Commentaries

Why a company unload its new service division at a rock-bottom price just five years after launching it? Like many other established companies, it learned the hard way that new ventures rarely coexist peacefully with the core business that launched them. The company failed to nurture its nascent division, and venture stumbled badly.

Innovative ideas are not enough to fuel breakthrough growth in a new business. To thrive, new ventures must surmount three challenges:

1. Forget some of what has made your core business successful, such as which skills to acquire and which customers to serve.
2. Borrow only those assets from your core business, brands, sales relationships, manufacturing capacity that provides a distinct competitive advantage.
3. Learn quickly. The faster you resolve your venture’s inevitable unknowns, the sooner you will zero in on a winning business model.

To master these challenges, you must redesign virtually every aspect of your new business, from hiring, performance evaluation, and budgeting to compensation, definitions of success, and reporting relationships. Hard work? Yes. But payoff is worth it. By artfully blending forgetting, borrowing, and learning, you can turned around a dismal start and generated profits just a few years after launch.

The allure of brands is fading. Increasingly, customers would rather buy a generic product than its pricier big-brand counterpart. From 2003 to 2005, private-label market share jumped 13%.

To counter this trend, big brands are increasingly resorting to price promotions. Sure, promotion provides a quick revenue lift. But they also hurt your brands’ long-term health. Customers do not buy more of your products over the long run. They stock up during sales and wait for the next deal. Result? Deeper discounts for shoppers and shrinking profits for you.

To stop this vicious cycle, start protecting your brand equity. First, track purchasing trends. For instance, major lift in sales volume when you offer discounts may signal consumers’ unwillingness to pay a premium for your brands. If promotions are backfiring, invest in advertising, new product development and new distribution strategies, strategies that enhance short and long-term sales.

In every industry, products are becoming commoditized faster than ever. To stand out from rivals, many manufacturers have begun offering value-added services (installation, training and maintenance). When this strategy works, services become new sources of income. But for every success story, failures abound: customers aren’t willing to pay. Revenues are low. Companies barely break even.

That is because entrepreneurs, dazzled by this strategy’s promise, jump in without preparing. And, they get blindsided by the complexities of providing services.

To sell ancillary services profitably, start slowly. First, charge for simple services you’re already providing. You will build enthusiasm for adding services that are more complex. Deliver your services efficiently to safeguard your profits. And train salespeople to pitch complex services, including helping customers understand these offerings’ benefit.

By taking these steps, entrepreneurs have derived up to half their sales from services. And they’ve achieved margins on services up to eight times those on product sales.

Many companies, striving for unprecedented growth by cultivating intensely loyal customers, invest lots of time and money measuring customer satisfaction. But most of the yardsticks they use are complex, yield ambiguous results, and don’t necessarily correlate to profits or growth.

The good news is, you do not need expensive surveys and complex statistical models. You only have to ask your customers’ one question: “How likely is it that you would recommend our company to a friend or colleague? The more promoters your company has, the bigger its growth.

Why is willingness to promote your company such a strong indicator of loyalty and growth? Because when customers recommend you, they are putting their reputations on the line. And they’ll take that risk only if they’re intensely loyal.

By asking this one question, you collect simple and timely data that correlate with growth. You also get responses you can easily internet and communicate. Your message to employees “Get more promoters and fewer detractors” becomes clear-cut, actionable, and motivating, especially when tied to incentives.

Is your company in death spiral? Are secrecy, blame, turf protection, and helplessness running rampant? Does no one seem to know how to reverse the decline, never mind halt it?

If so, now is when your leadership matters most. But, how do you spearhead a turnaround? Smart financial and strategic decision-making help. But they’re useless without a psychological turnaround, restoring your people’s confidence in themselves and each other.

To engineer a psychological turnaround, initiate four critical interventions:

1. Promote dialogue in lieu of secrecy
2. Engender respect in place of blame
3. Spark collaboration instead of turf protection
4. Inspire initiative that vanquishes helplessness

Managing the tension between performance and people is at the heart of every leader’s job. Focus single-mindedly on delivering profits, and you disenchant your workforce, destroying your capacity to drive needed strategic change. Concentrate solely on employees, and the organization may slide into complacency, eroding its competitive vitality.

Exceptional leaders refuse to choose between profits and people, as high-commitment, high-performance companies reveals. They support both factors with action such as:

1. Earning employees’, investors’, and other stakeholders’ trust
2. Engaging directly with employees
3. Maintaining focus and consistency of purpose
4. Building collective leadership power
5. Fostering shared purpose

By applying these practices, CEOs turn the recession-stricken companies around. Launch a global program to rearticulate companies’ mission and reaffirm their values. Then companies taught employees’ skills needed for a new strategy. Boost sales. Increase net earnings, and soar employees’ commitment to the new strategy.

Are you about to hit a stall point? A diagnostic survey of 6 red flags can help signal the danger in time. Below is the 6 red flags relating to premium-position captivity. To the extent that your senior team and high-potential managers see these as areas for concern, you may be headed for a free fall.

1. Our core assumptions about the marketplace and about the capabilities that are critical to support our strategy are not written down.
2. We haven’t revisited our market definition boundaries, and therefore our list of current and emerging competitors, in several years.
3. We haven’t refreshed our working definition of our core market, and therefore our understanding of our market share, in several years.
4. We test only infrequently for shifts in key customer groups’ valuation of our product/service attributes.
5. We are less effective than our competitors at translating customer insights into new product and service categories.
6. Core customers are increasingly unwilling to pay a premium for our brand reputation or superior performance.

At the top of every industry are companies that have built premium positions for themselves, dominating the market among the most demanding customer segments and providing products or services that lead the field in performance, thus commanding higher prices. The organizational strengths in product development, brand management, and marketing that created these top positions are sources of great pride to the firms that cultivated them.

But attack from new competitors with significantly lower cost structures, or changes in customer preferences that start slowly and then reach tipping points, can actually transform these dependable sources of competitive advantage into weaknesses. Product innovation loses its ability to protect pricing premiums, and presumed brand and marketing strengths no longer dependably protect market share. All the firm’s business processes and activities developed and honed for the top end of the market become impediments to refreshing strategy.

It is possible to spot the onset of premium-position captivity. The six yes-or-no questions below probe awareness of threatening market dynamics, an executive team’s blind spots regarding competitive threats, and intelligence capabilities for recognizing an impending encroachment on premium turf.

1. Are we losing market share to non-premium rivals in sub-segments of our market?
2. Are key customers increasingly resistant to paying price premiums for product enhancements?
3. Does the senior executive team resist the proposition that non-premium players operate in the same business or product category that we do?
4. Do we commonly dismiss the possibility that non-premium rivals and low-end entrants will penetrate the upper ends of our markets?
5. Do we fail to track shifts in secondary and tertiary customer-group behavior with the same rigor we use for our higher-end segments?
6. Do we exclude non-premium players and low-end entrants from our tracking of competitive threats?

A yes to two or more of these questions suggests the need to refocus research into markets and competitors. The goal should be to map premium features and low-end competitor performance. A yes to four or more suggests an immediate need for contingency planning: how might the firm modify its current business model (including its margin requirements and cost basis) to respond to a low-cost entrant within 18 months?

The division of Europe into a Catholic and a Protestant camp affected even the art of small countries like the Netherlands. The southern Netherlands, which today we call Belgium, had remained Catholic, and we have seen how Rubens in Antwerp received innumerable commissions from churches, princes and kings to paint vast canvases for the glorification of their power. The Northern provinces of the Netherlands, however, had risen against their Catholic overlords, the Spaniards, and most of the inhabitants of their rich merchant towns adhered to the Protestant faith.

The taste of these Protestant merchants of Holland was very different from that prevailing across border. These men were rather comparable in their outlook to the Puritans in England: devout, hard-working, parsimonious men, most of whom disliked the exuberant pomp of the Southern manner. Though their outlook mellowed as their security increased and their wealth grew, these Dutch burghers of the seventeenth century never accepted the full Baroque style, which held sway in Catholic Europe.

Even in architecture, they preferred a certain sober restraint. When, in the middle of the seventeenth century, at the peak of Holland’s success, the citizens of Amsterdam decided to erect a large town hall, which was to reflect the pride and achievement of their newborn nation, they chose a model, which, for all its grandeur, looks simple in outline and sparing in decoration.

Early sixteen-century art connoisseur seemed to agree that painting had reached the peak of perfection. Men such as Michelangelo and Raphael, Titian and Leonardo had actually done everything that former generations had tried to do. No problem of draughtsmanship seemed too difficult for them, no subject matter too complicated. They had shown how to combine beauty and harmony with correctness, and had even surpassed the most renowned statues of Greek and Roman antiquity.

For a person who wanted one day to become a great painter himself, this general opinion was perhaps not altogether pleasant to listen to. However, much he may have admired the works of the great living masters, he must have wondered whether it was true that nothing remained to be done because everything art could possibly do had been achieved. Some appeared to accept this idea as inevitable, and studied hard to learn what Michelangelo had learned, and to imitate his manner as best they could. Michelangelo had loved to draw nudes in complicated attitudes – well, if that was the right thing to do, they would copy his nudes, and put them into their pictures whether they fitted or not.

The results were sometimes slightly ludicrous – the sacred scenes from the Bible were crowded out by what appeared to be a training team of young athletes. Later critics, who saw that these young painters had gone wrong since they merely imitated the manner of Michelangelo because it was in fashion, have called this the period of Mannerism.

One year! We have accomplished our first year of existence. This first year was at the same time, full of surprises and banalities, of discoveries and mysteries, of happiness and sadness, of inquietude and certitude. For all these reasons, I like the entrepreneur life and I believe that besides creating a family and procreate, a man will not achieve its existence without creating its own business.

What I have experienced during that year, confirm what I knew. The consultancy business in this region, and especially in the service industry, has a bright future. Indeed, there are more creative people than scientific, and that is why our services are essential for those who want to implement their dreams in a professional way.

Today, our business perspective extends to Europe and United States, where consortium and private investors are looking for fruitful land of profit. Even in the midst of worldwide financial insecurity, some smart people understood that it is the right time to invest. In addition to the workload of my business and my Doctorate Thesis, I am working on a unique hotel concept that will revolutionize the hospitality industry, which is between us quite predictable.

The great achievements and inventions of the Italian masters of the Renaissance made a deep impression on the peoples north of the Alps. Everyone who was interested in the revival of learning had become accustomed to looking towards Italy, where the wisdom and the treasures of classical antiquity were being discovered. We know very well that in art we cannot speak of progress in the sense in which we speak of progress of learning.

A gothic work of art may be just as great as a work of the Renaissance. Nevertheless, it is perhaps natural that to the people at that time, who came into contact with the masterpieces from the south, their own art seemed suddenly to be old-fashioned and uncouth. There were three tangible achievements of the Italian masters to which they could point. One was the discovery of scientific perspective, the second the knowledge of anatomy, with it the perfect rendering of the beautiful human body, and thirdly the knowledge of the classical forms of building, which seemed to the period to stand for everything that was dignified and beautiful.

There is a great demand for professional in the tourism industry, but there are numerous academic standards that cause fragmentation and difficulties, which is mainly due to the lack of transparency in training. The French LMD (Licence – Master – Doctorate) intends to standardize the European higher educational system in each European country. Every student will obtain their first Bachelor (Licence) Degree after 3 years of university, a Master Degree after 2 more years, and a Doctorate after 3 more years. This reform was developed to improve the quality of tourism education focusing on European and international qualifications.

The objective is to improve the efficiency of tourism education and training at the highest level with PhD and Thesis Doctorate. To reach these objectives it is essential to define clearly the contents and delivery mechanism of a tourism education programme, mainly for a postgraduate research degree.

Risks in any form take a toll on tourism and thus the economy. Thought there are many risk detection prevention and recovery plans, and they pose many challenges for most of the developing countries. As a result, risk directly and indirectly affect tourism, the economy and society. As certain risks are unavoidable, the travel and tourism industry need to be prepared to tackle this problem. It is crucial to ensure safety and security measures important to travelers are in place, and to introduce processes that expand tourist awareness of these operations.

Consider a child climbing a tree. There are two ways to safeguard the child. Stop the child from climbing the tree or stand beside the child and help him climb as high as he wants and be there in case he falls. Travelers are in the same position as the child. If they are given appropriate safeguards, they will have the confidence to travel more. They may even take greater risks.

An organization culture is made up of held values to which employees are strongly committed. In addition, there are a number of forces continually operating to maintain a given culture. These include written statements about the organization’s mission and philosophy, the design of physical spaces and buildings the dominant leadership style, hiring criteria past promotion practices, entrenched rituals, popular stories about key people and events, the organization’s historic performance, evaluation criteria, and the organization’s formal structure.

Selection and promotion policies are particularly important devices that work against cultural change, and employers select senior managers who will continue the current culture. Even attempts to change a culture by going outside the organization to hire a new chief executive are unlikely to be effective. The evidence indicates that the culture is more likely to change the executive the other way around.

Our argument should not be viewed as saying that culture can never be changed in the unusual case in which an organization confronts a survival-threatening crisis. Members of the organizations will be responsive to efforts at cultural change. However, anything less than is unlikely to be effective in bringing about cultural change. Changing an organization’s culture is extremely difficult, but cultures can be changed. The evidence suggests that cultural change is most likely to take place when most or all of the following conditions exist:

1. A dramatic crisis: This shock undermines the status quo and calls into questions the relevance of the current culture. Examples are a surprising financial setback, the loss of a major customer and a dramatic technological breakthrough by a competitor.

2. Turnover in leadership: New top leadership, which can provide an alternative set of key values, may be perceived as more capable of responding to the crisis.

3. Young and small organizations: The younger the organization is, the less entrenched as culture will be. Similarly, it is easier for management to communicate its new values whether organization is small.

4. Weak culture: The more widely held culture is and the higher the agreements among members on its values, the more difficult it will be to change. Conversely, weak cultures are more amenable to change than strong ones.

If most of these conditions exist, the following management actions may lead to change initiating new stories and rituals, selecting and promoting employees who espouse the new values, changing the reward system to support the new values; and undermining current subcultures through transfers, job rotation and terminations. Under the bets of conditions, these actions will not result in an immediate or dramatic shift in the culture. In the final analysis, cultural change is a lengthy process – measured in years rather than in months. Nevertheless, cultures can be changed.