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World Business Forum: Of Tide, Frozen Mountains and Blue Ocean Strategy

RP Siegel | Saturday October 9th, 2010 | 0 Comments

Earlier this week I gave a whole column to Al Gore’s talk at WBF, because I felt what he had to say was important in the broadest terms and merited the space. There were a number of other impressive speakers on the final day of the conference who provided some terrific business insights in the realm of customer focus, strategy, innovation, creativity, and the importance of personal characteristics such as courage and determination in business leadership that I would like to recap here.

AG Lafley is former CEO of Procter & Gamble, the highly successful manufacturer of household consumer products such as Tide and countless other household names. P&G has recently announced a number of sustainability initiatives after an initial slow start out of the gate. But Laffley, pretty much in keeping with the overall tone of the conference, focused on financial performance.  He attributes the company’s impressive performance with their customer-centric focus, something he personally championed during his tenure. One of the goals he set for the company was to be best in industry in consumer understanding. He described how he would often venture out into the field, visiting customers in their homes to see how they were using the products, then to the stores to see how the products were being displayed and then finally to the local sales office, to see how that operation was being run.

“The purpose of a business,” he said, “is to create a customer.”

One insight he shared from the company’s hard won customer understanding, is that when it comes to personal care products, women want choices, men don’t. Men just say, “give me the tool I’m supposed to use for this job.”

Taken to the limit, customer-centered management means getting customers involved in  co-designing and co-creating products.

It makes sense that a company that relies so heavily on customer input, an effective, if somewhat conservative approach, would be a lagging, rather than a leading indicator of social trends, as opposed to a company like Seventh Generation that likes to get out in front of trends, providing personal care products for leading edge early adapters.

Yet, product innovation has been been the historical driver of sales growth for P&G as they continually improve their existing brands and introduce new ones. For the most part, it has been incremental innovation, working within the assumptions of cultural context as opposed to creating new ones. The latter tends to be the province of much smaller start-ups who tend to more closely follow Bob Dylan’s famous observation that “when you got nothin’, you got nothin’ to lose.”

This type of game-changing innovation is the kind of thing that Renee Mauborgne, business strategy consultant and author of Blue Ocean Strategy, has very effectively facilitated. Thinkers 50 ranked Mauborgne among the top five most influential thinkers in 2009, the highest placed woman ever.

She questions the role of management. Is it to maintain the present or create the future? She asserts that top level managers should be spending most of their time creating the future, though they rarely do.

Mauborgne tells us that the challenges facing businesses in the future are much the same as those facing the planet. There is not enough energy or water to support the movement of the world’s poor to affluence. And yet more and more companies want to provide goods and services to these people. She calls this highly competitive scenario, Red Ocean, conjuring an image of sharks in a feeding frenzy. It requires creativity to overcome this type of  challenge and move out into open Blue Ocean.

The most innovative companies have used creativity to develop new demand and new markets.
She described the example of Comic Relief, a charity organization in the UK that became wildly successful in an environment where the number of charities was going up 70% a year while donations were going down by 28%, clearly a red ocean scenario. How did they do it? By being creative and entirely changing the game. They came up with Red Nose Day, an annual event linking comedy with charity. This was a day when everyone bought a red rubber nose like a clown would wear. Last year’s theme was “Do Something Funny For Money” and it raised a whopping $5.5 million dollars.

Nando Parrado, on the other hand, had few laughs in his presentation. Instead, he told the miraculous story of how, at the age of 23, he survived a plane crash high up in the Andes, was given up for dead, with a broken skull, only to walk out of there 72 days later. The ordeal was the subject of his book Miracle in the Andes in which he poses the following three questions:

  • Am I able to live in the moment?
  • Do I have a clear view of what’s important in my life?
  • Do I focus on future possibility, rather than reliving the past?

He received a standing ovation at the end of his inspiring talk.

RP Siegel is the co-author of the eco-thriller Vapor Trails. Like airplanes, we all leave behind a vapor trail. And though can we can easily see others’, we rarely see our own.

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