Companies need to be quite clear about where their brand falls along the continuum between local and global. Is yours a truly global brand like Starbucks, which is the same everywhere, or are you a local brand like Wish Bone salad dressing, which is only sold in the U.S., asked Reibstein. Or is your brand somewhere in between, like KFC, which is basically KFC the world over but serves tempura in Japan and potato and onion croquets in Holland
The benefits of a strong brand are indisputable, he said. "It improves the efficiency of marketing, intensifies customer loyalty, improves leverage with the trade, and creates a true asset for the firm." That is, of course, if the brand has credibility. Terry Tyrrell, European chairman of Enterprise IG, warned of consumers' waning trust in brand promises. "If an organization's brand is about reputation," he said, "then we're living in a graveyard of broken promises." He suggested that a brand used to be a mask, which companies could hide behind. "Today, those masks have been turned into windows," and companies had better be sure that their words and deeds match up.
The brand must hold up not only externally, but internally, suggested several of the speakers. Indeed, Barry W. Wilson, senior vice-president and president international of Medtronic, said that the group's commitment to its leadership in major medical technology markets was matched with the requisite R&D spending. "Two-thirds of our revenues are from products introduced in the last two years," noted Wilson. Given that innovation is the company's lifeblood, it will spend $851 million on R&D in 2004, equal to 9.4 percent of sales. You cannot expect innovation but not support it through R&D spending, he said.
Similarly, Cisco practices what it preaches, having grown globally by placing significant weight on business processes. Robert Lloyd, president EMEA, senior vice-president, suggested that "strong global processes drive strong global profits." He cited the Net Impact 2003 study by Momentum Research Group which showed that letting business processes drive the Internet business applications, instead of the other way around, produces 25 percent - 30 percent costs savings. Developing Internet business applications first, then building the business processes from there, results in 6 percent - 9 percent cost increases. According to Lloyd, Cisco has realigned around business processes, stating that "basic infrastructure provides competitive advantage."
IQ and EQ
All of the speakers agreed that the skills needed to manage a global company are quite complex and difficult to find. Jean-Philippe Courtois, chief executive officer, EMEA, and senior vice-president, Microsoft Corp., said that he would prefer leaving a position open for a while, with someone serving as "acting" manager, rather than filling a post immediately with someone who might not be the right fit.
According to John Grumbar, chief executive of Egon Zehnder International, the "hard" competencies, such as strategic orientation, customer focus, market knowledge and functional knowledge, are given too much weight. Rather, the "soft" skills, such as team leadership, change leadership and people development skills, are the competencies you find in effective leaders. Indeed, when Egon Zehnder studied 515 managers from three regions (Germany, Japan, and Latin America), it found that among three competencies - relevant experience, IQ, and EQ (emotional intelligence) - the most significant determiner of failure was a low EQ. Said Grumbar: "Most people are hired on IQ, but fired because of EQ."
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