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Big brands lose pricing power in battle for consumers
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Anna Nicolaou in New York and Scheherazade Daneshkhu in London 2 HOURS AGO

The product manufacturers are being squeezed by the big retailers — notably, Amazon and Walmart, which together sell $600bn worth of goods a year. Walmart has long put pressure on suppliers to cut prices. Amazon’s rise has exacerbated the “deflationary impact”, Société Générale says, creating a “much tougher environment in the US”. After Amazon bought Whole Foods in June, the price war grew more intense in groceries, pushing prices to historic lows that punished producers. 

Brand loyalty has suffered in the process. Equipped with the tools to compare prices online instantly, and bombarded with more choices, shoppers are growing more likely to opt for cheaper and discounted products — particularly in categories such laundry detergent and shampoo. To keep their spots on store shelves, brands are having to accept lower prices......Former Amazon employees say the company’s algorithms scan prices across competitors in real time, automatically adjusting its own so it can offer the lowest price. While most big brands have wholesale agreements with Amazon, third-party sellers are prolific on the site, complicating price control further. A 34oz bottle of P&G’s Pantene Pro-V Shampoo & Conditioner was listed by 10 different sellers — nine of them third parties — on the shopping site.

Amazon’s dominance makes it difficult for brands to abandon the platform, or try to sell directly on their own websites. “You have 200m customers on Amazon. If you walk away, there’s 200m people who are going to just buy from your competitors,” says James Thomson, a former Amazon manager who consults brands. “You’re probably not going to win.”

“This is a pretty dire situation,” he adds. “If brands are worried about meeting quarterly targets, they can’t afford to lose Amazon sales.”

Still, “the retailers have nothing to gain by pushing [consumer products makers] into bankruptcy”,
......Consumer goods companies have responded to the pricing pressures by aggressively cutting costs, led by the “zero-based budgeting” model of 3G Capital,
large_companies  Fortune_500  brands  CPG  pricing  price_wars  shareholder_activism  Amazon  P&G  Nestlé  win_backs  price-cutting  Nelson_Peltz  shifting_tastes  Colgate-Palmolive  upstarts  Unilever  zero-based_budgeting  3G_Capital  e-commerce  Mondelez  Big_Food 
february 2018 by jerryking
IKEA Jumps Into ‘Gig Economy’ With Deal for TaskRabbit
Sept. 28, 2017 | WSJ | By Saabira Chaudhuri and Eliot Brown.

IKEA agreed to acquire Silicon Valley startup TaskRabbit—the online marketplace that connects people with freelancers willing to run errands and do odd jobs—combining the pioneer of the flat pack with a trailblazer of the so-called gig economy.
....Documents related to a financing round from 2015 suggest TaskRabbit then had a valuation of about $50 million....the deal represents a bigger strategic tack at the furniture company. It also underscores a broader shift at many large companies grappling with big changes brought on by digitization. Many established corporations are increasingly turning to Silicon Valley to help their business grow, or slow their declines—sometimes spending heavily on small venture capital-backed startups that have strong traction with young consumers.

Especially where older industries are shifting rapidly, deals have piled up. Auto makers have become prolific investors and buyers of self-driving startups. Wal-Mart Stores Inc. has become one of the more active buyers of startups as it grapples with a shift to e-commerce, including a June deal to buy men’s online clothier Bonobos.

Several large firms have launched small Silicon Valley outposts and venture capital arms of their own. Often, though, they say it makes more sense to buy these startups than build a new brand or operation themselves.

The TaskRabbit deal is IKEA’s first foray anywhere near Silicon Valley. The privately held company—when it has bought anything at all—has tended to focus on forestry and manufacturing firm purchases..... IKEA intends to also learn from TaskRabbit’s digital expertise. Retailers and brands globally have been racing to capture shopper data in a bid to personalize their offerings and build customer loyalty.......The bulk of IKEA’s sales are still made in its sprawling out-of-town superstores that house everything from plants to beds. It has 357 stores across 29 countries. But it has worked to adapt to a rise in online shopping, rolling out home delivery and click-and-collect options. IKEA has also been opening small, centrally located stores situated near public transport that stock a limited range of offerings and are also used as collection points.

The company’s website had 2.1 billion visits in fiscal 2016, up 9% from the prior year. Earlier in September, it launched an augmented reality app that lets people place IKEA furniture in their homes. It has also souped up its product range, offering tables and lamps that double up as wireless phone chargers and bulbs that can be controlled wirelessly.

“As urbanization and digital transformation continue to challenge retail concepts we need to develop the business faster and in a more flexible way,” Mr. Brodin said. “An acquisition of TaskRabbit would be an exciting leap in this transformation.”
IKEA  TaskRabbit  gig_economy  home-assembly  mergers_&_acquisitions  M&A  Silicon_Valley  large_companies  brands  Fortune_500  start_ups  e-commerce  home-delivery  BOPIS  augmented_reality  urbanization  digital_strategies  retailers  product_launches 
september 2017 by jerryking
Benevolent Bacon? Nestle And Unilever Gobble Up Niche Brands - WSJ
By Saabira Chaudhuri
Sept. 7, 2017

The global packaged-food industry is facing fierce competition from a burgeoning number of small, but high-growth food and beverage brands. These brands have struck a chord with consumers looking for locally produced or more healthy, natural choices.

Amid this shift, sales from traditional players have flagged, spurring consolidation, cost cutting and restructuring.

Unilever fended off an unsolicited takeover by Kraft Heinz Co. earlier this year. Activist investor Dan Loeb’s Third Point hedge fund in June disclosed a major stake in Nestlé, calling for changes in strategy to improve shareholder returns. In response, the two consumer-goods firms have focused on cost cutting and promises to boost dividends, while going on the hunt for nimbler food and beverage brands with the potential to accelerate growth.

‘We’re experiencing a consumer shift toward plant-based proteins.’
—Nestlé USA Chief Executive Paul Grimwood
Nestlé’s deal to buy Sweet Earth comes less than three months after it bought a stake in subscription-meals company Freshly, which sells healthy, prepared meals to consumers across the U.S.

Moss Landing, Calif.-based Sweet Earth bills itself as a natural, ethical, environmentally conscious company that substitutes plant proteins for animal ones in meals like curries, stir fries, breakfast wraps, burgers and pasta. Founded in 2011, Sweet Earth is available in more than 10,000 stores in the U.S. It is stocked at independent natural grocers, as well as bigger chains like Amazon.com Inc.’s Whole Foods, Target Corp. , Kroger Co. and Wal-Mart Stores Inc.

“We’re experiencing a consumer shift toward plant-based proteins,” said Paul Grimwood, chief executive of Nestlé’s U.S. arm. Plant-based food, as a sector, is growing at double-digit percentages rates, Nestlé said.
Big_Food  brands  CPG  emotional_connections  Unilever  niches  mergers_&_acquisitions  M&A  Nestlé  shifting_tastes  start_ups  large_companies  Fortune_500  plant-based  healthy_lifestyles 
september 2017 by jerryking
Global brands — FT.com
JUNE 29, 2017 by Scheherazade Daneshkhu and Chris Campbell
best_of  rankings  brands  Fortune_500  multinationals  globalization 
july 2017 by jerryking
Reza Satchu: What I learned after selling my first startup for nearly $1 billion
JUN. 30, 2017 | The Globe and Mail | INTERVIEW BY DAWN CALLEJA

The major disadvantage I had coming out of McGill was that I had more modest expectations. Whereas kids at Harvard, Yale, Stanford—through their interactions with CEOs, they get to see what’s possible. The reason I created Economics for Entrepreneurs at the University of Toronto, and then Next 36, was to provide that bridge.
The class is purposely stressful, because guess what? Being an entrepreneur is stressful.

There’s an increasing prosperity gap between Canada and the U.S. Not because we don’t work as hard, but because we don’t have any Facebooks, any Googles, any Ubers here.
If someone asked me if I wanted to teach entrepreneurship in high school or to 30-year-olds, I’d go for high school. Google, Microsoft, Facebook, Uber—they were all started by people in their 20s.

In Silicon Valley, failure is almost a badge. In Canada, getting young adults thinking about failing and taking risk early in their careers is a good thing.....Never underestimate the stupidity of large companies. If they did everything right, there’d never be new companies.
Part of being an entrepreneur is suspending disbelief and just going with your gut. So take the imperfect information you have and make a judgment. If it’s wrong, who cares? Just keep going.
chutzpah  audacity  entrepreneur  Alignvest  large_companies  brands  Fortune_500  McGill  thinking_big 
july 2017 by jerryking
Outside Voices: Why Boards Need to Hire More Marketing Experts - WSJ
MediaLink’s Wenda Harris Millard argues more CMOs are needed as directors because board positions at Fortune 500 companies remain largely homogenous
May 19, 2017
CMOs  boards_&_directors_&_governance  Fortune_500  marketing 
may 2017 by jerryking
From Diaper to Soda Makers, Big Brands Feel the Pinch of a Consumer Pullback - WSJ
By Sharon Terlep, Jennifer Maloney and Annie Gasparro
April 26, 2017

Some blamed the weak start of the year on higher gas prices, bad weather and other external factors, while other executives pointed to shifting consumer tastes. Analysts say some big brands, such as Gillette and Yoplait, are losing ground to upstarts. Overall purchases of consumer packaged goods in the U.S. declined 2.5% in unit terms in the first quarter, according to Nielsen.....consumers are cutting back purchases, aggressively seeking deals and drawing down supplies at home. At the same time, he said, a growing affinity for beards has played a big part in driving down razor sales, which contributed to a 6% organic sales decline for P&G’s grooming unit....PepsiCo, like big food rivals Kraft Heinz Co. and Nestlé, is struggling as consumers shift away from diet sodas and processed foods to fresher and healthier options. It has launched new products, such as a premium bottled water brand, to adjust to the shift.....For food and nonfood staples, big brands are struggling more than the overall industry. The 20 largest consumer packaged goods companies last year had flat sales while smaller ones posted sales growth of 2.4%, according to Nielsen.

Wal-Mart Stores Inc., meantime, has been reducing inventories and slashing prices as it fights to compete with Amazon.com Inc. and European discounters moving into the U.S. Those cuts are eating into its own profit and, in turn, leading the world’s biggest retailer to put pressure on its vendors.........The dynamics are driving tough choices for companies as they are forced to decide between reducing prices and ceding market share. PepsiCo and Coca-Cola Co. have been shrinking packages and raising prices.
brands  hard_choices  large_companies  volatility  P&G  Gillette  Yoplait  CPG  PepsiCo  healthy_lifestyles  Kraft_Heinz  Nestlé  Wal-Mart  Coca-Cola  price-cutting  price_hikes  Fortune_500  upstarts  supply_chain_squeeze  shifting_tastes  Amazon  Big_Food 
april 2017 by jerryking
Fintech Fictions, Fallacies, and Fantasies
July 20, 2015 | Subscribe to The Financial Brand for Free

A Snarketing post by Ron Shevlin

There’s No Debate

Towards the end of the Great Debate (referenced at the beginning of this post), I suggested that the question at hand–Who would rule banking: fintech or banks?–was the wrong question to ask. There is no one or the other. Banks need fintech, fintech needs banks. And banks become fintech, as fintech become banks.

In many ways, fintech is a–or the–path to reinvention for many banks. This is why a Capital One acquires design firms, or a BBVA acquires a Simple. It’s not simply to acquire the technology, and certainly not to “usurp the threat of FinTech by co-opting it.” It’s to inject new thinking and new capabilities into the company.
fin-tech  myths  fantasies  financial_services  banks  symbiosis  large_companies  new_thinking  start_ups  capabilities  Fortune_500  brands  Capital_One  design  Simple  BBVA 
march 2017 by jerryking
Big Companies Should Collaborate with Startups
Eddie YoonSteve Hughes
FEBRUARY 25, 2016

Growth is increasingly hard to come by, so large companies are increasingly looking to entrepreneurs to help them find it. In the food and beverage category, growth came from 20,000 small companies outside of the top 100, which together saw revenue grow by $17 billion dollars.
Despite that aggregate revenue growth, not every startup is successful — in fact, the vast majority will fail.

Ironically, startups and established companies would both improve their success rates if they collaborated instead of competed. Startups and established companies bring two distinct and equally integral skills to the table. Startups excel at giving birth to successful proof of concepts; larger companies are much better at successfully scaling proof of concepts.

Startups are better at detecting and unlocking emerging and latent demand. But they often stumble at scaling their proof of concept, not only because they’re often doing it for the first time, but also because the skills necessary for creating are not the same as scaling. Startups must be agile and adapt their value proposition several times until they get it right. According to Forbes, 58% of startups successfully figure out a clear market need for what they have.

In contrast, big companies often end up launching things they can make, not what people want.

Successful collaboration between startups and established companies must go beyond financial deals: it must be personal and mission-oriented.....areas of emerging and latent demand are often highly concentrated.... spend time physically in hotbeds specific to your sector. ....met people...walk the aisles ...... explore up and coming datasets. SPINs is a retail measurement company that covers the natural and organic grocers. Yet too many companies don’t even bother to acquire this data because they dismiss it as too small to matter.....Just as important as personal knowledge are personal relationships. ...spend time with customers....skew more toward emerging customers......connect with key people who have tight connections with both startups and established companies in your industry.....collaboration needs to be mission-oriented, meaning it has to be focused on something larger than financial success. ......Executives who wish to tap into the growth of these smaller companies will find that having a big checkbook is not going to be enough, and that waiting for an investment banker to bring them deals is the wrong approach. A mercenary mindset will only go so far. When big companies try to engage with startups, a missionary mindset will create better odds of success.
large_companies  Fortune_500  brands  scaling  start_ups  collaboration  face2face  personal_meetings  personal_touch  information_sources  personal_relationships  personal_knowledge  HBR  growth  funding  M&A  success_rates  latent  hidden  proof-of-concepts  mindsets  missionaries  mission-driven  Mondolez  cultural_clash  Gulliver_strategies 
march 2017 by jerryking
McDonald’s is going to play SXSW this year — Quartz
Svati Kirsten Narula
March 03, 2015

McDonald’s will host three “pitch sessions” at SXSW on March 13, offering an audience for tech startups with ideas for innovation in three categories:
Reinventing the Restaurant Experience: “This is not about tweeting, ordering online or Wi-Fi connectivity…. We are talking about multiple screens, proximity technology, personalization and even smart packaging.”
Content Creation: “Brands have to co-create content with communities, curate daily content to stay relevant, and create content with social in mind. How can brands tap into new content partners and models that can tackle these objectives?”
Transportation and Delivery: “Our existing idea of door-to-door delivery and drive-thru will soon be obsolete. Imagine a world where drones could deliver you food while you’re driving down the highway.”
The best pitch will earn the presenter a trip to McDonald’s corporate headquarters, where he or she will be invited to pitch directly to the company’s C-suite. McDonald’s says pitches will be evaluated based on “current traction and milestones,” “market potential,” “customer value proposition and service offering,” and “overall brand fit.”
brands  CAMEX  co-creation  McDonald's  SXSW  digital_strategies  sponsorships  millennials  Fortune_500  creating_valuable_content  content_creators  metrics  proximity  personalization  home-delivery  drones  Michael_McDerment  pitches  C-suite 
march 2017 by jerryking
For Non-Tech Companies, if You Can’t Build It, Buy a Start-Up - The New York Times
By LESLIE PICKER JAN. 2, 2017

Last year, the number of technology companies sold to non-tech companies surpassed those acquired by tech companies for the first time since the internet era began, according to data compiled by Bloomberg. Excluding private equity buyers, 682 tech companies were purchased by a company in an industry other than technology, while 655 were acquired by tech companies....Non-tech chief executives have been found mingling at technology conferences, trying to spot their next potential target. ....One major shift as to why non-tech executives are becoming more active in tech deal making is that they have become more comfortable with the technology itself.....The next challenge for many of these companies might be in integrating their tech start-ups with the main business.

When traditional companies acquired small technology companies, they typically would place them in a “digital division” separate from the rest of the company.

That too needs to change, according to Aryeh Bourkoff, the founder and chief executive of the investment bank LionTree.

“Technology should not be a division of a company, it should be integrated into every division,” he said.
start_ups  mergers_&_acquisitions  M&A  GE  Honeywell  post-deal_integration  Fortune_500  large_companies  brands 
january 2017 by jerryking
Laurier initiative to separate the strong startups from the weak - The Globe and Mail
JENNIFER LEWINGTON
Special to The Globe and Mail
Published Friday, Jul. 08, 2016

[For Corey & UpSpark]
Earlier this year, the school’s Lazaridis Institute for the Management of Technology Enterprises issued a report, Scaling Success: Tackling the Management Gap in Canada’s Technology Sector, that concluded Canada “continues to underperform its peers in the creation of high-growth firms.” For example, a majority of tech startups in the professional, scientific and technical sector demonstrated “consistently negative rates of business creation” between 2001 and 2012, according to the report.

Given the poor showing, the dean asks: “So how do we take our most promising startups and take them to the next level?”

One answer, he hopes, is a new collaboration between the Lazaridis Institute and several tech-focused industry partners.

Working with Communitech, a Waterloo-based innovation centre that supports more than 1,000 technology companies, the Institute plans to develop an assessment tool this fall to identify startups with the potential to scale up. The tool, currently being tested, would evaluate companies for the quality of their product, technology, staff, management and financial muscle.
business_schools  start_ups  failure  WLU  gazelles  scaling  Communitech  Colleges_&_Universities  Kitchener-Waterloo  large_companies  brands  Fortune_500  high-growth  under-performing  culling  assessments_&_evaluations 
july 2016 by jerryking
The path to enlightenment and profit starts inside the office
(Feb. 2, 2016): The Financial Times | John Thornhill.

Competition used to be easy. That is in theory, if not always in practice. Until recently, most competent companies had a clear idea of who their rivals were, how to compete and on what field to fight.

One of the starkest - and scariest - declarations of competitive intent came from Komatsu, the Japanese construction equipment manufacturer, in the 1970s. As employees trooped into work they would walk over doormats exhorting: "Kill Caterpillar!". Companies benchmarked their operations and market share against their competitors to see where they stood.

But that strategic clarity has blurred in so many industries today to the point of near-invisibility thanks to the digital revolution and globalisation. Flying blind, companies seem happier to cut costs and buy back their shares than to invest purposefully for the future. Take the European telecommunications sector. Not long ago most telecoms companies were national monopolies with little, or no, competition. Today, it is hard to predict where the next threat is going to erupt.

WhatsApp, the California-based messaging service, was founded in 2009 and only registered in most companies' consciousness when it was acquired by Facebook for more than $19bn in 2014. Yet in its short life WhatsApp has taken huge bites out of the lucrative text messaging markets. Today, WhatsApp has close to 1bn users sending 30bn messages a day. The global SMS text messaging market is just 20bn a day.

Car manufacturers are rapidly wising up to the threat posed by new generation tech firms, such as Tesla, Google and Uber, all intent on developing "apps on wheels". Chinese and Indian companies, little heard of a few years ago, are bouncing out of their own markets to emerge as bold global competitors.

As the driving force of capitalism , competition gives companies a purpose, a mission and a sense of direction. But how can companies compete in such a shape-shifting environment? There are perhaps two (partial) answers.

The first is to do everything to understand the technological changes that are transforming the world, to identify the threats and opportunities early.

Gavin Patterson , chief executive of BT, the British telecoms group, says one of the functions of corporate leaders is to scan the horizon as never before. "As a CEO you have to be on the bridge looking outwards, looking for signs that something is happening, trying to anticipate it before it becomes a danger."

To that end, BT has opened innovation "scouting teams" in Silicon Valley and Israel, and tech partnerships with universities in China, the US, Abu Dhabi, India and the UK.

But even if you foresee the danger, it does not mean you can deal with it. After all, Kodak invented the first digital camera but failed to exploit the technology. The incentive structures of many companies are to minimise risk rather than maximise opportunity. Innovation is often a young company's game.

The second answer is that companies must look as intensively inwards as they do outwards (e.g. opposing actions). Well-managed companies enjoy many advantages: strong brands, masses of consumer data, valuable historic data sets, networks of smart people and easy access to capital. But what is often lacking is the ambition that marks out the new tech companies, their ability to innovate rapidly and their extraordinary connection with consumers. In that sense, the main competition of so many established companies lies within their own organisations.

Larry Page, co-founder of Google, constantly urges his employees to keep being radical. In his Founders' Letter of 2013, he warned that companies tend to grow comfortable doing what they have always done and only ever make incremental change. "This . . . leads to irrelevance over time," he wrote.

Google operates a 70/20/10 rule where employees are encouraged to spend 70 per cent of their time on their core business, 20 per cent on working with another team and 10 per cent on moonshots. How many traditional companies focus so much on radical ventures?

Vishal Sikka, chief executive of the Indian IT group Infosys, says that internal constraints can often be far more damaging than external threats. "The traditional definition of competition is irrelevant. We are increasingly competing against ourselves," he says.

Quoting Siddhartha by the German writer Hermann Hesse, Mr Sikka argues that companies remain the masters of their own salvation whatever the market pressures: "Knowledge can be communicated. Wisdom cannot." He adds: "Every company has to find its own unique wisdom." [This wisdom reference is reminiscent of Paul Graham's advice to do things that don't scale].

john.thornhill@ft.com
ambitions  brands  breakthroughs  BT  bureaucracies  competition  complacency  constraints  Fortune_500  incentives  incrementalism  Infosys  innovation  introspection  irrelevance  large_companies  LBMA  messaging  mission-driven  Mondelez  moonshots  opposing_actions  organizational_culture  outward_looking  Paul_Graham  peripheral_vision  radical  risk-avoidance  scouting  smart_people  start_ups  staying_hungry  tacit_knowledge  technological_change  threats  uniqueness  unscalability  weaknesses  WhatsApp  wisdom  digital_cameras  digital_revolution 
april 2016 by jerryking
What a Year of Job Rejections Taught Me About Pitching Myself
SEPTEMBER 09, 2015 | HBR | Nina Mufleh.
[send to Nick Patel]
After sending out hundreds of copies of my résumé to dozens of companies over the last year, I realized that I was getting nowhere because my approach was wrong....How could a career that ranged from working with royalty to Fortune 500 brands and startups not pique the curiosity of any hiring managers?

As a marketer, I decided to re-frame the challenge. Instead of thinking as a job applicant, I had to think of myself as a product and identify ways to create demand around hiring me. I applied everything I knew about marketing and storytelling to build a campaign that would show Silicon Valley companies the kind of value I would bring to their teams.

The experiment was a report that I created for Airbnb that highlighted the promise and potential of expanding to the Middle East, a market that I am extremely familiar with and until recently they had not focused on. I spent a couple of days gathering data about the tourism industry and the company’s current footprint in the market, and identified strategic opportunities for them there.

I released the report on Twitter and copied Airbnb’s founders and leadership team. Behind the scenes, I also shared it by email with many personal and professional contacts and encouraged them to share it if they thought it was interesting — most did, as did some of the top VCs, entrepreneurs and many peers around the world....What I realize in hindsight is probably one of the most important lessons of my career so far. The project highlighted the qualities I wanted to show to recruiters; more importantly, it also addressed one of the main weaknesses they saw in me....What the report helped me do was show, not tell, my value beyond their doubts. It refocused my perceived weakness into a strength: an international perspective with the promise of understanding and entering new markets. And though none of the roles that I interviewed for in the last two months focused on expansion, by addressing and challenging the weakness, I was able to re-frame the conversation around my strengths....asking yourself a different version of that question is going to make you better prepared for any conversation with a recruiter, a potential client, or even a potential investor....not “What is my weakness?” but rather “What do they perceive as a weakness in my background?”
Airbnb  campaigns  career_paths  creating_demand  Fortune_500  founders  HBR  hindsight  inbound_marketing  job_search  Managing_Your_Career  Middle_East  networking  personal_branding  pitches  problem_framing  reframing  rejections  self-promotion  social_media  strengths  value_propositions  via:enochko  weaknesses 
september 2015 by jerryking
Lunch with the FT: Vikram Pandit - FT.com
July 11, 2014 | FT | By Tom Braithwaite.

“For a large group of people who grew up over the past two, three, four decades, they’ve been in a very different world – it was a world of predictable growth, it was a world of the ability to finance yourself, it was a world where you could really put one foot in front of the other. You find people grappling with what’s the new sustainable model for growth. And that is true of countries, it’s true of businesses.”
At the same time, Pandit proclaims that, largely thanks to technology, “It’s never been easier to start your own business.”
Our starters arrive. Beetroot and ricotta for Pandit while I get a plate decorated with delicious oily slivers of fish and vegetables offset by the occasional crunch from puffed rice and bite of horseradish.
“Bon appétit,” says Pandit, as he slices into a beetroot and continues to extol the virtues of something he calls the “SMAC stack”. I tell him this sounds awful but, he assures me, “it’s the vernacular for the ease for which you can get into business today,” and it stands for “Social media, Mobility, Applications and Cloud.
“Data is like . . . You’re too young, but there was a movie with the [line about] plastics.” When I assure him I’m familiar with The Graduate, he says: “Data is this generation’s plastics. I don’t see business models being truly successful until you get it.”...Pandit has a fondness for big concepts and management-speak and it can be difficult to bring him down to earth. I press him for examples. “You have large auto companies saying, ‘Where is the growth?’ and, on the other hand, you have a SMAC stack that’s created Uber. What’s interesting is that all those intangible abilities are inside the auto companies to make it happen.”
He has been investing in a steady stream of companies that he thinks embody innovative ideas that might make them the next Uber, the suddenly ubiquitous taxi-ordering app. At the same time, he is chairman of TGG Group, a consulting company set up by Steven Levitt, co-author of pop economics book Freakonomics – which aims to help corporations unlock their inner Ubers....Accordingly, while many of Pandit’s new investments are financial companies – Orchard, a platform for users to trade loans; CommonBond, a student lending platform; Fundbox, which lends money to small businesses against their invoices – only one, in India, has any aspirations to be a traditional bank.
With many of his new interests, Pandit says he is looking to remove “frictions”, which happen to be the way Citi and other banks make their money: for example, the middle men that sit between a big bond manager and retail investors and charge a fee. As he points out, the wealthiest individuals are not saddled with these costs to the same extent.
Vikram_Pandit  Citigroup  Wall_Street  career_paths  start_ups  financiers  financial_services  Sheila_Bair  fin-tech  Steven_Levitt  data  behavioural_economics  Second_Acts  reinvention  platforms  layer_mastery  data_driven  jargon  frictions  pain_points  large_companies  growth  Fortune_500  intangibles  SMAC_stack  automotive_industry 
july 2014 by jerryking
Innovation: If you can’t make yourself obsolete, someone else will - The Globe and Mail
GUY DIXON
The Globe and Mail
Published Thursday, Jun. 26 2014

I think at the root of the problem is a deficit of ambition [i.e. a lack of chutzpah or audacity] The larger the corporation, the safer they become. What I’ve witnessed, certainly between 2008, 2009, is this deficit of ambition.....All of our research points to the fact that companies that do manage and measure innovation outperform those that don’t. You can put resources into place, and that’s where managing it comes in: deploying resources that will support innovative, new ideas; ensuring that you have a strong knowledge architecture – and that it is a formal, systemic thing, so that people access knowledge that is already developed; ensuring access to markets – that’s a structural element. Do your people have access to customers and markets?; and actively managing talent and selecting people and promoting them and ensuring that they have an orientation toward innovation and the development of new ideas....What percentage of turnover or revenue is presented by products that have been introduced in the past number of years? And for different companies, in different industries, that’s going to vary. Companies that are very successful treat that number as sacrosanct for the sales projection for next year and the bottom line for next year....Way too many companies are focused on market share versus the modern metric of, ‘Are we gaining a disproportionate share of opportunity?’ [Is this distinction something to be explored with the help of sensors, location-based services and the LBMA??] And then we’re back to this abandonment thing.
Managing_Your_Career  organizational_culture  innovation  metrics  ambitions  opportunities  market_share  complacency  measurements  talent_management  ideas  obsolescence  disproportionality  latent  hidden  self-obsolescence  large_companies  new_products  Fortune_500  brands  Guy_Dixon  outperformance 
june 2014 by jerryking
Ad executive Winston Binch preaches the importance of invention - The Globe and Mail
May. 15 2014 | The Globe and Mail | SUSAN KRASHINSKY - MARKETING REPORTER.

Q: You spoke about the way advertising is migrating more toward inventing things – a big trend for advertisers looking to get noticed.

A: Agencies have been making products for a long time. Alcohol brands have been invented by plenty of agencies, for example. But it used to be an idea and you’d outsource the production. What’s different now is a lot more of it is technology, it’s digitally based. That requires new people in the building. ... There’s a lot of talk about invention right now in advertising. It’s startup culture."....The difficult thing is selling [invention/innovation] to clients. A lot of our clients all know they need to do it, and they want to, but it’s hard to find room for it given the demands of their businesses, particularly the Fortune 500s. ... They’re more concerned with short term than long term. Innovation is seen as a long-term thing. And also hasn’t been in marketing organizations; usually IT, product design and R&D, not the marketing side. How do we sell more invention products to our clients?
Susan_Krashinsky  inventions  advertising  advertising_agencies  hard_to_find  data_driven  digital_media  long-term  innovation  ideas  storytelling  experimentation  Fortune_500  product_development  large_companies 
may 2014 by jerryking
Harvard Business School Case Study - Gender Equity - NYTimes.com
By JODI KANTOR
September 7, 2013

The dean’s ambitions extended far beyond campus, to what Dr. Faust called in an interview an “obligation to articulate values.” The school saw itself as the standard-bearer for American business. Turning around its record on women, the new administrators assured themselves, could have an untold impact at other business schools, at companies populated by Harvard alumni and in the Fortune 500, where only 21 chief executives are women. The institution would become a laboratory for studying how women speak in group settings, the links between romantic relationships and professional status, and the use of everyday measurement tools to reduce bias.
gender_gap  HBS  business_schools  case_studies  women  Fortune_500  students  makeovers  leadership  Nitin_Nohria 
september 2013 by jerryking
Unlikely expansion: When retail brands go wholesale -
Apr. 16 2013 | The Globe and Mail | MARINA STRAUSS - RETAILING REPORTER.

Aldo Group Inc. is on the hunt for retail space – inside the stores of other retailers, as the shoe specialist pursues a cost-conscious expansion in which it is teaming up with a growing roster of indirect rivals.

Merchants ranging from Aldo to fashion purveyor Joe Fresh (owned by grocery giant Loblaw Cos. Ltd.), Reitmans (Canada) Ltd. and Hudson’s Bay Co., have stepped up their partnering efforts, even as they raise the stakes by being tied to sometimes unstable chains....multichannel distribution allows rapid expansion into new markets without the expense or time needed to open new stores....Retailers are trying to cash in on brand awareness and production expertise to reach more customers in a cost-savvy way. But the business model isn’t without drawbacks, as merchants lose some control over the placement, prominence and marketing of their products....For years, in a reverse trend, manufacturers – from Nine West to Apple – have set up their own standalone stores to showcase their products and ensure their brands are not lost among many others within a larger retailer.

“Retailers want to be wholesalers and wholesalers want to be retailers,” Mr. Lichtszral said. “The lines are blurred everywhere … Wholesale distributors are opening their own websites and shipping directly to the consumer and, in doing that, are technically competing with their retail customers.”
growth  retailers  brands  distribution_channels  Aldo  Loblaws  Nine_West  Apple  wholesalers  multichannel  omnichannel  Joe_Fresh  partnerships  Reitmans  HBC  business_models  drawbacks  merchandising  manufacturers  expansions  store_within_a_store  cost-consciousness  Marina_Strauss  standalone  Fortune_500 
may 2013 by jerryking
Growing at a Smart Pace
Growing at a Smart Pace

What Every CEO Should Know About Creating New Businesses
1 Ultimately, growth means starting new businesses.
Most firms have no alternative. Sectors decline, as they did for Pullman’s railroad cars and Singer’s sewing machines. Technology renders products and services obsolete—the fate Polaroid suffered, as digital cameras decimated its instant photography franchise. Markets saturate, as Home Depot is now finding, after establishing more than a thousand stores nationwide.
2 Most new businesses fail.
3 Corporate culture is the biggest deterrent to business creation.
New ventures flourish best in open, exploratory environments, but most large corporations are geared toward mature businesses and efficient, predictable operations.
4 Separate organizations don’t work—or at least not for long.
5 Starting a new business is essentially an experiment.
6. New businesses proceed through distinct stages, each requiring a different
7. New business creation takes time--a lot of time.
8. New businesses need help fitting in--"bridging"--with established systems and structures.
9. The best predictors of success are market knowledge and demand-driven products and services.
10. An open mind is hard to find.
growth  Thomas_Stewart  HBR  CEOs  Junior_Achievement  hard_to_find  start_ups  failure  organizational_culture  experimentation  trial_&_error  life_cycle  tacit_data  entrepreneurship  dedication  obsolescence  demand-driven  infrastructure  new_businesses  bridging  large_companies  customer-driven  market_saturation  Home_Depot  Fortune_500  mindsets  open_mind  decline  Michael_McDerment  Polaroid  digital_cameras 
december 2012 by jerryking
The 9 Characteristics Of A Strong Brand:
October 26, 2008 | Branding Strategy Insider| Posted by Martin Roll.
1. A brand drives shareholder value
2. The brand is led by the boardroom and managed by brand marketers with an active buy-in from all stakeholders
3. The brand is a fully integrated part of the entire organisation aligned around multiple touch points
4. The brand can be valued in financial terms and must reside on the asset side of the balance sheet
5. The brand can used as collateral for financial loans and can be bought and sold as an asset
6. Customers are willing to pay a substantial and consistent price premium for the brand versus a competing product and service
7. Customers associate themselves strongly with the brand, its attributes, values and personality, and they fully buy into the concept which is often characterized by a very emotional and intangible relationship (higher customer loyalty)
8. Customers are loyal to the brand and would actively seek it and buy it despite several other reasonable and often cheaper options available (higher customer retention rate)
9. A brand is a trademark and marquee (logo, shape, colour etc) which is fiercely and pro-actively protected by the company and its legal advisors
brand_purpose  brands  branding  ksfs  large_companies  Fortune_500  emotional_connections  goodwill  customer_loyalty  brand_equity  boards_&_directors_&_governance  logos  trademarks  intangibles  shareholder_value  assets  collateral 
november 2012 by jerryking
A Capitalist’s Dilemma, Whoever Wins the Election - NYTimes.com
November 3, 2012 | NYT| By CLAYTON M. CHRISTENSEN.

cash hoards in the billions are sitting unused on the pristine balance sheets of Fortune 500 corporations. Billions in capital is also sitting inert and uninvested at private equity funds.

Capitalists seem almost uninterested in capitalism, even as entrepreneurs eager to start companies find that they can’t get financing. Businesses and investors sound like the Ancient Mariner, who complained of “Water, water everywhere — nor any drop to drink.”

It’s a paradox, and at its nexus is what I’ll call the Doctrine of New Finance, which is taught with increasingly religious zeal by economists, and at times even by business professors like me who have failed to challenge it. This doctrine embraces measures of profitability that guide capitalists away from investments that can create real economic growth.

Executives and investors might finance three types of innovations with their capital.
(1)“empowering” innovations. These transform complicated and costly products available to a few into simpler, cheaper products available to the many.

The Ford Model T was an empowering innovation, as was the Sony transistor radio. So were the personal computers of I.B.M. and Compaq and online trading at Schwab. A more recent example is cloud computing....Empowering innovations create jobs, because they require more and more people who can build, distribute, sell and service these products. Empowering investments also use capital — to expand capacity and to finance receivables and inventory.
(2) “sustaining” innovations. These replace old products with new models. For example, the Toyota Prius hybrid is a marvelous product. But it’s not as if every time Toyota sells a Prius, the same customer also buys a Camry. There is a zero-sum aspect to sustaining innovations: They replace yesterday’s products with today’s products and create few jobs. They keep our economy vibrant — and, in dollars, they account for the most innovation. But they have a neutral effect on economic activity and on capital.
(3) “efficiency” innovations. These reduce the cost of making and distributing existing products and services. Examples are minimills in steel and Geico in online insurance underwriting. Taken together in an industry, such innovations almost always reduce the net number of jobs, because they streamline processes. But they also preserve many of the remaining jobs — because without them entire companies and industries would disappear in competition against companies abroad that have innovated more efficiently.

Efficiency innovations also emancipate capital. Without them, much of an economy’s capital is held captive on balance sheets, with no way to redeploy it as fuel for new, empowering innovations....The economic machine is out of balance and losing its horsepower. But why?

The answer is that efficiency innovations are liberating capital, and in the United States this capital is being reinvested into still more efficiency innovations. In contrast, America is generating many fewer empowering innovations than in the past. We need to reset the balance between empowering and efficiency innovations.

The Doctrine of New Finance helped create this situation.. The Republican intellectual George F. Gilder taught us that we should husband resources that are scarce and costly, but can waste resources that are abundant and cheap. ...in the 1930s and the ‘50s, capital was relatively scarce in our economy. So we taught our students how to magnify every dollar put into a company, to get the most revenue and profit per dollar of capital deployed. To measure the efficiency of doing this, we redefined profit not as dollars, yen or renminbi, but as ratios like RONA (return on net assets), ROCE (return on capital employed) and I.R.R. (internal rate of return). ...

Three ideas to seed a productive discussion:
(A) CHANGE THE METRICS. We can use capital with abandon now, because it’s abundant and cheap. But we can no longer waste education, subsidizing it in fields that offer few jobs. Optimizing return on capital will generate less growth than optimizing return on education.
(B) CHANGE CAPITAL-GAINS TAX RATES
(C) CHANGE THE POLITICS
Clayton_Christensen  capitalism  metrics  George_Gilder  Gilder's_Law  taxation  tax_reform  innovation  idle_funds  taxonomy  Fortune_500  cash_reserves  abundance  ratios  ROCE 
november 2012 by jerryking
Build your own insurance company
August 22 2007 | Fortune Small Business | By Jeanne Lee, with Brandi Stewart

Across the nation, small-business owners are already finding captive insurance an attractive alternative to the commercial market. For manufacturers, contractors, and professional-service firms, property and liability insurance has become a pricey and uncontrollable variable - a wild card that can break a small business. Since 2000, when the captive business was mostly geared to self-insuring Fortune 500 companies, the industry has expanded to 27 states and the District of Columbia, and the number of captive insurance companies has more than doubled, to nearly 1,100. Dudley Miles is among the converts. Miles is CEO of J.D. Miles & Sons in Chesapeake, VA. Miles turned to Roof Connect, an alliance of about 75 firms with annual revenues ranging from $2 million to $90 million. By banding together and creating their own insurance company, these business owners hoped to bring predictability back to their profit statements, secure special coverage, and make certain that their insurance would not suddenly disappear. A group creates an insurance company, providing enough capital to cover a set amount of risk. The company then purchases reinsurance to cover losses beyond that amount. Day-to-day management is usually outsourced to a specialized company, called a captive manager. Over time, if there are no large losses, excess reserves can come back to the owners as dividends. Captives are not for every business.
small_business  insurance  product_recalls  owners  Fortune_500 
june 2012 by jerryking
Look to Giants, Not Start-Ups, for Innovation
From the Wall Street Journal
Informed Reader
November 20, 2007; Page B8

When people think of radical innovations, they usually think of start-ups that shake an industry from the ground up. Some sectors are hobbled with "intractable, industry-wide problems" that only a large company can solve, says Mr. Grove, the co-founder of Intel. Mr. Grove, who has been researching the phenomenon with Stanford Graduate School of Business professor Robert Burgelman, calls this "cross-boundary disruption." Crucially, the industry on the other side of the boundary is "stagnant and populated with companies that cling to doing business the way they always have."
Andy_Grove  Apple  brands  breakthroughs  cross-boundary  disruption  industry_boundaries  innovation  large_companies  moonshots  Fortune_500  GE  stagnation  start_ups  Wal-Mart 
june 2012 by jerryking
Your Resume vs. Oblivion - WSJ.com
JANUARY 24, 2012| WSJ| By LAUREN WEBER

Inundated Companies Resort to Software to Sift Job Applications for Right Skills...To cut through the clutter, many large and midsize companies have turned to applicant-tracking systems to search résumés for the right skills and experience. The systems, which can cost from $5,000 to millions of dollars, are efficient, but not foolproof.

Ed Struzik, an International Business Machines Corp. expert on the systems, puts the proportion of large companies using them in the "high 90%" range, and says it would "be very rare to find a Fortune 500 company without one."

At many large companies the tracking systems screen out about half of all résumés, says John Sullivan, a management professor at San Francisco State University.
onboarding  applicant-tracking_systems  résumés  hiring  Fortune_500  online_recruiting  job_boards  recruiting  job_search 
january 2012 by jerryking
Why big businesses are bad for business
Oct. 19, 2011 | The Financial Times. (): Business News: p12.|
Luke Johnson
too many executives in large public companies actually have more in common with various arms of government than they do with entrepreneurs and start-ups. I used to believe that the great divide was between the public and the private sector: between state and commercial interests. But in truth the real difference is between giant and small organisations, whether they are for profit or not; between huge bureaucracies and owner-run outfits.
Luke_Johnson  size  large_companies  small_business  bureaucracies  Fortune_500  owners 
november 2011 by jerryking
Litigation Portfolio Outsourcing
To reduce costs, Fortune 500 corporations outsource a wide variety of products and services outside their core competencies (e.g., information technology, employee benefits). The corporate self-insured litigation market is the last, large cost center where outsourcing opportunities have been unavailable. Many large corporations spend more on litigation than on most services and products. Litigation is the only corporate activity where transaction costs exceed all other costs.

DryStone Capital offers corporations the opportunity to outsource litigation. DryStone focuses exclusively on defending large portfolios of litigation, including employment, personal injury, product liability, commercial and environmental. DryStone offers a buy-versus-make alternative.

DryStone Capital resolves all lawsuits for a fixed price, which includes both defense and liability cost, and is 10% less than what it would otherwise cost. Using our own capital, DryStone Capital creates a reserve to take the financial risk away and to guarantee the savings.
law  Outsourcing  litigation  financial_risk  Fortune_500  transaction_costs 
november 2011 by jerryking
How to Be Like Apple - WSJ.com
AUG. 29, 2011 | WSJ | RACHEL EMMA SILVERMAN. Driving
Innovation: Mgmt. experts say there are specific ways firms can generate
and execute new ideas. Solicit input. Great ideas come from all levels
of the organization, not just the top. Provide workers time for
"unofficial activity," set time to work on creative ideas. Executing
ideas is often tougher than generating them. Companies need a clear
process to prioritize, resource & test ideas quickly and cheaply, so
that they can afford to experiment...Observation can help companies
understand not just what people say they want, but what they really
need. Clay Christensen says P&G's new-product success rate in recent
yrs. came from observing that people were concerned about how their
clothes smell (Febreze) & were always looking for simpler ways to
clean the floor (Swiffer.). P&G overhauled its new-biz strategy
after realizing that just 15% of its ideas, developed in more of an
ad-hoc approach, were meeting revenue & profit targets.
Apple  ideas  idea_generation  innovation  execution  Vijay_Govindarajan  P&G  business_development  Clayton_Christensen  new_products  kill_rates  success_rates  ad_hoc  new_businesses  slack_time  companywide  observations  experimentation  primary_field_research  process-orientation  large_companies  Fortune_500  brands  unarticulated_desires  Michael_McDerment 
august 2011 by jerryking
U.S. business leaders finally getting that international feeling
Dec. 10, 2010 | G&M | CHRYSTIA FREELAND...After a century
when succeeding in the U.S. was the surest route to commercial success,
the country’s best businessmen and women have realized that the way to
win is to go global....in the U.S. just 10 % of Fortune 500 chiefs were
foreigners. Now that the American century is over, however, U.S. biz
leaders are catching on fast. A sign of the times was the recent
decision by Stephen Schwarzman, CEO of Blackstone, to move to Paris for
3 to 6 mths. next year...Like Blackstone, GE is moving its chiefs to
where the action is: Last month John Rice, a GE vice-chairman, was
reassigned to Hong Kong, where he will oversee non-U.S. sales, mktg.
& operations....the shift of U.S. capital and American capitalists
outside the country will further polarize an already bitter national
debate. By 2012, Americans won’t just be arguing about tax breaks for
millionaires, they’ll be targeting the millionaires who spend six months
a year in Paris or Hong Kong.
globalization  Chrystia_Freeland  Blackstone  Fortune_500  parochialism  GE  Stephen_Schwarzman  CEOs  leadership  cosmopolitan 
december 2010 by jerryking
How to Innovate After a Recession -
Sept. 7, 2010 | BusinessWeek | By Vijay Govindarajan who
outlines a 3-pronged plan for making innovation flourish in a
post-recession environment. Why can't organizations execute innovation,
especially Fortune 500 companies which have such vast resources and
capabilities? (1) The true challenge: execution. Business organizations
are not built for innovation, but for efficiency. Organizations today
are only modestly more prepared for the challenges of innovation than
they were 50 yrs. ago. While most companies have plenty of creativity
and technology, they lack the managerial skills to convert ideas into
reality.(2) Building a special project team. To be successful in
execution, each innovation initiative needs a special kind of team and a
special kind of plan.(3) Conducting the innovation experiment (i)
Formalize the experiment. (ii) Break down the hypothesis.(iii) Seek
the truth.
innovation  recessions  economic_downturn  Vijay_Govindarajan  experimentation  execution  Fortune_500 
september 2010 by jerryking
Op-Ed Columnist - An Economy of Grinds - NYTimes.com
July 12, 2010 | NYT | By DAVID BROOKS. Mentions in passing
Sebastian Mallaby's book, “More Money Than God,” on hedge fund
operators. However, the thrust of this piece is really the contrast
between the post-2008 recession prospects of Fortune 500 companies
populated by charming, archetype corporate executives, with those of
smaller, entrepreneurial owner-managed firms, populated by those who
are, shall we say, a whole lot less socially graceful. Brooks contends
that as a society, we mistakenly attribute trustworthiness to those who
are the most socially graceful and consequently: (i) overlook their
ability to cause damage; as well as (ii), overemphasize their importance
as a barometer of economic recovery. He suggests instilling greater
business confidence in the minds of "grinds" is the challenge at hand.
David_Brooks  trustworthiness  innovation  business_confidence  books  hedge_funds  socially_graceful  Fortune_500 
july 2010 by jerryking
Gap Widens Between Tech Richest and the Rest - WSJ.com
MARCH 16, 2010 | Wall Street Journal | Ben WORTHEN. A handful
of cash-rich companies are consolidating power in the technology
industry, using their wealth to expand into new businesses and making it
harder for small and midsize competitors to break through. Why the
industry is evolving this way is rooted in balance sheets. Over the past
2 years, Apple Inc., Oracle Corp., Google Inc., Microsoft Corp. and 6
other large tech companies have generated $68.5 billion in new cash,
compared with just $13.5 billion for the other 65 tech companies in the
S&P 500 Index combined. Because of their massive cash accumulation,
these companies can afford to take risks that smaller companies can't
at a time when the economy remains fragile. The result is a bifurcated
tech landscape, says Erik Brynjolfsson, a professor at MIT's Sloan
School of Management.
Apple  barbell_effect  Ben_Worthen  Big_Tech  cash  cash_reserves  consolidation  Erik_Brynjolfsson  Fortune_500  Google  large_companies  market_power  Microsoft  new_businesses  Oracle  risk-taking  small_business  start_ups  trends  winner-take-all 
march 2010 by jerryking
Unboxed - Who Says Innovation Belongs to the Small? - NYTimes.com
May 23, 2009 | New York Times | By STEVE LOHR. Technology
trends also contribute to the rising role of large companies. The lone
inventor will never be extinct, but W. Brian Arthur, an economist at the
Palo Alto Research Center, says that as digital technology evolves,
step-by-step innovations are less important than linking all the
sensors, software and data centers in systems.
innovation  size  Steve_Lohr  Clayton_Christensen  large_companies  W._Brian_Arthur  sensors  software  interconnections  Fortune_500  brands  back-office  data_centers  systematic_approaches  systems  systems_integration  Xerox 
october 2009 by jerryking
FT.com / Columnists / Luke Johnson - Rites of passage for young entrepreneurs
Published: July 15 2008 FT column By Luke Johnson that focuses
on the fact that Gen X and Gen Y entrepreneurs have never been in
business during a recession. Worries that a lot of their companies are
fragile constructs, not built to weather severe conditions. Established
corporates have years of retained profits to fall back on but smaller,
newer businesses do not.
entrepreneurship  fragility  resilience  Luke_Johnson  serial_entrepreneurship  adversity  setbacks  bouncing_back  recessions  coming-of-age  retained_earnings  large_companies  start_ups  brands  Fortune_500 
february 2009 by jerryking

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