Will Apple Stay Premium In The Long Run?

http://seekingalpha.com/article/1074471-will-apple-stay-premium-in-the-long-run?source=email_rt_article_title&ifp=0

This article highlights the challenge of trying to maintain a premium brand, pricing strategy which often leads to lower volumes. This is a critical component to Apple’s future strategy and one faced by every business where brand –whether B to C or B to B—is an important component of its marketing effort.

Although several electronic gadget companies have introduced interesting variants in the industry, people who are loyal to Apple (AAPL) products seldom think of switching. Experts believe that this is mainly because of the prestige attached to this brand. AAPL seems well aware of its prestigious position and this is one reason why its marketing mix is aimed at enhancing this prestige. 

Apple has the same pricing philosophy as Louis Vuitton. It sells premium products at premium prices and never discounts. That philosophy has made it an aspirational brand worldwide. You don't see vendors in China selling fake Google Nexus 7s. Apple products are so much more expensive than the competition that only the rich and faithful tend to buy them. But that uncompromising devotion to the fundamental philosophy is what has made Apple such a powerful global brand. 

This analysis by Felix Salmon clearly indicates that the success AAPL has attained is mainly because of its premium positioning strategies. However, we feel that AAPL's success because of this prestige based perception can fade away in the near future. This is because of some recent strategies adopted by the company through its key strategic partner Wal-Mart (WMT). 

The world's leading retail giant, WMT, is selling iPhone 5, iPhone 4s, and iPad at significant discounts. Wal-Mart said it is selling the 16 GB iPhone 5 for $127 versus an original price of $189.97. The price is valid with a two years contract from wireless carriers such as Verizon (VZ), Sprint (S) and AT&T (T). WMT also reported that it is selling the third generation iPad for $399. While this certainly can boost sales for WMT, we feel that this strategy of selling on discounts can become one of the biggest threats to AAPL's premium positioning. 

As mentioned earlier, AAPL has long used the premium pricing strategy by refraining from discounts to enhance its prestige based image. However, this new promotion based on offering discounts can make customers feel that AAPL is no longer a brand for the prestige loving customers…. 

….Such deals become even more dangerous if moves from competitors like Samsung (SSNLF.PK) are taken into account. Samsung has introduced new high end products like the Note 2 to capture the prestige based market long held by AAPL. In such a situation, if AAPL loses its premium because of discount based promotions, other brands can get a chance to strengthen themselves in the perceptions of customers.

NOTE: OUR NEXT CLASS ON DRIVING ORGANIC GROWTH THROUGH INNOVATION  (a slight name change but the same course) IS BEING OFFERED MARCH 17 TO 20, 2013

About Scaling Edges: A Pragmatic Pathway to broad internal change

https://www.deloitte.com/view/en_US/us/About/Catalyst-for-Innovation/Center-for-the-Edge/scaling-edges/index.htm

I thought this was a very provocative approach to a major problem facing many corporations. The web site offers important dialog

The world as we know it is changing. Increased globalization and rapid advancements in technology, collectively referred to as The Big Shift, are profoundly altering our economy and creating new markets. In order to thrive in a post-Big Shift world, today’s companies should consider how they move from innovating at a product and service level (i.e. flooding the market with new, marginally improved products) to innovating at an institutional level. Though trans-formative change is required, it is admittedly far from a simple task. Pragmatic Pathways is a framework for executives seeking to embark on this difficult, but necessary transformation. This paper will introduce and break down the three prongs of the Pathways framework:
• First, by focusing on edges rather than the core of a company, change agents can better identify projects which align with Big Shift forces, and therefore, are most likely to achieve significant and sustainable returns.
• Second, by leveraging external resources rather than internal support to scale, these edges can circumvent the scrutiny and organizational resistance that change initiatives are typically met with.
• Finally, by accelerating learning rather than focusing solely on short-term outcomes, edges can become conduits of transformation, helping the companies of today achieve institutional innovation and tap into the opportunities of tomorrow.
By leveraging the Pragmatic Pathways framework, executives can maximize upside potential, minimize investment required, and reach maximum impact as quickly as possible for major change initiative

NOTE: OUR NEXT CLASS OF DRIVING ORGANIC GROWTH THROUGH INNOVATION ( a slight name change but the same course) IS BEING OFFERED MARCH 17 TO 20, 2013

Sourcing Growth
A review of Build, Borrow, or Buy, by Laurence Capron and Will Mitchell.
by Ken Favaro
Build, Borrow, or Buy: Solving the Growth Dilemma
by Laurence Capron and Will Mitchell
Harvard Business Review Press, 2012

http://www.strategy-business.com/article/00138?pg=all

We have found the major reason growth initiatives tend to whither and eventually fail is the inability of a business to resource them to win. This offers an interesting thought process to address this very important issue

In our current environment,  companies must field the right resources — the know-how, technology, processes, and people — in the right way if they are to have any chance of generating consistent, healthy levels of growth. 

The book is a highly structured examination of the three fundamental modes — or “pathways” — for obtaining the resources needed to grow. They are: developing the needed resources internally, or “building” them; contracting or partnering to obtain resources, or “borrowing” them; and acquiring, or “buying” them. According to the authors, companies should be adept at all three…. 

….What is most striking about Build, Borrow, or Buy is its finding that most companies use only one or two of the pathways. Perhaps that is because it is hard to use all three effectively and to smoothly switch between them. The authors offer a litany of obstacles, including internal conflicts of interest, organizational biases, entrenched habits, and past mistakes. Given these barriers to obtaining the right resources in the right way for any particular strategy, it’s surprising that any company can sustain growth beyond its initial market success… 

….Capron and Mitchell provide a simple decision tree for navigating the build, borrow, and buy choice. It requires answering four sequential questions:
1. Do you have internal resources that “are similar to those you need to develop and superior to those of competitors”? If so, build.
2. Can you easily trade for the necessary resources? If so, borrow via contract.
3. Do you need to collaborate closely with the resource supplier? If so, borrow via alliance.
4. Can you successfully acquire and integrate the resource supplier? If so, buy.

The Global Innovation 1000: Making Ideas Work
The early stages of innovation can be challenging. But Booz & Company’s annual study of R&D spending reveals that successful innovators bring clarity to a process often described as fuzzy and vague

http://www.strategy-business.com/article/00140?pg=all

Please, read the article in full. It is very insightful!!

"Those companies are the quiet stars of our annual Global Innovation 1000 study of R&D spending. As our study has consistently shown over the past eight years, there is no long-term correlation between the amount of money a company spends on its innovation efforts and its overall financial performance; instead, what matters is how companies use that money and other resources, as well as the quality of their talent, processes, and decision making. Those are the things that determine their ability to execute their innovation agendas. In 2011, corporate spending among the Global Innovation 1000 increased 9.6 percent over the previous year, slightly faster than the 9.3 percent gain in 2010. But because corporate revenues grew by a robust 13 percent last year — even faster than the year before — R&D intensity, or the percentage of sales that companies spend on innovation, actually declined to traditional pre-recession levels 

If you have a creative idea and it doesn't create value,” says Matthew Ganz, vice president and general manager of research and technology at the Boeing Company, “it’s not technology. It’s art. If you’re all about value creation with no creativity, the accountants are going to take over. You need to prime the pump with creative ideas, and then you need to have rigorous processes in place to turn those ideas into dollars."

What is your definition of entrepreneur?
Richard Branson

http://www.linkedin.com/today/post/article/20121030140136-204068115-what-is-your-definition-of-entrepreneur?goback=%2Eptf_204068115_true_*1_*1_*1_*1&trk=who_to_follow-b

Simple and elegant discussion! What does being an entrepreneur mean to you? Look forward to hearing your thoughts.

"What is your definition of entrepreneur? 

Speaking at an entrepreneur event in Egypt earlier this week with President Carter, he mentioned how President George W Bush had reportedly said "the French don't have a word for entrepreneur." 

A quick Google will tell you that the word entrepreneur is a loanword from the French verb "entreprende", which means "to undertake". That sounds quite fitting, as entrepreneurs are always undertaking new challenges and coming up with new ideas.Joseph Schumpeter's definition is pretty good. "Entrepreneurs are innovators who use a process of shattering the status quo of the existing products and services, to set up new products, new services." Peter Drucker was onto something too when he made the following definition in 1964: " An entrepreneur searches for change, responds to it and exploits opportunities. Innovation is a specific tool of an entrepreneur hence an effective entrepreneur converts a source into a resource." 

But to me, being an entrepreneur simply means being someone who wants to make a difference to other people's lives. 

When making a start in business with Student Magazine, I didn't even know what an entrepreneur was. All that interested me was starting a publication to protest against the Vietnam War - and having some fun along the way. If that meant becoming an entrepreneur, then that was fine too. 

Over the years the nature of entrepreneurship has changed as new businesses have developed and the world has evolved. New innovative business people will keep coming along and changing the game all over again. Was inspired at a recent B Team gathering of young business leaders who have successfully built businesses that prioritize people, planet and profits. They are well on their way to building and spreading better business practices. Here at Virgin, we intend to keep changing the game for good too"

5 Ways to Get People to Actually Listen to You

http://www.inc.com/marla-tabaka/5-ways-to-get-people-to-listen.html

Great stuff!!!!

You may be a fact- and logic-driven leader, but others don't think like you do. Learn to get your point across through emotional connection.

Have you ever stood before an audience, uncertain whether you are truly connecting with them? Or, have you spoken to an employee who appears to be getting the message--but whose actions later tell another story?... 

…"Humans are wired to connect with each other," says Garcia. "And we connect with one another by feeling, not thinking." 

Why? Because of the structures in the brain that allow people to experience someone else's plight as if it were their own. These structures, called mirror neurons, are also referred to as empathy neurons. 

"Emotion is now increasingly recognized as the key to moving hearts and minds," says Garcia. "All too often leaders assume that facts matter," he says. "That if only we let the facts speak for themselves, people will understand and agree with us."  

Here are five strategies that can help you stop reciting facts--and start making a true connection.1. Keep your mouth shut--for a couple of moments: Don't say anything substantive until you have an audience connection….2. Get your audience engaged: Get the eyeballs looking up before you say anything…. 3. Grab their attention to make it memorable: People remember the very first substantive that you say. Once you have their attention, jump right in to the most important thing you have to say…. 4. Use verbal cues: Use attention-provoking signals when you move from one part of the speech to the next. For instance, you might verbally number your key points or use other verbal signals like "Let's move on" or "My next topic is..."  Always give the audience verbal cues to look up at you.5. Recap what matters: Take all of the substantive points from your talk and group them all together at the very end of the presentation….

"In summary," your audience must be able to feel and experience your communications, or you simply won't have the impact that you set out to achieve.

This is Your Brain on Organizational Change
by Walter McFarland  |  11:00 AM October 16, 2012

http://blogs.hbr.org/cs/2012/10/this_is_your_brain_on_organizational_change.html?utm_source=dlvr.it&utm_medium=linkedin

Very interesting on how to drive change. It is a beginning of a broad new approach. I urge you to read the posting and followup with references in the article.

Why can't we change our organizations? Year after year, the list of companies that no longer exist because they were unable to evolve continues to grow. ….

…This is bad news for 21st century organizations. Increasing competition, globalization, technological changes, financial upheaval, political uncertainty, changing workforce demographics, and other factors are forcing organizations to change faster and differently than ever before. Worse, there is little reason to believe the field of organizational change can be of much help. Not only is the track record of change efforts dismal — it may not be improving. Experts have reported similar results for organizational change efforts since the 1980s. Clearly, new insight is needed into how organizations can better adapt to their environments and change.
Although myriad factors are cited, the inability to engage people is the factor noted longest and most often…

…One source of insight may be the field of neuroscience…..

….Keep in mind that there is no accepted general theory of change but rather traditional "best practice" clusters around a series of activities that have contributed to the continuing poor performance of change initiatives. These include:
• Perpetual underpreparation: change is always dreaded and a surprise to employees
• A perceived need to "create a burning platform": meant to motive employees via expressed or implied threat
• Leading change from the top of the organization down: only a few individuals are actively involved in the change and either under communicate or miscommunicate with others 

Most of these ideas have implications in the field of neuroscience. For instance, the need to create a burning platform atmosphere at work can trigger a limbic response in employees. Instead of motivating people to change in a positive way, a burning platform makes them uncomfortable — thrusting change upon them. In another example, driving change from the top can trigger fear within employees because it deprives them of key needs that help them better navigate the social world in the workplace. These needs include status, certainty, autonomy, relatedness, and fairness — the foundation of the SCARF model. If out of synch, these five needs have been shown in many neuroscience studies to activate the same threat circuitry activated by physical threats, like pain.

Keeping all this in mind, let us propose one idea we haven't explored yet. We strongly believe that we need to think about change differently. To begin, let's think about people differently — not as commodities to be hurried and pushed around but as sources of real and powerful competitive advantage. A second step is to see change differently — not just as a perpetual crisis, but as an opportunity to be better prepared and equipped to manage organizational shakeups as a normal part of doing business, and as an opportunity to personally develop and grow.

What Leaders Can Learn from Wild Animal Trainers
Daniel Goleman

http://www.linkedin.com/today/post/article/20121017183242-117825785-what-leaders-can-learn-from-wild-animal-trainers

We often suggest looking at experts in non-related fields to gain insights into best practices. I thought this was a very interesting example

A command and control leadership style may have its time and place. But at the negotiation table? You may find concession-making skills will work more in your favor. When I last spoke with negotiation expert George Kohlrieser, he eloquently compared the delicate dance between an animal trainer and animal to managing concessions during negotiations. 

Concession making can be material or it can be in the relationship. If we're in a heated debate in negotiation and you suddenly answer my question or you ask me a question, that's a concession. I have to take time to reward that concession. It’s almost Pavlovian.
How do I train the person I'm talking with to respond to the law of reciprocity, being able to make concessions and be able to recognize when they're given one? It may be a little concession, just answering questions, or by being cooperative. 

My friend Alfredo is a wild animal trainer; he's third generation. When he goes into that cage and cracks that whip, he wants to get their attention. Then the negotiation starts. He's the boss. He's in charge but he doesn't dominate. It’s not command and control.
When he goes forward, the lion steps back and when the lion stops, Alfredo has to stop and step back. And then the lion relaxes and comes forward. And if Alfredo then moves forward one step, two steps, the lion steps back the same. 

He can take those lions anywhere in that cage through the law of reciprocity; it’s a dance. 

It’s all about the bonding. How you respect the animal? He has this whole philosophy of knowing the animal’s names, knowing their mood. Knowing what is going on in the group of lions that are there, or whatever wild animals he's training.
But if he steps forward and the lion stops -- he doesn't make a concession -- and Alfredo moves again, he's likely to be attacked. It’s an act of aggression. It is what's called iatrogenic (describes a symptom or illness brought on unintentionally by something that a doctor does or says)  violence. This very often happens with leaders. They push and they push. They don't recognize concessions, and they don't use this dance of give and take, the dance of bonding. The dance of flow.

Negotiation is a fun thing. It should be an enjoyable and it should be an exchange. It doesn't have to be where you're trying to destroy and get everything. It’s the ability to look for mutual gain.

The No. 1 Enemy of Creativity: Fear of Failure
by Peter Sims  |   9:00 AM October 5, 2012

http://blogs.hbr.org/cs/2012/10/the_no_1_enemy_of_creativity_f.html

This is GREAT and sums up what must change in the corporate world to sustain innovation driven growth!!

For me, the most important insight from design thinking was that you have to make sure you've defined the right problem before you try to solve it. So, you act like an anthropologist to understand human needs and problems before jumping to solutions. Most of us in business, if we need to discover how to do something new, use PowerPoint or Excel spreadsheets to rationalize our approach. This is what I call "the illusion of rationality." Whether motivated by a lack of insight arrogance, or stupidity, the illusion of rationality is a waste of time and resources — yet one that keeps a lot of people employed in management consulting, as I learned first hand. 

Instead, if you don't have the data, you have to create the data. That does not mean plugging random numbers into your spreadsheet. It means generating real insight, from nothing. Designers and bootstrapped entrepreneurs I've worked with use rapid low cost experiments to create data. I refer to these "affordable losses" in the interest of learning, creativity, and discovery as "little bets." 

This seems like common sense; so why is it so hard? Three words: fear of failure.
If you're an MBA-trained manager or executive, the odds are you were never, at any point in your educational or professional career given permission to fail, even on a "little bet." Your parents wanted you to achieve, achieve, achieve — in sports, the classroom, and scouting or work. Your teachers penalized you for having the "wrong" answers, or knocked your grades down if you were imperfect, according to however your adult figures defined perfection. Similarly, modern industrial management is still predicated largely on mitigating risks and preventing errors, not innovating or inventing. 

But entrepreneurs and designers think of failure the way most people think of learning. 

Darden Professor Saras Sarasvathy has shown through her research about how expert entrepreneurs make decisions, they must make lots of mistakes to discover new approaches, opportunities, or business models

Rethinking Sleep
By DAVID K. RANDALL
Published: September 22, 2012

http://www.nytimes.com/2012/09/23/opinion/sunday/rethinking-sleep.html

This fascinating article is worth reading as an individual and parent. Traditional myths are challenged. It does also have an impact on the business world and your company on its impact on productivity.

Gradual acceptance of the notion that sequential sleep hours are not essential for high-level job performance has led to increased workplace tolerance for napping and other alternate daily schedules…
….researchers at the City University of New York found that short naps helped subjects identify more literal and figurative connections between objects than those who simply stayed awake….
…Robert Stickgold, a professor of psychiatry at Harvard Medical School, proposes that sleep — including short naps that include deep sleep — offers our brains the chance to decide what new information to keep and what to toss…. 

....Employees at Google, for instance, are offered the chance to nap at work because the company believes it may increase productivity. Thomas Balkin, the head of the department of behavioral biology at the Walter Reed Army Institute of Research, imagines a near future in which military commanders can know how much total sleep an individual soldier has had over a 24-hour time frame thanks to wristwatch-size sleep monitors. After consulting computer models that predict how decision-making abilities decline with fatigue, a soldier could then be ordered to take a nap to prepare for an approaching mission. The cognitive benefit of a nap could last anywhere from one to three hours, depending on what stage of sleep a person reaches before awakening.
Most of us are not fortunate enough to work in office environments that permit, much less smile upon, on-the-job napping. But there are increasing suggestions that greater tolerance for altered sleep schedules might be in our collective interest. Researchers have observed, for example, that long-haul pilots who sleep during flights perform better when maneuvering aircraft through the critical stages of descent and landing.

Has Apple Peaked?
By JOE NOCERA
Published: September 21, 2012
http://www.nytimes.com/2012/09/22/opinion/nocera-has-apple-peaked.html

The classic challenge of any company is to maintain healthy growth AFTER business success. The mindset often changes from aggressive market actions to protecting what you have. You must build the awareness of this phenomenon into your strategic thinking and corporate culture to avoid this insidious trap.

If Steve Jobs were still alive, would the new map application on the iPhone 5 be such an unmitigated disaster? Interesting question, isn’t it?.... 

…..No doubt, the iPhone 5, which went  on sale on Friday, will be another hit. Apple’s halo remains powerful. But there is nothing about it that is especially innovative. Plus, of course, it has that nasty glitch. In rolling out a new operating system for the iPhone 5, Apple replaced Google’s map application — the mapping gold standard — with its own, vastly inferior, application, which has infuriated its customers. With maps now such a critical feature of smartphones, it seems to be an inexplicable mistake… 

…..But there is also a less obvious  (Job’s death)— yet possibly more important — reason that Apple’s best days may soon be behind it. When Jobs returned to the company in 1997, after 12 years in exile, Apple was in deep trouble. It could afford to take big risks and, indeed, to search for a new business model, because it had nothing to lose.
Fifteen years later, Apple has a hugely profitable business model to defend — and a lot to lose. Companies change when that happens. “The business model becomes a gilded cage, and management won’t do anything to challenge it, while doing everything they can to protect it,” 

It happens in every industry, but it is especially easy to see in technology because things move so quickly. It was less than 15 years ago that Microsoft appeared to be invincible. But once its Windows operating system and Office applications became giant moneymakers, Microsoft’s entire strategy became geared toward protecting its two cash cows. It ruthlessly used its Windows platform to promote its own products at the expense of rivals. (The Microsoft antitrust trial took dead aim at that behavior.) AlthoughMicrosoft still makes billions, its new products are mainly “me-too” versions of innovations made by other companies….. 

….And you can see it in the decision to replace Google’s map application. Once an ally,Google is now a rival, and the thought of allowing Google to promote its maps on Apple’s platform had become anathema. More to the point, Apple wants to force its customers to use its own products, even when they are not as good as those from rivals. Once companies start acting that way, they become vulnerable to newer, nimbler competitors that are trying to create something new, instead of milking the old. Just ask BlackBerry, which once reigned supreme in the smartphone market but is now roadkill for Apple and Samsung.

This Diagram Explains Facebook's Next $10 Billion Business

http://www.businessinsider.com/a-plugged-in-ad-tech-source-drew-this-diagram-to-explain-facebooks-next-10-billion-business-2012-7

This is a great example of an idea that uses the true base strength of your business or company—in this case with Facebook it is their enormous data on us—to expand your business by deploying different market access. The idea is summarized in this 2X2:

An explainer: Right now, Facebook only sells ads on Facebook.com. These ads can only be targeted to users based on data they gave Facebook about themselves – their "likes" and their profile information.  That's the top left quadrant. 

In the bottom left quadrant, our source wrote "FBX," which stands for Facebook Ad Exchange.  Through the Facebook ad exchange, which is in beta right now, advertisers will be able to buy ads on Facebook.com and target them using both the same Facebook data described above AND data about users provided by third-party sources.
Right now, Facebook says it will build this exchange, but our source thinks Facebook will eventually acquire New York-based ad tech platform AppNexus and plug it in, instead. 

Our source says Facebook's next $10 billion business (which would be its first) takes place in the top-right quadrant. In this business, Facebook will sell ad inventory on third-party sites and target it using its own data AND third-party data.

A Tablet Straining to Do It All
By DAVID POGUE
Published: August 15, 2012

http://www.nytimes.com/2012/08/16/technology/personaltech/samsungs-rival-for-the-ipad-loads-on-the-features.html?_r=1

In the heated battle for supremacy between two giants—Apple and Samsung— in the digital electronics market,  the product and IP battles are fierce. We discussed the former in an earlier posting (http://marketdrivengrowth.blogspot.com/2012/08/apple-case-muddies-future-of.html). Now, Samsung is coming out with a new product to compete with the iPad.  The approach of loading new products with features is a natural reaction to compete with a winner. However, one must aways first define the key criteria in the target customers’ buying decision and then ensure the product attributes separate you from competition against these criteria. Adding features that are superfluous add cost and often complicates the product for the intended user.

The hot news in Silicon Valley legal circles these days is Apple’s titanic lawsuit against Samsung. Apple maintains that Samsung pilfered some of its iPhone and iPad designs when creating the Samsung Galaxy series of phones and tablets.
It’s a big, big deal; billions of dollars are at stake. And it’s already having an effect: these days, Samsung is being careful to avoid unvarnished Apple mimicry....
....Its message to the tablet-buying world is this: “O.K., the iPad is great for consuming stuff — reading books, watching videos, surfing the Web. But our new Galaxy tablet is also good for creating stuff, for one simple reason: it comes with a pen. See how different we are from Apple?”....
....But over all, the Note feels like a laundry-list tablet. It has a higher feature count than any other tablet, but those features are stuffed into a machine with less coherence than any other tablet.
Clearly, Samsung had no Steve Jobs on hand to veto anything. Features that don’t work well are mixed in with the winners; features you’ll never use are jammed in with the useful ones....
...But the Galaxy Note 10.1 demonstrates that superior specs, more impressive hardware and a much longer list of features don’t necessarily add up to a superior product. Sometimes restraint is just as important as exuberance.

Blank Checks: Unleashing the Potential of People and Businesses
How an unusual management technique inspires business teams to envision — and achieve — breakthrough results.
by Sanjay Khosla and Mohanbir Sawhney

http://www.strategy-business.com/article/00124?gko=4f2f2&cid=20120807enews

This is a fascinating approach to enable innovation and growth. We continually find that one of the major barriers to success for a project is the inability of the business to resource it to win. Here is an approach that does that. I strongly suggest reading the article!!!

The secret of (many Kraft businesses)  turnaround was to free the team from resource constraints that could limit their imagination, inspiring them to achieve unprecedented results that would create a virtuous cycle of growth. This, of course, ran counter to one of the gospel truths in management that people need to live within their means. Managers have always been taught that they have to work with the limited resources available. Unfortunately, resource constraints limit more than plans. They also limit the creative potential of people. 

What if resources were not a constraint? If managers were free to dream and act big without worrying about busting their budgets, they would be limited not by resources, but by their imagination. We believe that business leaders can unleash tremendous untapped potential by unshackling their people and their businesses from resource constraints (while still, of course, holding them accountable for results). The key insight is that business leaders, instead of defining budgets and resources, should focus on defining ambitious goals, while leaving it to their managers and their teams to ask for whatever resources they need to achieve these goals. When teams decide their own budgets, they act as owners and are inspired to achieve the impossible. At Kraft Foods (where coauthor Sanjay Khosla is president of the developing markets group), we call this idea a “blank check” initiative....

How Blank Checks Work 

1. Picking the best bets. The first step in a blank check initiative is for the business leaders to choose the business domains that should be targeted for growth.
2. Selecting the team. Blank checks are ultimately bets on people, rooted in the faith that they have the potential, the passion, and the perseverance to transform their businesses. 3. Defining goals and plans. Once the business leaders have selected a business domain and chosen the team leaders who will receive a blank check, they need to define the targets they expect the teams to achieve. 4. Kicking off the initiative. Once the business plan has been agreed upon, business leaders need to formally “issue the check” by approving the amount the team has asked for and transferring it into an account that can be accessed by the team leaders.
5. Monitoring results. As the blank check initiative begins, it is important to set milestones for key deliverables, and then to monitor them closely as the initiative proceeds

Apple Case Muddies the Future of Innovations
By NICK WINGFIELD
Published: August 26, 2012

http://www.nytimes.com/2012/08/27/technology/apple-samsung-case-muddies-future-of-innovation.html?_r=1

The recent patent decision favoring Apple’s patent position vs. Samsung raised significant discussion on whether current patent laws stimulate innovation or. limits it. The following article touches on both sides of the argument. My personal belief is that the complaint of the industry against Apple results more from Apple’s incredible innovation from technology to business to patents that resulted in a historically strong market position. They changed the market and protected every aspect of the change. Samsung, the court said, tried to copy their system vs. innovating around it. I would love to hear your thoughts.

Apple’s victory on Friday in a patent lawsuit against Samsung could, if upheld, give its rivals a kick in the pants to create more original products.

Whether consumers respond by buying the more distinctive devices is another question entirely.
Consider the case of Windows Phone, Microsoft’s operating system for smartphones, which looks almost nothing like the Apple software for iPhones and iPads. Reviewers have praised Windows Phone for its fresh, distinctive design, with bold typography and a tile system for using phone functions. 

But the phones, including the Lumia 900 from Nokia, have not sold well.
Microsoft’s product has not gained traction for a number of possible reasons, among them the big lead its rivals had in the marketplace and the relatively weak distribution of its main partner, Nokia….. 

… People across the technology industry have expressed concerns about the future of innovation after a nine-person jury ruled in Apple’s favor last week in Federal District Court in San Jose, Calif. The jury said Samsung smartphone and tablet products violated a series of Apple patents protecting a number of designs and functions — including the rectangular shape and rounded edges of the iPhone and the pinch-to-zoom gesture that magnifies an image on Apple devices…. 

… For Apple and executives at other companies in Silicon Valley that emphasize distinctive design, the verdict was a welcome validation of the effort they put into making and protecting technologies that create original user experiences. “It’s good for intellectual property, and good for firms that invest in design,” said Chip Lutton Jr., vice president and general counsel of Nest, maker of a smart thermostat…. 

… But he said the decision could also create a “minefield” for product designers, in which they are constantly second-guessing whether functions will step on someone else’s patents. Mr. Flora is concerned, for example, that Apple’s patent on the pinch-to-zoom function covers a gesture that now is so common that touch screen products without it would be like cars with square or triangular steering wheels…. 

… But Mr. Kindel also was concerned about the possibility of the mobile device market becoming increasingly complex. Software developers already have a complicated mix of mobile devices to make apps for, and the pressure on manufacturers to design devices differently could make it even harder. Consumers could be confused over which phones have which apps and functions. It may grow harder to persuade phone users to switch to another system, another roadblock to competition.

What is your innovation selection strategy?
By Paul Sloane

http://www.innovationtools.com/Articles/EnterpriseDetails.asp?a=782

In our MDG framework, we strongly advise clients to develop a set of Decision Criteria that aligns the decision team on what is important and telegraphs to whole company what will be the driving force for resourcing new initiatives. The Decision Criteria sets the conversation across the company. I thought the flowing is an interesting mix of criteria:

1. Does it meet our corporate vision and business strategy? This is a good generic criterion but it can be too broad to give you much help in choosing a specific product to invest in.
2. Can we master the technology? If there is a new technology or system that you can harness then you can look for a technology-led innovation
3. Does it meet a customer need? This is probably the best known and most effective way to select new product developments
4. Can we make money quickly? Also known as the low-hanging fruit approach. We look at adjacent products or markets where we believe that we can make money by developing or acquiring a product. This tends to be incremental and tactical rather than strategic and is sometimes harder to accomplish than it first appears
5. Does it take us into the Blue Ocean? You draw value curves for your offering and those of your competitors.  Often the curves are remarkably similar. Then you ask whether you can differentiate your proposition by bringing out a product that offers dramatically more or less in some of the feature areas
6. Does it go where the brand leads?  A brand is a promise. So ask how can your brand promise can be developed and fulfilled

The Weakness of Positive Thinking
When an upbeat management style becomes excessive, it wards off reality and asks for trouble.
Author: David Collinson (Lancaster University Management School)

http://www.strategy-business.com/article/re00199?pg=all

This builds on a thesis in our Market Driven Growth process where the underlying psychological dynamics of group interactions –Conformation Bias and Cognitive Dissonance --can lead to the phenomenon of “Escalation of Commitment” where negative data is ignored and the team just pushes forward with their original hypothesis often with disastrous results. . Overzealous “Prozac Leadership” just intensifies these phenomenon.

There is such a thing as too much positive leadership, according to this paper, which finds that a blind allegiance to organizational optimism lies at the heart of many of the financial miscalculations that drove the Great Recession. Countering the widely held view that positive thinking by leaders invariably challenges and inspires subordinates, the author coins the term “Prozac leadership” to describe how optimism tends to resemble a well-intended but addictive drug: It promotes artificial happiness and discourages critical reflection, leaving companies ill equipped to deal with setbacks. 

Drawing on an analysis of nearly 200 studies of leadership, positive thinking, and organizational dynamics, the author acknowledges that the ability of supervisors to be persuasive is a key skill, and that optimism is one of the most effective communication methods. In fact, leaders’ positive narratives and vision can be transformational, improving innovation and teamwork, especially when employees are part of the strategic dialogue and trust their bosses. 

But several recent studies have critiqued the positive thinking movement, highlighting the negative personal and organizational effects that can result from “excessive optimism,” “irrational exuberance,” “gambling against the odds,” and the “tyranny of positive thinking.” In short, Prozac leaders can wind up believing their own narrative that everything is going well. As a consequence, they ask fewer and fewer questions and become deaf to feedback that is “off message,” leaving them, and their companies, dangerously insulated from economic and social realities.

Brand Transformation on the Internet
To Aaron Shapiro, CEO of the digital agency Huge, online marketing means creating immersive environments where people go to get their problems solved.

 http://www.strategy-business.com/article/00117?gko=96ae3&cid=TL20120719

This is a fascinating interview that I strongly suggest you read in full. Whether you are a B to C or B to B company, the importance of your digital face to your customers is growing exponentially.

What kind of online marketing strategy makes the most of digital media?..... companies don’t thrive by selling products or services anymore. They thrive by creating immersive experiences where people go to get their problems solved or their aspirations realized…
… If you think about the history of brands since World War II, most of them were fundamentally built through storytelling. A 30-second ad would blast out a narrative for a passive audience. But on the Web, consumers are not a captive audience, so marketers need a very different approach.
People are interested in utility. When users go online (B to C or B to B), in particular, they are very task-oriented. …….To be sure, they want to feel good about what they buy, and they’re still looking for a connection. But they will only respond to a marketing message they think is relevant. They’re not a passive audience that will buy something after seeing a story….
… Users are people who interact with your company in the digital space — on your website, by e-mail, or on Facebook or Twitter. Customers are a subset of them. You could be a user of Amazon and never buy a product; you would just go to its site to read reviews, apply for a job, or publish a book. When companies focus on fulfilling the needs of this broader group of users, they are much more successful than if they just serve customers….
… S+B question: For a typical consumer packaged goods company, is this true? Don’t the majority of customers go to the store, pick up a bottle of cola or bleach, and never become website users at all?
SHAPIRO: There is certainly a large segment of that type of customer; TV is not going away. But the percentage is declining over time. In 2011, according to Forrester Research, 50 percent of all consumer sales involved an Internet experience. The big change is the number of people who use digital as their primary point of reference for making decisions and learning about brands. They research a product online before they buy it, or buy it online directly. There is no such thing as an offline business anymore.

Rethinking the Product Launch
Your customer value proposition is the key to organic growth — for a fast-food chain like Wendy’s, or for any other consumer business.
by Max Cuellar, Leslie Moeller, and Heberto Molina

http://www.strategy-business.com/article/12206?pg=all

Some interesting approaches for ideation. This example was for Wendy’s in the Quick Service Industry but they would work for all businesses

If you could consistently drive organic growth, how much would that be worth? Quite a lot, especially in mature industries where the customer base isn’t growing much and people are habitually loyal to their favorite brands. For many companies interested in growing their markets by launching new products or services, having a framework for organic growth based on a better customer value proposition could make all the difference…. 

….Many companies try to “bottle lightning” when launching new products or services. Either they base their decisions on their own executives’ hunches or they create a disciplined process that siphons the creativity and speed out of the organization. But neither approach leads to sustainable success. Those companies that beat the odds and succeed with multiple new-product launches, time after time, tend to apply a certain type of discipline. This discipline involves three separate practices, combining creative inspiration and analysis. Each of these three practices is both a “thought starter,” raising new concepts about directions for growth, and an “idea filter,” helping a team decide which products and services to launch and how to position them. The three practices are: 

1. Market-back analysis: an approach to gathering consumer insights that pinpoints the value consumers assign to different parts of a product or service, and produces actionable intelligence as a result. Wendy’s, for example, would have to look at its potential customers, the attributes they value in quick-service restaurants, and the needs that are still unmet. 

2. Darwinian competitive review: a close observation of the customer value propositions that have been shown to work across multiple markets, and the competitors who have already established themselves in those spaces. Within the fast-food restaurant landscape, Wendy’s would consider the track record of mainstream and niche contenders around the globe. It would also look for non-QSR models and innovations that might be adjusted for its business. 

3. Capabilities-forward assessment: a dispassionate look at what the company already does well, and which new value propositions its capabilities system could support. If your company has a notable form of prowess, it behooves you to understand what other products or services that capability might help deliver. For instance, if your kitchen setup excels at producing made-to-order hamburgers, might that flexibility also be extended to new entrees, side dishes, beverages, and desserts?

Parsing the growth advantage of emerging-market companies
Surprisingly little of their edge is attributable to starting from a smaller revenue base. They also seem to invest more, allocate resources more fluidly, and spot fast-growing segments.
MAY 2012 • Yuval Atsmon, Michael Kloss, and Sven Smit

https://www.mckinseyquarterly.com/Strategy/Growth/Parsing_the_growth_advantage_of_emerging-market_companies_2969

Some real “food for thought”. Read the full article.

Leaders of multinational companies are by now well aware of the growth potential that emerging-market consumers represent, an opportunity that we estimate could exceed $20 trillion annually by the end of this decade… 

… One striking finding was that companies headquartered in emerging markets grew roughly twice as fast as those domiciled in developed economies—and two and a half times as fast when both were competing in emerging markets that represented “neutral” turf, where neither company was headquartered…. 

…. It is impossible to definitively disaggregate the sources of the remaining growth differential. However, the following three factors appear to be materially different for these two classes of companies: 

Higher reinvestment rates. Emerging-market companies paid dividends at a lower rate than developed-market companies, returning only 39 percent of earnings to shareholders, while developed-market companies returned close to 80 percent…. 

… Agile asset reallocation. Additionally, we found that on average, emerging-market companies have been reallocating capital toward new business opportunities more dynamically than those headquartered in developed economies… 

….. Growth-oriented business models. Emerging-market companies generally serve the needs of fast-growing emerging middle classes around the world with lower-cost products. Developed-economy companies tend to rely more on brand recognition while targeting higher-margin segments, which are relatively smaller and thus less likely to move the needle on the companies’ overall growth rates. 

Measuring marketing’s worth.

MAY 2012 • David Court, Jonathan Gordon, and Jesko Perrey
Source: Marketing & Sales Practice


https://www.mckinseyquarterly.com/Marketing/Digital_Marketing/Measuring_marketings_worth_297



I strongly recommend you read the full summary!!

You can’t spend wisely unless you understand marketing’s full impact. Here are five questions executives should ask to help maximize the bang for their bucks 

1. What exactly influences our consumers today?
The digital revolution and the explosion of social media have profoundly changed what influences consumers as they undertake their purchasing decision journey.2 When considering products, they read online reviews and compare prices. 

2. How well informed (really) is our marketing judgment?
Marketing has always combined facts and judgment: after all, there’s no analytic approach that can single-handedly tell you when you have a great piece of creative work. A decade ago, when traditional advertising was all that mattered, most senior marketers justifiably had great confidence in their judgment on spending and messaging. Today, many privately confess to being less certain 

3. How are we managing financial risk in our marketing plans?
Successful communication requires hitting the right audience with the right message at the right time: a small, moving target. With traditional media, marketers have mitigated the risk of failure through years of trial and error about what makes great advertising. That’s not the case with today’s new media.

4. How are we coping with added complexity in the marketing organization?
As the external marketing environment becomes more complex, so must the internal environment. Marketers historically had only a handful of communication vehicles; now they have dozens of them, and the number is growing rapidly. 

5. What metrics should we track given our (imperfect) options?
In an ideal world, the financial returns and the ability of all forms of communication to influence consumers would be precisely calculated, and deciding the marketing mix would be simple. In reality, there are multiple, and usually imperfect, ways to measure most established forms of marketing. Nothing approaches a definitive metric for social media and other emerging communication channels, and no single metric can evaluate the effectiveness of all spending. 

Leading Through Connections

http://public.dhe.ibm.com/common/ssi/ecm/en/gbe03486usen/GBE03486USEN.PDF

This is a brief summary of an IBM Global CEO study (1700 CEO’s across 18 industries and 64 countries). Go to ibm.com/ceostudy2012 for the full study.. it is GREAT!!!

“This is now a continuous feedback kind of world, and we need the organizational nimbleness to respond.” (CEO, Financial Markets, United States)

For some time, businesses have been refining and optimizing their networks of suppliers and partners. They’re streamlining supply chains and creating massive back-office efficiencies. But something just as meaningful has been happening in the marketplace—the sudden convergence of the digital, social and mobile spheres—connecting customers, employees and partners in new ways to organizations and to each other. These changes put pressure on the front office to digitize and adapt but also create opportunities for the organization to innovate and lead. 

“How do you unleash the innovative power of the people who deal with your customers every day?” (CEO, Insurance, United Kingdom)CEO’s are creating more open and collaborative cultures—encouraging employees to connect, learn from each other and thrive in a world of rapid change. The emphasis on openness is even higher among outperforming organizations—and they have the change-management capabilities to make it happen. As CEOs open up their organizations, they are not inviting chaos. The need for control remains, but it is evolving into a new form—one better suited to the complexity and pace of business today. 

Of course we need better information and insight, but what we need most is the capability to act on it.” (Unit Head, Government, Hong Kong SAR)As a group, CEOs are investing more in customer insights than any other functional area—far above operations, competitive intelligence, financial analysis and even risk management. They are seeking a better understanding of individual customer needs and improved responsiveness. Although face-to-face will remain the most prevalent form of customer interaction, CEOs expect a step-change in the use of social media. Given the need for deep customer insight, outperformers have a distinct advantage. They are far more adept at converting data into insights, and insights into action. 

In our industry, the biggest risk we face is not regulatory mandates, as many think. It’s industry disruption…” (CEO, Retail, United States)The pressure to innovate is not subsiding, and organizations are teaming to meet the challenge. Compared to their less successful peers, outperformers are partnering for innovation more aggressively. But they are also tackling more challenging and disruptive types of innovation. Instead of settling for
simply creating new products or implementing more efficient operations, they’re more likely to be moving into other industries or even inventing entirely new ones.

 “We tend to see everyone as a competitor, but we need to see them as partners…this is a cultural shift; it’s hard to change.”(CEO, Banking, Vietnam)
With nearly 70 percent of CEOs aiming to partner extensively, what will make this a differentiating strategy?

 

With Tablet, Microsoft Takes Aim at Hardware Missteps
By NICK WINGFIELD
SEATTLE — Around the time the iPad came out more than two years ago, Microsoft executives got an eye-opening jolt about how far Apple would go to gain an edge for its products.

http://www.nytimes.com/2012/06/25/technology/companies/with-tablet-microsoft-takes-aim-at-hardware-missteps.html

We hear a lot about the power of the connected world re true partnerships of “eco systems” to deliver the best and most innovative offerings to customers. HOWEVER, recent business model success strongly suggest that in building a strong relationship between a supplier and its customers, particularly if aspects of a strong brand are involved, someone has to be the true owner to CONTROL all aspects of the offering. The classic struggle between Microsoft and Apple business models is a clear example:

Microsoft learned through industry sources that Apple had bought large quantities of high-quality aluminum from a mine in Australia to create the distinctive cases for the iPad, according to a former Microsoft employee involved in the discussions, who did not wish to be named talking about internal matters. 

The executives were stunned by how deeply Apple was willing to reach into the global supply chain to secure innovative materials for the iPad and, once it did, to corner the market on those supplies. Microsoft’s executives worried that Windows PC makers were not making the same kinds of bets, the former employee said. 

The incident was one of many over the last several years that gradually pushed Microsoft to create its own tablet computer, unveiled last week. The move was the most striking evidence yet of the friction between Microsoft and its partners on the hardware side of the PC business. It is the first time in Microsoft’s almost four-decade history that the company will sell its own computer hardware, competing directly with the PC makers that are the biggest customers for the Windows operating system.... 

...“ You've got this sclerotic partnership structure where the partners don’t have any oxygen to be innovative,” said Lou Mazzucchelli, an entrepreneur in residence for a venture capital fund backed by the state of Rhode Island and a former technology analyst. “I believe Microsoft was painted into a corner. If they’ve didn’t move soon, Apple would have so much of a lead, it would be almost impossible to catch them.”.... 

....Microsoft worked with other hardware partners to devise products that would be competitive with the iPad, but it ran into disagreements over designs and prices. “Faith had been lost” at Microsoft in its hardware partners, including by Steven Sinofsky, the powerful president of Microsoft’s Windows division, according to the former Microsoft executive.

Three Myths about What Customers Want
9:10 AM Wednesday May 23, 2012
by Karen Freeman, Patrick Spenner and Anna Bird

http://blogs.hbr.org/cs/2012/05/three_myths_about_customer_eng.html#.T7967WsEYCk.mailto

Very interesting! Although this article focuses on business to consumer dynamics, I think it can be a critical learning for business-to-business interactions.

Most marketers think that the best way to hold onto customers is through "engagement" — interacting as much as possible with them and building relationships. It turns out that that's rarely true. In a study involving more than 7000 consumers, we found that companies often have dangerously wrong ideas about how best to engage with customers. 

Myth #1: Most consumers want to have relationships with your brand.
Actually, they don't. Only 23% of the consumers in our study said they have a relationship with a brand. In the typical consumer's view of the world, relationships are reserved for friends, family and colleagues. 

Myth #2: Interactions build relationships.
No, they don't. Shared values build relationships. A shared value is a belief that both the brand and consumer have about a brand's higher purpose or broad philosophy

Myth #3: The more interaction the better.
Wrong. There's no correlation between interactions with a customer and the likelihood that he or she will be "sticky" (go through with an intended purchase, purchase again, and recommend) 

How should you market differently? 

Instead of relentlessly demanding more consumer attention, treat the attention you do win as precious. Then ask yourself a simple question of any new marketing efforts: is this campaign/email/microsite/print ad/etc. going to reduce the cognitive overload consumers feel as they shop my category? If the answer is "no" or "not sure," go back to the drawing board. When it comes to interacting with your customers, more isn't better.

It's Time to Rethink Continuous Improvement
RON ASHKENAS
1:25 PM Tuesday May 8, 2012

http://blogs.hbr.org/ashkenas/2012/05/its-time-to-rethink-continuous.html#.T797yJDEOGA.mailto

This has been an issue with me for years and is critical to having a successful growth company…companies must be ambidextrous and chose the right process for a given task. Go to our blog site (http://marketdrivengrowth.blogspot.com/)and look under the articles titled Process: Being Ambidextrous on the left hand column. This IS CRITICAL!!!!!!!!!!!!

Six Sigma, Kaizen, Lean, and other variations on continuous improvement can be hazardous to your organization's health. While it may be heresy to say this, recent evidence from Japan and elsewhere suggests that it's time to question these methods…..

Admittedly, continuous improvement once powered Japan's economy….…But what's happened in Japan? In the past year Japan's major electronics firms have lost an aggregated $21 billion and have been routinely displaced by competitors from China, South Korea, and elsewhere. As Fujio Ando, senior managing director at Chibagin Asset Management suggests, "Japan's consumer electronics industry is facing defeat. "Similarly, Japan's automobile industry has been plagued by a series of embarrassing quality problems and recalls, and has lost market share to companies from South Korea and even (gasp!) the United States.Looking beyond Japan, iconic six sigma companies in the United States, such as Motorola and GE, have struggled in recent years to be innovation leaders. 3M, which invested heavily in continuous improvement, had to loosen its sigma methodology in order to increase the flow of innovation. As innovation thinker Vijay Govindarajan says, "The more you hardwire a company on total quality management, [the more] it is going to hurt breakthrough innovation. The mindset that is needed, the capabilities that are needed, the metrics that are needed, the whole culture that is needed for discontinuous innovation, are fundamentally different….."…Customize how and where continuous improvement is applied. One size of continuous improvement doesn't fit all parts of the organization. The kind of rigor required in a manufacturing environment may be unnecessary, or even destructive, in a research or design shop……Question whether processes should be improved, eliminated, or disrupted. Too many continuous improvement projects focus so much on gaining efficiencies that they don't challenge the basic assumptions of what's being done….…Assess the impact on company culture. Take a hard look at the cultural implications of continuous improvement. How do they affect day-to-day behaviors? A data-driven mindset may encourage managers to ignore intuition or anomalous data that doesn't fit preconceived notions

In a Downturn, Provoke Your Customers
HBR, March 2009
by Philip Lay, Todd Hewlin, and Geoffrey Moore
The companies you serve are slashing their budgets—but you can still make the sale.

This is a fascinating article on doing business in hard times. How many of you run into problems at your customers because their discretionary budgets are gone? The underpinning of this approach – going to your customers with a provocation to help stimulate their interest and therefore “find” the budget – requires you to REALLY know your customer and the context/system/environment in which they do business. A very important factor is that you must try to reach the most senior people because it requires finding the dollars.

I did this in 1982 recession without having the benefit of having a name for it. I was selling an undifferentiated product into a market that was declining but had substantial cash flow for DuPont. The industry sales-to-capacity was low as you would expect in a severe recession. One of our largest customers had their own capacity that satisfied about half their needs. I approached the most senior purchasing person with a provocative idea – if you shut down your capacity, we will offer a supply package that you will not be able to say no to. The capacity went down within six months with a substantial cost (they found the budget) and when the market came back, our sales-to-capacity was better than our competition and we benefited for years.

I recommend reading the article.

No question about it: This is a tough time to be selling to business customers. The budget allowances simply aren’t there. If you thought it was hard to make a sale before—when typically 85% of a customer’s budget was allocated to existing commitments and only 15% remained for discretionary spending—you’re finding out how much harder it can be, as even that fraction disappears in across-the-board cuts. Making matters worse, your customer relationships have lost much of their power. With less money to go around, proposals are subjected to higher levels of review in buying organizations, and the managers you’ve traditionally dealt with are no longer the decision makers.
All this would be thoroughly discouraging if not for one fact: Companies have survived downturns before, and some have even profited from them. In the research and consulting we’ve done since the 2001 dot-com bust, we’ve seen how. Rather than resign themselves to hearing the standard “Sorry, we have no budget for that,” some vendors—even some very young start-ups—have found a way to reach their customers’ resource owners and motivate them to allocate the necessary funds. Using what we call provocation-based selling, they persuade customers that the solutions they bring to the table are not just nice but essential…………


Learning to Be Provocative


Underlying provocation-based selling is the idea that the vendor should help the customer find investment funds even when discretionary spending appears to have (at least temporarily) dried up.

Sybase, a data management and mobility company, did just that in the spring of 2008, as it tried to pry business out of financial services clients. Companies it had served for years were cutting overall operating costs severely. Instead of using precious meeting time to discover what customers were fretting over, Sybase salespeople told them what should be keeping them up at night: the fact that managers across the industry were failing to look at risk in a comprehensive and integrated way. Financial institutions tended to have separate risk-management systems for credit cards, mortgages, commercial lending, equity investment products, fixed income, commodities, and derivatives. Sybase’s message was that a risk-management failure in one area (say, home mortgages) would have direct consequences for the risk exposures in other areas (for example, collateralized debt obligations and other derivatives), so companies had to find a way to bring their risk positions together in a single view. By revealing the scale of the threat and the opportunity, Sybase could sell its Risk Analytics Platform (RAP), a new tool for integrating risk management, to clients who had not previously been troubled by the lack of one.

This was provocation-based selling at its finest: The vendor identified a process that was critical for customers in the current business environment, developed a compelling point of view on how it was broken and what that meant in terms of cost, and then connected the problem to a solution that the vendor was offering.