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Dear readers,

Thank you for reading this blog! I have moved my regular publishing to pkward.com. Please visit me there!

All my best,

Paul Ward

Do you know the biz value of your IT investments?

The IT Capability Maturity Framework is out. Take a little quiz here to get a flavor of how the framework might help your organization.

What is Social Currency? (Graham Brown mobileYouth.org)

Check out this SlideShare Presentation:

What is Social Currency? (Graham Brown mobileYouth.org)

View more presentations from Graham Brown.

Wal-Mart, Scott, Duke. Time to get excited?

I've written and taught a lot about Wal-Mart's missteps in its globalization strategies, looking particularly hard at the situation in Germany, which yielded to a perfect confluence of a Porter Five Forces analysis and my five forces of customer experience analysis. (For more info on the Five Forces of CEM, contact me.)

But Germany wasn't the only market that Wal-Mart was drummed out of. Asia - including Japan - has been hard to the company. But wait -- Germany and Japan, why should they be such a big challenge? They're developed economies with good GDP and a sizeable number of people who want to save money on a range of products.  How on earth could Wal-Mart mess that up?

Nevertheless, clearly Wal-Mart must have a globalization strategy. They need it for the long haul. And the new guy in charge of Wal-Mart, Mike Duke, managed their globalization efforts. His next big foray?

Australia.

Now, this makes some sense, if you look at all the available research on consumer buying styles (which, frankly, Wal-Mart appears not to have done in Japan and Germany). Australia and the US are pretty darn close on their consumer style preferences. And, because such preferences factor heavily in my five forces of CEM, Wal-Mart might seem to be on track.

Except.

One of the things Wal-Mart will have to figure out is how to maintain enough profit in their global operations factoring in global macroeconomic changes bound to be coming down the pike. Currency exchange rates and cost of capital will become a huge part of financial and growth projections and planning, and I believe a huge component of Wal-Mart's risk going into Australia.

And, I have no particular information to indicate how Wal-Mart's brand will be accepted in Australia. One of the challenges I've faced as a global customer management consultant is determining the extent to which global communications affects brand perception. This is a counter-balance to highly localized strategies that focus on local knowledge of a company's value prop. So, for example, the "China" strategy for Wal-Mart would have to be quite different on the east coast as it would be for the interior. Buying styles, consumer perceptions and values, pricing and assortment -- all will vary. And many consumer expectations about a good value prop will be influenced in subtle ways by information they get about companies via the Internet (directly or indirectly).

So, now that Wal-Mart has developed a brand of its own -- and by this, I mean a blend of the brand it intends and the brand as perceived by its publics -- how will Australia process this brand position? Is Australia's consumer base posing another unknown market risk to Wal-Mart?   

I saw a marketing report released on the Internet from an anti-Wal-Mart group, and from what I read, Wal-Mart's market data is so gingerly presented, so heavily filtered by pro-Wal-Mart language, that Mike Duke's first order of business is to get to the truth of the matter. 

Mike Duke has got his work cut out for him. A potentially low-margin play Down Under in a risky economic environment, with potentially huge game-shaping unknowns about how its brand is perceived in Oz ... and elsewhere.

Corporate Social Responsibility - Genuine or Generous?

As a part of my model of customer forces (imagine the Porter Five Forces sweater turned inside-out), I hang corporate social responsibility on the hook of the customer's process of reflecting on a company's values.

The idea is that CSR programs make a statement about a company's values, and that these values can generate an emotional bond with prospects and customers. But the cynical company will develop a CSR program (if they develop one at all) that is just for show. That dog won't hunt. The phrase I heard recently is that CSR should be genuine, not generous. 

For me, that means two things. First, the program should REALLY indicate the company's values, and the company's values should be reinforced internally around a principled CSR program. Second, the program should focus on impact in a nuanced, measurable way. Whereas a company's marketing program should strive for consistency and simplicity in its messaging, its CSR program should respond to the non-commercial needs of the world in a sophisticated way. This is because a customer's expectation of a company's CSR program is set by how the company is performing tasks that a government, or non-profit, would perform them. It's a policy filter, a program filter -- not a marketing filter. 

We're OK with the one-two punch simplicity of Apple's Mac vs PC ads. We won't be OK with Apple simply removing certain chemicals from its products. That's a step in the right direction. But add in their recycling program, you're starting to get the sense that Apple is thinking this through. If Apple were to add additional "green" practices, and to support other "green" initiates even if they don't control them, people would believe in the genuineness of Apple's commitment.

I think a consequence of this analysis is that companies should actually consider tackling complex, hairy problems in their CSR programs. This may fly in the face of compartmentalizing CSR and coming up with simple measures guaranteed to succeed. Even Apple, which I believe is indeed sincere about its green policies, likes to show checklists of things it has accomplished. But the worries that face customers are often complex, multivariate problems. A simple scorecard won't work. And these worries are well-founded.

A beautiful example is the problem of honeybees. They don't just make honey, they pollinate up to a quarter of the world's vegetable, fruit and nut food supply. They make up a critical part of an ecosystem that has sentimental, practical and economic impact. 

They are also probably going to be extinct in 10 years or so, at least in Britain. 

Just as some companies are too big to fail (to use the parlance justifying the current financial bailout program in the US), some insect ecosystems are just too important to fail.

And to fix that sticky problem, who's going to take the lead? Is it a multinational governmental problem? 

Or do global companies have a role to play?

Time for some corporate social responsibility where it really matters, and where we really need it: On the hard, messy, non-linear, hard-to-measure problems. 

You're probably not global. Nor are you domestic. You are semi-global.

Pankaj Ghemawat of IESE has a nice series of videos on the Financial Times web site on globalization strategies. Click here for the first video, and here for the second.

He makes the point in these videos that many companies are really semi-global. In my experience, this is true, for the following reasons:

1. Most companies with a domestic profile are actually dealing with multiple cultures. In the USA, the Latino, African-American, and white populations often have distinct value systems and expectations -- with variations depending on where in the USA you are. 

2. Most companies with a "global" profile are really doing most of their business in just a few countries, and are reluctant to completely innovate their product and service line to be completely compatible with the demands of local markets -- thus making their offerings partially local, partially "global". 

3. Many companies in economically unified areas that are nevertheless diverse in terms of language and culture may have to market across cultures with print, broadcast and cable ads in order to take advantage of their ad spend size -- but run into serious issues when they fail to create ads that speak intelligibly in all the cultures they must address. Not to mention having to deal with some local customs and regulations regarding truth in advertising.

So, taking advantage of one's size, extra resources, range of resources, and so on, can be challenging for a global company -- even more so for a semi-global one whose pockets aren't as deep as huge multinationals, and where the margin for error is therefore smaller. We can't all be Wal-Mart, whose essay into Germany cost them billions of dollars -- a mere drop in their revenue bucket. They tucked tail and left the country. Semi-global companies would find a similar loss disastrous.

What's a company worth?

I was poking around the internet today to get some idea about the distressed asset strategies that JP Morgan is employing regarding WaMu and -- potentially -- Wachovia. I found this fascinating link that looks at the relative merits of the class capital asset pricing model (CAPM). It rains hard on CAPM, and makes some really interesting observations about what market behaviors of stock pricing and purchasing really mean.