Revenue growth management. New thinking required.

Dear reader

While most companies are struggling to improve their economic results, a fact comes immediately to mind: the net revenue line is the most powerful leverage to improve EBIT.

It is not easy to drive an increase in net revenues without increasing price, but it is possible and feasible. I have seen great companies doing it through product differentiation, smart segmentation, and improved channel focus; sharp consulting firms such as Globalpraxis are leading the charge in many sectors with outstanding results.

Globalpraxis - consulting at high level

One of the keys to successful business today: understand the modern consumer, innovate regarding his/her needs, and communicate this innovation effectively. Result: more sales at a higher price!

To better understand modern consumers is essential. They are typically different from the traditional breed – multitaskers, who simultaneously swipe their iPhones, work on their iPad, read a newspaper, listen to loud rap music, drink a cup of coffee, and miraculously hold a conversation. We may not necessarily like such a person. Still, it is key that we try to better understand what he / she wants.

Keys to successful business today: understand the modern consumer

This brings us to the importance of coming up with relevant innovations – i.e. something that today’s consumer might need and appreciate. It would be better to bring these out fast (even if on their own, they may be relatively small) rather than to rely on major innovations that might emerge from a central lab, and on an infrequent basis. We could talk about new business models here, such as new routes to market, or developing innovative, more luxury-centric brands. Innovations could also come in the form of further modifications of one’s products, and so on.

Communicate a given innovation to the target customer group. Social media might be particularly key here.

The next step would then be to create an effective way to implement and communicate a given innovation to the target customer group. Social media might be particularly key here. This might be more effective for reaching the modern consumer than traditional advertising, for instance.

Silo thinking does not work (cartoon)The all-too-frequent silo thinking would not work

The amazing, and encouraging, result of all of this is that we might then be in a position to state a higher price, and to sell more! This is value-based selling, not discounting! Plus, our profitability would also grow – good news!

So, there are plenty of opportunities in today’s business world, but to benefit from them would require a focus across disciplines. The all-too-frequent silo thinking would not work!

Yours,
Peter Lorange

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Working Smarter in a Digital Economy

Dear reader

Let me start with a wrong statement: “The future of business is digital.” Wrong, you might ask? Of course it is wrong. The present and the business of today is digital.

Digital business is omnipresent. This is a fact that makes the search for answers on how to profit from it not easier. Everybody is somehow aware that “business is online” and that “the internet is a cash cow”. These are commonplaces.

We will look closer at noteworthy issues such as how to be successful when doing business online and how to gain a new understanding of our way through the cyberspace and the threats, rights, and duties connected to it.

Digiatl Business. Forum. April. 2013.Our day event “Speed, action: results!” on April, 19. Book your seat right now.
Download program

Just think of all the companies and brands that are now advanced by the digital opportunities that allow to acquire, to excite and to engage their customers.

We want to know how some of today’s most important practices look like. We have thus invited speakers from renowned companys such as Robert Beer from XING, Giovanni Fantasia from ebay or Microsofts country manager advertising online, Arend Hendriks.

We are aware that business networks have a growing impact on us. But is this transformation of the information society good or bad? And for whom?

We will provide you with answers. Join us for our day event “Speed, Action: Results!” and learn how to work smarter in a digital economy.

I am looking forward to welcoming you!

Yours,
Peter Lorange

“Brands will tumble and fall.”

Dear reader
on September 10/11 we organize our next marketing module: Building Global Brands with former BAT Marketing Director Jimmi Rembiszewski *).
Recently he gave this interview, which we shortly published in our newsletter.

Please join us next Monday and start right away your Executive MBA or your Master of Science.

Kind regards,
Peter Lorange

> GERMAN VERSION <

A whole chapter in your new book (written together with Peter Lorange) is dedicated to the ‘hidden champions’. It sounds a bit like: the small, flexible businesses do everything right, contrary to the big ones. Nevertheless, the big players are successful still. Who is doing it right?

What we are referring to in the book is not necessarily the size itself but internal and external obstacles, which have not been adjusted to the new world of e-consumers. Hidden champions is more about old companies, which have developed their business models in the last century and find it difficult to radically adjust it whilst others, mainly companies which where born into the Internet world, find it by definition easier.

Also, you will see the same great examples in the consumer space of old companies which do rather well because their business model does fit the economic circumstances. Take for instance some luxury brand companies.

That’s what we say. All successful companies are doing it the right way.

In your initial question you said that old big consumer companies are successful today. Well, success is relative. Measure it with top line growth and brand value growth and compare it to, say 20 years ago, and you will see: they lost out big time.

“Factories are a liability today. They are one of the key obstacles for fast innovation.”

You are writing a lot about innovation, decentralization, R+D as the formula for success, but you say nothing about the brand itself. You as a branding expert: How important is the brand?

The brand value is critical, but no brand can survive outdated products. So, products need constant upgrades. In the 20th century this has become more important than ever because of the new consumer who is expecting faster. In brief: a brand can rise much quicker than ever but it will also fall quicker.

Mercedes Logo. One of the top brands of the 20th and the 21st centuryOne of the top brands of the 20th and the 21st century

I consider Peter Drucker’s sentence “I’d rather own a brand than a factory” as outdated. I’d rather have a factory than a brand, but could create a brand through innovative products. Isn’t this the root of all evil of our time: We want brands, but we don’t care for content?

No. Factories are a liability today. They are one of the key obstacles for fast innovation cycles. Brands as stated above must deliver content, of course, but they must do it faster and better to stay relevant. Also retail shops that can uniquely bring a brand experience or message across are better to be owned than factories. More along these lines you can find in our book.

“No brand can survive
outdated products.”

On their website, the Lorange Institute of Business writes about ‘Building Global Brands’ (the course Jimmi is teaching on September 10/11: In a global competitive environment professional brand stewardship can make the difference between success and failure. Do you agree with this drastic statement?

I do, a hundred percent.

You’re a man who is never at a loss for an answer. Every year ‘branding trends’ are published. Which of these trends are a fad and which are sustainable?

Marlboro Logo. Marlboro, one of the top brands of the 20th centuryMarlboro, one of the top brands of the 20th century

Well, I am sorry, but this is too broad a field to answer. Some books might be great; having said this I am not an expert in marketing literature. I am a person who learned by doing. Certainly what I have seen so far from the academic side on modern marketing is poor.

To conclude, we are interested in your personal review and a forecast. Which are your top-brands in the 20th century and which brand do you predict a bright future in the 21st?

For the 20th century I choose Coke, Marlboro, Nestlé, Pantene, Colgate, German luxury cars, Swiss watches and McDonald’s.

For the 21th: French and Italian designer labels, Samsung, Apple, German luxury cars, Samsung.

 

Jimmi Rembiszewski*) Jimmi Rembiszewski

He joined the British American Tobacco Group as a Marketing Director and as a Territorial Director in 1991, having had various senior marketing and business appointments in Procter & Gamble and Jacobs Suchard. In 1996 he became a member of the Management Board of the new BAT and stayed the Marketing Director for the Group until his retirement at the end of 2009.

How to handle chaos or new order in tomorrow’s world?

Dear reader

a few weeks ago 52 students graduated from our business school: an important step in the personal and professional development of all graduates!

My faculty fellow Bill Holstein held a terrific speech I would like to share with you.

Download Graduation Remarks – March 30, 2012
by William K. Holstein, Professor of Strategy and IT, Lorange Institute of Business Zurich

He compared the current economic situation with the weather forecast and concluded that we’ve entered an area of unpredictability, which has a lot to do with the increased speed of communication.

I quickly summarize a few of his statements:

“In 2005 there were 134 million mobile phone users in Africa. In 2011, only six years later, there were 660 million – an average growth rate of more than 30 percent per year. (…) Such explosive growth in such a chaotic area of the works spells opportunity for those who can spell correctly.”

Bill Holsteins Graduation Speech (Graduation Remarks – March 30, 2012 William K. Holstein, Professor of Strategy and IT, Lorange Institute of Business Zurich) at our Business School“Sales on eBay conducted over mobile phones amounted to $600 million in 2009 and over $5 Billion in 2011. More than an 8 times increase in two years! And eBay expects the percentage of sales over mobile phones to grow 100 percent more in the next few years. (…) This changes the business model for a traditional retailer dramatically. Many will not be able to respond fast enough to survive.”

“U.S. workers tenure in their current job is 4.4 years. The average number of jobs in a lifetime: 11.4 for men, 10.7 for women, not three as for me.”

Bill summarized his speech in one word: chaos. Chaos is the opposite of the idea of order.  Or as Bill put it: “when conditions are chaotic, you must apply different techniques. “ This is the true challenge.

Yours,
Peter Lorange