Why Being Different Makes All the Difference

I simply loved this article because it describes perfectly well what should be a good brand, and maybe a little bit because I am also different; foreign, “really” energetic and fan of extreme sports when my fellows are more keen to go to the golf course.  Anyway, enjoy:

“Harvard Business School professor Youngme Moon has emerged as one of the world’s compelling voices on the future of strategy, competition, and brands. She teaches one of HBS’s most popular courses, she has written some of its best-selling case studies, and, a few years ago, she co-authored one of the most provocative articles that HBR has published in years. So it’s no surprise that her new book, Different, is both refreshing in its honesty and challenging in its implications for established companies (and cautious leaders) in all sorts of industries.

Professor Moon’s message is as simple as it is powerful: Most companies, in most industries, have a kind of tunnel vision. They chase the same opportunities that every other company is chasing, they miss the same opportunities that everyone else is missing. It’s the companies and brands that see a different game that win big–but all too often, the big companies in a field see things exactly the same way.

“In category after category,” she writes, “companies have gotten so locked into a particular cadence of competition that they appear to have lost sight of their mandate–which is to create meaningful grooves of separation from one another. Consequently, the harder they compete, the less differentiated they become …Products are no longer competing against each other; they are collapsing into each other in the minds of anyone who consumes them.”

It’s hard to argue with this insight. It always feels risky, and at times it can feel downright scary, to start from scratch and do something new, whether it’s launching an entrepreneurial venture or championing a game-changing venture inside an established organization. There are so many uncertainties, so many variables, so much that can go wrong, especially in an environment with so little room for error. But when it comes to thriving in an age of widespread uncertainty and rapid-fire innovation, the only thing more worrisome than the prospect of too much experimentation and change may be the reality of too little experimentation and change. There are too many competitors chasing too few customers with products and services that look too much alike.

That’s what occurred to me a few years ago as I listened in on one of those hush-hush, invitation-only conferences for CEOs and top executives. This conference was for leaders of regional banks across the United States. The setting was beautiful, but the mood was somber. Much of the talk was about tough the business had become: Credit markets were wreaking havoc with profit margins; acquisitions were creating a handful of giants that were putting the squeeze on mid-sized rivals; customers had become demanding, fickle, impossible to please. (This was, by the way, well before the worldwide financial meltdown, back when bankers thought TARP was what groundskeepers used to cover an infield during a rain delay.) There were lots of bankers, with lots of problems, looking for sympathy from one another.

It was enough to make me, as an outsider, feel sympathetic too, until one industry insider explained an overlooked source of the bankers’ pain. This market-research guru runs a firm that has conducted thousands of “mystery shops” and interviews with front-line employees at retail banks. He told the executives that during their visits, his firm’s researchers always ask bank employees one question: “As a customer, why should I choose your bank over the competition?” Two-thirds of the time, he reported, front-line employees have no meaningful answer. They either say nothing or they “make something up on the fly.”

The bank executives seemed unsurprised. I was stunned. How can the leaders of any company expect to outperform the competition when their own people can’t explain what makes them different from the competition and better than they’ve been in the past? That’s the real problem with so many organizations today. It is also the huge opportunity for executives, entrepreneurs, and innovators of all stripes who are prepared to shake up their industries by doing something truly distinctive.

The most successful companies and leaders don’t just try to outcompete their rivals at the margin. Instead, they aspire to redefine the terms of competition by embracing one-of-a-kind ideas in a world filled with me-too thinking. They aim to create what Professor Moon calls “idea brands,” products and services whose performance and personality in the marketplace challenges the limits and assumptions of entire categories. Cirque du Soleil is an idea brand, a circus that reimagined what a circus could be. So is Harley-Davidson, which invented the concept of the white-collar, weekend “biker outlaw.” And Dove soap, whose Campaign for Real Beauty challenged preconceived ideas from the worlds of fashion and style.

“Idea brands are not perfect brands,” Professor Moon warns. “Far from it. They are polarizing brands. They are lopsided brands. They are brands devoted to the skew …They may not make much sense on paper, but they make perfect sense to us.”

It all makes perfect sense to me. If you want to take the idea of “idea brands” seriously, ask yourself: If your company went out of business tomorrow, would anybody really miss it? I first heard this question from advertising legend Roy Spence, who says he got it from Jim Collins of Good to Great fame. Whatever the original source, it is worth taking seriously as a guide to what really matters in terms of strategy and marketing. Why might a company be missed? Because its products and services are so distinctive, its culture is so unique, and its mission is so compelling. Few organizations meet any of these criteria, which may be why so many companies feel like they’re on the verge of going out of business.

Think about it: If you do things the same way everyone else in your field does things, why would you expect to do any better? Being different is what makes all the difference.

By Bill Taylor”

What Poor Countries Can Teach Rich Ones About Health Care

At first glance, it is hard to imagine how innovations from poor countries could provide much help in solving the cost and quality problems plaguing health-care delivery in rich countries like the United States. While it is easy to understand why a poor man would want what a rich man has, why would a rich man benefit from a solution created originally for a poor man?

India’s Aravind Eye Care System demonstrates why rich countries should take such reverse innovation seriously.

Aravind’s operations include a chain of five eye hospitals, a manufacturing facility for producing intraocular lenses and other consumables needed for cataract and other eye surgeries, a training center for imparting training to other eye hospitals in India and other countries, and a network of outreach centers. Aravind hospitals conducted 269,577 eye surgeries in 2008-09, of which nearly 50% were performed for free for poor patients. The charges for the remaining 50% were at or below market rates — i.e., there were no cross subsidies.

Of the facilities’ 2.46 million outpatients during that time, 50% were treated for free, and the fee for most of the others was a nominal $0.50. Aravind takes no donations or charity and yet not only makes a profit but enough to fund a new hospital every three years! All these new hospitals and expansions have been internally funded. Aravind has been doing this for more than two decades.

The $64,000 question is: How? The answer lies in the elements that make up Aravind:

1. Extraordinary productivity. Aravind doctors average about 25 cataract surgeries per day (actually, over six hours), whereas other eye-care hospitals do six to eight surgeries per doctor. Aravind achieves this by having a highly streamlined, innovative, and efficient system and a highly trained paramedical staff.

2. Exploiting economies of scale. This allows its in-house manufacturing facility, Aurolab, to produce intraocular lenses (IOLs) at $5; global prices are about $80. Aravind is the lowest-cost producer of IOLs in the world. Its scale of production enables, or rather, compels it to export almost 50% of its production to other eye-care hospitals, both in India and abroad.

3. Borrowing best practices from other sectors. Aravind has borrowed concepts like economies of scale and assembly lines from the industrial sector and applied them in health care to bring down costs without sacrificing quality. Volume is critical to this mode of operation. Aravind generates volume through its outreach programs and eye camps, which are even conducted in interior villages. Now, it is setting up satellite centers that are staffed only with technicians but are equipped with webcams that allow the base hospitals to help make diagnoses remotely. High volume not only lowers costs but more importantly, it leads to better quality since doctors build world-class competencies as they do more surgeries.

4. Investing in critical activities but saving on frills. Aravind lowers its cost position by reducing bells and whistles without compromising on the quality of its equipment or medicines or the competence of doctors and nurses.

5. Aravind’s ideological foundations. Its founder, the late Dr. Govindappa Venkataswamy (“Dr. V”), stated his mission simply as “eradication of needless blindness” when he founded the hospital in 1976. This mission has continued to this day. All staffers — from doctors and nurses right down to attendants and sweepers — are imbued with this mission. Every patient, however poor he or she may be, must be treated with respect. Commitment is vital. Every action Aravind undertakes is tested against the criterion of whether it will help achieve this mission. Thus, a new research facility has just been constructed with the objective of devising better methods of overcoming the blindness problem. Aravind’s training facilities impart training at very low rates to doctors and nurses from other hospitals in conducting surgeries in the “Aravind Way.” Its outreach programs include diabetes and refraction checking to preempt later complications.

Today, cataracts are gradually being overtaken as the dominant cause of blindness in India by other causes, such as diabetes-related diseases and refraction problems. Consequently, Aravind is slowly placing greater emphasis on these areas.

Aravind charges about $100 for a cataract surgery with ordinary IOLs — an amount that includes a two-day stay in the lowest-category room. Even with the highest room rates and with phacoemulsification surgery with modern, three-piece, foldable IOLs, the charges are still only about $300. In contrast, a cataract surgery typically costs between $2,500 to $3,500 in the U.S. Aravind’s morbidity rates are benchmarked against and consistently exceed those of the Royal College of Ophthalmologists in the U.K.

Aravind is a perfect example of how astonishing the results can be when produced through a congruence of vision, values, purposeful implementation, and a high degree of efficiency. Its mission and vision statements are not pieces of paper on display; they come alive in each of the organization’s activities.

There is nothing in this model that cannot be replicated in any country — developing or developed. The keys are simple: pay close attention to operational efficiency, work on separating the core from the frills, maximize the productivity of the costliest resources (doctors and equipment), and utilize the sheer power of volume.

Here are some questions for reflection and debate:

  • How might Aravind expand its reach inside India, in other emerging markets, and in developed countries?
  • How can we systematically identify all the breakthrough innovations in health-care delivery in poor countries that might be applied in the U.S. and other developed countries?
  • Jim Yong Kim, president of Dartmouth College, has stressed the need to incorporate health-care-delivery science in undergraduate education. Do you agree

by Vijay Govindarajan and S. Manikutty; Vijay Govindarajan is the Earl C. Daum 1924 Professor of International Business at the Tuck School of Business at Dartmouth.  S. Manikutty is a professor at the Indian Institute of Mangement in Ahmedabad, India.

Entrepreneurial spirit? Don’t look too hard for it. It may not exist.

Energy. Ambition. Confidence. Patience. Fearlessness. All these traits are associated with that mysterious quality of “entrepreneurialism”. Self-made men, such as Richard Branson and Alan Sugar, seem to exude different qualities from ordinary wage slaves.

But that is not the way things look to economists. It’s not that we are blind to the very idea that personality matters; it’s just that the evidence suggests a different story.

Andrew Oswald of Warwick University and David Blanchflower, a former member of the UK’s monetary policy committee, have assembled an intriguing picture of entrepreneurialism. They conclude that it is less a matter of character and more a matter of opportunity. The first piece in the puzzle is that many people who aren’t entrepreneurs claim that they wanted to be. Across Europe, 10-20 per cent of workers are typically self-employed, but 30-60 per cent say they’d like to be.

Oswald and Blanchflower also looked at evidence on happiness and concluded that the self-employed tend to be happier. In short, people say they want to be self-employed, and are more satisfied when they are self-employed, but frequently do not take the plunge.

Is this just because they lack that essential entrepreneurial spirit? Probably not. Oswald and Blanchflower originally intended to study the psychological make-up of entrepreneurs. That work went nowhere, because it seems that there is nothing distinctive about the psychological make-up of entrepreneurs.

What matters instead is capital. In surveys, would-be entrepreneurs identify lack of finance as the key obstacle. And in a clever piece of analysis, Oswald and Blanchflower compared people who had recently received a substantial bequest with those who had not. They found that such bequests – essentially twists of fate – were good predictors of whether people became entrepreneurs. They were especially influential on the decisions of people to become entrepreneurs early in life, presumably because older people have other ways to acquire funding.

Another substantial influence on entrepreneurship seems to be family background. People with at least one self-employed parent are two or three times more likely to be self-employed themselves.

Recent research by Simeon Djankov, Yingyi Qian, Gérard Roland and Ekaterina Zhuravskaya examines entrepreneurs in Brazil, with similar results. Unlike Oswald and Blanchflower, the Brazilian research looked at entrepreneurs who employed at least six people. Yet, again, they find that family background matters. If you have entrepreneurs in your extended family, you are much more likely to become one yourself.

There is some evidence that personality matters, although the data do not always reinforce the entrepreneurial stereotype. Djankov and his colleagues find that entrepreneurs tend to be more patient and more intelligent. There was no evidence that entrepreneurs were more confident than non-entrepreneurs, and entrepreneurs actually seem to be more averse to taking risks. Separate research by Djankov and different colleagues suggests that low taxes and efficient regulations are hugely important in encouraging the overall prevalence of new businesses.

The lesson I draw is that entrepreneurs learn from example and can be helped by social connections. The business environment – whether access to capital or freedom from too much bureaucracy – matters a great deal, too.

But the entrepreneurial spirit? Don’t look too hard for it. It may not exist.

Tim Harford

Nike in the UFC world?!

I didn’t notice it, but a few months ago, Nike released a new commercial with a huge surprise (for me at least…), they included a sequence of ultimate fighting (UFC) featuring “Rampage” Jackson, former UFC light heavyweight champion. In this video clip, superstars such as Maria Sharapova, Lance Armstrong, Deron Williams and Ladanian Tomlinson are featured alongside Jackson.

Hate it or like it, it is impressive to observe the evolution of this sport, still considered by many as a show for rednecks, but henceforth a real deal for sport companies as the number of corporate sponsors looking to get a piece of the action is growing exponentially.

10 Emerging Technologies 2010

Each year, Technology Review selects what it believes are the 10 most important emerging technologies. The winners are chosen based on the editors’ coverage of key fields. The question that they ask is simple: is the technology likely to change the world?

Some of these changes are on the largest scale possible: better biofuels, more efficient solar cells, and green concrete all aim at tackling global warming in the years ahead. Other changes will be more local and involve how we use technology: for example, 3-D screens on mobile devices, new applications for cloud computing, and social television. And new ways to implant medical electronics and develop drugs for diseases will affect us on the most intimate level of all, with the promise of making our lives healthier.

10 Emerging Technologies 2010

Why Stock Price Drops When Women Join the Board

Bias, pure and simple, appears to be the reason why a company’s stock price tends to decrease after women take seats on the board of directors.

But what about the pervasive belief out there that adding women to corporate boards leads to financial blessings? Research from Catalyst, a nonprofit dedicated to advancing women in business, promotes this idea. A much-quoted 2007 study shows that at companies with high numbers of female directors, metrics such as return on equity, return on sales, and return on invested capital are substantially higher than at companies with very few or no female directors.

But studies looking specifically at the consequences of appointing women to corporate directorships show that stock performance tends to be unchanged or slightly worse after boards increase their gender diversity.

A group of researchers led by Harvard sociologist Frank Dobbin has been looking into the cause of the negative stock-price effect, and bias seems to be the culprit. Investor bias, that is.

One telltale finding pointing toward this conclusion is that decreases in stock valuation aren’t due to any falloff in corporate results — financial performance tends to remain unchanged after boards increase their gender diversity, Dobbin says.

Another is the behavior of “blockholders,” investors that each own 5% or more of a company’s shares. After the addition of women to the board, these institutional buyers tend to increase their holdings of the company’s shares. Non-blockholders tend to decrease them.

“These are moderately strong and pretty significant effects,” Dobbin recently said during a talk at Harvard Business School.

The blockholders, he conjectures, assume that their buying-and-selling actions are likely to be noticed by the public and the financial press, so they quash any bias they may feel toward female directors. The non-blockholders assume no such thing and are less likely to “censor their own inclinations to sell in response to growing board diversity,” according to a working paper by Dobbin, Jiwook Jung of Harvard, and Alexandra Kalev of the University of Arizona. In the absence of public scrutiny, these institutional investors’ “natural biases” are apparently unleashed.

Non-blockholders can have a significant effect on stock price. They controlled fully half of the shares in the companies that Dobbin and his colleagues studied — about twice as many as owned by the blockholders. So “the aggregate effect,” apparently, was to reduce the value of firms that appoint women directors, the paper says.

The research serves as a reminder of how deep and pervasive gender bias is. “Studies show we all hold gender biases and act on them intuitively — and in the blink of an eye,” Dobbin says.

by Andrew O’Connell from the Harvard Business Review