Archive for September, 2013
Want to Be a Leader? Have the Courage to Take a Stand

Via David Edelman on LinkedIn

My favorite character in The Wizard of Oz is the cowardly lion. He steals the show with his humor and pathos. I’ve been thinking about his quest a lot recently because it goes to the core of what real leadership needs today: Courage.

Marketers are living in a risky time. They’re under a lot of pressure to perform at a time of great change and uncertainty. Today’s customer decision journey has unleashed a wave of creative destruction. In the face of this challenge (and huge opportunity), I am surprised how often marketers shrink from risk. I see strong pressure to go with what has been working in the past. When it comes to social media, fear of risk creates institutional speak instead of human conversation. Investments in digital capabilities are reviewed for what they can enable in cost reductions from other channels, less for how they can build brand ties, switching costs, or open up new areas for growth.

Here is the truth: In today’s world stasis is death, the status quo is the enemy, and the biggest risk is taking no risks. Leadership requires the courage to take a stand for change. That courage unlocks innovation, which is absolutely critical if companies want to get ahead of their customers’ journeys and shape their expectations. Creating new journeys might even be patentable. But that requires risk, experimentation, and a recognition that many of the structures that made it easier to manage a company in the past — such as channel-based P&L’s — prevent a brand from delivering the right experience for the future.

Several colleagues recently published a great article in Harvard Business Review on the value of managing customer journeys (you can read it here). The piece makes a compelling case about the power of customer journeys in driving growth, and I find myself wondering how to advise my clients on leadership.

In such a world, leaders have to pull the rip cord and make change happen. Leaders should be asking what the most important 10-25 journeys are that move the needle on customer value, and then change whatever needs to be changed to improve them. They should throw out org charts and focus on building “SWAT” teams that pull in the right people no matter what group they’re in. They should have “journey innovation labs” to drive new experiments, track outcomes, and scale what works. And finance teams looking at where better performance across the journeys creates higher returns, and using that to guide allocations of budgets.

One CMO client of mine did make a big change. He redesigned the planning processes to force managers to lay out their latest understanding of the decision journey and then describe how that will change their marketing strategy. He wanted to see explicit discussions of trade-offs between new customer acquisition and expanding their relationships with existing customers. He questioned the paid media that their agencies’ mix models seemed to sanction, and demanded that they move spend into “owned” channels such as email, web site messaging, and mobile messaging. He also wanted to see the media opportunities available from their e-commerce trade partners added as an explicit channel to consider.

Doing all of this resulted in radical shifts in their spend — 50% of their budgets moving from ad spend in the “consider” phase to much more invested in social and direct spend for the “evaluate, experience, and advocate” phases. They have dramatically improved their marketing ROI. But the change didn’t stop. Customer service and in-product packaging report to the CMO now, enabling him to coordinate more of the total journey.

This isn’t easy. Making big bets on new technologies and behaviors isn’t easy. Shaking up organizations isn’t easy. Taking a risk isn’t easy. But it’s absolutely necessary today. And only leaders with real courage can make it happen.

What do you think are those traits we most need in leadership today?

Good News For Barter Trade: India plans barter trade pact with Singapore

By Subhomoy Bhattacharjee, of The Indian Express

To provide a cushion to the foreign exchange reserves, India plans to do a barter trade deal with Singapore and follow it up with similar deals with other Asian nations.

It is based on the assumption that more of the exports by these countries to India will be settled in Indian rupees. The assumption is that the rupee is now acceptable de facto as a unit of currency by traders in economies like Singapore and so the barter trade will give it legitimacy. It is one more step to push the rupee closer to capital account convertibility. Since India-Singapore trade is over $24 billion in 2012 and diversified, there is certainly room for savings by India of $1 billion of foreign exchange through this arrangement.

This principle, however, cannot be used to sign trade pacts with countries from where we import oil. While Iran is a special case, Iraq or Saudi Arabia is unlikely to accept the arrangement as the volumes are much larger and they hardly import anything from India. So the rupee chest will be useless for them.

It is here that the significance of Governor Raghuram Rajan’s first day statement about creating an international role for the rupee makes sense. At every forex crisis we have hunkered down with more controls clipping the role of the currency. Each control reduced the utility of rupee for our trading partners. Yet, as India trades more with the world, our partners will-nilly end up holding the rupee for at least some time.

They want to hedge that risk, which till now, can only be settled through an offshore non-deliverable forwards market. The volume of rupee NDF offshore market is now 18 per cent of the daily turnover for all emerging market economies, as per a Nomura estimate. Available literature also shows that typically for India and China, it is the NDF market that determines how the domestic currency behaves compared with economies that allow more convertibility, like Brazil and South Korea. For instance, since 2008, while NDF trade in the Brazilian real has retained the top spot among all nations, the rupee has vaulted to the second position by 2013, the same Nomura paper shows.

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