Archive for September, 2010

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new brain @ the brain store? no, innovate the Swiss way

Wednesday 29 September, 2010

I participated in this exercise The Swiss Idea Machine. How great ideas can be produced in good quality and implemented within fixed deadlines, produced by the Swiss American Business Council & sponsored by Swiss International Airlines & the 4 Seasons Hotel.  Our facilitator was Markus Mettler, CEO of the Brainstore.  He was kind enough to make his presentation available brainstore_presentation_2.

We set out to answser 3 questions:

  1. how to create ideas?
  2. how to innovate?
  3. how to create an innovative culture?

To answer the 1st question, Markus broke our group of 60 into 3 groups of 20 & assigned each group to address a different task:

  1. how to find new customers in an uncertain environment
  2. how to reduce product development cycle times
  3. how to create a positive team atmosphere

I joined group 1 where we started off by posing inspiring questions, then generating tons of ideas & posting them on post-it notes all over.  We considered everyone else’s ideas, combined/refined them into a few great questions/ideas & then rated/ranked them.  Here are a few of the ideas our group came up with:

  • study the customer’s criteria
  • build greater personal trust
  • collaborate with other businesses
  • help new customers find us more easily
  • identify prospects who’ve had a bad experience with a competitor

We reverted back to the presentation to answer the remaining 2 questions.

Q&A

  • You need to just do it, train, & cycle through again & again.
  • Corporations want innovation to be an ongoing activity, but that talk sometimes results in little action.  Changing the corporate culture is a talent development issue which requires triggers & their outputs to wake dormant human capital.  BASF was able to change its employees’ mindsets.
  • Fear of change is actually a myth, a laziness of the mind that was never stimulated.  It’s not a natural mindset because stimulation is non-threatening.
  • Brainstore has a representative office in Long Beach, CA & works with 3000 freelancers who are trained facilitators.
  • Encouraging governments to be innovative is difficult because different relationships result in irrational behavior, i.e. it gets political when it’s more important who had the idea & who does/doesn’t support it.
  • Big companies are just conglomerations of many small organizations, so innovation can happen as long as people are open with transparency.
  • Google is a current example of a successful innovative company because of their frantic pace of innovation & that they’re not afraid to discontinue innovations quickly.
  • Cultural differences impact upon innovation:
  • English-speakers & northern Europeans are no problem
  • Latins take more time which requires adjustments
  • The French should be in change mode, but don’t seem to be
  • Asians start out speechless, then explode later on
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2ND ANNUAL U.S.-INDIA BUSINESS OPPORTUNITIES SUMMIT

Friday 24 September, 2010

The Chicago Council on Global Affairs hosted this event 2ND ANNUAL U.S.-INDIA BUSINESS OPPORTUNITIES SUMMIT, which featured an interesting array of speakers & companies visiting from India. I’ll hit the highlights here.

Marshall Bouton led off by noting that President Barack Obama named the US-India relationship the defining relationship of the 21st century & he will visit there in November.  50 Illinois companies operate in India while 15 Indian companies work in Illinois.  Illinois exported $1B to India in 2009.

Meera Shankar, Ambassador of India to the US, summed up the Indian economy.  India’s economy grew 9% annually before the crisis,  6.7% in 2008, & is expected to grow 8.5% this year.  Foreign investment is still robust @ $34B & $20B foreign institutional investment.  While trade with the US dropped in 2009, it’s up 33% this year.  Growth has come from all sectors, not just services.  Indian companies are moving up the value chain.  Booz Allen Hamilton noted that 10 of the top engineering services companies were Indian. India is also different from other emerging economies in that their growth is not export-led, rather by expansion of domestic demand & investment.  Infrastructure is a priority.

Hari Bhartia, President of Confederation of Indian Industry spoke to the opportunities with & for MSE’s (medium sized enterprises).  They employ 15% of the workforce & comprise 80% of the formal economy.  1 challenge is 40% of the population lives below the poverty line, so they must train their youth.  20M enter the job force every year, so 10% growth is needed.  He noted India is investing faster in India than the US is investing in India.

Panel discussions

Dr. Rahul Khullar, Commerce Secretary, Ministry of Commerce & Industry of India explained India’s growth, which was fueled by imports as exports from western countries grew 25-30%/year.  Reforms dropped tariffs from 100% to 5-10%.  Depending on consumption demand, growth will be $40-80B annually based on a $1.6TR economy in 2014-15.  1% growth in the US results in $50B increase in consumption demand.  At its upper end, India will beat that.  India exports $200B & imports $330B worth of goods.  Opportunities lie in collaboration on R&D, clean energy, agriculture, markets, & infrastructure. 2 Korean companies entered the market 20 years ago & are now household names.  Ignore this market at your own peril.

Manufacturing

  • Rik Geiersbach, VP-Corporate Strategy @ Boeing  let us know they helped India enter the jet age 60 years ago.  In 2006 Air India placed the largest order ever.  India is seeking to reach the moon by the end of this decade.
  • Deep Kapuria, Chairman Hi-Tech Gears, Ltd talked about manufacturing in India.  It comprises only 15% of India’s GDP & employs 12% of the workforce.  Their aspiration is for manufacturing to become 25% of GDP by 2022, (when India turns 75 years old).  Automobiles are growing @ 20% & 12M cell phones were sold last month.  India has $300M in manufacturing assets, but needs investment in 3-4X that.  Indian state governments are receptive to offering incentives for foreign MSE manufacturers to set up shop.

Innovation

  • Dr. Pravinray Gandhi, Director of Global Corporate Research @ Underwriters Laboratories said UL was founded in 1892 @ the Columbian World’s Fair to create international standards.  They’ve been in India for 15 years.
  • Anpama Arya, Co-founder of Mobera Systems lived in the US for 14 years & moved back to India to do contract research & development.  She proposed that India has moved from a cost arbitrage location to innovation center.  Their telecom industry has figured out how to make a profit with an RPU (revenue per user) of $8, so her lesson was don’t settle for American price points.  Although collaboration is difficult, a middle class of 350M is hungry for products.  The legal system which protects intellectual property is slow, but it works.

Keynote Anand Sharma, Minister of Commerce & Industry of India said India needs higher growth rates & the IMF is revising them upwards.  India will be implementing $1.7TR of infrastructure in the next decade.  They are setting up 10,000 skills training centers to invest in their human resources because India will need 500M skilled workers by 2020.  US investment in India has dropped from $1.9TR in 2008 to $1TR in 2009 as its 2nd favorite destination for foreign direct investment, but supposedly returns in India are highest.  India is an ancient population, but 2/3 of its population is young.  In the next decade, India’s GDP will quadruple.

Here are the firms visiting from India

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McDonald’s CEO & Phil Kotler on Global Consumer Demand

Wednesday 22 September, 2010

I attended this event organized by the Chicago Council on Global Affairs NEW PATTERNS IN GLOBAL CONSUMER DEMAND featuring Jim Skinner, (JS) CEO of McDonald’s & Philip Kotler, (PK) Professor of International Marketing @ Kellogg, Northwestern’s business school.  These 2 provided a nice contrast between the theoretical academic world & practical real world of business.

Skinner led off by saying earlier McDonalds built their restaurants & their customers simply came, but that doesn’t work any more.  They’ve created robust consumer insight & are using it to create diversified & localized menus, such as shrimp in Japan, beer in Germany, & spam in Hawaii.  He emphasized 5 points:

  1. US consumers are spending less than in December, 2007, saving more (6%), & spending differently.
  2. Consumers seek excitement, so you have to keep innovating to keep them interested.
  3. Emerging markets are the future;  2B people control 1/3 of consumer spending ($7TR of $20TR).  The rising middle classes of China & India represent 40% of the population growth of the world.
  4. Entering these new markets requires work & persistence.  There is lots for even McDonald’s to learn, for example, when they 1st opened drive-through restaurants in China, the Chinese would drive through to get their meals, then park their cars, walk in the restaurant, & sit down to eat their meals.
  5. You have to do what it takes to fit in locally, such as by recruiting locally.  Brands always have to identify locally.

Philip Kotler was actually educated as an economist under Milton Friedman @ the University of Chicago, but became a Keynesian when he studied marketing under Paul Samuelson while getting his graduate degree @ MIT.  He converted to marketing because economics was all related to price & ignored distribution, wholesalers, etc.  That said, our problem now is insufficient demand, & bringing back easy credit would only bring back the problems that got us into this mess.  Consumers are commoditizing by buying store brands for 20-30% less than name brands.  A Young & Rubicam study found that LOHAS (41M who live a lifestyle of health & sustainability) 62% are happier with just the basics of life & 72% value their time more than money.  Excess supply & overcapacity have driven down prices, which has prevented us from moving the recession into a growth economy again.  Technology & infrastructure investment can create jobs.  But as manufacturing declines, so does innovation.

Alternatively, as poverty has been reduced, China & India are booming, to become the world’s largest consumers of everything. India is bringing down costs by putting things in smaller packages, such as a $100 computer powered by a hand crank & a $2500 car from Tata.

The environment is a growing issue.  Unilever’s CEO wants to double his business without increasing its environmental impact.  Walmart is forcing its suppliers to profit from saving energy.  But as the world’s poor earn more money, pollution & congestion increase as they spend it.

The stature of the US is falling in the world.  A Newsweek study ranked the US #11th best country in the world based on 4 criteria.  We were only #9 in GDP/per capita.  We may be moving from the age of marketing to de-marketing.  Our current system encourages unhealthy behaviors such as wasting energy & water, so maybe we need to be more concerned about the King of Bhutan’s happiness metrics & pose John Kenneth Galbreath’s question, “What makes the good life?”

Panel discussion

  • What will be the future savings rate?  JS-we’re not savers, so that will subside.  PK-some segments will continue to save.
  • What are the trends in technology?  PK-automobiles are getting smaller & more fuel efficient.  Students are spurning big companies & becoming entrepreneurs.
  • What other trends do you see for the next 5 years?  PK-social media doesn’t allow companies to be bad anymore, but we’re still trying to figure out how to measure both old & new media.  We are at risk of disintermediating salespeople.  JS-20% of McDonald’s media is devoted to the internet today.
  • Is deflation a risk?  PK-Cheap imports contribute to deflation.  Japan is the best example.  JS-McDonald’s has 4000 restaurants in Japan where sales are flat but not declining.

Q&A

  • Is government spending the only way out of recession?  PK-the Keynsian in him says there is a positive role for government.  Scandinavian countries set good examples.
  • Can China’s & India’s growth offset declines in the US?  PK-As those countries mature, growth slows, but for now they are making all of Asia energetic.  US companies are going there to benefit from that growth, but that is not creating jobs in America.  IMF #’s indicate while the US economy shrunk 3% last year & will grow 2.6% this year, the emerging markets grew 2 1/2% last year & will grow 6.8% this year.
  • Should Africa be brought in closer to the world economy?  PK-Botswana & South Africa are doing well.  As costs rise elsewhere, Africa will become the next sourcing region.  JS-McDonald’s is in the north & south, but elsewhere is risky.
  • Should the US government prevent American manufacturers from manufacturing abroad?  PK-no, that would make American manufacturers uncompetitive & create perverse consequences.  JS-McDonald’s sources locally everywhere the operate.
  • Do consumers world-wide want healthier menus? JS-McDonald’s tested pizza in Germany & the Germans liked it, but wouldn’t buy pizza @ McDonald’s regularly because it’s not a pizza house.  Lower class customers want the full experience in Indonesia.  McDonald’s can sell whatever they want, but it has to be what people actually buy & it’s not organic yet.  McDonald’s sells as much chicken as beef & is the world’s largest buyer of apples.  McDonald’s most frequent customers visit their restaurants once/week, & 85% of meals are still eaten at home, so you can’t blame McDonald’s for America’s obesity problems.
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Italians @ International Manufacturing Technology Show

Friday 17 September, 2010

The Italian Trade Commission, UCIMU-the Association of Italian Machine Tool Manufacturers, Association for Manufacturing Technology, & Midwest Clean Tech sponsored a reception @ the International Manufacturing Technology Show @ McCormick Place.  This was a scaled down affair compared to past years, but still a lovely evening.

Italian Trade Commissioner Pasquale Bova seemed to be speaking to the Italians present by noting that the US Dept of Commerce indicated that the US still holds the highest place in worldwide manufacturing with 21-22% share @ $1.6T & employing 12M workers.  Manufacturing is up 9% & GDP up 2.4%.  Being green is a necessity.  Sustainability is a responsibility & both of these traits are available from Italian machine tool manufacturers.

I believe it was UCIMU President Giancarlo Losma who informed us about Italian machine tool manufacturers.  He indicated their sales were up 30% to 493M € making them a top exporter because of their precision & quality features.  While machine tool sales in the US are down 10.2%, the US has slipped to 3rd place in Italy’s exports behind Germany & China, acquiring 8.7% of Italy’s machine tool exports.

To see my summary of the event the last time it was held in Chicago, check out this blog entry  Italian Machine Tools dinner In case you can’t tell, this year’s version was a scaled-down event, no doubt a reflection of the change in the economy between then & now.  The Italians took on a different less deep-pocketed group of partners & put it on much less expensively, with a buffet rather than a sit-down dinner.  However, on the rooftop garden of the McCormick Place West building on a lovely night, it was no less a nice evening.

For my thoughts @ the time on manufacturing in Europe, take a look @ this post  Financial Times/Italian manufacturing event My thoughts have not substantially changed, although given the intense focus on maintaining jobs while still enhancing competitiveness, it must be an increasingly expensive investment to continue to pour money into competing with Asians.

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Romanian manufacturers in Chicago

Wednesday 15 September, 2010

Gabriel Dutu, Consul for Economic Affairs @ the Consulate General of Romania in Chicago, organized a gathering of Romanian manufacturers in town to attend the International Manufacturing Technology Show.  These companies weren’t actually exhibiting @ IMTS, rather just attending the show in anticipation of exhibiting potentially @ a national pavilion the next time the show is in Chicago in 2012.  There was no powerpoint & we basically went around the conference room table & all briefly introduced ourselves.  Viorel Onel, the minister of economy, commerce, & business environment who opened the Chicago office in 2002, said “Chicagoans like short speeches,” & “his soul remains here.”  The Director of the Employer’s Association for Machine Building Industry & a person from Romania Trade & Investment were in attendance, but didn’t say much, while the John Varan, President of the Romanian Chamber of Commerce and Industry in Chicago, the 1st in the U.S. which opened last year, said a few words.   A European representative of the Association for Manufacturing Technology admitted that registrations for IMTS are down 8% vs. 2008.

Here are the firms that visited Chicago:

Each of the representatives of each of these firms said a few words, but more information can be found on their websites.  Their visit was partially sponsored by the Romanian Economic Ministry.

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RECEPTION WITH KOREA’S MAJOR INDUSTRY LEADERS

Friday 10 September, 2010

I attended this event Networking RECEPTION WITH THE EXECUTIVES OF KOREA’S MAJOR INDUSTRY LEADERS which featured Chicago Mayor Richard M. Daley on the day he announced he is no longer running for re-election as mayor of the city of Chicago.  Here’s what I learned:

Gerry Roper of the Chicagoland Chamber of Commerce said members of his organization employ 1M employees in/around the Chicagoland area, which was news to me.  He also mentioned that helping their members globally is an increasingly important focus.

Kyung Shik Sohn of the Korea Chamber of Commerce & Industry, (KCCI is the largest private organization in Korea), informed us that Korea does $8.6B in trade with Chicago.  LG, Samsung, & Korean Air are based here in Chicago.  Motorola & McDonald’s are Chicago firms that are big in Korea.  The US is the #3 exporter to Korea & Korea is the #7 exporter to the US.  The US shipped $5B worth of agricultural products to Korea.  Korean firms invested $35.7B in the US while US firms invested $41.8B in Korea.

Korea’s Consul General in Chicago Chul Huh, a former baseball player,  had to turn down throwing out the 1st ball @ the Cubs game that night to attend the event.

Richard Daley congratulated the Chambers for signing their Memorandum of Understanding, praised Korea for its commitment to democracy, & encouraged both governments to sign the free trade agreement (FTA) between the 2 countries.  He also noted that Korea provides the 3rd largest source of foreign students to Chicago’s public schools.  Interestingly, cameras from NBC, WGN, & other TV stations covered the event, & promptly followed Daley when he left out the door.

Jong-Hyun Choi, Minister of Economic Affairs @ the Korean Embassy in Washington, D.C., apparently spent some time in Chicago because he wanted to talk about the Bears, but didn’t because he is a diplomat after all.  Unfortunately Choi’s data conflicts a little bit with Mr. Sohn’s.  Choi let us know the US was Korea’s largest trading partner until 2004, but has been surpassed by China, the European Union, & Japan since then, so we are now #4.  He noted that Korea is the 8th largest market for American manufactured goods.  He said Koreans invested $4B in the US, while American invested $1.5B in Korea.  I don’t know whose numbers are correct.  Korea is bringing its Smartgrid & electric vehicles to Chicago.  Choi also extolled the virtues of an FTA between Korea & the US.  It would eliminate 81% of tariffs immediately, 94% in 3 years, & 100% in 10 years.  This would lead to increased exports of $11B, a reduction in the trade deficit of $4B, an increase in GDP of $12B, & create 70K jobs.  Failure of the FTA would cost 345K jobs.  An FTA would contribute to the National Export Initiative of doubling US exports in the next 5 years.  They are entering the home stretch for these negotiations & hope Obama will have something to say when he visits Korea later this year for a G20 Summit.

Mike Glynn of ITW bought Daelim to serve automobile manufacturers & now imports $8M from Korea.  David Habinger of Sonic Solutions has been working with LG & Samsung for 12 years & noted Seoul is very similar to Chicago. Jae Ho Oh of Kotra Chicago gave concluding remarks.

Here are the firms from which Korean Industry Leaders attended:

the following companies were represented by the KCCI

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Does Your Language Shape How You Think?

Tuesday 7 September, 2010

Fellow T’bird Bart Kohnhorst alerted Thunderbird President Angel Cabrera to this article in the New York Times: Does Your Language Shape How You Think? & he blogged about it, which brought it to my attention.  My 1st reaction is “Of course language shapes how we think.”  My experience is in Germany in German.  Here are my thoughts on the relationship between the German language & how Germans think:

  • German is a very structured language & Germans think in a very structured way.
  • Germans are more exact because their language compels them to be.
  • There are 3 genders, masculine, feminine, & neuter-I found that many relationships are still very old fashioned, reflecting dated gender roles.
  • Sentences usually follow a pretty consistent pattern, but in some cases throw the verb (or its prefix) to the end: occasionally the Germans will go a little wild.
  • Many foreigners find many of German’s rules complicated;  the Germans recognize they have an advantage with foreigners speaking their native tongue & are not hesitant to use it.

Here are a few observations on how Americans think & its relationship with the English language:

  • perhaps we as Americans see men & women equally because we don’t differentiate between them as other languages do
  • some other cultures don’t focus on the future like Americans do because their languages only speak in 1 tense, usually the present tense
  • English is known to be full of exceptions-is it any surprise that we’re encouraged to seek the exceptional?
  • might how Americans think of geography& space (always referenced to where we are) a reflection of our self-centeredness compared to others who reference to direction (North, South, etc.)

So how does this apply to international business?  It just reinforces the need for global business people to learn as much of the language as they can of the people with whom they’re doing business wherever they go.  It will give you some insights into how they think, which can provide some small advantage or simply bring a small observation that you might have missed thinking of the world only in English.  Every little bit helps.