Overseas Expansion by Japanese Companies

Cross border M&A’s by large Japanese firms have been on the rise over the last 10 years. So too have been overseas expansion efforts by small and medium sized enterprises (SME’s). In fiscal year 2011-2012 474 M&A’s totaling (US$92 billion) was the new record. This activity is of course being driven by the current poor state and worse future prospects of the local economy, and the attractiveness of lower labor and other costs abroad. A more serious driver in recent years is the fact that many of the SME’s have discovered that the large Japanese companies they used to sell to have already moved their operations overseas and are now looking for local suppliers close to their overseas factories.

However, many of these ventures will fail to produce value if they are managed in the same way that the previous (bubble era) round of overseas activity was managed and if the wrong people are selected to lead them. The main cause was a lack of understanding of how to manage globalization: usually as a result of attempting to export Japanese management style to global operations.

Today, the ability to manage diverse workforces is critical to success: Japanese overseas investment is not just in manufacturing anymore. Now, Japanese companies must globalize R&D, logistics and marketing capabilities as well. To do this requires a clear business strategy and a corporate culture that functions across diverse markets. Companies that fail to do this well will end up risking much and losing huge amounts of money and big opportunities.

Reasons for failure:

Historically many Japanese overseas acquisitions have performed badly, producing little or no value and occasionally, huge losses. The reasons for these failures can be grouped into two broad categories: (1) Poor post M&A integration management and (2) A lack of global leadership skills.

One extreme example is Nippon Sheet Glass. They acquired the huge British glass company, Pilkington, in 2006 in an effort to expand overseas. But due to poor planning, poor leadership and a culture clash, two foreign presidents quit in disgust and ultimately, NSG’s revenue dropped 35% by 2011.

 

1.     Poor post M&A integration management[i]

The specific reasons for failed integration management efforts generally fall into four categories:

  • Lack of alignment between Japanese home office and the overseas office
  • Attempting to export Japanese management practices overseas
  • Lack of attention to overseas talent retention
  • Lack of skilled post acquisition management/leadership

In fact the inability to integrate the acquired company into the parent organization and benefit from business synergies often stems from language barriers, culture differences and a lack of mutual trust. As a result, the two companies fail to share knowledge and best practices and gain little or nothing from their union.

 

2. Lack of global leadership skills

In a recent survey of HR professionals and leaders in 2600 Japanese companies only 4% said that the leadership at their firms was of very good or excellent quality, compared to 38% globally[ii]. This tells us that Japanese companies are very aware and very concerned about the quality of their global leadership talent. As we can see from the data collected by the Ministry of Economy, Trade and Industry (see graph below) finding and training global leadership talent is one of the biggest challenges faced by Japanese companies when expanding overseas.

Figure 1: Problems experienced when establishing overseas operations[iii]

 

Another survey, conducted by Jeitosa, shows us a slightly different (global) perspective, but with some agreement in the sense that managing cultural differences and securing global leadership talent are very big issues for any companies seeking to do business globally.

Figure 2: Challenges to Being Global[iv]

 

 

Success Stories

Good examples of overseas expansion do exist: Suzuki Motor’s acquisition of Maruti Udyog, and Takeda’s acquisition of Millenium are good cases to examine. In both cases the acquirers had a very well-defined strategy for post acquisition integration, one that was focused on making the most out of the combined strengths of the two companies.

Collaboration is the key to success in mergers and acquisitions, the leadership of both sides must make efforts to understand their new partners and work hard to find the best way of operating in the new, hybrid culture to discover business synergies, share knowledge and leverage the benefits of diversity. To do this, a clear strategy, strong leadership skills and intercultural sensitivity are the foundation.

Update: The Suzuki-Maruti merger has begun to suffer somewhat due a series of complex labor-related issues. This just reinforces the fact that this type of deal is extremely complex and even the best plans will require effective implementation.

 

Global Leadership Competencies

But what skills are required for a global leader to be successful? More data from the same global survey suggests that the following skillset is ideal for leaders to function successfully overseas.

Figure 3: Global Human Capital Competencies[v]

 

But the question remains: is leadership competence development sufficient to achieve business success? Unfortunately, the answer is “no”. Without organizational support for global leadership competence, isolated efforts to develop global leaders will ultimately fail.

Global Leadership Development

So what can be done to develop leaders who can then guide these Japanese companies to growth and competitive advantage overseas?

Globalinx has been working with Japanese companies to prepare managers for overseas assignments in leadership roles for over 40 years and we have discovered one fact to be true. Simple training programs (leadership, intercultural awareness, communication skills, etc.) alone have not proved to be effective.

All too often graduates of such programs come back to Japan (after short overseas assignments) totally frustrated because although they may have worked very hard to develop their leadership skills, intercultural awareness, and communication skills, they have been unable to apply their knowledge and skills to produce any meaningful results. This is often because too much “organizational friction” has hampered their ability to get things done.  And their overseas colleagues end up being equally frustrated because they see these well-intentioned managers getting tied up in red tape and bureaucratic complexity.

So a more holistic approach is necessary, one that takes into account the knowledge and skills of the individual as well as the organizational environment in which they will operate. Rather than thinking of leadership development as a skill-building activity on an individual level, one has to think of it as developing organizational capability.

 

 


[i] McKinsey and Co; Honda,K; Lostaglio,K; Oka,G: A Yen for global growth, 2012

[ii] Development Dimensions International; Global Leadership Forecast; Boatman, J; Wellins, R; 2011

[iii] METI, グローバル人材育成に関するアンケート調査 [Survey on the development of global human capital], 2010, p. 4.

[iv] 2010-2011 Going Global Report Highlights; Jeitosa Group International.

[v] 2010-2011 Going Global Report Highlights; Jeitosa Group International.

Mentoring Program Planning

Mentoring Program Planning

Setting up an internal mentoring program requires good planning for it to be successful and produce the desired results. There are complex logistical issues as well as confidentiality requirements and the need for continuous performance management to ensure that the program is on track. Occasionally a mentoring relationship will need to be terminated if, for example; there is a poor fit between the mentor and the mentoring client. As a result, all of the main players in such a program will need to know what is expected of them as well as the ideal overall life-cycle, the framework for each individual mentoring engagement, and the best mentoring style and skills to achieve the desired results.

Roles

A mentoring program has multiple roles with unique skillsets and duties that are critical to success:

  • Mentoring Program Director: This person is responsible for recruiting mentors, and mentoring clients and then matching them up based on the clients’ developmental objectives. They must also monitor the program to ensure that the rules of confidentiality are being observed and that the objectives are being achieved. Occasionally they will need to intervene if any of the parties is unhappy.
  • Mentor: The party who will meet with the mentoring client and provide learning opportunities and guidance based on their personal and professional experience.
  • Mentoring Client: The party who’s learning and developmental objectives are the basis for the relationship. These objectives can be either personal or professional and may have a direct impact on their work or a more indirect impact.
  • The Client’s Line Manager: The manager whose business objectives must be achieved through the mentoring client and other direct reports. This person can have a strong positive or negative impact on the success of the mentoring process.

Figure 1: Mentoring Roles

Benefit

An organization that knows how to do mentoring well can respond faster to business challenges and continuously improve, strengthen and retain its most important resource: its human capital.

 

Figure 2: The Mentoring Life-Cycle


What Is The Value Of Business Analysis

Globalinx delivered a special new seminar titled “Business Analysis

The participants learned how using Business Analysis methods before starting a project can contribute to project success, customer satis- faction, reduce costs and increase benefits. At the moment there is a perception that Business Analysis is only for IT projects, but it can add value to any kind of project.

According to the definition: “Business Analysis is the discipline of identifying business needs and determining solutions to business problems.” This, more general definition, allows us to use BA methods in any situation where a customer has a need and the vendor is some kind of solution provider. Especially where the solution has to fit to the unique needs of the customer very closely.

In the last half of seminar, the participants were able to apply the learning points to a case study and practice their new skills. Participants came from different industries and they participated in the 6-hour seminar very actively and with enthusiasm. They all agreed that Business Analysis skills are becoming critical to success for their companies.

Voice of participants (questionnaire)

• Chance of speaking and volume of listening is better than any other seminar

• Power Point slides were very easy to understand and well organized

• There are some good examples and I can use them for my job.

Content of seminar score 4.7/5.0 Instructor score 5.0/5.0 Summary score 4.8/5.0

BA’s have the specialized knowledge to act as a guide: to lead the business from its current state to its desired state. The value of business analysis is in realization of benefits, avoidance of risk and cost, identification of new oppor- tunities, understanding of required capabilities and modeling the future state of the organization. It is the role of the BA to ensure an organization realizes these benefits, ultimately improving the way they do business.

What is the Value of Business Analysis?

Business analysis is the discipline of discovering business needs and proposing solutions to business problems. These solutions may often include an ICT systems compo- nent, but may also consist of process improvement, organizational change or strategic planning and policy development. The person who carries out this task is called a business analyst or BA.

Business Analysis is the practice of enabling change in an organizational context, by defining needs and recommending solutions that deliver value to stakeholders and then tracking the development and delivery of these solutions throughout the project (and prod- uct) lifecycle to ensure that that value is indeed realized.

Job titles for business analysis practitioners include not only business analyst, but also systems analyst, requirements engineer, process analyst, product manager, product owner, enterprise analyst, business architect, management consultant, business intelligence analyst, etc.

The Business Analyst is a change agent. Business Analysis is a disciplined approach for introducing and managing changes to orga- nizations. Business analysis is used to identify and communicate the need for change in how organizations work, and to facilitate the delivery of that change.

Business analysts work across all levels of an organization and may be involved in everything from defining strategy, to creating enterprise architecture, to taking a leadership role by defining the goals and requirements for programs and projects or supporting continuous improvement in an organization’s technology and processes.

Differentiation as a Sales Strategy in a Mature Market

Executive Summary

Recent entries into the Japanese market by aggressive, low-cost competitors is requiring a retooling of the sales approach of existing vendors if they are to continue to grow over the long term. Both local and long time foreign vendors were once protected by certain barriers to entry: strong, trust-based client relationships, technical and quality leadership, and manufacturing and service delivery capacity. The new entrants have cleared these hurdles and are now a viable threat to sales due to their low cost value chain and pricing. Since it is impossible to win in a drawn-out price war, the key to success in a competitive sales situation is differentiation. The successful salesperson will seek to consult with the client to uncover needs that can only be satisfied by their company, thus making it difficult for the client to choose the low cost solution.

However, this seemingly obvious solution is complicated by the business culture of Japan. The buyer/seller relationship is a vertical hierarchy, with the buyer on top. To attempt to diagnose a client’s needs or business problems and offer a solution could be seen as a reversal of the natural order. Unless handled properly, both the salesperson and the client will strongly resist this. However, if the salesperson trusts that the process can work and is able to prove to the client that the benefits outweigh the costs, it can be very successful for both sides. A third difficulty would be getting high quality information that can be used to propose a sufficiently valued and differentiated offering. This can be complicated by two factors: access to and availability of information. In some cases, the salesperson will simply be denied access to certain information and in others, the necessary information may not even exist, for example; some companies do not have a clear mid–long term business strategy to align with. As with the previous issues, the cause lies partly in the cultural make-up of Japan. The solution in the first case is to leverage the greater access to information that the executive team has. In the second case, the answer is to work to build a business partnering relationship with the client in order to co-develop a mutually profitable strategic vision. Again, this is likely to require some executive level involvement.

Competitive Sales Strategies

In a vertical or niche market, when a low cost competitor (Cost Focus Strategy) enters, the only sales strategy[1] that can work over the long run is Differentiation Focus. This is because direct price competition with a low cost rival is not sustainable unless your company’s business strategy is also cost focus, since it would require a restructuring of the company’s whole value chain all the way from research and development through to service delivery and support. In other words, your organizational structure must be at least as cost efficient as the competition’s. Even if this were the case, the result would be price wars and decreasing margins.

A differentiation strategy is appropriate where the market is extremely competitive or saturated with many alternatives, customers have very specific needs that are possibly under-served, and the firm has unique resources and capabilities that enable it to satisfy these needs in ways that are difficult to copy.

 

How to Implement

Customers with high purchasing power and low switching costs (Switching costs means how easy or difficult it is for the customer to change suppliers.) in a competitive and mature market usually attempt to force vendors to compete against each other on price thus driving profit margins down to zero. This is done by the customer issuing RFPs to several technically competent vendors, receiving proposals with identical specifications, and then choosing the lowest priced proposal. In a growth market, this is not a problem since only a very few companies have the technical and scale capabilities to clear the first hurdle and the amount of business opportunities is big enough for everyone to profit. However, in a mature market with many technically competent competitors, this makes it very difficult for all but the most cost efficient companies to survive.

Differentiation in Action

Rather than simply responding to RFPs with client prescribed proposals, which places them in an unwinnable price competition, a company with differentiation as their competitive strategy needs to add value to their offerings in a way that produces competitive advantage against their low cost competitors.

This can be accomplished in several ways: through bundling products and services, to create a total package that is unique and cannot be duplicated by the competition, through offering a specific and valuable technical capability that the competition does not (yet) have, or through “loss leaders” which tie the customer to service or technology with high switching costs. (e.g. Canon personal printers are sold at or below cost, committing customers to purchasing ink cartridges for the life of the machine.)

The problem with the differentiation strategy is that it requires sidestepping the usual RFP/proposal procedure. In other words, the salespersons would need to use the RFP as a starting point from which to begin a consultative diagnosis of the client’s business needs (not only technical needs) in an attempt to uncover opportunities for differentiation through bundling, or unique technical capabilities or by identifying other value drivers that could influence the customer. Even identifying an attractive loss leader with which to force a commitment requires greater than normal knowledge of the client’s business.

 

Consultation

The only really reliable way to differentiate a product or service from a competitors’ is to thoroughly investigate the client’s needs until you can uncover high value needs that you can satisfy, and your competitors cannot. This means taking the time to diagnose before prescribing solutions.

This idea of diagnosis before prescription is actually quite unusual in sales. Even quite experienced sales people will immediately begin telling the client about new features of their product and the benefits those features can bring. The problem with this approach is that everyone does it, and so the client cannot make choices between sellers except based on price.

Consultation can produce other benefits also: where a strong client/vendor relationship exists, there may be little threat from competition. However, sales will remain flat unless the seller finds ways to grow existing sales channels or to offer solutions to opportunities they would not normally attack. Both of these ways of growing sales requires consultation to uncover new opportunities within existing channels as well as to find ways to modify client requests to suit the seller’s product portfolio.

However, from a cultural standpoint, this consultative approach can be very difficult for a number of reasons.

Buy/Seller Relationship

Compared to other countries, the relationship between buyer and seller in Japan is very hierarchical and vertical. “Buyers generally get most of what they ask for. Sellers, however, expect Buyers to take care of them”[2] Therefore, for the sales person to be successful, it means that they must always carefully show respect and to never suggest that the customer has problems that need to be solved. They must simply respond to customer requests with “yes we can do that” and when the customer asks for a presentation of their proposal, to propose based strictly on the customer supplied RFP.

And so the experienced Japanese salesperson is unlikely to attempt this sort of diagnosis. “While it’s quite acceptable in the West for sellers to ask buyers about problems, this isn’t so easy in the Japanese culture. There’s always the risk of being insulting or offensive if you suggest that your customer – a person of status – has problems.”

On top of that, the customer himself may hesitate to allow this sort of diagnosis, for the same reasons mentioned above and also as a way to avoid risky or uncertain situations. Most employees in Japanese companies have a reasonable expectation of lifetime employment with regular promotions and salary increases. The only thing that can threaten this is if they make a mistake. So workers are very hesitant to try anything new or to take risks with established procedure: allowing a salesperson to spend time investigating their company needs and proposing creative solutions may seem too dangerous for the average employee.

The third difficulty is the ability to get the necessary information, once one has permission to search for it. Because of the hierarchical nature of most Japanese organizations and the inability to communicate with persons above one’s own level, the average salesperson cannot even speak to decision makers or executives who might be able to explain the strategic vision of their company. This makes it difficult to uncover strategic business drivers to link proposals to. One of the reasons for this could be the strong communitarian/collectivist tendency in Japan: salespeople from other companies are perceived as outsiders, with no access to inside information and decisions are made by teams with lower level delegates as the contact persons or gatekeepers. And not only that, according to Michael Porter[3], many Japanese companies tend to be more reactive to external stimuli, rather than being driven by a clear internal vision, so many companies may have no identifiable vision anyway, rather their purchasing decisions would be made in response to competitive pressures or environmental, economic and regulatory changes. All of this makes it extremely difficult to find the means to propose a differentiated solution to a customer request/need.

Recommendations

The sales team needs to believe that service to the customer is more than simply taking orders, that they have technical know-how and business acumen that can be beneficial to the customer, and that they are doing a disservice by withholding their contributions. This way, they can maintain the culturally appropriate vertical relationship with the client, while obtaining access to the information they need. Also, they may need clear statistical evidence that this consultative approach will not lose sales, but rather should increase sales, when used properly. In fact, Fuji-Xerox Japan saw a 74% increase in sales when their team used this type of consultative selling approach[4]. So one recommendation would be tracking the team’s sales successes, compared against a control group that does not use the consultative approach. Once there is a clear pattern of success, the process should gather traction with the rest of the organization.

It is a fact that; “Japanese professionals tended to avoid making mistakes at all costs in order to protect their career growth.”[5] Therefore, the client side contact needs to be shown specific evidence that the consultative approach will produce better results for their company and not increase their personal risk level. To accomplish this, we would recommend using a recent “success story” to illustrate how the consultative/diagnostic sales approach produces better value solutions for the client organization and involves no risk to the reputation of the contact person.

Since many Japanese companies are reactive to their business environment, the sales person needs to become aware of all the external stimuli that are combining to create the client’s evolving strategic vision. He/she can then demonstrate this awareness along with reasonable mid-long term business solutions linked to technical capabilities. And since access to decision makers is limited, the sales team must also leverage the abilities of their own executives to uncover the client’s emerging vision and propose strategic solutions to the appropriate level in the client organization.

So, with careful attention to respecting the cultural needs of the customer, it is possible to change the sales approach to one which will produce better results for both the client organization and the seller.

About the Author: Mark Beresford is Principal and Senior Consultant at Globalinx CORP. Tokyo.


[1] Michael Porter, What is Strategy? (Boston, Harvard Business Review, 1996), 64.

[2] Nancy Adler, International Dimensions of Organizational Behavior (South Western, 2002), 216.

[3] Michael Porter, What is Strategy? (Boston, Harvard Business Review, 1996), 63.

[4] Neil Rackham, SPIN Selling (Surrey, UK: Gower Publishing, 1995), 70.

[5] John P. Miliken, Dean Fu, Koichi Tamura, The Global Leadership of Carlos Ghosn at Nissan (Thunderbird, 2003), 3.

Consumption Chain Analysis

How to Find Differentiators

Background

Offering customers something of value that competitors cannot or do not provide is the essence of differentiation. The problem is that most companies (and most sales people) focus all their energy and attention only on their products and services or their price. We often hear sales people complaining that their company’s product portfolio is no different that their competitors and that their prices are just not aggressive enough to beat the competition.

But changing the product portfolio or dropping the price (while it may make things easy for the sales person in the short run) is actually the most expensive and slowest form of differentiation. In fact, a company has the opportunity to differentiate itself at every point when it comes into contact with its customers—from the moment potential customers realize that they need a product or service to the time when they no longer want it and decide to dispose/upgrade/replace it. This relationship life-cycle is known as the consumption chain.

When a company thinks creatively about their customer’s entire experience with a product or service, they can discover opportunities to both position and sell their offerings in ways that they, and their competition, would never have thought possible.[1]

Objectives

  1. To facilitate a mindset shift from product/service/price differentiation to consumption chain differentiation,
  2. To inform sales people how to search for critical value drivers when speaking to their clients,
  3. To provide a practical vision for how to successfully implement the consultative method of selling in reality, when the sales person is facing the customer.

Method

There is often some doubt that it is actually possible to differentiate against the competition using the products and resources at hand. If one can work together to create a clear and practical vision of how to differentiate against competitors, it will become much easier for the sales team to adopt and use the consultative sales methods successfully and therefore exceed their own sales targets and contribute to long-term growth.

We have found it very effective to hold a series of focus groups with small sales teams, with similar customer profiles, to analyze the entire customer life-cycle and find all the potential sources of value in the consumption chain.

The information gathered and compiled in this focus group would then be shared with the whole sales team as a way of informing them how to search for critical value drivers when speaking to their clients. This would enable the sales team to ask the questions necessary to demonstrate unique value that already exists in the organization’s total offering package. (As a definition of offering we are using: “the total package of benefits the customer receives when he or she buys.”[2])

More importantly, this information will help to provide a clear vision for how to use the consultative method of selling in reality, in front of the customer.

Activities

Of course the process we use varies slightly from company to company and from sales unit to sales unit. But basically the process follows these steps outlined below:

1.Map the consumption chain

·Starting from need recognition all the way through to disposal/upgrade/replacement of the product

2.Analyze the customer’s experience

·At each link along the chain what is the customer doing; how are they interacting with you, your product, etc.

3.Identify differences

·What does our company do?

·What does our company not do?

·How does the competition do it differently?

·What are our strengths?

·What are their weaknesses?

4.Build value propositions (for each link in the chain)

·What value does our way add?

·What costs does our way reduce?

Expected Outcomes

What we have achieved by facilitating this discussion at various companies in different industries:

  • A clear picture of the total customer experience over the entire product life-cycle
  • A recognition and consensus of what the customer values highly (and also what they do not care about)
  • A list of our points of differentiation against their competitors
  • A concrete value proposition for each point of differentiation
  • A clear picture of where the customer experience could be improved

 

1) Mapping the Consumption Chain

Below is an example of a generic consumption chain. This procedure can be applied to any industry, product or service and can be profitably applied to product design, marketing, and sales. It is particularly useful for salespeople operating in a mature market where products and services appear quite similar.

By mapping the consumption chain, the sales (or marketing or product development) person is encouraged to consider the entire customer experience with the organization that delivers the product or service. Each of the links in the chain has activities and attributes that can create cost or generate benefits for customers and therefore need to be considered when customers make a purchasing decision. Total life cycle costs must be deducted from the total benefits delivered by the product or service to calculate a measure of total delivered value.

As sales people, we can reduce the downward price pressure usually applied by customers who only look at product acquisition cost, by helping them to calculate this total life-cycle value.

2) Analyze the Customer’s Experience

This helps us to see what the customer values at each stage along the consumption chain. Basically, what we want to learn is what they like about what the company does and how much it is worth to them. To do this we need to think about how the customer interacts with our Product, People, Processes and Past.

  • Product: The features and benefits of the product. This is the baseline of differentiation. To be competitive, the features and benefits of a product have to convey valuable differences to buyers. When there are no or minimal differences, the other Ps in the 4Ps model must be used to differentiate the product or service.
  • People: The individual or team working with the client represents another part of the total offering. As a product, the individual or team literally has features and benefits. The level of expertise, ability to get things done, experience with similar clients, and even industry status represent examples of potential features of individuals that can help reduce uncertainty and facilitate buying.
  • Process: How the organization does business is a strong potential area for differentiation. If the actual buying, delivery and implementation process is efficient and user friendly, it can be a major differentiator. Careful definition of this process, especially for intangible services, can bring a sense of security to an uncertain buyer.
  • Past: Another resource is the combined experience of the organization with the type of issues the buyer is facing.

Questions: Below is a short list of questions that could be used to uncover value at the various stages (links) along the consumption chain:

Awareness of need

  • How do customers become aware of their need for our product/service?
  • What kind of future proofing do we provide to the customer?
  • Do we make customers aware of their needs in a new or unique way, or proactively rather than reactively?

Search and learn

  • How does the customer find out about our products or services?
  • How do we make our customer’s learning process more convenient and less expensive?

Solution Design

  • How is the technical solution designed?
  • Who is consulted during this process?
  • What resources or information are used?

Selection

  • How do we make the customer decision making process more convenient and more comfortable than competitors’?
  • How do customers select among competing vendors?
  • What are their priorities?

Financing

  • How easy is it to arrange financing?
  • What is done to reduce the financing costs?

Delivery

  • How is our product delivered?
  • How quickly or carefully is it delivered?
  • What is the customer perception of the delivery method?

Installation/construction

  • How is our product installed?
  • Who does the installation or construction?

Relocation

  • How is our product moved around?
  • How do we make it easier to do this?

Use

  • What are customers really using the product for?
  • What fundamental need are they addressing with the product?
  • How do we work to help them minimize their operating costs?

Support

  • What do customers need help with when they use our product?
  • How do we help them?

Complaint Handling

  • How does the company handle complaints?
  • How does the company work to prevent future complaints?

Replacements

  • Does the customer need uninterrupted service?
  • How do we support this?

Service

  • How cheap or convenient is it?
  • How fast is it?

Disposal

  • How do we assist in the disposal/recycling of the obsolete product?

Upgrade

  • How easy is it to upgrade an existing product to a newer version?
  • How do we minimize costs and maximize the lifespan?

Product Development

  • What efforts are made to predict the customer future demands and to plan for them?

3) Identify Differences

Next, we will want to assess the results to identify realistic and valuable differentiators. To do this we need to know exactly how we do things differently than our competitors. Then we can use the Attribute Map to objectively evaluate how we are performing against the competition in the eyes of the customer.

Table 1: Attribute Map[3]

4) Build Value Proposition

What we want to learn at this stage is what is the actual value of the differences. These could be between how we do things and how our competitors do them or between the quality of our people and the competitors’ people, or between our experience and our competitors’, etc.

  • What value does our way add?
  • What costs does our way reduce?
  • What risks does our way eliminate?
  • How much is this all worth?

Results

We have found this to be an excellent way of facilitating the shift from traditional (features and benefits) selling to a more consultative approach, with an aim to finding ways to differentiate against competitors even in very mature and highly competitive markets.

One thing to bear in mind though is that competitors catch up very quickly these days, so this kind of awareness building is best done on an ongoing basis and the information fed back to product development and marketing to maintain or build competitive lead.

About the Author: Mark Beresford is Principal and Senior Consultant at Globalinx CORP. Tokyo.


[1] MacMillan and McGrath, HBR on Innovation, 2001, p. 132

[2] Theodore Levitt, Marketing Success Through Differentiation—of Anything, HBR, Jan-Feb, 1980, p. 3.

[3] MacMillan and McGrath, “Discover Your Products’ Hidden Potential”, HBR, 1997

Global Readiness

Situation

Globalization is possibly the hottest word in business today. And yet, does anyone really know what is involved in going global? And if your company has decided to be- come a global player, do you really have what it takes to compete on the global stage?

The answer is probably “NO.” In fact, most mid-sized companies are completely unprepared to pursue a globalization strategy. Global readiness is not just about having the right products, services, or go-to-market plan. You also need to think about your organi- zation’s ability to simultaneously support existing and new market organizations without burdening either with costly or unresponsive operations or procedures.

Complications

While the opportunities presented by a global expansion are potentially huge, so are the risks and barriers. Some of these include:

• The company’s firm specific advantages and core competencies may not be transferable to the target market

• Economic, political and regulatory risk can wipe out profits overnight

• Cost advantages in labor, raw materials, capital, etc. are usually short lived as competitors quickly catch up, and can be outweighed by increased coordination costs

• Globalization plans are often poorly considered, commu- nicated, misunderstood, and sometimes sabotaged by internal resistance

• Inability to collaborate with foreign counterparts limits innova- tion and consumes profit and time

Solution

For globalization to proceed with minimum risk and maximum return the strategy needs to be resilient and to be a realistic fit to the organization expected to deliver on it. Strategic Alignment: What we do begins with assessing the firm’s globalization strategy from the top down to identify risks and make recommendations.

Once the strategy is strong, we then work with the organization to ensure that it is ready to deliver on the plan. This includes defining the new global competency re- quirements, assessing the current competency level of the depart- ment or business unit, design of the new organization, aligning and re-designing the hiring and selection, learning and develop- ment, performance management, and compensation strategies to support the global strategy. The result is an organization that is more performance oriented, that rewards risk taking and entrepre- neurialism, and that feels account- able for producing sustainable business results.

About the Author: Mark Beresford is Principal and Senior Consultant at Globalinx CORP. Tokyo.

Case Study: Mentoring Program

Client Overview

This client is one of the largest design and construction companies in Japan, with ongoing projects in many regions around the world.

Project Overview

This client recruited a group of young, foreign construction engineers and project managers as part of their strategic plan to strengthen their position in foreign markets, and manage overseas projects more effectively. They recognized that the project management methods used in the local market and overseas had significant differences: these new recruits were to become a kind of bridge between the two sides.

It was decided to have the senior local staff train the new recruits in the ways of working employed at the head office so that when this group was mobilized overseas they could more easily interface with head office and eliminate confusion, mistakes and expensive rework.

Globalinx’ Role

Globalinx provided a team of training consultants who worked both on site and virtually on this one-year project. The project included the following work:

Needs Analysis: This included the following areas:

•Training objectives and experience

•Culture and communication styles

•Mentor selection and assessment

•Mentee readiness assessment and preparation

Train the participants: Globalinx designed pre-mentoring workshops to train both mentors and mentees and thereby prepare them for entering into a productive mentoring relationship.

Tracking tools: Globalinx supplied templates, worksheets, checklists, and guidelines to make progress easy to track and evaluate.

Monitor and control: Globalinx provided ongoing monitoring and support of the mentoring program by supplying a Mentor Program Manager (MPM).

Lessons learned: The program was evaluated against the original objectives and the lessons learned were documented for future projects.

Results

The participants reported high levels of satisfaction with the program and the new recruits are now performing well in their new roles.

A main reason for the success of the project was the inclusion of the consultants from the beginning. This level of involvement allowed the consultants to set up the program based on best practices and to establish clear standards of performance both for the mentors and the mentees. As a result, the mentees were able to understand their learning objectives and

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