Executive Insight

Choosing How to Compete

Strategy is about setting yourself apart from the competition. It’s not just a matter of being better at what you do - it’s a matter of being different at what you do. Increasingly, market leaders will be those companies that don’t just optimize within an industry, but actually transform it.

This requires executives to think differently about their business and to devise and stake out a unique and valuable strategic position involving a competitively differentiated set of activities that integrate and compound to create a value proposition that is difficult, if not impossible, to imitate. A comprehensive, coherent, integrative and evolving portfolio of initiatives is then required to drive value and long-term performance. This includes a balance of adapting the core business to meet future challenges, shaping the portfolio in an ongoing way to respond to a changing environment, and building the next generation of business growth.

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Achieving and Sustaining the Strategic Logic of the Merger

Following a merger, management is under intense pressure to address challenges such as defining integration priorities and quickly identifying and capturing synergies. In addition, special attention has to be paid to addressing cultural change and controlling business risk in the new organization.

Key considerations include:

• What is the best way to most quickly realize the strategic objectives of the merger?
• What must be integrated quickly, and how to draw down on synergies?
• How to best integrate two different cultures and deal with conflicts between them?
• How to retain key talent during and beyond the integration process?
• How to keep employees focused on business and customers during the integration process?

It is widely known that roughly half of all mergers and acquisitions fail to create shareholder value and that about one-quarter actually destroy it. It is also no secret that there are tried and tested methodologies for successfully integrating companies. So why do so many deals—especially those that appear to offer substantial cost and revenue synergies—produce such disappointing results?

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The Connected Consumer Era is No Longer on the Way; It Has Arrived.

A new IBM study of the media and entertainment market reveals that as consumers adopt an increasing number of digital devices, four distinct new "digital personalities" are emerging. This shift is compelling companies to adopt more innovative business models that deliver personalized experiences.

The "Beyond Digital" study paints a portrait of a rapidly changing audience that is adopting a wide range of digital devices at a dizzying pace. And, contrary to popular belief, most are not college students. For example, sixty-five percent of respondents aged 55 to 64 report surfing the Web and texting with friends while watching TV. Of those over age 65 watching TV, 49 percent surf the Web and 30 percent are texting. Eighty-two percent of surveyed global consumers aged 18 to 64 are embracing connected digital devices.

Moreover, consumers in China and the U.S. are moving away from traditional forms of media, with more than 50 percent using online sources for breaking news.

The New Personalities
Today's connected consumers demand instant access to personalized content on their own terms. With the growth of digital devices, one-way communication and distribution of content is no longer feasible. According to the IBM study, most users fall into one of four emerging personality categories:

Efficiency Experts

With 41 percent in this category, these respondents use digital devices and services to simplify day-to-day activities. Efficiency experts send emails rather than letters, use Facebook to communicate with others, access the Internet via mobile phones, and shop online.

Content Kings

Are generally male consumers, who frequently play online games, download movies and music, and watch TV online. This audience represents 9 percent of the global sample.

Social Butterflies

Place emphasis on social interaction – they require instant access to friends, regardless of time or place. Fifteen percent of consumers surveyed reported they frequently maintain and update social networking sites, add labels or tags to online photos, and view videos from other users.

Connected Maestros

35 percent of those surveyed take a more advanced approach to media consumption by using mobile devices and Smartphone applications to access games, music, and video or to check news, weather, sports, etc.

According to the IBM study, media and entertainment companies' payment infrastructures need to be flexible and scalable to allow a variety of innovative pricing approaches to attract consumers with different preferences to their content. The need for payment option flexibility, even for the same set of consumers, is apparent by looking at those most active in adopting new devices. This group's preferred mode of payment to watch a movie on a website is by viewing advertising that is included with the movie (39 percent of this segment chose this option), while they prefer to see movies on a tablet by purchasing a subscription (chosen by 36 percent). But to watch movies on a smart phone, they prefer to pay per use (the payment choice of 36 percent).

IBM surveyed 3,800 consumers in six countries – China, France, Germany, Japan, the United Kingdom and the United States for this study, and also met with global representatives in broadcasting, publishing, as well as media service agencies, and telecommunication providers, to evaluate digital consumption behaviors.

Read the study

Source: IBM

Finding Answers in the Global Market - Entrepreneurship Rather Than Aid for Africa

Realities, myths, lessons learned and changing the narrative.

In a powerful and pragmatic speech at the NYU Development Research Institute, entrepreneur Andrew Rugasira asks why, if the private sector is the engine for growth, do economic development discussions on Africa so rarely include the private sector.

He argues that the only way to bring about sustaining growth and development is not through handouts, charity and sympathy, but through hard work, creativity and innovation, and creating an environment where entrepreneurship flourishes. He comments  that it’s the same thing that happened in the US, and says he often wonders why, when it comes to Africa, a whole different set of solutions are promoted: “You don’t really hear people talking about models for entrepreneurship and models for business solutions to these big problems”.

Rugasira describes what happened as Good African Coffee, the business he founded in Uganda’s Rwenzori mountains, began to take off. As farmers began to produce higher quality coffee and see higher prices for their crops:

Something really extraordinary began to happen.  The values that we don’t really hear about in a lot of these development reports began to manifest: entrepreneurship, business exposure, dignity, esteem, the pride in producing a product that they knew was going into a market…

Find Andrew’s full speech and other video from DRI’s conference here.

Source: NYU Development Research Institute

 

The Gender Wage Gap by Occupation

Full-time working women in America earned only 82.2% of men's median weekly earnings last year, according to a new report by the Institute for Women's Policy Research, a think-tank in Washington, DC. Women earned less than men in almost all occupations. Only in the fields of "stock clerks and order fillers" and "bookkeeping, accounting and auditing clerks" did women make slightly more than their male counterparts. The gender wage gap (women’s earnings as a percentage of men’s) was most pronounced amongst CEOs and financial managers. Female chief executives earned only 69% as much as male bosses, reports The Economist who analyzed the findings.

The study reports that women’s median earnings are lower than men’s in nearly all occupations, whether they work in occupations predominantly done by women, occupations predominantly done by men, or occupations with a more even mix of men and women. During 2011, median weekly earnings for female full-time workers were $684, compared with $832 per week for men, a gender wage ratio of 82.2 percent. Added to the gender wage gap within occupations is the gender wage gap between occupations. Male-dominated occupations tend to pay more than female-dominated occupations at similar skill levels, particularly at higher levels of educational attainment. Tackling occupational segregation is an important part of tackling the gender wage gap, IWPR suggests:

“The gender wage gap and occupational segregation—men primarily working in occupations done by men, and women primarily working with other women—are persistent features of the U.S. labor market. Only four of the 20 most common occupations for men and the 20 most common occupations for women overlap. Four of ten women (39.5 percent) work in traditionally female occupations and between four and five of ten male workers (44.5 percent) work in traditionally male occupations; only 5.8 percent of women work in traditionally male occupations and only 4.6 percent of men in traditionally female occupations.”

Read the report

Chart: The Economist

What Keeps CEOs Up At Night? The Conference Board Thinks It Knows

According to the 776 CEO respondents to the 2012 edition of The Conference Board CEO Challenge survey, the race to innovate, the war for talent, “black swans” and bad debts, and the hunt for new markets—all driven by an increasing drumbeat of regulation and oversight—define today’s global business environment. When this combination of risk, regulation, uncertainty, and complexity is mixed with the need for speed and an overwhelming flow of information and data (not all of it reliable), it makes for risky business and an intense set of unique leadership challenges for CEOs in every region of the world.

What Keeps CEOs Up At Night?

The five top challenges—Innovation, Human Capital, Global Political/Economic Risk, Government Regulation, and Global Expansion—show a balance between concerns related to the macro business environment (of which business leaders have limited or no control individually) and company-specific challenges that are driven by management action and require a well-executed business strategy.

Since 1999, The Conference Board CEO Challenge survey has asked CEOs, presidents, and chairmen from across the globe to identify their most critical challenges. This year’s survey features a somewhat revised set of 10 overall challenges and a more in-depth strategy section to better reflect today’s business environment. Follow-up interviews with CEOs across the globe enhanced our qualitative understanding of the issues.

The Year of Shareholder Communication

Francis Byrd, Senior Vice President, Corporate Governance/Risk Practice Leader, Laurel Hill Advisory Group discusses the importance of thorough shareholder communication, including, three things that all boards should be doing to make sure that shareholders understand their efforts to improve shareholder value.

Source: BoardMember.com

New Release: CEO Succession Practices Report

The Conference Board has just released the 2012 edition of CEO Succession Practices, its annual report documenting leadership turnover events at S&P 500 companies.

One of the most important strategic risks that a corporation must manage is the succession of its chief executive officer. This is true today, more than ever, due to the extraordinary challenges posed by the economic times we live in and the increased turnover of top business leaders. To make an informed decision, the board should understand not only the technical knowledge and experience necessary to effectively lead the company into the future, but also the context and practices of the succession planning process. 

The purpose of CEO Succession Practices is to provide such background information and serve as a practical tool to the corporation in the performance of this critical task. 

In its News Release, The Conference Board highlighted the following key findings:

CEO succession rate

In 2011, 55 CEOs in the S&P 500 left their post. The rate of CEO succession was 10.8 percent, consistent with the average number of annual succession announcements from 2000 through 2010.

Company performance and CEO age as determinants

The probability of CEO succession is higher following poor performance. In the 2000–2010 period, the succession rate of CEOs of poorly performing companies averaged 14.0 percent, ranging from a high of 21.2 percent to a low of 10.0 percent. In 2011, the succession rate of CEOs of poorly performing companies was consistent with the prior trend at 12.7 percent. The succession rate of CEOs of better performing companies varied from 6.5 percent to 11.6 percent during the 2000-2010 period, averaging, 9.7 percent. In 2011, the succession rate of CEOs of better performing companies was 10.3 percent.

The probability of CEO succession is also higher for CEOs who are at least 64 years of age. In the 2000–2011 period, the succession rate of CEOs who were at least 64 years old ranged from 29.0 percent to 9.4 percent (on average, 18.4 percent over the period), while the succession rate of younger CEOs ranged from 8.3 percent to 13.4 percent (on average, 10.1 percent over the period). The rate of CEO succession for younger CEOs is remarkably consistent across the sample.

CEO dismissal rates

CEO dismissal rates vary across the 2000–2011 period, ranging from a high of 40.0 percent in 2002 to a low of 16.2 percent in 2005 (on average, 28.2 percent for the period). Despite that variance, the rate of CEO dismissals for the 2000–2005 period, at 28.6 percent, is similar to the rate for the 2006–2011 period, at 27.9 percent. Since 2008, which roughly coincides with the beginning of the financial crisis, 28.6 percent of all succession events were associated with CEO dismissals.

Inside promotions and outside hires

Consistent with a continuing trend in the hiring of outsiders that has been recorded since the 1970s, 19.2 percent of successions in 2011 involved an outsider CEO appointment.

Joint election as board chairman

Only 19.2 percent of the 55 successions in 2011 involved the immediate joint appointment of an individual as CEO and chairman of the board of directors. Based on reviewed succession announcements, the majority of departing CEOs remained as board chairman for at least a brief transition period, typically until the next shareholder meeting.

The report is organized in four parts: 

Part I: CEO Succession Trends (2000-2011) illustrates year-by-year succession rates and examines specific aspects of the succession phenomenon, including the influence on firm performance on succession and the characteristics of departing and incoming CEOs. 

Part II: CEO Succession Practices (2011) details where boards assign responsibilities on leadership development, the role performed within the board by the retired CEO, and the extent of the disclosure to shareholders on these matters. For ease of reference, data is categorized based on industry groups, company size, and financial performance. 

Part III: Notable Cases of CEO Succession (2011) includes summaries of 10 episodes of CEO succession that made headlines in the past year that were carefully chosen to highlight key circumstances surrounding each transition. 

Part IV: Shareholder Activism on CEO Succession Planning (2011) reviews examples of responses by companies that have recently received shareholder proposals in this area. 

The report ends with an Appendix featuring The Conference Board Roadmap to CEO Succession Planning—a series of practical steps to make it all happen. 

Click here to access the report 

Source: The Conference Board

Inside the Foxconn iPad Factory

An interesting and balanced report from American Public Media reporter, Rob Schmitz:

Read Schmitz’s notebook from his visit.

More about Apple in China and Foxconn from American Public Media’s special project portal The Apple Economy, including the debunking of Mike Daisey’s account of Chinese factory conditions that initially caused such a furor.

Breakthrough-Thinking Revolutionizes the Sales Training Industry

This is a story of business disruption and an executive brave enough to cannibalize a successful business because he felt there was a better way to serve clients.

Just two years ago PLAYER MAP – a sales performance advisory firm – was celebrating two decades of helping sales organizations improve their win rates on large, complex sales projects on a worldwide basis. Clients included large high technology and engineering firms employing hundreds of field sales personnel in over 60 countries. Client sales personnel were responsible for many millions of dollars of revenue generation in highly competitive industry sectors.

Over the years PLAYER MAP had continued to refine its approach and methodologies, but essentially it taught sales people how to compete for and win high value projects. It had a loyal client base and a large, active user base for its methodologies. Mostly, salespeople liked how PLAYER MAP distanced itself from the process complexities of other competitive/consultative selling offerings and kept it all simple and pragmatic. And it worked, with one large global client reporting 30% improvements in win-rates and doubling of average project profitability.

Yet PLAYER MAP still delivered its methodology in high-impact (generally) two-day workshop settings – as is the industry norm. Participants left with new tools, insights and considerable enthusiasm. Clients shelled out relatively large facilitation fees. Sustaining momentum though was hard - as it is with all training type of interventions. Frequently PLAYER MAP was called in to provide refreshers or to coach on particularly important project pursuits.

Believing there had to a better way, PLAYER MAP president, Scott Leland set about reinventing the business. Today, the essence of the PLAYER MAP methodology has been distilled into a $3 a month computer app. Clients are signing up in droves. Large companies are enrolling hundreds of field sales personnel and process adoption seems to be sticking and working. Customer Relationship Management (CRM) industry leader Salesforce™ has just approved PLAYER MAP to be embedded into its AppExchange offerings.

So what do you get for $3 a month?

Access to a web-based portal and application where you can build a “map” of the “players” vital to the success of each of your project pursuits. Graphical keys readily label the players and visually show the positives and negatives of the situation – what is looking good and what needs to be worked on. Sales managers and colleagues can weigh in and the “Player Map” becomes a tool for project communication and collaboration. A series of legends reminds users of the competitive strategies they need to consider to advance and intensify the project pursuit. The portal is full of handy tips and reminders that guide the utilization of the tool.

Most importantly, the application becomes the sales and communication tool that users work with each and every day. It sure beats all of those complex proformas that typically characterizes large account methodologies.

Certainly users need help to get started and the company offers free webinars to new subscribers. Expert process coaching is also available to users and sales managers to enhance process utilization or to provide guidance on specific project pursuits. But it’s certainly a disruptive business model that reinvents the sales training marketplace, and clients are loving it. PLAYER MAP has a mantra, “Sell more sooner when you Player Map it” and this is playing out in practice.

For more information on PLAYER MAP, please visit www.playermap.com or call 414-921-2550.

In addition PLAYER MAP has also recently launched a professional certification process for its users. Based upon the proven principles of PLAYER MAP and best practices of professional development, the certification process provides users and user companies with a systematic and sustaining route to competitive sales mastery.

Charlesmore Partners has a strategic alliance with PLAYER MAP, is certified to provide PLAYER MAP user coaching and is the co-developer of PLAYER MAP’s new Certification Process.

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