Agility Update June 2011

Sometimes, to get a new perspective, you need to turn things on their heads. The articles in this month’s issue of Agility Update certainly do this. First up is an article on HTML5 and a warning to the C-suite of the very real world impact of this seemingly tiny, technical change. Next are articles that pit the question of ‘over-feeing’ customers vs.. simply charging a higher base fee; and look at how reversing the traditional expat strategy can gain a competitive edge in emerging countries. Our final article reveals how standard business tests and processes kill innovation and suggests ways to overcome this.

Shifting to Web-centricity
Management consultants McKinsey is advising senior executives across industries to take note of the shift to a new generation of an Internet programming standard – HTML5 (Hyper Text Mark-up Language 5th generation). This seemingly arcane, technical detail holds potentially significant implications for consumers and businesses as it transforms the web browser into a universal platform. This means consumers will be able to access the same programs and cloud-based content from any device (personal computer, laptop, smartphone or tablet) without using device-specific applications or apps. As this increasingly strong tendency of consumers to use mobile devices to access company and product information – sometimes called the “m-dot revolution” – organisations will be under additional pressure to invest in corporate cloud infrastructure. The greatest operational impact is expected in marketing. Instead of merely inserting ads into apps, marketing teams must develop mobile-advertising strategies using mobile capabilities and tactics e.g. monitoring shopping activity to deliver real-time, location-specific coupons. CEOs and CIOs are advised to take a big-picture approach to the collective implications of Web-centricity now to prepare for the day when consumers, employees, and suppliers all communicate and interact through the use of mobile devices that run Web applications. McKinsey estimates that more than 50% of all mobile applications will switch to HTML5 within three to five years.  Read more at:
https://www.mckinseyquarterly.com/Telecommunications/ Broadband/How_new_Internet_standards_will_finally_deliver_a_mobile_revolution_2788

Is It Possible to ‘Over-fee’ Customers?
Passing extra costs to customers is almost a given. Over the years, ancillary and premium fees have sneaked into our everyday lives to the extent that such fees can represent more than a quarter of a company’s income. In some cases, these charges are for services that were once free e.g. $2.50 for a paper statement and processing fees of $1.10 (cinema ticket) to $19.95 (domestic air ticket) for online bookings. However, businesses that impose fees need to tread carefully, experts say, because customers will quickly revolt if the extra costs are perceived to be unreasonable. By way of explanation Wharton marketing professor Peter Fader points to ‘prospect theory’, which states that people prefer their gains in smaller increments to spread out their joy, but want losses to be concentrated so the pain arrives in one hit. "It's ... ironic that companies don't charge enough to begin with," and then compound their problems by spreading out the rest of the cost in the form of unpopular fees, Fader says. Generally three factors need to be in place for customers to accept fees: Customers need to understand the need for the fees, perceive them as fair, and feel that they have received some benefit from the fee. Read more at: http://knowledge.wharton.upenn.edu/article/2751.cfm

The Reverse Expat
A Reverse Expat strategy is increasingly being viewed as a crucial step toward helping companies prepare for a future in which emerging markets may become their most important growth engine, says McKinsey. A reverse expat is a local manager who is placed at the helm of a Western-based company’s emerging-market business and then rotated through some of the company’s more mature operations outside of that market. Typically, this involves exposure to major functional areas such as finance, HR, and marketing where the reverse expat shadows and role-plays with the mature-market leaders and develops a plan for quickly adapting any relevant developed-market practices to their emerging-market home country. To achieve the full potential of a reverse-expat program, senior executives need to make sure everyone involved:

• Is clear on the expectations and objectives, and takes it seriously.
• Focuses on coaching and not simply imparting functional skills.
• Understands that the goal is to adapt and not simply to transplant mature-market practices into emerging markets.

Read more at: https://www.mckinseyquarterly.com/Organization/ Talent/Beyond_expats_Better_managers_for_emerging_markets_2802

Three Questions that will kill Innovation
Business leaders firmly believe that active pursuit of ”innovation” is critical to generate more growth and profits. Yet, innovation runs counter to so many of the standard tests and processes that make businesses (and executives) successful. On the Harvard Business Review blog, founder and CEO of Sydney consulting firm 2nd Road Tony Golsby-Smith said the three standard ‘killer’ questions were:

• "What is the return on investment on this project?” – Scares the innovation team into lying as it's way too early to know what the ROI will be.
• "Can you prove your case and back it up with hard data?" – diverts the team’s energies into data extrapolation and away from thinking about customers, good ideas, and new paradigms.
• "Are you meeting your milestones?” – Forces an innovation team to abandon anything controversial and go back to the concrete world that they already know.

Mr Golsby-Smith suggested that the questions to ask instead are:

• "What hard and soft capabilities are you beginning to build by doing this?” 
• "What value are you creating for stakeholders?"
• "What are you learning?"

Read more at: http://blogs.hbr.org/cs/2011/03/three_questions_that_will_kill.html