, analyze, and use data about their people-ranging from a simple baseline of metrics to monitor the organization's overall health to custom modeling for predicting future head count depending on various "what if" scenarios. They go on to show that companies competing on talent analytics manage data and technology at an enterprise level, support what analytical leaders do, choose realistic targets for analysis, and hire analysts with strong interpersonal skills as well as broad expertise.     

Is success a sin? A conversation with the reverend Peter J. Gomes. Interview by David A. Light

The difficult task of achieving worldly success while also storing up spiritual treasure is perennially with us, in good times and in bad. Today, however, as the economy has cooled and companies have demonstrated their mortality, questions about meaning and value appear more relevant, even urgent. HBR associate editor David A. Light recently spoke with the Reverend Peter J. Gomes, one of the nation's best-known preachers and the minister at Harvard University's Memorial Church, about why and how it is both possible and necessary to reconcile a life of success with a life of faith. To do so, says Gomes, you must first "get used to it"--come to terms with the age-old tension between being rich in spirit and rich in worldly goods. Second, you should "get over it"--arrive at an understanding of the value and responsibilities associated with power and wealth. Finally, "get on with it"--figure out how you can live your life spiritually while continuing to lead in the business world. For those wondering how to get on with spiritual development, Gomes cites the growing phenomenon of senior executives gathering with peers--out of shared need, not shared accomplishment--to pray, study sacred texts, and share their religious life together. He counsels that it's never too late to get on with it: We can amend life at any time, whether we're 35, 45, or 75. Gomes concludes that business will continue to be one of the most significant forces in American culture, but it will always struggle against people's need for a perspective that is beyond this world's.     

Predictable surprises: the disasters you should have seen coming

Think hard about the problems in your organization or about potential upheavals in the markets in which you operate. Could some of those problems--ones no one is attending to--turn into disasters? If you're like most executives, you'll sheepishly answer yes. As Harvard Business School professors Michael Watkins and Max Bazerman illustrate in this timely article, most of the "unexpected" events that buffet companies should have been anticipated--they're "predictable surprises." Such disasters take many forms, from financial scandals to disruptions in operations, from organizational upheavals to product failures. Some result in short-term losses or distractions, while others cause damage that takes years to repair. Some are truly catastrophic--the events of September 11, 2001, are a tragic example of a predictable surprise. The bad news is that all companies, including your own, are vulnerable to predictable surprises. The good news is that recent research helps explain why that's so and what companies can do to minimize their risk. The authors contend that organizations' inability to prepare for predictable surprises can be traced to three sets of vulnerabilities: psychological, organizational, and political. To address these vulnerabilities, the authors recommend the RPM approach. More than just the usual environmental scanning and contingency planning, RPM requires a chain of actions--recognizing, prioritizing, and mobilizing--that companies must meticulously adhere to. Failure to apply any one of these steps, the authors say, can leave an organization vulnerable. Given the extraordinarily high stakes involved, it should be every business leader's core responsibility to apply the RPM approach, the authors conclude.     

Strategy as ecology

Microsoft's and Wal-Mart's preeminence in modern business has been attributed to any number of factors--from the vision and drive of their founders to the companies' aggressive competitive practices. But the authors maintain that the success realized by these two very different companies is due only partly to the organizations themselves; a bigger factor is the success of the networks of companies with which Microsoft and Wal-Mart do business. Most companies today inhabit ecosystems--loose networks of suppliers, distributors, and outsourcers; makers of related products or services; providers of relevant technology; and other organizations that affect, and are affected by, the creation and delivery of a company's own offering. Despite being increasingly central to modern business, ecosystems are still poorly understood and even more poorly managed. The analogy between business networks and biological ecosystems can aid this understanding by vividly highlighting certain pivotal concepts. The moves that a company makes will, to varying degrees, affect the health of its business network, which in turn will ultimately affect the organization's performance--for ill as well as for good. Because a company, like an individual species in a biological ecosystem, ultimately shares its fate with the network as a whole, smart firms pursue strategies that will benefit everyone. So how can you promote the health and the stability of your own ecosystem, determine your place in it, and develop a strategy to match your role, thereby helping to ensure your company's well-being? It depends on your role--current and potential--within the network. Is your company a niche player, a keystone, or a dominator? The answer to this question may be different for different parts of your business. It may also change as your ecosystem changes. Knowing what to do requires understanding the ecosystem and your organization's role in it.