the european business review 07 08 2020

July - August 2020europeanbusinessreview.com

The European Business Review

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Coronawashing: How toEstablish Moral Authenticity

Why Leaders Should Never Leave the Battlefield

BUILDING THE FUTURE ON A CENTURY OF HERITAGE

AN INTE

Max nCEO OF GROUP

A family business on the move– FOR GENERATIONS TO COME

EXECUTIVE TRANSITION PROGRAMPrepare for the highest level of leadership

execed.esmt.berlin/etpEXECUTIVE EDUCATIONRANKING 2020

WORLDWIDETOP 10

JULY– AUGUST 2020

The EuropeanBusiness Reviewempowering communication globally

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47COVER STORYBuilding the Future on a Century of Heritage:A family business on the move – for generations to comeInterview with Max Viessmann, CEO of Viessmann Group

ROBOTICSRobots are cleaning up – and much more besidesInterview with Claus Risager, CEO of Blue Ocean Robotics

LEADERSHIPTurning a weakness into a strength: Why Leaders shouldnever leave the battlefi eldDavid De Cremer

EXECUTIVE EDUCATIONWharton Live: Best-In-Class Online Learning

GLOBAL ECONOMYThe Corona Virus Threat – The issue of re-opening oureconomies or continuing the “lock-down” and the businessimplications of this uncertaintyPeter Lorange

BUSINESS ETHICSCoronawashing: How can fi rms establish moral authenticity?Glyn Atwal and Maya Kaiser

DIGITAL TRANSFORMATIONTimeXtender Technology Used forCritical Community Efforts

GLOBAL BUSINESSHow Businesses are Getting Back on Track in ChinaFrank Riemensperger, Svenja Falk and Serena Qiu

CULTUREResponse to COVID-19, Global PandemicHighlights the role of National Cultures Bhaskar Pant

DATAFree Flow of Data: What the Corporate WorldCan Learn from ScienceAndreas Deppeler

TECHNOLOGYIT as the Whipping Boy: Mistakenly Confusing‘Enterprise IT’ with ‘Consumer IT’Joe Peppard

LUXURYInnovation Pathways for Luxury Brands – Evolution or ReinventionHannes Gurzki and Ashok Som

MARKETINGHow To Profi t From Reference Marketing In B2B MarketsAndre Vilares Morgado

ENTREPRENEURSHIPEntrepreneurial Fundamentals: Key entrepreneurial skillsrequired to navigate in the Creative IndustriesGene Shill

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Production & Design: Angela Lamcaster Print Strategy: Stefan Newhart Production Accounts: Lynn Moses Editors: Elenora Elroy, David Lean Group Managing Editor: Jane Liu Editor in Chief:The European Business Review Publishing Oscar Daniel READERS PLEASE NOTE: The views expressed in articles are the authors' and not necessarily those of The European Business Review. Authors may have consulting or other business relationships with the companies they discuss. The European Business Review: 3 - 7 Sunnyhill Road, London SW16 2UG, Tel +44 (0)20 3598 5088, Fax +44 (0)20 7000 1252, [email protected], www.europeanbusinessreview.com No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without written permission. Copyright ©2020 EBR Media Ltd. All rights reserved. ISSN 1754-5501

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6 The European Business Review July - August 2020

BUILDING THE FUTURE ON A CENTURY OF HERITAGE

A family business on the move – for generations to come

Cover Story

INTERVIEW WITH MAX VIESSMANN,CEO OF VIESSMANN GROUP

Max Viessmann• The CEO Viessmann Group, a

German manufacturer of heating,cooling and climate solutions.

• The great-grandson of founderJohann Viessmann.

• He oversees the private company's climate solutions portfolio and drives the digital transformation and culturalrenewal of the group.

• He was a management consultant at The Boston Consulting Group in itsMunich and Shanghai offices.

• He studied industrial engineering at the Karlsruhe Institute of Technology (KIT) and at the TU Darmstadt.

www.europeanbusinessreview.com 7

If knowledge is power, then shared knowl-edge must surely be the way for a companyto maximise the potential of its employees.Here, Max Viessmann, CEO ViessmannGroup, explains how, in a changing worldclimate, that principle enables the companynot only to thrive commercially, but also tofulfil its vision of making a difference.

Hello, Mr Viessmann. Thank you fortaking the time to talk to us today. It is agreat pleasure to have the opportunity totalk to you. To begin with, is there such athing as a typical workday for you and whatmight it look like?

I don't think I can describe my current work-days as typical workdays. These are extremelychallenging times, with substantial changesto our production, our logistics and supplychains, our work practices, our workforcecollaboration, our social responsibilities andthe increasing importance of solidarity. Timeslike these demand excellence, compassion,innovation, foresight, speed of change and,indeed, courage. All I have learned and allthat Viessmann stands for, has been broughtinto focus by today's business environmentand by the economic and social factors whichconcern all of us. I am extremely happy tosay that our company ethos, honed for over acentury, has proved resilient and has success-fully met the many challenges of this pandemic– a testament to the many generations of mypredecessors. The crisis has shown who we are,rather than maybe who we just wish to be.

The Viessmann company has been inbusiness in a competitive industry forover 100 years, which is an impressiveachievement. What would you say are thecharacteristics that have contributed to thecompany’s success?

I am convinced more than ever that our company culture is our biggest competi-tive advantage and, having taken a century to develop, one that is not easy to emulate. Today, competitive advantage is not just about finan-cial results, but more about how we serve and treat our employees – our valued members of

the extended Viessmann family. It’s also aboutour partners and end customers, and the people we live amongst – the society we operate in. This culture is embodied and embedded in our company DNA. It is all about creating a common mindset. A company that is successful over centuries must be doing something right and these positive attributes are passed down from generation to generation through our DNA. Viessmann has not only always been open to change, but actively looks for change. It has always been part of our company philos-ophy to focus more on opportunities than on threats, especially in challenging times. Change is an opportunity to learn, to develop and to grow. Every generation at Viessmann has faced technological, political, environmental and social change and has used disruption to learn how to serve people better than before. Today is no exception; digital and cultural transfor-mation and the volatility caused by the current pandemic will produce a better and more

A company that is successful over centuries must be doing something right and these positive attributes are passed down from generation to generation through our DNA. Viessmann has not only always been open to change, but actively looks for change.

Max Viessmann andMartin Viessmann


proficient Viessmann, better able to meet the challenges of the coming decades. Digitalisation and sustainability are centennial opportunities that we will need to manage successfully, not only for ourselves, but for all generations to come.

Viessmann has always beena family-run company. Do youthink that this influences thecompany’s approach to corpo-rate responsibility towards itsemployees and towards societyin general?

Yes, because being a family-ownedfirm enables us to take a long-termview. This is fundamental to servingall our stakeholders, to being awareof the bigger picture and not justthis quarter or financial year. I amnot talking about five-to-ten yearplanning, I am talking about lookingat the impact of what we are doingnow on the next generation. This iswhere my personal outlook and thecompany ethos come together. Irecently became a father for the first time, and now I look at the generational aspect with heightened awareness, both of the responsibility my father handed to me and the world we will leave to our children. It saddens me that we, the human race, have disrupted the delicate ecological balance that has functioned for thousands of years, through industrialisation and the resulting carbon emis-sions. Now, it’s all the more imperative that we work together to make the necessary changes. The use of technology, for example, digital solutions and services, smart homes and ecosystems, as well as the Internet of Things, can help us transform. Indeed, I believe there is nothing else that can have the necessary impact and I am in the fortunate position that I can make an impact together with our 12,300 family members across the globe – because we create living spaces for generations to come.

The idea of “creating living spaces for generations to come” is an intriguing and inspiring one. Could you enlarge on what that concept means for the company?

Today, the dominant topics for us include climate change, global warming, energy efficiency and carbon-neutral energy through electric and hydrogen technologies, and how we can affect the environment for the better through more sustain-able products and business practices. Creating

living spaces for generations to come is Viessmann’s purpose and contribu-tion to solving this existential issue. This again is the long-term view in action, both looking forward at what practical action Viessmann can take, and learning from, and building on, our heritage. It’s about combining our heritage and future. And it’s about the right culture with the right level of transparency, the right level of trust and courage. And it’s about co-crea-tion. Many companies underestimate the creativity of their own people. We do not. Instead we share, provide the right context for the right decisions and we encourage. For example, every month we discuss what drives the company with all our 12,300 global

family members in what we call “State of the World” meetings. On our centenary anniversary, we developed our purpose from the bottom up, in close collaboration with many of our colleagues. One result is a change in perspective. Our impact is

Cover Story


actually much higher than one might initially think. We are not just assembling machines which heat a room. We are creating a future for people, for our family members, our partners, society – everyone, in fact. Our focus is on energy efficiency and the reduction of CO2 emissions in single houses, large buildings and urban areas. We are aiming to create the smartest ecosystem everyone can access for the perfect temperature, the perfect climate envi-ronment and perfect air quality. Another digital aspect is the on-time delivery of warmth or cool-ness. Through our integrated solutions offering, including heating-as-a-service, our customershave the possibility of controlling their homes via smartphones or mobile devices. Combining our heating technology with other smart homesystems that support geofencing and using theGPS data of the connected smartphones, thesystem recognises the current location of theresidents. When you approach your smart home,the rooms are automatically heated to the desiredtemperature, and turned off, of course, when youdo not need heating. There are incredible oppor-tunities for the customer to save money, help theenvironment and improve their living space.

The COVID-19 pandemic has hadsomething of a sledgehammer effect oncountries and people around the world.Where would you say corporate socialresponsibility fits into this? Do you thinkthat businesses have a role to play?

We have come to the realisation that this crisis will not be over for anyone until it is over for everyone. All contributors to this fight must think both locally and globally. There is no halfway or one-country-only solution. We are in this together, we live in mutually dependent economies, enterprises and societies that will succeed together in solidarity, or fail together apart. The biggest challenge we face is addressing the unequal access, or poor access, to medical or other forms of aid. Too many people face the impossible task of protecting themselves or their families with inadequate resources. How we help those with so little will define this period, and how we will be remembered – with pride in our new solidarity, or shame. At Viessmann, we have, in record time, rebuilt some of our produc-tion facilities to produce mobile solutions for the pandemic – mobile intensive care units and ventilators. This is our social responsibility and has been part of the Viessmann approach from the very beginning. Once we decided to venture into medical technology, everyone contributed. Our family members, who normally work as data scientists or product managers for fuel cell technology, really drove the implementation forward. They presented us with the first venti-lator within a week. This is just remarkable, and I am so proud of our ability to reinvent ourselves. These ventilators, for example, use only parts that we already use for boilers and heat pumps. Of course, we also sought advice from outside,

We are aiming to create the smartest ecosystem everyone can access for the perfect temperature, the perfect climate environment and perfect air quality.


from hospitals, intensive care doctorsand the medical faculty at the technicaluniversity of Aachen. The ventilatorproject was developed in one smooth,rapid process. With us, such projectssimply utilise an existing, flexible oper-ating system, enriched with courage andpassion. We have the capacity now forseveral thousand appliances per week.

It is evident that the Internet ofThings is now among us to stay. Whatare the principal opportunities of thisthat you see in your industry? Andwhat are the pitfalls? Are there issuesin terms of social responsibility?

With digitalisation and the Internet ofThings, we will be able to turn ideas intosmart solutions much faster and reducethe global consumption of energy. InGermany alone, two-thirds of our 21million heat generators are outdated and

inefficient. Something must be done– here and globally. There are manywonderful opportunities to do big orsmall things for the climate. That’s whywe have called on our 12,300 familymembers to develop their own ideasand submit them to me. As for pitfalls,of course privacy is a major issue. This

Cover Story

is something that Europe has taken an international lead in. We can turn our focus on privacy into a competitive advantage, if we do it right. You might smile hearing this from a German, but there is a fresh wind blowing through Europe, opening doors to new opportu-nities, and Germany must be courageous in catching this wind of change. Germany and Europe can utilise its culture, empathy and way of doing things to develop innovative solutions that we, and the generations to come, can benefi t from. We must adopt new technologies faster than any other society. Germany must free itself from “Angst” and its fear of change, and encourage curiosity, reward experimentation, celebrate ideas, and focus on the benefi ts. We should understand any possible negative effects, but we should not let that paralyse our thinking. We should strive to know more, to understand more and to be more. We

Germany must free itself from “Angst” and its fear of change, and encourage curiosity, reward experimentation, celebrate ideas, and focus on the benefi ts.

are explorers and should always be curious andtry to improve the lives of those around us, nearand far. Let's be courageous!

How important for the company is theemployee experience in terms of workingenvironment and professional development?What is it like to work for Viessmann?

We all work together with one purpose:creating living spaces for generations to come,regardless of where we come from individuallyor which country we live in. It is that simple atViessmann; there is no “us” and “them”, thereis only “we”. This can be seen in our response tothe pandemic. We formulated very clear princi-ples for ourselves early on. Firstly, our top priorityis our family members’ health. So far, we havehad very few infections. The second principle isthat solidarity and social responsibility are funda-mental to getting through these challenging timessuccessfully. And thirdly, we must do everythingto ensure the survival of our 103-year-old familycompany. As we are relatively well representedin China, we gained knowledge and experiencefrom our Chinese colleagues at the beginning ofthe pandemic and were able to put preventativemeasures in place at all our sites worldwide earlyon, because a lesson learned is only helpful if it isa lesson shared. In a way, this response epitomisesViessmann. I am all that I have learned. I havelearned from my mother and father, my familyand from my colleagues around me. And it is myresponsibility to share my knowledge, just as itis the responsibility of each Viessmann familymember to learn and share their knowledge withthe next generation at Viessmann.

What aspects of your work to date havegiven you the most satisfaction? And whatare some of the goals that remain?

Three aspects have given me most satisfaction,although everything is, of course, still a work inprogress. Firstly, defi ning our purpose of creatingliving spaces for generations to come, with the

incredible support of all our Viessmann family members. This has given each and every Viessmann employee a very clear connection and relevance to the future of our planet, to all the generations to come, that, perhaps, one might not have had. It has also given us an additional tool to measure and validate every decision we make – how well does this fi t our purpose? Secondly, the digital-isation of traditional machinery that allows us to fulfi l our purpose. Digitalisation is not a straight-forward initiative; the software and the hardware are the easy bits, but not the full story. The cultural changes needed, the hearts and minds of everyone involved, these are the real tools of success. Thirdly, the inclusiveness and transparency and open communications needed to undertake the digital transformation. The success of this can be seen in Viessmann’s rapid response to the pandemic. I must say that my pride in our 12,300-strong family can leave me speechless. Goals that remain? We are only 30 percent there. This is a lifelong task. Longer than that, you could say; it is generational. You will have to ask the next Viessmann generation.

What does success mean for you, personally?I learned from my father that we are not

owners, but custodians and serving leaders. He took over Viessmann from his father and further developed it before handing me a company with much greater potential than he inherited. I thank him for that every day. Currently, my father and I are leading the company and it is a privilege for me to learn from him and his experiences every day. To have the best advisor at my side – this is the power of two generations. The future will decide upon our successes. For me, one measure of personal success could be handing a more successful Viessmann company to the next gener-ation of the Viessmann family. However, if the next generation wishes to take another path in life, then I need to ensure that I try to make the world a better place. A new digital Viessmann company or a better world – that is more than enough to get me up in the morning.

We all work together with one purpose: creating living spaces for generations to come, regardless of where we come from individually or which country we live in. It is that simple at Viessmann; there is no “us” and “them”, there is only “we”.


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Robotics

The potential of robots to assist and even replace

humans in a variety of work areas was already

appreciated long before the advent of COVID-19.

But now, in the context of that global health crisis, the notion of a device that can work tirelessly in environ-

ments where humans are at risk has boosted interest in

the sector. Claus Risager of Blue Ocean Robotics tells

us more about this fasci-nating industry.

PIONEER

ROBOTEXPERT

ENTREPRENEUR


by 1 February 2013. The overall purpose of the company is to make robots that give people better lives by making them more productive in their work, by enabling them to create better quality, to improve the health situation in their jobs, and so on. We also wanted to focus on making autonomous mobile robots and products for the professional service robot industry. We focused on segments with very low productivity increase, such as healthcare, hospitality, construction and agriculture, which are segments where robots can really make a big difference for the people that work in them. This is also why we included “for humans” in our logo.

The company has an interesting busi-ness model in which each robot brand is set up as a subsidiary. Could you tell us a little about why you chose that model, rather than simply having a range of products within the parent company itself ?

We wanted to provide very clear communi-cation to our customers, such that each brand name and logo is directly associated with a particular robot that brings a unique value to the customers. If we had set up all robots to have the Blue Ocean Robotics logo and brand name, it would have been more confusing for customers

Hello, Mr Risager. Thank you for sparingus a little of your time. It’s a great pleasureto have the opportunity of talking to you. Tobegin with, is there such a thing as a typicalworkday for you and what might it look like?

In the early morning, I exercise on a cross-trainer while I watch the latest business news.After that, I check the emails that arrived duringthe night. Until lunchtime, I mainly spend timeon larger projects of strategic importance. Afterlunch, I normally have internal meetings withvarious managers in the company or we have teammeetings related to our individual robots. Here, Ialso give interviews to journalists and take part invarious networking meetings. The last meetingswith our US peers typically end by 6 or 7 p.m.After that, I normally spend time on emails fromduring the day or I check out my social media andshare and like what I find most interesting.

It’s hard to imagine a more futuris-tic-sounding area of business than robots.Could you give us some background on howBlue Ocean Robotics came to be set up?

I have been working with robots since 1988. In 2012, I decided to start up Blue Ocean Robotics and founded the company together with two colleagues; we were up and running

The overall purpose of the company is to make robots that give people better lives by making them more productive in their work, by enabling them to create better quality, to improve the health situation in their jobs, and so on.


to understand. Furthermore, we also see BlueOcean Robotics as a robot venture factory. As aconsequence, once we have proved the businessof a particular robot, we believe another companywill be better at scaling up the business to evenhigher levels, and at that time we will search forsuch a company and sell our robot business to it.We have structured our business such that eachindividual robot is prepared for this, and there-fore it also has its own unique brand name.

How does the company approach R&D?Do you tend to wait to be approached for asolution in a particular problem area, or doyou perhaps more proactively identify applica-tions for robotics with commercial potential?

It’s really a combination. Often, we are approached by customers or other parties from the market with ideas or problems to be solved. And often we get an idea ourselves based on a deep understanding of the capabilities of our robot technologies and problems that are yet to be solved on a global market. We have a very

structured way of analysing and sorting these ideas, as well as a process of taking various steps from idea through design, development and commercialisation all the way to a fi nal exit one day. Internally, we have named this whole frame-work as our “RoBi-X” model.

In the current situation of pandemic, the focus is very much on healthcare appli-cations for robots, not least because of their imperviousness to biological viruses. The company’s UVD robots are currently enjoying huge success, for example, in China. Could you tell us a little about the history of the product?

UVD Robots is a result of a collaboration between Blue Ocean Robotics and a group of Danish hospitals that started in 2014. Together we set the goal of solving the problem of patients getting infections during hospitali-sation. In Denmark alone, the problem with hospital-acquired infections is so big that every year 50,000 patients get a hospital acquired

infection, and over 1,000 people lose their lives as a direct consequence of this. UVD Robots created its fi rst generation of the robot in 2015 and started scaling its commercial sales activities in 2018. Today, we are in more than 60 countries and the company is the world leader in autono-mous mobile robots that do UV-C disinfection, with more than 75 percent of the world market. The UVD robots are used in general to prevent infections of all kinds of bacteria and viruses and, naturally, also COVID-19.

Robotics


Do you see robots moving into other areas ofhealthcare in the future?

Yes, for sure. There are many applications withinthe healthcare segment where we will see many morerobots. At Blue Ocean Robotics, we have two morerobots coming into the healthcare market just now.GoBe Robots is a telepresence robot enabling physi-cians and other healthcare professionals to connectto a robot in order to talk to patients and colleagues,so as to diagnose and treat patients. PTR Robots isa robot for safe patient-handling and rehabilitationcombined, and is of particular use for patients withstroke and similar kinds of paralysis, where rehabili-tation of patients in order to train lost gait functionsis essential, while also at the same time being ableto move the patients around in a super-flexible way.

Can you tell us a little about the other rangesof robots that the company has developed? Andare there any other sectors of industry that youhave set your sights on as potential applicationareas for robots?

I’ve already mentioned GoBe Robots andPTR Robots. In addition, GoBe Robots is a veryCO2-friendly robot, because it basically encouragesand enables people to travel less, while still beingable to be physically present and interact withother people. This leads to enormous amounts ofCO2 saved, as just one flight from Copenhagen toSingapore for one person is 3.1 tonnes of CO2.

There is currently a lot of speculation aboutthe nature of the post-pandemic world. Do yousee the pandemic as a game-changer for theapplication of robotics?

In some types of applications, it is clearly a game-changer for robots. We have already talked about disinfection, but also reduced travelling. Other appli-cations are related to logistics, where robots can take

goods from A to B and again reduce the degree of physical contact between people.

Sustainability is a high-profi le issue in busi-ness in our times. How do you see the robotics industry’s role in this regard? Can it make a contribution to improved sustainability?

Yes, indeed. Again, our GoBe Robots is the world’s most environmentally friendly and CO2-saving robot. The sustainability goals are at the top of our mind and this seems to also spread out to many more robot companies now.

The introduction of advanced-technology solutions, such as robotics, AI and drones, will obviously have implications for society in the future, for example in terms of privacy, ethics and employment. Should business leaders get involved in considering such issues, or are they a matter for other platforms of discussion?

Certainly, business leaders should get involved in discussing such issues and, fi rst and foremost, business leaders must make up their minds about how their businesses and products are going to contribute to making the world a better place for all of us.

The robotics industry has experienced diffi cult times in recent years and some companies have been unable to continue. What would you say are the qualities that have enabled Blue Ocean Robotics to thrive while others have failed?

Often, we are approached by customers or other parties from the market with ideas or problems to be solved. And often we get an idea ourselves based on a deep understanding of the capabilities of our robot technologies and problems that are yet to be solved on a global market.


I agree that there has been somehype about the robotics industry forsome years, but it seems to have cooled off a bit and that is good for the entire industry. The hype was caused by theclear realisation of the future poten-tial of the robotics industry, where itbecame obvious that robots are goingto play a major role in our future. Inthis century, the industry will play arole which is even bigger than the role the automotive industry played in theprevious century. This is a statementmade by the Economic Forum of theUN. And making robots successful is so much more diffi cult than just developing software and apps and similar, because robots are real things interacting with the physical world and the people in it. This is challenging across a range of parame-ters and many robot companies have not been fully prepared for it.

At Blue Ocean Robotics, we have over-come these challenges by establishingourselves as a robot venture factory. Wehave basically industrialised the variousphases and processes that it takes to gofrom idea, through design, developmentand commercialisation to a fully scaledand successful business. Such an indus-trialisation means that we have built upbest practices in all relevant aspects andwe can leverage this every time we makea new robot in our portfolio. In this way,we can make new robots better, fasterand more cheaply than anyone else andwe also have a higher quality, higher hitrate and a more streamlined way ofdoing it. And this makes a big differ-ence. Most robot companies are able to develop a robot, but many struggle with achieving success in the market for various reasons. Either they have not involved the customers deeply enough in the development, or they struggle with a cost-effi cient and qualitatively good production setup, or they are not prepared for how to sell to and support customers all over the world, or many

other things that were unforeseen andended up closing down the new roboticscompany. At Blue Ocean Robotics, wehave successfully established our robotventure factory and, with it, the capa-bility to create one successful robotafter another, like pearls on a string.

What aspects of your work todate have given you the most satis-faction? And what are some of thegoals that remain?

Clearly, our ability to help all overthe world in fi ghting the spread ofCOVID-19 has been really satis-fying for all our employees, as well asmanagement and investors. We werethe fi rst to get our robots on the groundin Wuhan, China to help prevent thefurther spread of the virus, and we werealso heavily deployed in Italy, helpingsolve the immense problems that camewith COVID-19. Furthermore, thefact that we save hundreds of tons of

CO2 every day with our GoBe Robots being applied all over the world is very comforting for all of us and shows that there are ways to tackle the major climate challenges we are facing.

Do you subscribe to the perspec-tive of a “work-life balance” and, if so, could you defi ne what it means for you?

Yes, we are indeed focused on ensuring there is a good work-life balance for all our employees. We have a variety of approaches we use in a combined way to ensure this. For example, we appreciate that all people are different, so we really embrace giving our employees the freedom to organise their own work as much as possible. We have coaches that support our employees with tackling profes-sional and private challenges, helping them to become successful in their lives. We have plenty of social activities, we invite the spouses to dinners and social get-togethers, and much more.

What constitutes success for you, personally?

Customers clearly stating that our robots give value to them, like the UVD Robots saving lives every day, the GoBe Robots saving CO2 every day, etc. As an example, in Italy recently, a leading physician said that they had had fi ve staff infected, but then they installed UVD robots and subsequently had no cases of infected people.

Claus Risager, CEO at Blue Ocean RoboticsPhD in Robotics & Artifi cial Intelligence, with 30-plus years of experience with professional service robots and expertise in development, innovation and entrepreneurship. He has given more than 250 talks about robotics worldwide, and has received numerous awards, such as the euRobotics Technology Transfer Award 2020, IERA Awards 2019, and many more.

At Blue Ocean Robotics, we have successfully established our robot venture factory and,

with it, the capability to create one successful

robot after another, like pearls on a string.

Robotics

It is no secret that within the business world companies have a starting date, but also that one day they will die. All of them! Most companies,

however, do not write their own ending. Rather, it is what happens around them (i.e. the context) that decides when a company comes to

its ending. Companies do differ, however, in their ability to extend their “survival” horizon. Some companies die young whereas others are able

to keep going and deal with external threats for a long time.

Leadership

18 The European Business Review July – August 2020

TURNING A WEAKNESS INTO A STRENGTH:

WHY LEADERS SHOULD NEVER LEAVE THE BATTLEFIELD


The tech world is a place of coming and going of start-ups. Mostly these start-ups suddenly excel and then sell out to one of

the bigger companies. Surviving for a longer time is not very much on the mind of young tech entrepreneurs. It’s a different story, however, when tech giants become involved in life strug-gles. Then, the whole world will watch and wonder what is happening. For several years, the conflict between the US and China has primarily been one of technology, where it is clear that the party possessing the most advanced technology will gain all the benefits, ranging from market share and economic prosperity to political influ-ence and global leadership. This global tech war has influenced the life struggle of one of the global tech giants, called Huawei.

Huawei is a Chinese telecom founded by Ren Zhengfei in 1987 in Shenzhen and is one of the giants in the world of telecommunication tech-nology, infrastructure and smart devices. They employ more than 194 000 employees, operate in more than 170 countries and regions, and serve more than three billion people (excluding the US market). In the fiscal year of 2019 Huawei’s revenue reached CNY858.833 billion (US$122.972 billion) and CNY62.656 billion (US$8.971 billion) in net profit (in 2018 revenue reached CNY721.202 billion and CNY59.435 billion in net profit). As a testimony to their global presence and level of success, they are leading the telecommunication industry, are second in smartphone sales globally and rank number 61 in the Forbes 500 list.

Despite the fact that Huawei overtook Ericsson in 2012 (in terms of sales revenue and net profit) to become the world leader in the telecommuni-cation industry, the company never really was a household name in countries outside China. But, that all changed when the US government more firmly started to impose sanctions on high-pro-file Chinese companies and the biggest one of all was Huawei. For years, the US prevented Huawei from doing business claiming that the company was involved in espionage and thus represented a security threat. With the trade war between the US and China becoming more intense, the actions towards Huawei also became more intrusive. In December 2018 the daughter of the founder

Ren Zhengfei, who was the company’s CFO, was arrested in Vancouver, Canada. An international warrant, issued by the US government, charged Meng and Huawei with bank and wire fraud in violation of American sanctions on Iran.

In 2019, Huawei was added to a list of compa-nies that US companies were not allowed to transfer technology to without a government license. For Huawei this meant that it lost its ability to license Google’s commercial compo-nents for Android. Losing access to Google for its phones made that the sales of the Mate 30, the first phone absent Google’s Android and Play store, plummeted. A story seemed to be in the make where Huawei would lose out. Would this be the moment that the survival of Huawei would really be threatened?

As it stands now, it may yet turn out that Huawei is like Houdini, the famous American stunt performer who could escape from almost any situation possible. So, can Huawei survive without Google on its smartphones? The recent numbers seem to suggest they may do. In fact, they may have found a way to turn things around, and choose a new path that may even be more beneficial to them on the long term. How? The big difference between Google and Huawei is that the former is in the data busi-ness whereas the latter is not and makes its

Ren Zhengfei, CEO of Huawei The source: huawei.com

It may yet turn out that Huawei is like Houdini, the famous American stunt performer who could escape from almost any situation possible


business by selling technology. Google collectsdata via its devices, browser and apps, and runsits business on it. With Huawei not being ableto use its services, Google lost access to thedata of many customers.

Huawei at the same time is using this situa-tion to introduce its own AppGallery initiative,but has started to emphasize that it will do betterthan Google. Why? Google’s Android is an opensystem that makes available apps to many usersworldwide, and a result the security screening ofthe apps have been difficult and of poor quality.Huawei has started to emphasize this and notedit will do better in terms of security and privacy.After all, it is hinted upon, Huawei is not a databusiness, so, the inference is clear: Huawei doesnot face the same pressures to go after the dataof customers, instead, because it does not needyour data, it can take better care of your privacy.

A bold move and if it works, Huawei is likelyto escape from a situation that looked initiallylike a very bad one and change it into one thatcreates new opportunities. Of course, Huawei going in the defence by claiming that they can protect your data privacy and security better than Google is somewhat of an irony. Indeed, the company was put on the list by the US, preventing them from using Google’s Android in their smartphones, because of allegations regarding privacy and security. Furthermore, the

company did make mistakes in that area in the past. For example, in July 2018, Ren Zhengfei gave a speech at the kick off meeting of the cyber security and privacy protection special forces meeting in Huawei, and stated: “We should place cyber security and privacy protec-tion at the top of the company's agenda. We cannot just shout out slogans; we need to work out action plans.” The reason for this statement was that the National Cyber Security Centre (NCSC) of the UK had given them a wake-up call since their UK team had not taken the NCSC's recommendations seriously by failing to implement those improvement requirements for several years. It made clear to Huawei that they had a security problem. In that same meeting, Ren Zhengfei said: “We should first change our wrong mindsets, and then make up our minds to improve thoroughly, build up our capabilities, and deliver on our commitments.”

Whether it is irony or a smart move, from a management point of view, this situation intro-duces an important question, which is: What kind of leadership does it take for a company to be creative and pro-active in deciding on its own fate when crisis knocks on the door? As mentioned earlier, we know that organizations at one point will end when some sort of crisis hits them. It’s for this reason that having lead-ership in place that guides organizations out of a crisis is of pivotal importance. In fact, it is those organizations that have strong and wise leadership acting as a catalyst that brings all other organizational elements together that will survive longer. Without such leadership in place an organization can be compared to an army without generals – in other words, ready to be slaughtered by the very first real attack that hits them. Leaders are recognized to build the right work cultures that facilitates employees to create value in line with the beliefs and strategies the organization employs. Leaders therefore install the conditions needed to shape the mindsets of their employees to respond in specific ways to the external environment.

The leader that has shaped the work culture of Huawei, and as such directly the mindset of the ones who are now formally leading the company, is Ren Zhengfei. So, to understand

Huawei headquater The source: huawei.com

Huawei does not face the same pressures to go after the data of custo-mers, instead, because it does not need your data, it can take better care of your privacy

Leadership

how it is that Huawei seems to be able to adapt to the crises they are confronted with, and ulti-mately survive, we need to understand what Ren Zhengfei stands for and which values he has infused in the mindset of his work force. Below, I outline four such values.

Always ready to fight to surviveIn the foreword of their 2019 report rotating Chairman Eric Xu noted at one point that “survival will be Huawei’s first priority.” As it usually goes within Huawei, the way to survive is to “optimise” their own functioning and install – once again – an attitude “to fight inertia and rid themselves of complacency.” The message was clearly intended to inspire people to continuously improve themselves while at the same time being on guard. It shows that Huawei’s culture is infused with the idea that one always needs to be ready to fight if one wants the company to survive.

And, this should not be such a surprise when looking at the history of Huawei. The company describes its own history as a long journey of battle and survival. This battle started with surviving the first 10 years of its existence while having to fight simultaneously the SOE’s receiving government funding and international

companies that were superior in technological advancement. Today the battle continues as the language of survival has returned now the company is fighting off the US allegations.

Where does this focus on survival come from? Throughout this journey, there was always one man who consistently emphasised that Huawei must survive: Ren Zhengfei. On one occasion, someone asked him what Huawei's most basic goal was. He replied: “Survival.” The person then asked what Huawei's ultimate goal was. Ren Zhengfei replied that it was also survival. Why is he so committed to be ready to fight and not take success for granted? Much may have to do with his child-hood experiences that took place in South-West China’s Guizhou Province, which was one of the poorest regions in China. He had 6 brothers and sisters and the circum-stances made it difficult for a family of 9 to survive. Poverty, hunger – they even had to eat grass at one point – was part of his early memo-ries and serves as the foundation of his belief that nothing is for granted and that continuous dedication and sacrifice needs to be shown.

This attitude of committing to the fight is frequently illustrated when he gives speeches. At an internal meeting in 2018, Ren Zhengfei said the following when he wanted to illustrate

Quality checks on a cell network antenna The source: huawei.com

Huawei’s culture is infused with the idea that one always needs to be ready to fight if one wants the company to survive

Leadership


the importance that everyone within Huawei can contribute to its success and long-term survival: “Today at this meeting, I saw you make a vow: "If I 'die' on the battlefield, I will be a hero; if not, I will be a general. If I become 'disabled' and still can't make it to the top, I will cook in the secondary battalion. No matter what, I won't leave the battlefield. I will hold onto this battle-field, forge ahead courageously, and uphold the spirit of 'One Battalion, One Gun'".”

Like a general, Ren Zhengfei exemplifies the attitude to fight until the end, and it’s an atti-tude that is “on” all the time. Walking the talk, Ren Zhengfei as such became the reminder for everyone within Huawei that survival should be on everyone’s mind.

Hardship and sacrifice as driving forcesWhen being focused on survival, Ren Zhengfei also shows the dedication to suffer hardship. And, he expects the same from everyone else. Take for example what his response was when his daughter was arrested in Vancouver. “As a father I of course care about my children,” Ren said. “However, the experience of hardship is good and suffering is good for Meng and her growth.” It paints the picture of a man who truly believes in the power of going through difficult times to ultimately prevail. And, throughout this crisis with the US, Ren Zhengfei indeed always expressed the confidence that Huawei is willing to suffer and work its way through this crisis.

This is an ability that Ren Zhengfei has demonstrated consistently throughout his career and which he has printed in the DNA of the

company. Huawei employees believe and are convinced that more effort, dedication and passion will eventually help the company to achieve their goals. As one Huawei executive said when talking about Ren Zhengfei’s way of making decisions; even if we only have 30% confidence in the decision then we will still take the risks, because we believe that the other 70% will come from our willingness to sacrifice and show dedication at every level of the company.

Being pro-active and confident as strategyThe ability to survive as a company does not only reflect itself by the decisions and actions taken in the midst of the crisis. Companies able to deal with and overcome crisis also anticipate the arrival of those crisis situations. Or, in other words, these companies are prepared to face what is coming. As I noted earlier, Ren Zhengfei fosters such anticipating attitude by being worried about survival all the time. Important to stress is that this is not done in a manner that creates anxiety 24/7, but more in a way that makes clear to everyone that things can change very quickly and that pro-active rather than re-active thinking is needed. This way, Ren Zhengfei empowers the company and its people to always think ahead and consider the worst scenarios possible. Rather than a sign of uncertainty, such pro-ac-tive attitudes are regarded as a strength.

Of course, emphasizing the necessity for a pro-active thinking mindset is one thing, but to find the time to actually live and work by it is another thing. It’s here that Huawei distinguishes itself from all other companies in their industry,

Mobile World Congress 2019 The source: huawei.com

Huawei distinguishes itself from all other compa-nies in their industry, which is that they are not a public company. Huawei is owned by its employees.

which is that they are not a public company. Huawei is owned by its employees. Ren Zhengfei likes this concept not only because it rewards – in his view – entrepreneurial and hard-working employees fairly, but also because it makes that the company does not have to think in the tradi-tional fi nancial quarter way and be accountable to external shareholders all the time. Liberated from this kind of thinking allowed Ren Zhengfei for many years to think about the kind of company he wants Huawei to be in the next 10 years. Indeed, Huawei plans the development of the company by decade, whereas most of their competitors plan it by fi nancial quarter or year.

It are those unique characteristics of the company’s DNA that makes their leadership also more confi dent about what they are doing. As such, it may not come as a surprise, if they take bold decisions or move in rather unexpected ways. Their strategic decisions have usually been thought about deeply and extensively and put in the context of scenarios differing in failure and success ratios.

Knowing why to survive: the customerAlthough Huawei endorses a kind of “deep thinking” culture where decisions are analysed and refl ected upon highly, which helps them to take risks when it is needed, their main value remains unchanged. That main value is to invest in the customer, at all times, regard-less of the costs. Ren Zhengfei believes that the hardship and sacrifi ce that is needed to deal with a crisis situation is rooted in the reality that Huawei employees all focus on the company’s primary goal: providing the best service possible to the customer.

Indeed, there is no confusion about the purpose of Huawei, which is helping customers to realize their dreams. Customers come fi rst and crisis situations need to be survived to ensure the interests of those customers. This focus on customer service as their natural born mission makes that Huawei’s product development is not simply based on a reactive strategy towards what the external environment introduces as chal-lenges (a crisis situation or a bold move from a competitor). In fact, the customer always comes fi rst and combined with Huawei’s mindset to anticipate and refl ect on all kind of options before a crisis emerges, makes that whatever the decision will be on how to deal with a crisis, it will be one that serves the customer and that is prepared in confi dence.

About the Author

David De Cremer is Provost ‘s chair and professor in management and organizations at NUS Business School, National University of Singapore. He is the founder and director of the Center on AI Technology for Humankind at NUS Business school; which is a platform developing research and education promoting a human-centered approach to AI development. Before moving to NUS, he was the KPMG endowed chaired professor in management studies at Judge Business School, University of Cambridge. He is named one of the World’s top 30 management gurus and speakers in 2020 by the organization GlobalGurus and has published over more than 300 articles and book chapters. He is also a best-selling author with his book “Huawei: Leadership, culture and connectivity”having sold more than one million copies. His newest book “Leadership by algorithm: Who leads and who follows in the AI era?” came out in print in May 2020.

viewimage / Shutterstock.com


When Wharton’s campus closed in March, more than 40 students from Shanghai were in California en route

to Philadelphia for a fi nance program. The global pandemic cancelled their plans, forcing them to return home. Just a week later, Wharton Executive Education brought the program to them, online.

Like all of the new Wharton LIVE programs – available for individuals and teams and custom-ized for organizations – it was taught in real time on a virtual platform. Participants experienced a high level of engagement with award-winning Wharton faculty and with each other, creating a true classroom community. In addition to inter-active lectures, it included individual exercises, group work, and peer-to-peer dialogue.

“Engagement and participation were incred-ibly high,” says management professor Emilie Feldman. “The technology allowed me to seamlessly lead case discussions and breakout sessions, just as I would in person. I could sense the aha moments happening through the screen as students learned and synthesized ideas from the week, which made this a really rewarding experience.”

Wharton LIVE offerings cover the same rigorous content as programs held on campus, and include a range of topics in fi nance and management. Venture Capital, Distressed Asset Investing and Corporate Restructuring, Corporate Governance: Essentials for a New Business Era, and other upcoming virtual programs were designed to give executives the edge they need today to tackle current business challenges and take advantage of the opportu-nities arising because of the crisis.

Michael Malefakis, associate vice dean of Wharton Executive Education, says the Wharton LIVE programs are in a class by themselves. “All online education is not alike. Executives who are seeking to gain new knowl-edge and skills during this unprecedented time need the most up-to-date, relevant research and best practices. Our faculty deliver it on a platform that makes the virtual personal.”

True Master Classes

Irene Lee, one of the participants in the Shanghai program, says she was surprised by just how personal and engaging the experience was. “Finance is a complex topic, and it was hard to imagine how the sessions would go. We thought engagement level would be very low. But the Wharton professors were very professional and they managed the classes very well. The online platform could take in a lot more questions and comments, and the professors were amazing in how they were able to address them.”

Like all of the new Wharton LIVE programs – available for individuals and teams and customized for organizations – it was taught in real time on a virtual platform.

“The program was truly a master class in the f ield, fantastic for anyone who is serious about venture capital at any stage of their career.”

-Katya Fisher

Executive Education


Katya Fisher, investment director and legaladvisor at Runa Capital, attended the two-weekVenture Capital program. She says as a lawyerworking with investments, private equity, andventure capital, her work often crosses over intooperations, decision making, and collaborationwith fi nance and investment professionals.

“I took Wharton’s Venture Capital program to see ifthere were any gaps in my knowledge, identify them,and learn how to fi ll them,” she says. “There were alot of things that I knew and was very familiar with,but it was great to have multiple professors looking atventure capital from various perspectives. They arenot only fi nance academics but also have a tremen-dous amount of hands-on experience, and helped megain real-world skills. The program was truly a masterclass in the fi eld, fantastic for anyone who is seriousabout venture capital at any stage of their career.”

Networking Opportunities

Stephen Beauchamp, a fi nancial researcher at MoneyMap Press and deal fl ow coordinator for the Angels& Entrepreneurs Network, says small-group work in the virtual platform’s “breakout rooms” offers a chance to get to know other participants. “There was a lot of socializing and networking, and it really felt like a cohort. Now we are staying in touch through WhatsApp, and I have connected with many of my classmates on LinkedIn.”

Beauchamp, who was one of the younger partic-ipants in his program, says he benefi tted from the experience and insights of his classmates. It is a senti-ment shared by Katya Fisher. “I wasn’t sure if a virtual program would draw the caliber of participants that would come on campus,” she explains. “But the group was very impressive, coming from varied backgrounds and with different professional experiences. The format worked quite well for us to get to know one another, and the content was at a high level that kept everyone interested. We went into breakout rooms to work on assignments in groups, which was a great way to maintain interaction and stay engaged.”

Ease of Access

The move to offering more live virtual program-ming has expanded the access to Wharton’sworld-class thought leadership and research to amuch larger audience. “The pandemic has openedup new platforms for knowledge sharing,” says Lee.“We are no longer constrained by traveling time,cost, and space. The Wharton professors, togetherwith their support team, have made this experienceso amazing. I am definitely looking forward to moreonline modules by the Wharton School.”

Fisher agrees. “I am always looking to growprofessionally, but before the lockdown I spent a lotof time on planes traveling around the world. It isvery difficult for me to find time in my schedule toadvance my education and improve my skills. Thefact that the Venture Capital program was online wasa big selling point; I was able to take advantage ofa learning opportunity that would not have beenpossible for me otherwise.”

“There was a lot of socializing and networking, and it really felt like a cohort. Now we are staying in touch through WhatsApp, and I have connected with many of my classmates on LinkedIn.”

-Stephen Beauchamp

Wharton LIVE offerings cover the same rigorous content as programs held on campus, and include a range of topics in fi nance and management.


Over the last few months, almost all coun-tries in the world have been faced with the challenge of how to handle the threat

from the highly contagious coronavirus. The governments of most countries have elected to “close down” their economies, at least to some degree, so as to contain the spread of the virus, and thereby also to “flatten the curve” of those that might be in need of hospital support as a consequence of the virus. Some govern-ments reacted more quickly than others when it came to imposing rules for societal lockdowns, thereby apparently contributing significantly to a more successful (initial) management of the virus, including saving lives. Other countries have decided not to impose such stringent lockdown rules, relying instead on the belief that their populations would become self-im-munised through exposure to the virus (Sweden) or that this pandemic might not be

that serious after all (Brazil, Mexico). But Sweden, guided principally by the leading epidemiologist Dr Anders Tegnell, seems to have been largely unsuccessful so far, with a death toll (as of 6 June 2020) of more than 4,500, while its closest neighbouring country, Norway, had less than 10 percent of that figure. Norway’s population is about half that of Sweden, at around 5.4 million, versus Sweden’s approximately 10 million.

There is undoubtedly a lot of tension among experts from both sides when it comes to closing down (or, now, continuing to keep fairly closed) versus reopening. Typical argu-ments from the closing-down side are, “We cannot deny the data,” or, “Human lives have infinite value.” Typical counterarguments from the reopening side are, “We must salvage the economy, and ameliorate extreme recessionary effects,” as well as, “Economic recession (as a

THE ISSUE OF RE-OPENING OUR ECONOMIES OR CONTINUING THE

“LOCK-DOWN” AND THE BUSINESS IMPLICATIONS OF THIS UNCERTAINTY

BY PETER LORANGE

THE CORONA VIRUS THREAT –

Global Economy


result of not reopening) might lead to health problems in its own right, at a serious time” (for example, as a result of a lack of food, or psychological issues). Handling this trade-off is certainly not becoming any less diffi cult in light of the fact that a second wave of the coronavirus may be on its way. As the renowned epidemiol-ogist Dr Anthony Fauci says, “It has devastated the world, and it is not over yet.” The head of the WHO exclaimed, “This microscopic virus has humbled all of us!” We ordinary citizens and business leaders are caught between two groups of opposing specialists – epidemiol-ogists and scientists versus economists and social scientists – and between adhering to social distancing and accepting social impact. It’s no wonder that we may slowly seem to be giving up, at least when it comes to key coun-tries such as the United States.

Politicians, always with an eye to their own re-election, are typically willing to reopen econ-omies in spite of the health concerns. And they are often supported by many of us “ordinary people”, who might have become impatient or restless with the effects of lockdown, feeling perhaps that their own democratic freedom

is being impacted or limited. They may claim social justice as a rationale for reopening. And there can be no doubt that the economic pain has been and continues to be enormous in many parts of the world. The Federal Reserve estimates, for instance, that a recovery is likely to be rather slow, with US unemployment being at a staggering 9.3 percent by the end of 2020, and this is assuming no second wave of the coronavirus outbreak!

Are some countries and communities opening up too soon? Is it possible to make gradual reopening safer in terms of health through testing and the isolation of emerging cases? Is a relatively uncoordinated reopening among different regions (for example, US states, Spain’s Balearic Islands) working well enough? These issues are, of course, being hotly debated.

The scientifi c community is, obviously, working at full steam on developing an effec-tive vaccine. Until now, the development of new types of vaccines, properly tested out on large samples of humans to confi rm their safety, has typically taken up to 10 years. At present, several research teams are working overtime to develop an effective new vaccine to fi ght the coronavirus. And both the US and the EU have already committed resources to prepare for rapid scale-up and mass production, which is remark-able, given the fact that we do not know yet when a workable new vaccine will be found. But it is all a matter of saving time. Those countries which have implemented relatively strict measures to contain the virus, to fl atten the contamination curve, have thereby probably gained an advan-tage, in the sense that delaying the threat means that the contamination of many citizens may now be ameliorated through vaccination.

So, the key question revolves around when we might have an effective vaccine available. Our epidemiologists will probably be able to gain the upper hand over the reopening/economic experts if a relatively early timing for the arrival of an effective vaccine can be achieved. Maintaining strict preventive efforts can then be more readily justifi ed in terms of cost-benefi ts.

To develop new types of vaccines, properly tested out on large samples of humans to confi rm their safety, has typically taken up to 10 years.


So, where are the business leaders in all of this? Which types of businesses are likely to benefit from a lockdown? Are there differences of opinion in terms of business sector, size and type of company, and leadership? On the other hand, which are the ones that, above all, might benefit from a reopening?

I have been struggling with these issues when it comes to my own company, S. Ugelstad Invest (SUI), which has some 28 active investments. In the following discussion, I’ll be referring to some of my own experiences based on SUI. I’ll also share with you what seem to be some of the key learning points, at least for me.

In the category of those who may benefit from a fast reopening we have businesses such as some types of basic manufacturing (relying on assem-bly-line processes), construction, hospitality (hotels and restaurants), much of the trans-portation sector (airlines and ferries), as well as most types of retail stores (except for basic food and pharmacies). And, as Peter Brabeck, former CEO of Nestlé, says, impulse products in retailing need to be seen in (now closed) stores!

(Lorange Network Webinar, 2 June 2020). Large gatherings, such as sports events, conferences, schools and universities, etc., are also typically no longer acceptable.

For many companies, it seems critical that they be able to “shift gear” successfully. Initially, many companies had to close down much of their business activities. The Norwegian digital events organising company Deltager, for instance, lost around 90 percent of its income within 10 days in March, when the government imposed its restrictions.

Later on, however, with a gradual reopening of many economies, including Norway’s, as a function of successful amelioration of much of the coronavirus threat, shifting gear once more to “full steam ahead” seems key for many businesses. More resources might perhaps be allocated to marketing again, to take advantage of the reopening, in order to gain new market share. Deltager, for instance, is presently enjoying higher income than it did at the same time last year. Dynamic thinking is thus called for: first brake, then reaccelerate!

More resources might perhaps be allocated to marketing again, to take advantage of the re-opening, in order to gain new market share.

Global Economy

However, let’s now talk about some of the key learning points from the SUI experience. To begin with, we need to highlight what seems to be a confi rmation that SUI’s basic strategy still seems to hold in light of the coronavirus threat.

Adopt co-creativity and a collabo-rative spirit

Rethink everything, constantly

Reduce complexity; it is harderto stay on top of your businessor investments when your struc-ture is not simple

Invest mainly inminority positions

Work primarily with solid partners

Go for projects that have establishedrevenue, real customers, documenteddemand, in contrast to merely “good ideas”

Only moderate to noleverage, with emphasis ona conservative break even

Focus on high tech, with particular emphasis onIT, which might extend to virtual reality


1

2

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5

6

7

8


As discussed elsewhere, SUI is active in fivemajor business areas. Let’s turn to some ofSUI’s experiences in light of the coronaviruscrisis with regard to each of these:

1. Stocks/bonds. We have reduced our stock expo-sure considerably. We are, however, engaging inseveral relatively small forward contracts, such asbetting on the future levels of various stocks. Andwe are maintaining our bond portfolio as is.

2. Shipping. We are not making any major changeshere, but continue to focus primarily on relativelylocal trades (for example, the Baltic, NorthernEurope, Adriatic, West Indies) and at least 50percent on b/b charter. We have reduced ourexposure slightly and are now involved in around15 projects only. Our major concern is whether ourb/b chartering counterparties are able to continueto serve their commitments to pay their b/b hiresin the face of a prolonged recession? In addition,we are trying to sell some shipping assets that aredoing well in order to free up more liquidity, so asto be able to “invest more at bottom”.

3. Real Estate. We are continuing more orless as before in the US (retrofitting mid-pricedresidentials), Norway (land development) andBulgaria (leisure). Another major concern is theability of ordinary consumers to pay their rentsand/or property purchase costs in the face of along-term recession.

4. Ventures. Most of these are still doing well.The exceptions are WIN Systems, where we areseeing no business activities any longer in thesoftware market for gambling; and A-Beauty,where we see have seen a dramatic drop indemand for luxury-type products.

5. Educational. We are continuing to adapt the Lorange Network (LN) offering. Although we have not been able to conduct the physical seminars that we would have wished for, we have focused much more heavily on webinars, our deal wall, podcasts and articles. In a sense, we have always been digital, but we have become even more so during the corona lockdown.

It goes without saying that this strategy was developed several years ago. Further, it seems to be a key advantage when coping with the coro-navirus issue that a realistic long-term strategy can be maintained as is.

There are, as we have seen, also potentially benefi cial aspects for many businesses when it comes to societal regimes with extensive social distancing. Working from home can lead to signif-icant offi ce cost savings. And more advanced uses of IT-based communication technologies can typically now more easily be implemented. Elsewhere, “diffi cult” restricting can now often be implemented smoothly, since most of the people affected might more easily understand the necessity for such moves. Lay-offs, for instance, can now typically be directly implemented.

There is no doubt that the advent of the coronavirus threat and the generally dramatic government-dictated shutdowns in many coun-tries might also have led to a sense of added acceptance on the part of many citizens of the need to accept hardships, as well as an added need to be more fl exible. For many companies, open-ings to implement rather radical changes might thereby have been central. The renegotiation of old contracts regarding offi ce rents, delays in payments (of loans and rent), reductions of

Global Economy


salaries (now often partly matched with govern-ment support), even lay-offs of employees, might now be more achievable. Changes might often be implemented which would be hard to carry out during more normal circumstances.

So, how can we better understand this apparent conflict between closing down versus reopening, between the epidemiology scientists and the economic experts? What is the relative influence of each group? To understand this better is key for us businesspeople, in order to see how this trade-off is evolving, and when reopening might start to take place. On the surface of it, the closing-down epidemiology experts seem to have the winning argument: to save lives! They typically take, we might say, a longer-term point of view. But as time goes on, the tide might turn more over to the reopening side. The pandemic may now be more under control. Therefore, politicians may increasingly boost their own standing with the electorate, and many of us “normal” citizens who are neither experts nor politicians might become increasingly impatient, even restless!

So, reopening becomes the norm. The economic experts (and the politicians) have won. This might be accompanied by large demonstra-tions, such as those we saw calling for judicial

On the surface of it, the closing-down epidemiology experts seem to have the winning argument: to save lives! They typically take, we might say, a more longer-term point of view. But as time goes on, the tide might turn more over to the reopening side.

reform after the death of George Floyd – no social distancing here! And the statue of the 17th-century slave trader Edward Colston was even removed by demonstrators and pushed into the River Avon in Bristol, UK. Impatience among large groups of ordinary people took over. Social distancing was ignored, despite warnings from epidemiology experts and politicians.

But is there something more than monitoring the basic sentiment of society when it comes to impatience? Yes, there seems to be. In a recent book, Professor Tom Nichols points out that ignorance among us common people seems to have a more profound (and negative) effect. We are now even increasingly proud to be ignorant. To reject advice from experts increasingly seems to be seen as showing autonomy – our democratic right, some may claim! “My ignorance is just as good as your knowledge,” the author quotes, citing Isaac Asimov. All those who Google seem to be reclassifying themselves as instant experts. This is accentuated by the speed and global reach that characterise social media today, even though it has been warned that social media can often be inaccurate and even plain wrong. The Dunning-Kruger effect states that “the dumber you are, the more confident you are that you are not actually dumb” (Nichols, p. 44).

However, experts can, of course, be wrong too. Overconfidence is perhaps the most prob-lematic issue for many experts. And, related to this, when well respected experts move from their established fields of expertise into new ones, things often go wrong for the expert.


1. We are generally much more conserv-ative when it comes to our investing. Wenow prioritize to continue to support existingcommitments in case any of these might runinto cash-flow problems, rather than to enterinto new projects.

2.“Cash is king” for SUI too. In line with this we are selling our 10% share in Cape-max oil carrier, and we are considering the same when it comes to our share in Affi body.

So, we individuals who are also active in business are faced with a third set of judgements to make, which may add to the call to reopen faster, thus reducing the infl uence of the epidemiologists and adding to that of the economists/social scientists and the politicians. How do we judge the crowd sentiment of the common people? Are there trig-gers, for instance, that might lead to an acceleration of the crowd’s impatience? Is an event such as the brutal police misuse of force leading to the death of George Floyd such a trigger?

What might seem like things getting out of control, with massive demonstrations worldwide defying social distancing, may simply represent signals to us in the business sector that reopening might be happening sooner rather than later!

It is, of course, hard to guess what to expect. How deep is the upcoming depression going to be, and how long will it last? Are governmental meas-ures going to work? Are we going to experiencea second wave of coronavirus, or perhaps even athird wave? While the implications for SUI seemclear when it comes to a relatively moderate and

short-term depression, it also seems clear, unfortu-nately, that SUI will have problems, perhaps rather serious ones, if the recession we are facing lasts longer and is signifi cantly more serious.

What are some of the key takeaways from all of this? In general, it seems clear that we should listen relatively more attentively to our epidemiological experts, i.e. remain disciplined. The contrasting view generally taken by economists, namely to “open up”, is often de facto motivated more by shorter-term hopes for economic gains and is typi-cally politically driven. The public’s fatigue factor further underscores that we might be safer sticking to the epidemiologists’ advice!

For SUI the most signifi cant learning points from the coronavirus threat seem threefold:

1. A well-balanced portfolio of assets seems to be important, especially during the type of crisis we are experiencing.

2. Speed and resoluteness seem to be key. Modifi cations in one’s strategy should be done with speed, and without falling into the trap of “hoping for a future miracle”.

3. Conservatism when it comes to new investing perhaps above all to conserve cash (“cash is king”) seems appropriate.

But we are, of course, all struggling to fi nd good answers with regard to coping with today’s dramatic crisis. Please get in touch with me with any questions and/or comments.

About the Author

Since selling his shipping company in 2006, Peter Lorange has been a successful entrepreneur and owner of a highly diversifi ed family offi ce. He is widely regarded as one of the world’s foremost business school academics, having held the position of president at IMD, Lausanne for 15 years, as well as several posi-tions on shipping company boards. His entrepreneurial journey spans key areas such as education, shipping, investments and, predominantly, family businesses. Peter founded the Lorange Network, a digital learning and networking platform, in 2017. He is Norwegian and lives in Küssnacht am Rigi, Switzerland.

References• Nichols, Tom (2018), The Death of Expertise, Oxford University Press.• Lorange, Peter (2019), Adaption and Flexibility in the Family Firm: A brief history of S. Ugelstad Invest, Smøyg.

For SUI, this has led to two strategic shifts, aimed both at ameliorating potential misjudgements by us, and staying “conservative”, rather than speculating on a quick upturn:

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HOW CAN FIRMS ESTABLISHMORAL AUTHENTICITY?

CORONAWASHING:

T he Covid-19 pandemic represents both challenges and opportunities for brand marketing. Spreading rapidly around the

globe, the novel coronavirus affected every level of society and nearly every facet of everyday life, imbuing everyday activities with a sense of fear and uncertainty, but also instilling a renewed concern with solidarity and altruistic values. Meanwhile, confi nement measures and shifts in consumer behavior forced many businesses into hiatus and vastly limited their ability to reach their target market. Consumers evinced a shift in priorities: for many, the pandemic led to a re-evaluation and a desire to return to funda-mental values.

What this has meant, for organisations, is a knot of marketing challenges. Few have ignored the crisis entirely. Some were reduced to marketing in absentia, reassuring customers of their continued existence. Others struggled to strike the right tone between their typical brand voice and the need to show a concern about the crisis. Many companies chose to show visible support for coronavirus relief efforts, with posi-tive results: companies distributed masks, donated to worthy causes, or switched to manufacturing PPE and other essential supplies. Luxury compa-

BY GLYN ATWAL AND MAYA KAISER

nies in Europe elicited positive media coverage by providing direct support to health services: in March 2020, when the WHO declared Covid-19 a global pandemic, LVMH announced that it was devoting its perfume production lines to making hand sanitiser for French hospitals; Prada manu-factured 80,000 medical overalls and 110,000 masks to distribute to healthcare workers in Italy. Other efforts, however, have been met with public backlash: Adidas and Primark are among the brands that faced a negative response when their contributions to relief efforts were deemed hypocritical. In all cases, ‘marketing as usual’ was not an option.

Crisis marketing represents a clear opportu-nity for brands to stand out through positive ethical engagement. Companies can deploy social marketing strategies as they integrate “good citizenship” within their corporate governance model (Maignan and Ferrell, 2000); their moral commitments can enhance their perceived value as well as their economic value creation (Pies et al., 2009). Yet crisis marketing also entails risks, as brands may be perceived as opportunistic, inconsistent, or insuffi ciently engaged. How companies respond to crises can become defi ning moments in their public image.

Consumers evinced a shift

in priorities: for many, the

pandemic led to a re-evaluation and a desire to return to fundamental

values.

Business Ethics


This is particularly the case because of theincreasing speed and amplitude of publicresponses via social media. Consumers cannow instantly take to Twitter or Instagramto denounce brands for not living up to theirstated values. Social media can amplify posi-tive responses, but it can also create a socialmedia backlash, as “call-out culture” empowersconsumers to share critical responses whetheror not a company’s actions directly affects them.

We stress the need to understand whichtypes of social purpose marketing lead tonegative vs. positive stakeholder responses.We identify key dimensions that shape stake-holder opinion concerning companies’ actionsin response to Covid-19. When initiatives areperceived to be on the positive or neutral sideof any of these dimensions, they are likely tobenefit the company’s public image. Whenactions are on the wrong side of one of thesedimensions, however, companies run the riskof being perceived as instrumentalising theiractions to manipulate public opinion – whatFerrón (2020) describes as “coronawashing”.This has ramifications not only for crisiscommunications but for “good citizenship”more generally, which is becoming increasinglyessential to business practices as a youngergeneration of consumers expects companiesnot to stand back from social issues.

BEYOND THE MORAL CAUSESocial purpose marketing provides an oppor-tunity for companies to develop “competitive agility” (Accenture 2018a, p.3), standing out to stakeholders through positive social engagement. While this kind of marketing is valuable at any time, it can provide a number of performance advantages at times of crisis, when companies may be under increased scrutiny as well as having immediate and evident opportunities to make positive contributions. Companies that employed social purpose marketing in the two months after Covid-19 was declared a pandemic are likely to see performance advantages across several catego-ries, with both short and long-term implications.

• BRAND AFFINITY. This is, in a broad sense, an emotional connection a customer feels

Business Ethics

towards a brand. In extreme cases, this can extend to powerful feelings of brand love (Carroll and Ahuvia 2006). Corporate Social Responsibility (CSR) has been shown to have a positive effect on brand love (Vlachos and Vrechopoulos, 2012), suggesting that social purpose marketing in the context of the pandemic could elicit positive feelings of brand affinity. As the Covid-19 outbreak worsened and health workers had to work long hours in dangerous and difficult conditions, often with insufficient personal protective equipment (PPE), numerous companies found ways to engage in initiatives supporting and honoring healthcare professionals, like Budweiser’s “One Team” in support of the American Red Cross. Pepsi and Global Citizen sponsored a livestreamed concert organized by the WHO to support healthcare workers and aid organ-izations, “One World: Together at Home”. Brand initiatives sometimes had immediate measurable effects: after General Motors (GM) announced a partnership with Ventec Life Systems to produce and supply ventila-tors on March 27, 2020, GM’s BrandIndex Buzz score (also known as the Net Sentiment score, a metric to gauge the intensity of brand affinity calculated by asking respondents if they have heard anything positive or negative about a brand and subtracting the percentage

Social media can amplify positive responses, but it can also create a social media backlash, as “call-out culture” empowers consumers to share critical responses whether or not a company’s actions directly affects them.


of negative responses from the percentage ofpositive responses) rose by 50 percent in just overa week (7 April 2020) (YouGov, 2020).

• PURCHASE INTENTION. Positive brand attitudesare likely to translate to consumer behaviouralintentions, meaning that consumers will favorcompanies that took positive action against thepandemic. According to YouGov Direct data,60% of Americans are more likely to purchasefrom a company that has aided in the Covid-19pandemic (YouGov, 2020). In France, a PWCstudy found that 62% of consumers plan tosupport businesses that suffered or took posi-tive action during the confinement (PWC, 2020).Similar findings emerged from a twelve-countryonline survey, where 65% of respondents agreedthat how brands respond to the coronavirus crisiswill have a significant impact on future purchaseintention (Edelman, 2020). Interestingly, thiswas higher for China (88%) and India (79%),suggesting that consumers in emerging marketsare more likely to reward or punish companiesfor their coronavirus-related marketing initiatives.

• INVESTOR SENTIMENT. Investors are increasinglyusing criteria such as the environmental, socialand governance (ESG) rating system to deter-mine investment decisions. According to Firestone(2020), more than one third of global equity assets

use some form of ESG screening in their investingpractices. A reasonable inference is that compa-nies which invest in coronavirus social initiativesmay benefit from a higher ESG rating and betterinvestor sentiment. A Reuters Events Survey (2020)of asset managers, asset owners and other stake-holders found that 74% of respondents claimedthat the Covid-19 situation has hastened the adop-tion of ESG into mainstream investment policy,suggesting that social purpose marketing during thecoronavirus pandemic is likely to have a long-termimpact on investor sentiment (Stoxx, 2020).

• EMPLOYEE ENGAGEMENT. Cause-related marketinghas been shown to enhance employees’ admirationfor their company, which in turn promotes engage-ment, sense of purpose, and identification with acompany’s mission (He et al., 2019). Brand lovecan be a motivating factor not just for consumersbut for employees as well, with positive behav-ioural implications (Wang et al., 2019). In a globalonline survey, 63% of respondents said employeeengagement had increased during the Covid-19crisis (The Institute for Public Relations, 2020). Itwas reported that a contributing factor was a senseof ‘we are in this together’. During the corona-virus pandemic, a number of companies engagedin social purpose marketing directed towards theirworkforce: for instance, companies like Walmart,Microsoft, Apple, and Lyft announced that theywould continue paying US hourly workers duringthe initial weeks of the lockdown. CSR and ethicalinitiatives of this kind also have broader implica-tions for organisations to attract and retain talent,as millennials expect employers to have a socialpurpose (BCG 2019).

• TRUST CAPITAL. This can be defined as consumer confidence in the integrity and responsibility of

Social purpose marketing provides an opportunity for companies to develop “competitive agility”, standing out to stakeholders through positive social engagement.

p J y g

an organization to deliver promises of value tostakeholders (Light and Kiddon, 2015). The will-ingness for companies to invest in coronavirussocial initiates can be viewed as a longer-termstrategy to preempt reputational loss in theevent of a crisis. Companies which deliver asocial purpose benefit from greater robustnessin the face of crises: their trust capital makes itmore likely that consumers will forgive them forfuture ethical transgressions. However, as weshow below, this could be deemed ineffectivewhen the ethical transgressions coincide withthe positive actions.

A DOUBLE-EDGED SWORDAlthough the business case for social purposemarketing strategies is apparent, it is not withoutrisks. Companies which engaged in social actionsduring the initial months of the Covid-19 pandemicwere not universally praised: some faced harshbacklash for actions perceived to be hypocritical,insufficient, or ill-judged. As Buck (2020) warnedabout acting during the crisis, “The rewards forgood behaviour in febrile times are likely to beconsiderable, but so are the risks for companies thatfall foul of the public mood.” The perception ofwhat Ferrón calls “coronawashing” led to increasedscrutiny of some companies and necessitated swiftcorrective action to reduce reputational damage.

CORONAWASHINGThe concept of “coronawashing” describes “thebiased disclosure of information on the compa-ny’s actions developed to address issues relatedto Covid-19” (Ferrón, 2020). Drawing on earliernotions of CSR-washing, it includes the deploymentof solidarity initiatives to change image perceptionduring the crisis. Zato�ski et al. (2020) provide theexample of tobacco companies which “ostenta-tiously behave like model corporate citizens in theirCSR efforts around the coronavirus crisis, [while]

behind the scenes they aggressively push back against emergency public health actions to reduce coronavirus transmission.”

We defi ne coronawashing as an opportunistic strategy for companies to capitalize on the coro-navirus crisis to leverage positive stakeholder impressions whilst failing to deliver ethical coher-ence. Coronawashing need not result from deliberate deception or attempts to mislead stakeholders, but emerges from perceived moral contradiction.

Two examples of companies that faced back-lash for their social purpose marketing during the pandemic are particularly instructive.

• PRIMARKPrimark is one of the leading fast-fashion retailers in the UK, with outlets around the world. Shortly after the pandemic was declared, the company donated 400,000 of its products to frontline workers, volunteers and patients glob-ally, including 74,000 products delivered to the NHS Nightingale Hospital in London (Primark, 2020). Despite generating positive stakeholder impressions, the company was criticized in the media as one of several high-profi le companies which made no commitment to pay in full for orders completed and in production (Workers Right Consortium, 2020).

• ADIDASIn March and April 2020, nationwide confi ne-ment measures in Germany resulted in the temporary closure of non-essential retail stores. As a result, German sportswear group Adidas, which had reported almost €2bn in net profi t in the 2019 fi nancial year, decided to suspend rental payments on its own-brand retail outlets. Although the decision was deemed legal, the company came under severe criticism. Separately, Adidas had introduced a number of corona-virus-related initiatives, offering free premium access to its training and running apps (March 2020) and collaborating with Carbon to produce 3D-printed face shields (April 2020). The contrast between these initiatives and a perceived attempt to raise profi ts at all costs led to negative public responses. Adidas subsequently reversed its decision and announced that it would pay rent on its stores.

Business Ethics

The concept of “coronawashing” describes “the biased disclosure of information on the company’s actions developed to address issues related to Covid-19


BEHAVIORAL OUTCOMESWhat these examples suggest is that CSR should be reframed beyond the traditional economic, social, and environmental categories to include a holistic focus on the impact and perception of their actions. Brands which act unethically or irresponsibly may be accused of corporate social irresponsibility, leading to anti-consumption, when individuals consciously make the decision to reject a specifi c brand or organization.

This supports research fi ndings that moral or ethical factors can trigger an anti-brand reaction to various degrees of animosity. Thus, the perception of coronawashing could have lasting implica-tions on a company’s public image, the emotions it evokes, and its relationships with consumers, employees, investors and other stakeholders.

• BRAND AVOIDANCE is defi ned as “the inci-dents in which consumers deliberately choose to reject a brand” (Lee et al., 2009, p.170). If coronawashing leads to a breach of trust, brand avoidance will be an inevitable outcome. This is not an abstract problem: in a study of over 7,000 companies, Accenture (2018a) found that so-called trust events had a direct impact on future revenue losses of US$180 billion in total. That coronawashing should be a cause of concern is evident in consumer

responses: an Edelman survey found that 71% of respondents agreed with the statement, “Brands and companies that I see placing their profi ts before people during this crisis will lose my trust forever” (Edelman, 2020).

• BRAND RETALIATION is to attack or take revenge on a brand (Gregoire et al., 2009), an escalation of negative sentiments which can result in boycotts, call-outs, and other anti-brand behavior. A 2017 Edelman Earned Brand survey of 14,000 people in 14 coun-tries found that 57 percent of consumers claim they will boycott a brand solely because of its parent company’s perceived position on a social or political issue (Edelman, 2017). Signifi cantly, the most valuable brands attract more anti-brand hate attention online than less valuable brands (Kucuk 2008). Brand retali-ation was a factor in the case of Adidas and its response to the coronavirus pandemic: calls to boycott Adidas (#BoykottAdidas, #niewiederadidas) trended on German social media, and a German member of parliament even fi lmed himself setting an Adidas shirt on fi re.

• NEGATIVE WORD OF MOUTH (NWOM). The term “amplifi cation” has been widely used in a social media context to defi ne “an inher-

Brands which act unethically or irresponsibly may be accused of corporate social irresponsibility, leading to anti-consumption, when individuals consciously make the decision to reject a specifi c brand or organization.


ently social motivator that spurs broader engagement and sharing” (McKinsey & Co., 2012). Negative attitudes are more likely to be disseminated through social networks (Allsop et al., 2007). Fan et al. (2014) found that angry emotions spread more quickly and broadly on Chinese social media networkWeibo. This type of response can be particu-larly toxic to brands as it gains momentumon social media. This was likely acceleratedduring the pandemic as social distancing andconfinement measures meant consumershad few other ways to share opinions aboutbrands. Edelman (2020) found that 33% ofrespondents agreed with the statement, “Ihave convinced other people to stop using abrand that I felt was not acting appropriatelyin response to the pandemic.” Significantly,this was higher for China (76%) and India(60%). Consumer calls to boycott Adidaswere amplified by German politicians, celeb-rities and columnists taking a position eitherto openly criticize or boycott the company.

CONCLUSIONS AND MANAGERIAL IMPLICATIONSThere is strong evidence that consumers globally want companies to take a stand on social issues, aligning their own personal values and beliefs with those of the brands they buy (Accenture, 2018b). Edelman (2018) has identified 64% of consumers in an eight-country study as so-called “Belief-Driven Buyers”. The far-reaching conse-quences of the pandemic meant that ignoring it was hardly an option.

Coronavirus marketing initiatives provide an important marketing opportunity for companies to demonstrate their purpose. However, brands are under greater stakeholder scrutiny and authenticity evaluations provide a mechanism to explain the perception of social marketing initiatives. Inauthentic evaluations as in the case of coronawashing which can be perceived as “a shortcut to brand self-awareness and vague corporate caring” (Rickett, 2020) can result in reputational damage and impact business performance. This raises the question: how can companies avoid becoming a victim of its own social marketing strategies?

To avoid accusations of “coronawashing”, executives can consider the following guide-lines of best practice: i) Alignment. A perceived lack of alignment between a company’s actions and social responsibility can be considered as a critical gap. Perceptions of profit-seeking at all costs can cause long-term stakeholder resent-ment; ii) Usefulness. Aid initiatives such as fashion brands manufacturing gowns and face masks were coherent with their core activities. Coronawashing accusations may result when actions are perceived as being irrelevant, unnec-essary or ‘vanity’ actions; iii) Integrity. The perception that companies are shirking respon-sibilities can lead to a negative perception. Actual commitment and engagement are core to all social marketing activities.

Natural disasters and tragedies in the past decade have increasingly attracted CSR efforts, as companies rush to support aid efforts, donate money and materials, and make other visible contributions. Hurricane Katrina, the Notre Dame fire, and more recently, shortly before the Covid-19 pandemic, the Australian bushfires, were all times of increased CSR visi-

There is strong evidence that consumers globally want companies to take a stand on social issues, aligning their own personal values and beliefs with those of the brands they buy

Business Ethics


bility. Yet it is not enough to do something, and to be seen to do it: the perception of align-ment, usefulness and integrity all contribute to the way stakeholders evaluate social marketing initiatives, and the company’s social reputation as a “good citizen”.

Moral authenticity needs to be the cornerstone of any purpose-driven marketing campaign. At its most extreme, coronawashing may be viewed as a breach of a moral contract between business and society. Managers therefore need to ensure that there is consistency between core values and social actions. A failure to deliver authentic integrity is a failure to demonstrate purpose.

References • Accenture (2018a), “To affi nity and beyond”, available at: https://www.

accenture.com/_acnmedia/thought-leadership-assets/pdf/accentu-re-competitiveagility-gcpr-pov.pdf (accessed 15 May 2020).

• Accenture (2018b), “Accenture Strategy Global Consumer Pulse Research”, available at: https://newsroom.accenture.com/news/major-ity-of-consumers-buying-from-companies-that-take-a-stand-on-issues-they-care-about-and-ditching-those-that-dont-accenture-study-finds.htm (accessed 21 May 2020).

• Allsop, D.T., Bassett, B.R., Hoskins, J.A. (2007), “Word-of-mouth research: principles and applications”, Journal of Advertising Research, Vol. 47 No. 4, pp. 398-411.

• BCG (2019), “Organizing for the Future with Tech, Talent, and Purpose”, available at: https://www.bcg.com/publications/2019/organizing-future-tech-talent-purpose.aspx (accessed 2 May 2020).

• Buck, T. (2020), “Adidas and the perils of doing business in a crisis”, available at: https://www.ft.com/content/88b0e1f4-78da-4b79-9b7f-479b15a584b3 (accessed 3 May 2020).

• Carroll, B.A. and Ahuvia, A.C. (2006), “Some antecedents and outcomes of brand love”, Marketing Letters, Vol. 17 No. 2, pp. 79-89.

• Edelman (2017), “More than half of consumers now buy on their beliefs”, available at: https://www.edelman.com/news-awards/consum-ers-now-buy-on-beliefs-2017-earned-brand (accessed 12 May 2020).

• Edelman (2018), “Brands Take A Stand”, available at: https://www.edelman.com/sites/g/fi les/aatuss191/fi les/2018-10/2018_Edelman_Earned_Brand_Global_Report.pdf (accessed 13 May 2020)

• Edelman (2020), “Edelman Trust Barometer 2020”, available at: https://www.edelman.com/sites/g/fi les/aatuss191/fi les/2020-03/2020%20Edelman%20Trust%20Barometer%20Brands%20and%20the%20Coronavirus.pdf (accessed 7 May 2020).

• Fan R., Zhao, J., Chen, Y., Xu, K. (2014), “Anger Is More Infl uential than Joy: Sentiment Correlation in Weibo”, PLoS ONE, Vol. 9 No. 10, e110184, available at: https://doi.org/10.1371/journal.pone.0110184

• Ferrón, V. (2020), “Are Companies Coronawashing? Ten pieces of evidence”, available at: https://corporate-sustainability.org/are-com-panies-coronawashing-ten-pieces-of-evidence/ (accessed 2 May 2020).

• Firestone, K. (2020), “Op-ed: Investors will reward companies that take care of others in the coronavirus pandemic”, available at: https://www.cnbc.com/2020/04/21/op-ed-investors-will-reward-com-panies-that-take-care-of-others-in-the-coronavirus-pandemic.html (accessed 11 May 2020).

• Ford (2020), “FORD WORKS WITH 3M, GE, UAW TO SPEED PRODUCTION OF RESPIRATORS FOR HEALTHCARE WORKERS, VENTILATORS FOR CORONAVIRUS PATIENTS”, available at https://media.ford.com/content/fordmedia/fna/us/en/news/2020/03/24/ford-3m-ge-uaw-respirators-ventilators.html (accessed 22 May 2020).

• Grégoire Y., Tripp, T. and Legoux, R. (2009), “When customer love turns into lasting hate: The effects of relationship strength and time on customer revenge and avoidance”, Journal of Marketing, Vol. 73 No. 6, pp. 18-32.

• He, H., Chao, M.M. and Zhu, W. (2019), “Cause-related marketing and employee engagement: The roles of admiration, implicit morality beliefs,

and moral identity”, Journal of Business Research, Vol. 95, pp. 83-92.• Lee, M.S., Motion, J. and Conroy, D. (2009), “Anti-consumption and brand

avoidance”, Journal of Business Research, Vol. 62 No. 2, pp. 169-180.• Light, L. and Kiddon, J. (2015), New Brand Leadership, Pearson

Education: New Jersey.• Maignan, I. and Ferrell, O.C. (2000), “Measuring Corporate Citizenship

in Two Countries: The Case of the United States and France”, Journal of Business Ethics, Vol. 23 No.2, pp. 283-297.

• McKinsey & Co. (2012), “Demystifying social media”, available at: https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/demystifying-social-media (accessed 22 April 2020).

• Pies, I., Hielscher, S. and Beckmann, M. (2009), “Moral Commitments and the Societal Role of Business: An Ordonomic Approach to Corporate Citizenship”, Business Ethics Quarterly, Vol. 19 Issue 3, pp. 375-401.

• Primark (2020), “A Thank You”, available at: https://www.primark.com/primark-supports-the-fi ght-against-covid-19 (accessed 12 May 2020).

• PWC (2020), “Etude consommateur de biens alimentaires• ‘Confi nement / Post confi nement COVID-19’”, available at : https://

www.pwc.fr/fr/assets/fi les/pdf/2020/04/fr-france-pwc-enquete-con-so-alim-confi nement.pdf (accessed 8 June 2020).

• Rickett, O. (2020), “Coronawashing: for big, bad businesses, it's the new greenwashing”, available at: https://www.theguardian.com/commentisfree/2020/may/11/coronawashing-big-business-green-washing-polluters-tax (accessed 12 May 2020).

• Stoxx (2020), “Investors See COVID-19 Driving Interest in ESG’ avail-able at; https://www.stoxx.com/pulse-details?articleId=1840270657 (accessed 7 June 2020).

• The Institute for Public Relation (2020), “SPECIAL REPORT: HOW COMPANIES ARE ENGAGING EMPLOYEES DURING COVID-19”, available at: https://instituteforpr.org/how-compa-nies-are-engaging-employees-during-covid-19/ (accessed 3 May 2020).

• Vlachos, P.A. and Vrechopoulos, A.P. (2012), “Consumer–retailer love and attachment: Antecedents and personality moderators”, Journal of Retailing and Consumer Services, Volume 19, Issue 2, pp. 218-228.

• Wang, Y-C., Ryan, B. and Yang, C-E (2019), “Employee brand love and love behaviors: Perspectives of social exchange and rational choice”, International Journal of Hospitality Management, Vol. 77, pp. 458-467.

• Workers Rights Consortium (2020), “Covid-19 Tracker: Which Brands Are Acting Responsibly toward Suppliers and Workers?”, available at: https://www.workersrights.org/issues/covid-19/tracker/ (accessed 15 May 2020).

• YouGov (2020), “Ford, GM see positive brand sentiment after commit-ting to COVID-19 efforts”, available at: https://today.yougov.com/topics/automotive/articles-reports/2020/04/09/ford-gm-see-positive-brand-sentiment-after-committ (accessed 7 May 2020).

• Zatoński, M., Gilmore, A.B. and Hird, T.R. (2020), “The two faces of the tobacco industry during the COVID-19 pandemic”, available at: https://blogs.bmj.com/tc/2020/05/10/the-two-faces-of-the-tobacco-industry-during-the-covid-19-pandemic/ (accessed 19 May 2020).

Moral authenticity needs to be the cornerstone of any purpose-driven marketing campaign. At its most extreme, coronawashing may be viewed as a breach of a moral contract between business and society.

Glyn Atwal is an Associate Professor of Marketing at Burgundy School of Business, France. He conducts research on brand management and is co-author of Luxury Brands in China and India(Palgrave MacMillan).

Maya Kaiser is a digital anthropologist based at the Burgundy School of Business, France, whose research looks at infl uence and emotion in politics, marketing, and social media. She is currently writing a book on social transformations in China.


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I t’s easy for businesses to be consumed with attending to daily schedules, servicing existing partners and customers, and driving

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What greater purpose is there than helping others in need?

TimeXtender’s core business is providing its technology to help business users within an organ-ization have instant access to data. The company also has a steadfast commitment for being involved in community and charitable events.

Recently, its technology focus and commitment to community service crossed paths by providing assistance on two major fronts. First, TimeXtender technology helped Puerto Rico with its efforts following Hurricane María, and second, the company’s technology supports Direct Relief with its global humanitarian efforts, most recently, helping those impacted by Covid-19.

Puerto Rico Uses TimeXtender After Hurricane MaríaEarly in 2018, just after Category 5 Hurricane María directly hit Puerto Rico, the property tax authority, Centro de Recaudación de Ingresos Municipales or CRIM, launched an initiative to improve its billing and collections processes.

Citizens are not always naturally enthusiastic about paying taxes, and they don’t want to see processes and systems poorly implemented or taxes being collected unevenly or spent care-lessly. Add to that the fact that time matters in government, especially when citizens want accountability. A few years back, Puerto Rico’s government had attracted media attention as some citizens had inquired about the property tax billing and collecting systems.

The CRIM’s potential revenue estimation represented a multi-billion-dollar opportunity,

TimeXtender’s core business is providing its technology to help business users within an organization have instant access to data.


but only 22% of the funds were beingreceived due to billing and collectionsproblems directly related to data silos,and lack of accurate information withinCRIM’s many information systems.

A decision was made to update.TimeXtender technology was used forthis initiative. One of TimeXtender’spartners, Truenorth Corporation,worked in Puerto Rico on this project.

The project goal was to deliver acomplete data warehouse and advancedanalytics platform. This would hope-fully help CRIM increase its income byat least 10% to satisfy the many needsof its citizens.

To begin, Truenorth’s evaluation ofCRIM’s data systems identified discrep-ancies in the properties pending forappraisals, in CRIM’s billing system,and in the digital cadastral database.

Truenorth was able to quantify over$250 million in specific potential yearly gains,representing a 31% increase in revenue.

Using TimeXtender, developmentefforts went from nine weeks to just15 days and a prototype was put inplace in two days. A Microsoft SQLServer on-premises data warehousewith Power BI for front-end visuali-zations was built. Data silos withinCRIM’s billing system, appraisalsystem and digital cadastral systemwere integrated, and required datasources were connected; includingOracle databases, SQL databases,a geographic information system,Hansen software and support servicesfor client notification.

With TimeXtender, code was gener-ated that was required for integrating allthe multiple data sources and to deliverthe consolidated and cleansed data forvisualizations. The platform was also usedto automatically produce data lineage anddocumentation for agency oversight.

Development was done on datapipelines to cleanse, transform and

With data well organized, sourced, and maintained in TimeXtender,new data sources could be added rapidly. Direct Relief now hashigher confidence in its data throughout its organization.

Digital Transformation

aggregate the data within the data ware-house to provide multi-dimensional analysis and data mining to support Power BI reports with real-time alerts and to visualize data. This also enabled data from various other government agencies to identify new income streams and reduce fraud.

TimeXtender is very proud of this accomplishment as it truly helped a government, in rapid time, achieve immediate and significant results.

TimeXtender Technology Helps Direct ReliefAnother community service success story was with Direct Relief, a humanitarian aid non-profit organization that helps improve the health and lives of people affected by poverty or emergencies. Most recently, Direct Relief has been helping those impacted by Covid-19.

To accomplish its global human-itarian efforts, Direct Relief relies heavily on data, analysis, and reporting. Its use of information has grown exponentially as the organization’s role in the world has expanded.

Years back, Direct Relief began using QlikView. This data-discovery tool enabled Direct Relief to improve its analysis and reports, and to show stakeholders the status of its humani-tarian activities. While Qlik gave Direct Relief ’s visibility into its data like never before, the organization’s lack of a data warehouse and a comprehensive data model made data sourcing a challenge. A lot of the data was hard to access as it resided in several areas, including SAP data, donor and fundraising records, Excel spreadsheets, and other sources.

The first step performed with TimeXtender was data modeling to


provide an understanding of the data sourcesand to streamline naming conventions. Next,came the building of the data hub and thecollection of all common data.

Specifi cally, Direct Relief relied on itsnumerous data sources to analyze, monitor,and report on people in need of medicalsupplies, donations from pharmaceuticalcompanies and medical companies, inven-tory and delivery dates, product usage by timeframe, and market information.

“Once we installed Qlik, we were able to workwith data in ways that weren’t possible before.However, a lot of the data was hard to access.We knew we needed a better way to organizeand standardize our data. Then, we discoveredTimeXtender,” said Dawn Long, senior vicepresident and COO at Direct Relief.

With data well organized, sourced, andmaintained in TimeXtender, new data sourcescould be added rapidly. Direct Relief nowhas higher confidence in its data throughoutits organization, as this is derived fromfaster, more reliable analytics and reporting,resulting in improved decision making andoperational efficiency.

“Direct Relief runs on data and the need toaccess it easily and quickly is essential,” addedLong. “Given TimeXtender’s seamless integra-tion with Qlik, staff members now have instantaccess to the organization’s data. They canquickly identify what supplies shipped, wherethey were delivered, and when they arrived.TimeXtender’s technology and data manage-ment approach helped us organize and build a

better data model that provides quality, valida-tion, and transparency.

“With TimeXtender, we were able to lookat our data and immediately organize it all withcommon names that ensured all our systems weretalking to each other. We built a model to bringtogether all our data sources, programs, prod-ucts, and events. This allows us to run multipleapplications on one platform and retrieve theinformation we need with one click,” said Long.

Long added that although the transition wascomplex, the project implementation was fastand efficient. “Now we can quickly and easilyanalyze data and report and share results withour stakeholders.”

These two success stories show how technologycan truly help change the world and aid thosefacing a crisis. TimeXtender is honored to do itspart in supporting the public and private sectors intheir efforts to provide assistance for people withinthe community who are in need of help.

TimeXtender is honored to do its part in supporting the public and private sectors in their efforts to provide assistance for people within the community who are in need of help.

TimeXtender inspires quality business decisions with data,mind and heart. They do this for one simple reason: becausetime matters. TimeXtender was founded in 2006 and isprivately owned, with headquarters in Denmark and theU.S. TimeXtender serves its customers, includingFortune 500, large-sized enterprises and mid-sizedcompanies, through a global network of partners.

FinTech Center of TokyoDriving Innovative Startups Forward

HOW BUSINESSES AREGetting Back on Track in China

Global Business

BY FRANK RIEMENSPERGER, SVENJA FALK AND SERENA QIU

Two months ahead of most other businesses in dealing with COVID-19, companies in China offer key insights into what it takes to regroup, rebuild, and position for growth.

Two months from now, how well will companies around the world be adapting to the challenges posed by COVID-19? The actions and experi-

ences of businesses in China suggest some answers.Chinese companies are about two months ahead

of most other businesses in their efforts to miti-gate the virus’s effects. By the end of March, for example, construction was back to 80 percent of previous levels, from a low of 20 percent. Home appliance production had rebounded to more than 90 percent, from lows of 50 percent. Even while factoring in varying levels of government oversight and incentive in different countries, these fi gures point to smart practices for others to implement.

To identify those practices, Accenture surveyed more than 100 Chinese executives representing such industries as chemicals, consumer goods, energy, fi nancial services, freight logistics, life sciences, and travel. We then interviewed a number of other leaders, from CEOs and chief digital offi cers to heads of supply chain, R&D, and factory operations.

We found that leading companies have concen-trated their efforts in two areas. First, they set out to steady the business. The crisis has proven to be a huge testbed, especially for examining processes and technology infrastructure. As one executive put it, the effects of the virus “made us see everything that didn’t work.”

Second, they have learned to stretch the busi-ness. Many have made efforts to help battle the effects of the virus – actions that have inciden-tally strengthened their brands. It has also led some companies to discover crisis-borne innova-tions with high potential. Rather than retreat, one executive emphasized that “it’s important to have a growth mindset amid such a crisis.”

Steady the BusinessThe company leaders we spoke to have taken three steps to steady their businesses. Almost all, for example, were quick to set up a crisis-management team. What’s different from the usual approach: a focus not only on internal operations but on the entire ecosystem. It’s more of a “control tower” approach, set up to take a big picture view – and to ensure that managers throughout the business also see and understand that view.

As one executive put it, the effects of the virus

“made us see everything that didn’t

work.”


One example comes from the50-50 joint venture between DongfengMotor Group and Nissan. The crisismanagement team includes expertsfrom production, logistics, marketing,new product development, and HR.They meet daily with suppliers, relayinginformation on topics ranging fromemployees’ well-being to inventory andlogistics, and communications withlocal governments to other companyexecutives. They also conduct scenar-io-planning exercises and develop plansto prepare the company for policychanges and shifts in the market.

Through this process, the companywas able to move quickly to reassignmore sales support to online chan-nels, producing a “digital marketingplaybook” to train employees. It alsoelevated the virtual shopping experi-ence for customers, with techniquesranging from virtual reality-poweredonline car demos to door-to-door test-drive bookings. On the supply side, thecompany also got a jump on engagingmore local parts-makers to ensureproduction in April and May.

Chinese companies have also pushedthe boundaries of digital tech in inno-vative ways. For example, 63 percenthave improved coordination betweenphysical and online sales channels, with

a focus on growing the online channelsin distinctive ways.

Consider retailer Suning.com, whichdespite the “dot-com” has 1,600 retailstores in China. Suning turned manystores – closed to walk-in business –into live-streaming marketing channels,essentially live broadcast rooms, featuringemployees in new roles as online influ-encers. This “social commerce,” alreadydisrupting online retail in China, nowreaches more than 60 percent of thecountry. For shoppers, the draw is enter-tainment, information, the chance to ask

Global Business

questions and offer up comments, and of course to make purchases. On March 6, Suning’s physical stores across China hosted more than 5,000 livestreaming events, with more than 2 million viewers in attendance.

Another area of boundary-stretching: using digital tech to conduct mainte-nance remotely. More than half of the companies we spoke to are doing this. For example, as elsewhere, China has constructed new hospitals on the fly. One industrial equipment company, XCMG, used a software platform to not only to monitor all of its construction equipment in real time but also to screen the body temperatures of its workers.

Some companies have pushed the boundaries on remote R&D. Insurance company China Life relied on a cloud-based platform it had deployed in 2019 to continue work during virus-compelled shutdowns. This platform integrates tools, codes, and hardware resources, enabling developers to collaborate easily. Already the end of February, the R&D center had completed 25 COVID-19 related tasks remotely. These included, for example, upgrading the infrastructure to support call-center employees working from home. Each of these tasks, on average, took just 8.6 days to launch.

Finally, companies rebounding in China have also shifted from a mindset of “just in time” to one of “just in case.” They have expanded their supply chains, focusing on strengthening rela-tionships with local suppliers. Informed by their crisis team, two-thirds of surveyed executives said they’ve been evaluating future demand and adjusting inventory levels with greater care. Many are also scrutinizing logistics lead times and delivery schedules far more closely.

Instant noodle and beverage producer Master Kong, for example, drastically ramped up communications with retail outlet leaders. The company was able to get a jump on changing demand,

Another area of boundary-stretching: using digital tech to

conduct maintenance remotely. More than half

of the companies we spoke to are doing this.

Employees work on a production line inside a Dongfeng Honda factory afterlockdown measures in Wuhan, April 8, 2020. Source: REUTERS/Aly Song


fi rst shifting inventory and support away from large,physical retail channels to online channels and smallerstores, and then quickly shifting again as larger phys-ical retailers reopen. (In China, the public was moreinclined to patronize smaller stores in their owncommunities, buying smaller amounts and spendingless time shopping each trip. They were more reluc-tant to travel to larger retailers where they weremore likely to spend longer in store and encountermany more people.)

Stretch the BusinessAs the crisis grew – and as we’ve seen around theworld – many Chinese companies enlisted in thefi ght. Does it help the brand? Yes. Was that themotivation? No. It was just the right thing to do.

Longer term, what’s critical is the high-potentialinnovation that may emerge.

Oil & Gas company Sinopec, for example, has anetwork of 340 gas stations and convenience storesin Beijing. It quickly implemented “no-touch” (nohuman-to-human contact) grocery shopping. Italso forged partnerships with new suppliers andexpanded its offerings to include vegetables, rice,cooking oil, and other fresh-food items. Consumersorder on their mobile phones, then fi ll up their tankswhile clerks inside the store assemble the goods andplace them in the customers’ trunks. One measureof its success? Every day, Sinopec sells 10 tons ofvegetables in Beijing. This could be a model in thefuture for its 6,000 stores in 147 cities.

Haidilao, a chain of more than 700 “hot pot”restaurants with a global footprint, has alsoused to crisis to test innovations. For example,

it swiftly launched a new line of products called Kaifanle (meaning “the food is ready” in English) – pre-cooked and partially prepared dishes that can be served in a matter of minutes, usually by stir frying. This venture beyond their comfort zone of restaurants was a quick response to the nationwide cooking-at-home campaign. The company has also launched new mini-restaurants (with fewer than 10 staff members each) offering low-budget meal packages in several cities.

Meanwhile, China Unicom has partnered with Meituan, a food and retail delivery service. The telecom giant will support Meituan’s autonomous delivery vehicle with a 5G network. In a world that increasingly seeks “contactless” commerce, Meituan is piloting the use of two autonomous vehicles for grocery delivery and also ramping up production of robots for smaller deliveries.

Digital technologies have clearly become the load-bearers for the kinds of cross-company collab-orations that crisis-response efforts have required. But as one executive put it, “It seems as if this crisis will be a breakthrough for ecosystem collaboration.”

“Flattening the curve” has become a widely used phrase since the emergence of COVID-19. But to most companies “getting ahead of the curve” has been an attractive concept for much longer. Companies in China are showing others, through their experiences, how to get ahead of the curve on surviving the crisis at hand and preparing for a strong future.

The authors would like to thank Ling Deng, Ajay Garg, Henning Lebbäus, David Light, Regina Maruca, Surya Mukherjee, Han Song and Mei Wang.

Frank Riemensperger (left) is Chairman of Accenture Germany, Austria, Switzerland and Russia. Svenja Falk (center) is a Managing Director with Accenture Research. Serena Qiu (right) leads Accenture Research in Greater China.

Employees, wearing masks, work on a production line manufacturing display monitors at a TPV factory in Wuhan, April 7. Source: China Daily via REUTERS

“Flattening the curve” has become a widely used phrase since the emergence of COVID-19. But to most companies “getting ahead of the curve” has been an attractive concept for much longer.

BY BHASKAR PANT

RESPONSE TO COVID-19 Global Pandemic Highlights the

role of National Cultures

Culture


fi rst identifi ed the difference between what he called “high-context” and “low-context” cultures. In a low-context culture, the content of what is being said is the most important thing; in general, people say what they mean, and an outsider will likely be able to understand the meaning of a conversation based on the words that are being used. German, German Swiss, and Scandinavian cultures are classic exam-ples of low-context cultures. By contrast, much communication in a high-context culture depends on subtle nonverbal cues and other contextual information, such as the relationship between two speakers. In Japan, for example, people often take great care not to use the word “no” in conversa-tions, and it is up to listeners to use contextual clues to understand when their request has been declined.

Individualist vs. Collectivist – Again, we’re seeing this difference played out in the varied responses to the coronavirus crisis. Individualism, along with the next three factors on this list, are four of the six “cultural dimensions” identifi ed by Dutch social psychologist Geert Hofstede, a pioneer in the fi eld of cross-cultural communication. It’s easy to see why this dimension may result in vastly different organizational cultures across different countries, even for compa-nies that largely have the same goals. In a country that emphasizes individualism, employees may be given a wide degree of latitude to “think outside the box” and pursue their own strategies to solve problems. In a more collectivist country, such behavior may be seen as detrimental to the group dynamic, and organiza-tions are likely to emphasize teamwork and adherence to agreed-upon practices.

Uncertainty Avoidance – A high level of uncer-tainty avoidance is associated with a low tolerance for uncertainty, ambiguity, and risk taking, while a lower level of uncertainty avoidance indicates the opposite. As a culture, the United States has a moderate level of uncertainty avoidance, whereas this avoidance tends to be much higher in European and Latin American countries. Employees in such

The novel coronavirus has affected countries around the globe. It is non-discriminatory in terms of who it hits. It is oblivious to race, gender or culture and agnostic to national borders.

Given these facts, one might expect to see a largely uniform response to the coronavirus across the world. But that has not been the case.

Why not? The answer may lie in cultural differences.

In countries where people tend to place a higher emphasis on group welfare, we’ve generally seen widespread compliance with nationally announced public health measures. But in countries which are more individualistic, such as the U.S., we’ve seen pockets of intense resistance to recommended guidelines of the World Health Organization (WHO) and/or the Center for Disease Control (CDC) on things like mask wearing, physical distancing, and the temporary closing of businesses.

This incredibly varied response, even at the risk of personal health, may indicate just how important deeply embedded national cultures affect people’s behavior, especially their reaction to “rules and regulations.” It’s also a reminder for those engaged in global business of why cultural awareness is an essential competency today for business leaders. One size does not fi t all, and yet we still see today large multi-national companies trying to create a uniform global corporate culture – pushing out identical human resources policies, for instance, from Seattle to La Paz to Tokyo. When those at corporate headquarters are not internationally expe-rienced or culturally aware, they often fail to realize that people from different countries have different reference points. They bring their own cultures with them into the workplace; they do not park them at the front entrance.

It is impossible, of course, for executives to be experts on every culture they encounter or operate in; however, it’s useful for leaders to be culturally sensitive, to have a mental framework to help them detect and respond to rapidly evolving situations through different cultural lenses.

Here are fi ve important cultural factors that busi-ness leaders need to be aware of:

High-Context vs. Low-Context – Anthropologist Edward Hall, widely credited for being the founder of “intercultural communication” as a fi eld of study,

One size does not fi t all, and yet we still see today large multi-national companies trying to create a uniform global corporate culture

it’s useful for leaders to be culturally sensitive, to have a mental framework to help them detect and respond to rapidly evolving situations


Bhaskar Pant is the Executive Director of MIT Professional Education, where he oversees a large portfolio of MIT developed education programs designed for working professionals around the world. Mr. Pant is also a globally experienced instructor in intercultural communication for professionals; for over two decades, he has taught courses and seminars on intercultural communication that include engi-neering students and staff at MIT, as well as manage-ment graduate students and professionals attending Harvard University’s Extension School. Mr. Pant is the lead instructor of the fall 2020 online MIT Professional Education course, “Cultural Awareness for Global Business”. Previously, Mr. Pant served in senior management positions globally for media, media technology and education organizations such as Time Warner/ CNN (in India), Sony Corporation (in Japan and the US) and the Educational Testing Service (in Singapore).

ABOU

T TH

E AU

THOR

countries may expect their employers to minimize risk through very defi ned rules and policies. The response to the Covid 19 pandemic in high uncer-tainty avoidance countries has been compliance, by and large, to national directives.

Power Distance – In a country with a high levelof power distance, there is a great deal of acceptanceof hierarchies – even among those nearer the bottomrungs of the proverbial ladder. Organizations oper-ating in countries with a low power distance indexmay see that their employees expect a more egali-tarian (or “fl atter”) organizational structure, but theywould need to be careful in exporting this perspectiveto high power distance countries.

Masculinity vs. Femininity – The termi-nology here is, admittedly, somewhat archaic. Butaccording to Hofstede’s defi nitions, participants inmore “masculine” cultures are driven by compe-tition, achievement, and success. By contrast, less“masculine” cultures, such as Scandinavian coun-tries, are characterized by an emphasis on quali-ty-of-life and collaboration, as opposed to standingout above the crowd. Understanding these differ-ences can be critical in multinational corpora-tions when determining local policies related, for instance, to family leave and vacation.

As much as cultural experts and trainers around the world over are well aware of the cultural dimensions mentioned here, when I teach business leaders about cultural awareness, most are unaware of these concepts and their practical signifi cance in improving effectiveness and business results in

today’s highly globalized work environment. We often see that mergers and acquisitions, for example, are more successful when partners are consciously aware of cultural differences between them and take proactive actions to deal with those, prior to merging operations. There are countless examples of business marriages falling apart because cultural factors were not considered seriously and dealt with at the outset.

How nations are dealing with the COVID-19 pandemic is laying bare national cultural differences and priorities. One would hope that learning from them will serve as opportunities for leaders to think about and tackle issues in their own world that may have been lurking under the surface for years. Often, citizens will most vividly remember a leader’s fi rst response to a crisis, and so it is true for businesses as well. It is important for executives to demonstrate empathy and sensitivity in the context of the culture they are operating in. In an increasingly globalized business world, effectiveness in communication and action requires a solid foundation in cultural aware-ness and cultural competence.

Mergers and acquisitions, for example, are more successful when partners are consciously aware of cultural differences between them and take proactive actions to deal with those.

Culture

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OUR MISSION. YOUR GROWTH.


It is often said that the digital economy runs on data. Digital technologies have trans-formed the economy and society – and data is at the centre of this transformation. TheCOVID-19 crisis reminds us of this by confronting us with a steady stream of dreadful

data: confirmed cases, deaths, patients hospitalised, in ICU and fully recovered. Despitethe difficulty of compiling reliable numbers, these daily statistics have helped govern-

ment actors and public health experts in taking actions to “flatten the curve” and,equally important, in justifying these actions to their citizens.

Data

FREE FLOW OF DATA: WHAT THE CORPORATE WORLD CAN

LEARN FROM SCIENCEBY ANDREAS DEPPELER


While the human and economic

devastation from this pandemic will undoubtedly be vast, a rational approach, based on data, analysis and expertise, has proven to be effective in slowing the viral spread.

Underneath the case statistics, there is another vast and growing trove of data which has been collected, aggregated and shared by the scientifi c research community since the early days of the outbreak: data about the virus itself (SARS-CoV-2) and the severe respiratory disease it causes (COVID-19). While public life and non-essential sectors of the economy were shut down, biomedical and clinical research laborato-ries around the world focused on a single topic: the coronavirus. As the New York Times wrote: “Nearly all other research has ground to a halt.”1

What we are witnessing may very well be the single largest research effort ever undertaken in the history of science. True to the established tradition of science, it is done with complete transparency and open data. The results are impressive. In only six months, researchers have identifi ed the likely origin of the virus, mapped many of its structural and functional properties, produced reliable diagnostic tests, improved treatment options and built a pipeline of 150 candidate vaccines.

Those remarkable achievements in the scien-tifi c world should give us pause for thought. Why has biomedical research on COVID-19 made such rapid progress in only a few months, while businesses struggle to adapt and respond to the new reality? Could data sharing have something to do with it? We are seeing some indications for this in recent announcements by big tech-nology fi rms. Microsoft launched an “Open Data” campaign.2 Noting that “fewer than 100

companies now collect more than 50% of the data generated by online interactions”, Microsoft is making aggregated data of confi rmed, fatal and recovered COVID-19 cases from all regions

available to academia and research. The CEO of Facebook wrote about

“a new superpower: the ability to gather and share data for good”.3 Apple

and Google partnered to launch application programming interfaces and a Bluetooth-based platform for contact tracing.4 Given the track record of big technology and platform compa-nies in collecting, hoarding and monopolising data for their own benefi t, these pronounce-ments and plans have attracted criticism from privacy advocates, scrutiny from regulators and scepticism from many other observers.

Apart from thin slivers of digital platform ecosystems, data is not shared widely in the private sector. This has been noted for quite some time by academics and policymakers. Two recent reports by the OECD and the European Commission shed some light on the reasons why data is not shared widely. The OECD report “Enhancing Access to and Sharing of Data”5 emphasises that “access to data is crucial for competition and innovation in the digital economy”. It then proceeds to identify three signifi cant barriers to data sharing: (1) privacy and IP rights and other legitimate commercial and non-commercial interests; (2) lack of trust among organisations, sectors and countries; (3) misaligned incentives, and limitations of current business models and markets. The “European Strategy for Data”6, published by the European Commission in February 2020, similarly states that “the value of data lies not just in its use but also in its reuse through sharing. Currently there is not enough data available for innovative reuse, including for the development of artifi cial intel-ligence.” The report provides several reasons why data sharing between companies has not taken off at suffi cient scale: lack of economic incentives, lack of trust, imbalances in negoti-ating power, fear of misappropriation of the data by third parties and lack of legal clarity on who can do what with the data.

What we are witnessing may very well be the single largest research effort ever undertaken in the history of science

Why data is not yet shared widelyin t

y data is not yet shared widelythe corporate worldy yWhy data is not yet shared widely


The fi ndings are clear and unambiguous: data is not shared widely between companies – or even within companies. Closely guarded depart-mental data silos, poor data quality, abandoned data lake projects and weak data governance are unfortunately all too common in businesses. Which brings us back to our original question. What can we as executives, managers and advi-sors learn from science during this crisis? Why is data fl owing freely in coronavirus-related scien-tifi c research but not in the digital economy? To answer these questions, let us look at two prom-inent examples of data and information sharing in COVID-19 science: genomic sequences and journal articles.

Genomic sequences. GenBank is the largest and most widely used genetic database, containing 216 million sequences with more than 400 billion base pairs (building blocks of the DNA double helix).7 On 12 January 2020, researchers submitted the fi rst genetic sequence of what they tentatively called “Wuhan seafood market pneumonia” to GenBank.8 Many other nucleo-tide sequences followed. The rapid sequencing

and global sharing of the virus genome in the fi rst weeks of January allowed the development of diagnostic tests and the commencement of research into vaccines and therapeutics. On 16 March, less than 10 weeks after the fi rst genetic sequences were released, biotech company Moderna injected a dose of an experimental RNA vaccine into a human volunteer partici-pating in an early-stage (phase I) clinical trial.9

As of 29 June, the WHO reported that 17 candi-date vaccines were in clinical trials and 132 were in preclinical evaluation.10

The University of Oxford is currently conducting a clinical trial with 1,100 partici-pants11, while at the same time partnering with AstraZeneca to further develop, manufacture and distribute the vaccine.12 The Serum Institute of India, the world’s largest vaccine producer by number of doses, announced that it would start producing the Oxford experi-mental vaccine without waiting for the clinical trials to complete.13

Even at pandemic speed, however, most experts agree that getting a licensed vaccine to the public will take at least 12-18 months. Side

Examples of how data sharingwor

amples of how data sharingrks in science

pExamples of how data sharing

Data


effects, dosing issues and manufacturing prob-lems can all cause delays.14

Journal articles. On 13 March, chief science advisors from a dozen countries called on publishers to voluntarily agree to make their coronavirus-related publications, and the available data supporting them, immediately accessible. In response to this call, close to 50 publishers (including commercial publishing houses like Elsevier, Springer and SAGE) have made their coronavirus-related articles discov-erable and freely accessible. One widely used open-access platform now lists more than 26,000 full-text journal articles15 relating to COVID-19. In addition, dozens of preliminary reports are posted every day on biomedical preprint servers.

So much is published, in fact, that researchers and clinicians fi nd it increasingly diffi cult to

keep up, extract relevant information from the literature and organise it into knowledge. Some are turning to artifi cial intelligence (AI), particularly information retrieval and natural language processing, to generate new insights. A well-known example is the COVID-19 Open Research Dataset (CORD-19), a machine-read-able and freely available resource of currently over 59,000 scholarly articles on COVID-19 and related historical research.16 With the help of CORD-19, AI experts worldwide have devel-oped text and data mining tools to help answer important scientifi c questions on transmission, incubation, risk factors, vaccines and thera-peutics. Through Kaggle, a machine learning and data science community owned by Google Cloud, these tools will be openly available for researchers around the world.

Data


Based on these and other examples, there should be no question that collective sharing of data and information through digital networks has greatly advanced the search for a treatment and cure to COVID-19. While global supply chain networks were disrupted, scientifi c data and information continued to fl ow freely. How then can data sharing be made to work in a corporate environment? Managers and executives need to recognise two simple principles: (1) data can and should be valued; and (2) data sharing adds value. Let us look at each in more detail.

Data can and should be valued. Getting a rough sense of the value of your data assets and those offered by others is the fi rst step

if you want to participate in the emerging data economy. Data can indeed be valued, but it is not straightforward. Markets for data usually do not have enough buyers and sellers to converge on a price that refl ects the true economic value of data. From an accounting perspective, data is treated as an intangible asset and is usually not disclosed on the balance sheet. Its value is only recognised if the fi rm holding the data is acquired. This happened when Microsoft bought LinkedIn for US$26bn, thereby valuing each active user (and the data generated by the user) at $260. Another way to estimate the value of data is through the income derived from data. For example, Facebook reported net income of $18.5bn for the full year 2019, or about $11 per user.17

HowHow data sharing could work in the corporate world


A recent report18 by the Bennett Institute for Public Policy at the University of Cambridge provides additional reasons why data is diffi cult to value. Data is very different from most other economic goods and services because of two economic features: non-rivalry and external-ities. Non-rivalry means that data can be used by many parties simultaneously without being exhausted. (That is also the main reason why the catchphrase “data is the new oil” should once and for all be abandoned.) Externalities can be negative or positive. Negative externalities have been the subject of much attention in recent years in the context of personal data collection and the resulting loss of privacy. Positive exter-nalities are discussed less often. They arise when one dataset is enhanced through being linked and combined with others – which is exactly what happens in data sharing.

Data sharing adds value. Interactions and transactions in the digital economy produce an endless stream of big data. Individuals generate data about themselves through various apps and wearable devices, businesses digitalise their value chains and oper-ations, governments build smart cities and digital services. Big data also happens to be an essen-tial input for training AI systems. Deep learning algorithms, which exhibit astounding accuracy in narrowly defi ned tasks such as image recogni-tion, machine translation and text analytics, must be trained with large amounts of labelled data. Today, only a small number of big technology fi rms have access to the kind of high-volume and high-velocity data that is required for state-of-the-art machine learning development. As an aside, this unequal distribution of data is the main reason why in recent years some of the most exciting innovations in reinforcement learning, generative adversarial networks and language models have come not from academia but from private labs funded by Google, Baidu, Nvidia and others.

Regulators and policymakers are aware of these imbalances and the high degree of market power resulting from the “data advantage”. To restore competition and support smaller fi rms that currently have no or limited access to

big-data pipelines, the European Commission intends to fund the establishment of common, interoperable data spaces in healthcare, mobility, agriculture, energy, industry and other sectors. The data spaces will offer access to secure data storage, sharing, modelling, computing and other services, and will be governed by a regu-latory framework and common standards. A similar initiative, called the “Data Collaboratives Programme”, was launched last year by the Infocomm Media Development Authority (IMDA) in Singapore. It comes with a govern-ance framework and a regulatory sandbox to explore innovative use and reuse of data.19 The ultimate objective of these initiatives by the EU, Singapore and others is to “open the data silos” and encourage innovation through the free fl ow of data. Managers and executives can use these regulatory initi-atives as a starting point from which to lay their own data pipelines and unlock value from data in a way that is trusted by all stakeholders.

Data is very different from most other economic goods and services because of two economic features: non-rivalry and externalities.

To restore competition and support smaller fi rms that currently have no or limited access to big-data pipelines, the European Commission intends to fund the establishment of common, interoperable data spaces in healthcare, mobility, agriculture, energy, industry and other sectors.


Data

The scientific method has been enormouslysuccessful in helping to gradually form andrefine our understanding of the natural world.Yet it has been slow to enter the world of busi-ness. “Scientific management”, a school ofthought founded by Frederick Winslow Taylorin the late 19th century, advocated divisionof labour and time study in manufacturing. Itcontinued to have considerable influence onindustrial engineering, quality management andlean manufacturing throughout the 20th century.In the digital economy of the 21st century, therigidity of Taylorism seems out of date. Thescientific method, on the other hand, is morerelevant than ever to the pursuit of knowledge.Like scientists who confirm hypotheses withexperimental data, managers transform raw datathrough analytics, visualisation and simulationinto knowledge on which to base rational deci-sions. The COVID-19 pandemic allows us tocompare, in almost real time, the effectivenessand societal impact of different decision-makingmodels. It has become impossible to ignore thefact that governments whose policies and meas-ures are based on data, science and evidencefare better at slowing the viral spread. Businessexecutives and managers should take note.Recognising the value of data, enriching itthrough sharing, and generating knowledge andactionable insights from it are bound to becomeessential parts of almost every organisation’sstrategy in the digital economy.

About the Author

Andreas Deppeler is an Adjunct Associate Professor at NUS Business School, National University of Singapore. He is also a Research Affi liate at the Centre on AI Technology for Humankind at NUS Business School. He teaches courses on emerging technologies, data value and business strategy. His academic research focuses on ethics and governance of artifi cial intelligence.

References:1. https://www.nytimes.com/2020/04/01/world/europe/coronavirus-science-research-cooperation.html2. https://news.microsoft.com/opendata/3. https://www.washingtonpost.com/opinions/2020/04/20/how-data-can-aid-fi ght-against-covid-19/4. https://www.apple.com/newsroom/2020/04/apple-and-google-partner-on-covid-19-contact-tracing-technology/5. https://www.oecd.org/going-digital/enhancing-access-to-and-sharing-of-data-276aaca8-en.htm6. https://ec.europa.eu/info/sites/info/fi les/communication-european-strategy-data-19feb2020_en.pdf7. https://www.ncbi.nlm.nih.gov/genbank/8. https://www.ncbi.nlm.nih.gov/nuccore/MN908947.19. https://www.modernatx.com/modernas-work-potential-vaccine-against-covid-1910. https://www.who.int/who-documents-detail/draft-landscape-of-covid-19-candidate-vaccines11. https://www.ovg.ox.ac.uk/news/oxford-covid-19-vaccine-begins-human-trial-stage12. https://www.ovg.ox.ac.uk/news/landmark-partner-ship-announced-for-development-of-covid-19-vaccine13. https://www.seruminstitute.com/news.php14. https://www.sciencemag.org/news/2020/03/record-setting-speed-vaccine-makers-take-their-fi rst-shots-new-coronavirus15. https://www.ncbi.nlm.nih.gov/pmc/?term=2019-nCoV+OR+2019nCoV+OR+COV-ID-19+OR+SARS-CoV-2+OR+((wuhan+AND+coronavi-rus)+AND+2019%2F12%5BPDAT%5D%3A2030%5BP-DAT%5D)16. https://www.semanticscholar.org/cord19/about17. https://investor.fb.com/investor-news/press-release-details/2020/Facebook-Reports-Fourth-Quarter-and-Full-Year-2019-Results/default.aspx18. https://www.bennettinstitute.cam.ac.uk/news/new-policy-advice-value-data/19. https://www.imda.gov.sg/programme-listing/data-collaborative-programme

The COVID-19 pandemic allows us to compare, in almost real time, the effectiveness and societal impact of different decision-making models.

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Technology

As users of digital technologies in their personal lives, many executives pine for their internal IT systems to give them a

similar experience and to be just like IT is in their daily lives. They point to the simplicity, ease of use and hassle free nature of the digital services they use and question why corporate IT makes it so complicated. Apps on their smart phone make services available at the push of a button. Software can be easily installed and confi gured at the click of an icon. Plug a printer into a USB port on a lap top and it is ready to print. If they want to use a Tablet there is no problem; they just buy one from the local elec-tronics store, connect to the internet via Wi-Fi and don’t have anyone cautioning them about the potential security risks or possible compat-ibility problems. Some executives even point to the fact that they have set up their own home router for broadband internet. In the consumer IT world everything just seems to work.

Unfortunately, most executives mistakenly confuse ‘consumer IT’ with ‘enterprise IT.’ Expecting everything to be just like consumer IT

shows a lack of understanding of the challenges and issues that IT poses within a corporate envi-ronment, particularly what it takes in achieving expected business outcomes. More worrying, their experience with consumer IT is also giving these executives a strong argument for opting out of any involvement in decisions regarding IT. After all, Apple doesn’t ask them for their input to iTunes but it is so easy to use and it syncs seamless with multiple devices; and most people are not really too concerned with where the jurisdiction of the server that stores their family photos is located when they use Dropbox.

Because enterprise IT is not like their expe-rience with consumer IT, the chief information offi cer (CIO) and IT organization effectively becomes the ‘whipping boy’ for all the perceived ills with corporate IT.1 The fact is, in the enter-prise IT world, executives cannot be just passive users; they must be active participants in many of the decisions that they today leave to the likes of Apple, Google, Vodafone and Yahoo in the consumer world. With enterprise IT, business executives play the pivotal role.

1 Whipping boys were reputedly established in the English court during the monarchies of the 16th and 17th centuries. As it was forbidden for a tutor to punish a prince, a whipping boy, who was often a friend of the prince, was assigned to a young prince and was punished whenever the prince misbehaved or fell behind in his schooling.

Expecting everything to be just like consumer IT shows a lack of understanding of the challen-ges and issues that IT poses within a corporate environment

AS THE WHIPPING BOY:MISTAKENLY CONFUSING

‘ENTERPRISE IT’ WITH ‘CONSUMER IT’BY JOE PEPPARD

In the consumer world, all digital services are vanilla versions: the exact same service is avail-able to all users. Sometimes, you can opt for either cheaper or more expensive versions with less or more functionality. But as a customer, you have no input as to what is offered; you either take it or leave it. There is nothing wrong with this; if the service doesn’t quite fi t with what you want, you just have to live with what’s available or don’t use it. In the corporate world, expecting users to “just live” with a new way of working or new process is the downfall of many IT projects; giving them the option to not use an application is just not an option. The func-tionality, user experience, logic and workfl ow decisions of exactly how the application will work, and thus how we as users should expe-rience the service, are made by the software vendor or app developer. In the corporate world this is akin to professionals working in the IT organization deciding the application logic, functionality, level of service, quality, availa-bility, etc. for users without their input. While a vanilla version of a software application can be adequate, and many corporations use standard versions of ERP software from the major vendors, any choice should be a business deci-sion made by business managers for operational and strategic reasons. Crucially, these decisions are not technical choices.

With consumer IT, the services on offer are, for the most part, ‘point’ solutions delivered from the “cloud”, operating in an asynchronous mode. Consider that you wish to travel to another city to see your favorite band play a gig. When you book

a fl ight with a particular airline, you select your preferred fl ight and time and enter your name, address, phone numbers, and credit card details to make the purchase, unless of course, you are a regular fl yer with the airline and this information has been previously entered and stored. Choose another airline, and all this data will have to be rekeyed; and, they will also probably have a different booking process with its own procedures that will likely differ from what you are familiar with. When you book the hotel room, you will probably have to again re-key in all this same information and follow the hotel’s unique booking process. Aggregators like Expedia and some airlines will argue that they do allow you to book both fl ight and hotel from the same portal, but what if you wish to stay at a boutique hotel that in not a partner? And can you really be sure that you are getting the best deal by using an aggregator anyway? You then still need to log-on to Ticketmaster to reserve your concert tickets and will again have to rekey much of the same information. And, of course the rental car still has to be booked.

While an irritation, we accept this practice in our personal lives; for sure, it is consider-ably better than it was pre-internet days. But operating this way today is a big no-no in the corporate world. Imaging your internal IT organization building systems where data had to be entered several times, with no sharing of data across multiple applications, or processes carrying out similar functions and tasks working differently with different interfaces, screen layouts and passwords. Just think of the ineffi -ciencies, confusion and opportunities for errors.

With consumer IT, the services on offer are, for the most part, ‘point’ solutions delivered from the “cloud”, operating in an asynchronous mode.

Technology


To ensure this doesn’t happen, some sort of architectural integrity is required and execu-tives must guide and shape such a blueprint. Unfortunately, too often this doesn’t happen; it is akin to a construction company building a house for a client room-by-room without their input or having any architectural blue-prints. Each room might have different ceiling heights, different size wall fi ttings, different window styles, different pipe sizes for plumbing, different voltages and plug types for electricity. While meeting their immediate need, ongoing maintenance and remediating will be expensive.

With enterprise IT, organizational architec-ture, clearly describing how the enterprise will function and defi ning how all the pieces fi t together to help it achieve operational and stra-tegic objectives, is critical. With enterprise IT you would never accept the rekeying of data or the need for manual reconciliation – and where it does exist, efforts are made to eliminate it. Companies generally insist that processes to achieve similar outcomes be standardized and similarly designed and if they are to be different there should be a good business or regulatory reason as to why this is so.

In the corporate world integration is not only required, it is mandatory; it is how effi ciencies are achieved and the smooth fl ow of informa-tion facilitated. Just think of the ineffi ciencies and opportunities for errors in the above simple example for one individual going to a gig; now imagine a company with tens of thousands of employees engaging in millions of different transactions. Information is the lifeblood of any corporation, and if it doesn’t fl ow smoothly the business will soon grind to a halt. IT may be an enabler, but it requires clear direction from busi-ness executives as to how it should be harnessed.

With their ERP systems from vendors like SAP and Oracle, organizations do seek enter-prise integration. However, history has taught us that this is not easily achieved, even from on-premise data centers, particularly for large companies operating globally. And the barriers are usually not technical but often down to culture and politics.

While the cloud is promoted by vendors as transformative, caution should be exercised in interpreting what this really means. Yes, appli-cations can be provisioned rapidly, without any hardware or software purchase, available for use

In the corporate world integration is not only required, it is mandatory; it is how effi ciencies are achieved and the smooth fl ow of information facilitated.


from any browser from most devices, and payed for on an as-you-go basis. Unless you buy from a “full stack” provider, most solutions available from the cloud are point solutions and can be a challenge if an organization is seeking inte-gration. Salesforce.com provides automation to help a fi eld salesforce manage its clients. Workday provides applications for human capital management (e.g. compensation manage-ment, absence management).

Interoperability across different cloud vendors can be diffi cult to realize. Data port-ability, the ability to seamless move data to another provider, is also contentious in a cloud computing environment, heightening the risk of being locked into to one particular vendor. It is for this reason that so called “shadow IT” can be dangerous. Even where applications run on a private cloud (and the vast majority of cloud implementations are of this type) there are still interoperability challenges to overcome.

The security and privacy issues are also different in the enterprise IT world. As a user of digital services in our personal life we take responsi-bility for the protection of our own personal data: how we use it, where we put it, and for the rights we assign to others to use it. In the corporate environment, executives are dealing with other peoples’ data, particularly those of customers, employees, patients, and citizens. They have responsibilities defi ned by law and need to worry about protecting and safeguarding this data and ensuring that it is not used in any inappropriate way. Furthermore, as custodians

Technology

of a business for shareholders, executives need to make sure that data or systems are not compromised in any way that will affect either the performance or reputation of the business. There are also data retention requirements to contend with. These responsibilities again rest with corporate offi cers and cannot be abdicated to the CIO and IT organization.

Moreover, with consumer IT, users don’t have to deal with the legacy and complexity of the IT estate that affl icts the corporate world. This is just a refl ection of the unfortunate characteristic of technology: today’s leading edge is tomor-row’s legacy. This legacy can also be the result of dysfunctional decision making regarding IT and shadow IT, leading to the accumulation of diverse IT assets with particular capabilities. The consequence of the resultant complexity, what is often referred to as technical debt, is that it essentially shapes what the organization can and cannot do, and the strategic options open to it, at least in the short to medium term. It also impacts the cost base.

But complexity can also occur during the normal course of business activity, for example, acquiring a company usually entails also acquiring its IT systems, application suites and the process logic that it facilitates. Global companies oper-ating in different geographies are faced with different maturity levels of national IT infra-structures and in meeting local regulatory and sometimes customer requirements. Strategic moves by competitors can also warrant an immediate response, meaning that new systems often have to be built rapidly, without necessarily fi tting the corporate architectural blueprint.

With corporate IT, you cannot simply throw away old IT systems and software and replace with newer versions as we typically do with consumer IT. Consumer IT is all about the indi-vidual, meaning we don’t have to deal with the scale and scope of an organization employing possibly many thousands of individuals, across multiple locations, with vested interests, ways of working, experiences, all embedded in the organization’s IT infrastructure. Many compa-nies also signifi cantly customize packaged software, tailoring it to what they see as their unique requirements.

Perhaps the biggest difference is in relation to impact. With consumer IT, making the wrong IT choices or the unavailability of systems or apps might mean inconvenience and frustration. If you cannot connect to Strava, you can still go for your run. Some people might even claim to suffer ‘cold turkey’ by not being connected, should a broadband or Wi-Fi connection not be available. But in general, most of us can work around these nuisances and life goes on.

However, in the corporate world, the majority of organizations are fundamentally dependent on their IT systems and are not able to operate for very long, if at all, without them. For most, the unavailability of certain IT systems can have an immediate devastating effect on their business. A retailer without its point of sale systems (POS) will not be able to process customer purchases at checkout; the unavailability of its reservation system can see an airline grounded; problems with its trading systems will result in a fi nancial institution unable to engage in currency markets or trade stocks. When revenue, profi tability and reputation are impacted, it is an executive and

With consumer IT, making the wrong IT choices or the unavailability of systems or apps might mean inconvenience and frustration.

board issue. It is for these reasons that they mustunderstand the risks around technology choicesas the buck ultimately stops with them.

As all businesses increasingly become digitalbusinesses, IT cannot remain the whipping boy.The CIO and IT organization cannot continueto be blamed for the misdemeanors of businessexecutives. Executives need to accept that howthey lead and manage IT impacts their organiza-tion’s experiences with IT. To move beyond thecurrent situation, some executives will need toembrace a new perspective; the old one is clearlynot working.

It is not that these executives set out to failwith IT; on the contrary. They firmly believethat what they are doing or prescribing and theirlevel of engagement and involvement is exactlywhat is required for success. Unfortunately, theyare working from the wrong frame of reference.This lens through which they view the world andis a complex set of assumptions and attitudesthat are used to filter perceptions and createmeaning. We perceive what we consider to bereality through subconscious frames. Because wesee perceptions as real, we believe others must

also see them as we do. It is as if we are wearingrose-tinted spectacles and naturally believe thatthe world has a red hue, and consequently thatothers see it likewise. A frame of reference alsoinfluences the decisions executives make andactions they take. Confusing enterprise IT withconsumer IT is just one of a number of beliefsthat contributes to an executive’s frame of refer-ence and shapes their reality.

Amending somebody’s frame of referenceis not easy. Moreover, while an executive mayacknowledge there is a problem with IT intheir organization they often don’t recognizethe paradox that they are, at least, part of theproblem! The real issue is many don’t know whatthey don’t know! Until this changes, it is likelythat in many organizations IT will continue tobe the whipping boy.

In the enterprise IT world, executives getwhat they are given if they have not botheredto take the time to define what they want; andwhen they get it, it is often not what they arelooking for because they have not provided thelevel of engagement required. With their enter-prise IT, executives get the IT they deserve!

About the Author

Dr. Joe Peppard is on leave of absence from Massachusetts Institute of Technology’s (MIT) Sloan School of Management. He researches, teaches, and consults in the domains of IT leadership; digital strategy and innovation; the execution of digital transformation programs; the creation of value from IT investments; and the role, structure, and capabilities of the IT unit in contemporary organizations. Findings from his studies have been published in leading academic and practi-tioner journals including Harvard Business Review, California Management Review, Journal of Information Technology and MIS Quarterly Executive. His most recent book is Taking The Reins as CIO: A Blueprint for Leadership Transitions (Palgrave Macmillan, 2020).

Executives need to accept that how they lead and manage IT impacts their organization’s experiences with IT.


Innovation pathways for

– EVOLUTION OR REINVENTION?LUXURY BRANDS

Luxury

Since its inception, the luxury industry has been a growth story. Product extensions, store network expansion, entering growth markets – especially China and digital commerce – have been the drivers of the last years. Business cycles? There were some downturns during the SARS epidemic and the fi nancial market crisis in 2009. Soon after, growth resumed at an even accelerated rate, driven by many more consumers craving luxury goods. Few thought that the diversifi cation in terms of products, geographies, sectors, and consumers could be affected by economic downturns. All that is needed is a constant growth of the luxury clientele and their dispos-able incomes for marketers to turn them into customers of the brand.

The illusion of controlThe belief that consumers can be “created” systematically and through

planned management decisions has been the guiding narrative for luxury brand managers over the last decades (Som 2020). Flawless execution and mana-gerial excellence were what mattered. However, in an environment where things are out of control and substan-tially affecting the business model, the perfection of codifi ed standards might reach its limits. COVID-19 has challenged these assumptions. Is this going to change the luxury industry as we know it? It has at least challenged our illusion of control. No one was prepared for the outbreak of

BY HANNES GURZKI AND ASHOK SOM

Stores had to be closed, supply chains were severely affected, travel was restricted, and consumers shifted demand to necessities.

a global and devastating pandemic. Before the crisis, luxury stocks were trading near all-time highs of about 26 times forward price-to-earnings. Stock prices of the large luxury fi rms have plummeted, depending on the sector, by 30% or more from the beginning of the year to the outset of the pandemic. Stores had to be closed, supply chains were severely affected, travel was restricted, and consumers shifted demand to neces-sities. While the effect over one fi scal quarter is temporary, the longer-term implications are still unclear, and the strategic response to the crisis will not be easy. Due to the closure of stores in most markets, store-based retail has been majorly affected. However, e-commerce has also suffered a decline in traffi c and transactions as consumers hold back with purchases in the face of uncertainty and by disruptions in the global supply chain. For example, the YNAP Group, one of the world’s largest e-commerce


platforms, has decided to close down its logisticscenter in Italy to ensure the safety of all employees.

Many are questioning what these developmentswill mean for the way our economic system operatesand how consumer needs and values will change.When societal values are changing, so must socialconceptions of what social actors perceive as anecessity and a luxury.

Crises are nothing new for the luxury industry, nor will this be the last crisis luxury brands will face. Luxury is a global business. With globalization comes the managerial need to master the complexity of orchestrating personalized solutions to diverse customer needs and creating a delivery system. Luxury brands need to ask themselves how they can build resilience and turn the threat into an innova-tive force. How should luxury brand managers act now? By asking themselves how to unleash this force and lead their business into the future.

Building resilience:The innovation imperativeInnovation is nothing new for luxury brands. One can even argue that luxury brands have started primarily as social innovation. For much of human history, status was ascribed through birth. The emerging consumer society challenged existing social orders for which luxury goods were a status marker unobtainable to everyone who did not belong to the club – a crisis for the aristocracy. Now, these status markers could be bought in the market-place and were accessible to anyone with the means to afford it, creating social status and an expression of identity (Kapferer & Bastien, 2009). With the emergence of luxury brands and their designs, the codes to construct social affi liation and distinction multiplied the myriad opportunities to create one’s social identity. This social innovation is also clearly visible in exclusive service offerings, from private member clubs to jets and upscale hotels. Exclusivity, as a value proposition, emerged out of a crisis of world order with predetermined faith.

Yet, these brands have not always been luxury brands. They started with an innovation catering to the needs of discerning customers who were willing to pay a premium for it. They have also challenged business models of incumbent players by providing functional innovations that offer a tangible benefi t to consumers. One such example was the story of

a young businessman whose initials are now known worldwide. Before the 1860s, one of the signifi -cant challenges for travelers was how to transport their clothes effi ciently. The round boxes that were the standard at that time were not easily stack-able on a horse carriage, and, due to the circular form, wasted valuable space that could have been fi lled with other goods. Even worse, they were not waterproof, so rain could quickly get in and wet the clothes. A young man called Louis Vuitton realized this need and developed rectangular trunks with a rainproof canvas. These trunks are still a core of the company’s heritage today, although the brand has since expanded its portfolio to a wide range of products for discerning global travelers.

Luxury brands also are a successful economic innovation. The luxury industry emerged in the 1980s, and new forms of managing creative indus-tries came to life with the holding model, in which desirable brands were combined to create synergies and increase their market power, such as harnessing shared resources, such as in buying media space, securing desired retail store locations in the high streets

E-commerce has also suffered a decline in traffi c and transactions as consumers hold back with purchases in the face of uncertainty and by disruptions in the global supply chain.

OPEN


and shopping malls through their negoti-ation power or building up and nurturing creative talent (Som & Blanckaert, 2015). Struggling family-owned companieswith a strong heritage were struggling to manage the generational transition. It provided an excellent space for active investors to infuse them with managerial expertise. Summarizing, the evolution of the luxury industry has been a history of innovations that emerged out of chal-lenges and crises triggering changes in consumer needs and purchasing behavior. It has been around for thousands of years, and we speculate that it will be for thousands of years to come. The funda-mental psychological, social, and cultural drivers of luxury consumption will survive almost any crisis. These ingredi-ents create the desire that makes luxury extraordinary: on a psychological level, feeling unique and special; on a social level, the creation of status; on a cultural level, endowing the creation of a magical and sacred aura (Gurzki, 2020). However, the form of luxury and its creation might change. The challenge for luxury brands is balancing and nurturing the heritage and preserving traditions while also being relevant today and imagining the future to elevate the brand into timelessness.

Shifting in the luxury playing fieldWhat’s next? Will the growth story of the past continue? This crisis might particularly highlight the agency of the consumer and the role of technology.

And more shifts might be coming for luxury brand managers to consider:

Social innovations: From brand-centric to customer-centricLuxury at heart is something extraor-dinary that creates desire. While luxury brands have been such a source of desire over the last decades, how to create desire changes with rising consumer expectations in the digital age. Luxury is about excellence and perfection. Also, the longevity of luxury is a strong proposition in an ever-changing world. New market entrants often use agility and iterative methods to design their customer-centric experiences. They have built excellence in managing the customer discovery process and scaling quickly. One example would be online shops such as Farfetch or YNAP that have set a standard for luxury online shopping and have quickly managed to establish a global presence. Moreover, with the rise of technology, these players have the potential to create new in-store experiences, for example, through the use of augmented reality, that address the needs of digitally savvy

shoppers, such as in Farfetch’s store of the future concept.

Shifting to such a mindset might be the most challenging and most risky part. Yet, to remain relevant, brands need to move away from a static approach to dynamic interaction with consumers. They must reengage in rela-tionships with consumers by assessing changing consumer values and inferring the expectations of target consumers. For example, digital touchpoints and social media listening can be excellent sources for learning consumer needs, wants, and desires. The challenge is to get a holistic view of the consumer and seamlessly integrate these insights across the entire journey.

While digitalization and data analytics offer possibilities to personalize the consumer experience, companies must go beyond personalization to truly co-create experiences with consumers. Seduction does not work by person-alized communication alone. It works if this communication triggers in consumers’ minds the desire to dream and be seduced.

Listening to and co-creating with

The challenge for luxury brands is balancing and nurturing the heritage and preserving traditions while also being relevant today and imagining the future to elevate the brand into timelessness.

Luxury


consumers might lead to radical new insights anda redefinition of what brands imagine as luxury.With changing social values, how consumersperceive luxury is likely to evolve further. Theluxury of the future can only be a luxury if itremains extraordinary, desirable, and relevant inthe world of tomorrow’s consumers.

Functional innovations: From omnichannel to orchestrating experiences in a luxury ecosystemThinking in ecosystems necessitates a shift fromperceiving marketing and selling as two differentdisciplines to integrating them into one compre-hensive experience. While providing trulyomnichannel experiences is still and will remaina challenge, the future may evolve to be aboutpersonalized and technologically augmentedexperiences. It could not only be shared seam-lessly across the company’s channels but acrossan entire ecosystem of partners. To stay ontop of the game, luxury brands may think ofnot only adopting technological innovationsbut setting the standard for desirable experi-ences. For example, players such as Tesla haveshaken up the luxury segment in the automotiveindustry by adopting software and tech-drivenapproaches to designing cars. Digital playerssuch as Apple have redefined the concept of thewatch, and Apple has undeniably created its ownspace as part of the premium end of the sportswatch segment. New players such as those inthe spaces of smart clothing, peer-to-peer-basedtravel, subscription-based business models, andsustainability-based models are just around the corner to shake up incumbent business ideas by offering enticing alternative experiences. With an explosion of touchpoints and corresponding consumer journeys, orchestration of these experiences becomes more crucial than before. Under this circumstance, it will be essential to find the right response, whether in developing offerings or thinking about the best partnering approach. On the consumer side, mix & match is a clear trend (BCG 2020). And brands thinking beyond their immediate sphere of value creation can leverage it to create buzz and business out of it. Examples would be the collaborations between players from street style and luxuries

such as Louis Vuitton and Supreme or evenacross sectors such as Rimowa and Off-White.Yet the ecosystem does not stop with products.It includes partners across all activities includedin the value co-creation, from channel partnersto producers of raw materials to consumers tothe society.

Economic innovations: From linear tocircular business logicWith the rise of customer-centric luxury ecosys-tems, the linear business logic of brands needs arethink. Re-invention is around the corner. Onlythinking from the factory to the point-of-salemay no longer be sufficient, if it ever has been.For example, with the rise of second-hand orthe use of recycled waste as materials, luxuryconsumers and innovative startups showedhow new trends could extend the scope ofcustomer interactions. Established brands arenow embracing these ideas. However, circularitygoes far beyond sustainability and is a radicalshift in business logic. For luxury brands, this

While luxury brands have been such a source of desire over the last decades, how to create desire changes with rising consumer expectations in the digital age. Luxury is about excellence and perfection.

Website selling second-hand luxury Rolex watches.


requires an even more vigorous pursuit of orches-trating the entire value chain. It necessitates thinkingabout new business models. Brands – includingthose producing products and experiences that aremeant to be timeless – need to think not only aboutsecond-hand markets. This will necessitate how topredict demand better, avoid overproduction, andbring them to the market smartly, avoiding reputa-tional damages. While part of the overstock nowmight be shifted to other markets where there isdemand, the industry faces the dilemma of recap-turing cash flows by selling it without engagingin risky promotions that could harm the brandlong-term due to their cultural specificity of beingmade-in a particular country. This also requiresbrands to think about how they can strengthentheir global resilience (cf. McKinsey 2020A).

Many studies show that the origin of luxury, the

made-in, matters for luxury. Made-how, -why, and-by will matter even more. Pursuing global resiliencewill witness changing the rules of the game – notbeing sustainable may come at a cost that luxurybrands can no longer afford. Brand heritage alonemay be insufficient to lure consumers that demandradical transparency. Slow-fashion designers orlocal-focused restaurants, such as designer StellaMcCartney or chef René Redzepi’s Noma, haveshown how the concept of circularity can helpbrands to reshape their value proposition – forexample, with locally sourced renewable ingredi-ents. This change in focus has implications acrossthe entire ecosystem, especially now for globalsupply and distribution chains. The benefit of localsourcing and circular thinking becomes particularlyapparent in the current crisis with a disruption ofglobal supply chains. For example, most Italianfamily-owned SMEs that make up 30 to 40 percentof Italy’s supply chain have to fight the economic

consequences of the crisis and are struggling to survive. Yet, they are crucial in refining the mate-rials through skilled craftsmanship. Without them, luxury will lose a core part of its value proposition. In economic terms, circularity also means thinking about how to restart the circular logic partnering approaches, including payment conditions and credit lines needed to sustain production. The role of the brand thereby shifts – in orchestral terms – from that of a soloist to that of a conductor.

Leading the way forwardIn the current health crisis scenario, luxury brands have reacted to the business challenges like any other industry. Market analysts expect a dip in sales between 10% to up to 40% for 2020, depending on how fast the recovery will take place and how effective luxury brands will be in restarting busi-ness globally (Bain & Company 2020, Biondi 2020, McKinsey 2020B).

How can luxury brands steer the way? Innovation imperatives – social, functional, economic – are the key to steer the way to profitable growth. This shift requires not only management but real leadership within an agile organization that is willing to navigate the oncoming waves. Many brands have shown their commitment to society, taking over responsibility

Luxury

Only time will tell how soon will luxury resume its growth story. Luxury brands can use the time in this severe and shocking crisis to take a step back and reflect on their future strategy and their role to shape a positive impact on society.

A staff member works as a model prepares for a livestream show of the China Fashion Week 2020/2021 AW Collection in Beijing, capital of China, May 3, 2020. Photo by: (Xinhua/Chen Jianli)


as social, environmental, or even political actors. Such examples include LVMH’s announcement to produce disinfection for free for healthcare profes-sionals in the COVID-19 pandemic or LVMH’s and Kering’s initiative to fi nance the rebuilding of Notre Dame. Luxury brands, as societal actors, do good in leading the way and demonstrating responsibility, leadership, and agility. This mindset, combining both opportunity-seeking and attention to deeply rooted values, could provide a fertile ground for organiza-tions to fl ourish.

While we already see fi rst post-crisis signs of people returning to stores and splurging on luxury purchases to engage in revenge buying, the market is still far from recovery. For example, Hermès reported single-day sales of $2.7 million at their Guangzhou fl agship store after the lockdown was over. According to media reports, this was the highest number that was said to be ever reported in China. Nevertheless, it will take time for business to resume. As global travel is restricted, consumers are likely to shop locally more often, rather than while traveling abroad, which has been a recurring pattern in the past. Because other experiential sectors such as hotels and tourism are likely to suffer for a longer time, consumers might seek out special shopping experiences in branded retail stores. Managing the relationship well will thus be crucial for brands to build trust with consumers locally and to offer them extraordinary shopping experiences.

Only time will tell how soon will luxury resume its growth story. Luxury brands can use the time in this severe and shocking crisis to take a step back and refl ect on their future strategy and their role to shape a positive impact on society. For example, the future of fashion shows certainly needs both evolu-tion and re-invention, as reported in the press. The COVID-19 crisis can be used as a catalyst for change and provides the energy to drive forward the inno-vation imperatives. And luxury brands have been at

The COVID-19 crisis can be used as a catalyst for change and provides the energy to drive forward the innovation imperatives.

the forefront in this, emerging out of the uncertain situation stronger than before. As has been shown repeatedly throughout history, consumer desire for the extraordinary will create the way to the next fron-tiers of the business of luxury.

References:1. Bain & Company (2020). Luxury after Covid-19: Changed for (the) Good? https://www.bain.com/insights/luxury-after-coronavirus/; retrieved on May 5, 20202. BCG and Fondazione Altagamma (2020). 2020 Luxury fi rst look. 6th

edition, January 15, 2020. https://cache.luxurydaily.com/wp-content/uploads/2020/01/2020-Luxury-FirstLook.pdf ; retrieved on May 5, 2020Biondi, Annachiara (2020). Fashion and luxury face $600 billion decline in sales. https://www.voguebusiness.com/companies/bcg-luxury-spending-drop-coronavirus-covid-19; retrieved on May 5, 20203. Gurzki, H. (2020). The Creation of the Extraordinary: Perspectives on Luxury. Springer.4. Kapferer, J. N., & Bastien, V. (2012). The luxury strategy: Break the rules of marketing to build luxury brands. Kogan Page.5. McKinsey & Company (2020A). A perspective for the luxury-goods industry during – and after – coronavirus. https://www.mckinsey.com/industries/retail/our-insights/a-perspective-for-the-luxury-goods-indus-try-during-and-after-coronavirus; retrieved on May 5, 20206. McKinsey & Company (2020B). The State of Fashion 2020: Navigating uncertainty. https://www.mckinsey.com/industries/retail/our-insights/the-state-of-fashion-2020-navigating-uncertainty ; retrieved on May 5, 20207. Som, A., & Blanckaert, C. (2015). The road to luxury: The evolution, markets, and strategies of luxury brand management. John Wiley & Sons.8. Cyclicality, coronavirus and consumers of the luxury industry. http://knowledge.essec.edu/en/society/cyclicality-coronavirus-consumers-luxury-industry.html


BY ANDRE VILARES MORGADO

Marketing

Reference marketing plays an important role in business markets. Customer references have a positive impact on vendors’ reputations. It also portrays customer references as a source of competitive advantage, as a foundation for competitive-ness and at the same time, they are presented as decreasing buyer uncertainty and perceived risk.

Many multinational compa-nies are profi ting from deploying large scale refer-

ence marketing programs. Among the fi rst to pursue this path, one may fi nd sound names like IBM or Siemens. Other fi rms have also joined this trend and are heavily promoting their customer references. Take for instance the example of the Swedish telecom vendor Ericsson – that only considers a project closed once they receive the reference from the customer – or the American cloud-based software company Salesforce.com, whose CEO

personally approves all the success stories the company disclosures. Apart from these big and well-established companies, fi rst customer references are also vital for start-up companies seeking to enter new markets and rounding up for new capital.

Recent research1 allows uncov-ering the factors that affect the ability of reference marketing programs to deliver their expected purchasing benefi ts. After an examination of these factors, recommendations for reference marketing best practice and suggestions for improvement emerged.

These practical recommendations help suppliers to pursue effi cient reference marketing programs and help buyers to pursue effective organizational purchasing practices.

The role of customer referencingReputation and customer references serve the same purpose and are highly effective tools for both attracting new customers and creating strong links with existing customers. Firms oper-ating in industrial markets should invest in reputation building, not only within the market segments they target, but also in the eyes of their various stake-holders. Existing relationships contain within them solid foundations that facilitate this crucial reputation building. The need for customer references is especially high in companies seeking entry into new markets, where their reputations have yet to be established. Suppliers also seek to demonstrate their ability to build strong relation-ships with their customers.

Reputation and customer references serve the same purpose and are highly effective tools for both attracting new customers and creating strong links with existing customers.

1 Morgado, A. V. (2020). Customer’s expectations and perceptions of reference marketing programs. Journal of Business & Industrial Marketing.


Status transfer is another key mechanism of customer reference marketing. The effects of status transference are greater in smaller compa-nies and in firms that have more recently entered the market than in larger companies with more solid reputations. A vendor can close a deal with a low to no margin in anticipation of gaining a valuable customer reference.

Building a customer reference portfolio is therefore relevant to the extent that it demon-strates the value delivered to the customer and forms the basis for the development of credible value propositions. Customer value calculators and value case histories are extremely effective sales tools. Nevertheless, to be effective these tools must provide evidence to potential customers of the superior value of the vendor’s offer. This evidence should be factual and based on the real business benefits that other customers have already received. As a result, the most adopted forms of customer reference marketing are case studies, customer cases and success stories. These forms involve a description of the problem faced by the customer, the solution generated by the vendor and the customer’s assessment of the outcome or customer value.

By integrating the following set of sugges-tions into their marketing strategies, marketers can pursue selling approaches based on more effective customer referencing practices. In the same way, purchasers will be able to consolidate and improve their buying effectiveness.

Reference marketing bestpractice for marketersSales managers wishing to undertake more compelling customer engagement approaches need to implement enhanced processes for marketing resource usage. Reference marketing enhances the link between value-based selling efforts and performance outcomes. As a result, it is highly recommended that vendors invest in reference material and value assessment tools. Along the same lines, we can also look at reference management from a wider perspec-tive. By integrating this broader view into their marketing strategies, managers can pursue marketing strategies based on more effective customer referencing practices.

WHAT ARE CUSTOMER REFERENCES?Customer references showcase suppliers’capabilities. They function as indirect evidence fora supplier’s ability to provide a product, service orsolution and demonstrate a supplier’s relationshipwith a customer, such that the former can beevaluated by prospective customers on the basis ofproduct performance, management and cooperation.

The principal recommendation is the need to manage the liabilities and conditions involved in customer referencing activity. This recommen-dation is made in the interest of helping firms to profit from the expenditures they make in the context of reference marketing programs. Purchasers base their evaluations in part on the consistency of reference lists. A good reference list will therefore be consistent. It should exhibit references for a certain project without regional or temporal gaps, as such gaps are viewed nega-tively by purchasing teams, who may become suspicious about the reasons for what they judge

THE REFERENCE TRIADOne of the interesting facets of B2B transactionsconcerns the triadic relationship establishedduring the generation, development, andpromotion of customer references. This particulartriadic unity involves three actors:

PROSPECTIVEBUYER

REFERENCECUSTOMERSUPPLIER


to be order interruptions. The geographic areas across which references span are also assessed by customers. Customers tend to feel more comfortable with references from their own geographic areas. When a certain region domi-nates others in a reference list, this may raise doubts in the purchaser’s mind regarding the vendor’s ability to serve other markets. This is even more relevant where the markets in whichthe vendor is present are less sophisticated thanthe target market.

The buying decision is the outcome ofcomplex interactions between buyers andsellers. References should consider marketingelements within a broader persuasion strategy.Although they provide strong evidence forseveral lines of sales arguments, they should becombined with other marketing and sales tools.These other marketing tools can be used at thesame time, enhancing the strength of the argu-ment, or as separate pieces of a complex salesstrategy, where any action is contingent on thecompetitive context shaped by customers andcompetitors. Suppliers should therefore incor-porate references with other marketing toolssince the positive effect of reference marketingincreases to the degree that it is complementedby other marketing and sales efforts.

Suppliers should not forget to influence and/or manage the external mechanisms that affectreference marketing programs. In particular,the presence of external actors, informality and

the opinions of peers should appear on the radar of sales teams. Every so often, a share-holder representative or an external consultant may infiltrate the buying center in charge of purchasing capital equipment. This presence is more relevant in situations where the procure-ment organization is not skilled enough to perform a specific buying task or does not have the purchasing capabilities to handle a specific project or technology. In these cases, the sales team should also be available and proactive in involving these external actors by making them targets of their referencing activity. If a refer-ence visit is planned, for instance, sales teams should not forget to invite external consultants and shareholder representatives.

Informality and opinions from industry peers go hand-in-hand to the extent that both can jeopardize vendors’ selling efforts. The existence of opinion leaders is a phenomenon that is well understood by firms operating in the context of B2C. An analogy might be established between opinion leaders and opinions from peers, the first of which is associated with the B2C context, the second with a B2B setting. Suppliers who wish to boost their reputations and credibility in a specific domain or technology should therefore direct their marketing efforts towards these industry experts and communicate their references as part of their strategy. Firms should be able to anticipate customer movement in the direction of their industry peers and should be able to ask for information on a vendor or on the viability of adopting a specific technology. Industry summits and exhibitions work as catalysts for this sort of activity as they facilitate the collection of opinions from various peers with low effort. Informality with regard to handling customer references increases the competitive advantage of less prepared and capable competitors. Firms that invest in reference marketing should thus make an effort to insist that purchasing departments include a referencing evidence request in their formal procurement processes.

The use of references inorganizational purchasingPurchasing managers who aim to improve their buying effectiveness need to implement

Marketing

Informality and opinions from industry peers go hand-in-hand to the extent that both can jeopardize vendors’ selling efforts. The existence of opinion leaders is a phenomenon that is well understood by firms operatingin the contextof B2C.


enhanced approaches to reference materialusage. To achieve the goal of extracting full valuefrom customer references, buying departmentsshould be able to implement several measuresfor reaching complex solutions.

First, a good reference presents content thatis relevant to the customer. Purchasing managersneed customer references that feature challengessimilar to their own. Both reference visits andsuccess stories should therefore be requestedfrom vendors as opportunities for customers tolearn from others’ experiences with a key issue.Putting in place reference visits and presentingsuccess stories that do not address real customerneeds is a waste of marketing expenditure and,most importantly, of the customer’s time. Thispoint should be kept in mind at workshops,and vendors should be invited to envisage this concern by selecting the right content and the most appropriate success stories to present to customers. Often, meetings with customers only serve the purpose of technology evangeliza-tion and include the presentation of irrelevant references by pilot customers. The usefulness of these meetings can be questioned, and their return is often non-existent. However, if the account management team works in advance to identify customer challenges, it will be able to organize useful workshops from which customers can gain relevant insights. Partnering with customers to share information and knowl-edge is a challenging process with which vendors

must become comfortable. With this said, it is not often the chosen path.

Second, the use of reference materials should be managed according to the buying phase in which the fi rm is operating. In addition, purchasing departments should develop their buying practices by including formal demands for customer references during the vendor qual-ifi cation process. Leaving room for dealing with reference material from an informal stance allows low-grade suppliers to access tendering opportu-nities. The burdens of this informality often only emerge when it is diffi cult to reverse the buying decision, and as a result, the company incurs high costs due to not being able to select the most appropriate suppliers to satisfy its buying needs.

Lastly, purchasing managers ought to under-take an accurate evaluation of the content provided by vendors in their referencing mate-rials. Checking reference lists is a mandatory component of this process. Other actions should follow, however. Customer references should be regarded as a starting point for increasing the purchaser’s familiarity with the supplier and the solution it is offering. That is to say, the use of customer references should be viewed not as an end in itself but as a starting point for accessing information beyond the content provided by the vendor. To achieve this objective, purchasers need to establish informal conversations with reference customers and explore the value avail-able in the information provided by customers who have already had experience working with that vendor.

Andre Vilares Morgado is Professor of Marketing at AESEBusiness School. He has authored several prize winning casestudies, while continuing his research in the field of industrialmarketing and regular work with companies in sales, busi-ness development and training projects. Professor Morgadohas published in prestigious publications and scientific jour-nals featuring various marketing subjects. He combines histeaching profile with an extensive professional and businessbackground of more than 10 years dedicated to the fastpace telecommunications industry. Andre holds a Ph.D. inManagement awarded by the University of Lisbon.

The use of customer references should be viewed not as an end in itself but as a starting point for accessing information beyond the content provided by the vendor.


BY GENE SHILL

The impact COVID 19 has had on the global crea-tive economy has been devastating. Yet amidst thedeluge of destruction, the consumption of entertain-

ment-based products not limited to music streaming, moviesand user-generated content such as video games have seenexponential growth.

In times of hardship and uncertainty, many turn toproducts from creative industries to reflect, inspire andenrich their lives, and this highlights how much these typi-cally intangible goods underpin the fabric of society. Withmore downtime and consistent access to WiFi, consumershave gravitated towards visual forms of entertainment(Westcott Grant, 2020) with millions of people goingonline for their fix – and even more. Total internet hitshave surged by between 50% and 70%, and streaming hasalso jumped by at least 12%. Additionally, eCommerce willsee a revenue boost as a result of the pandemic, adding$175 billion in revenue in 2020, which represents a 5%increase.” (Forbes, 2020).

Therefore, during this historical ‘downtime’ and combinedwith the democratisation of technology, online consumerismis beginning to rapidly evolve, whether it be in the form ofentertainment, education or business. COVID-19 has beenthe catalyst to further liberate entertainment, education oreCommerce products through online platforms and willcontinue to serve as a legitimate platform well after a vaccine

is available. But who will conceptualise, develop and producethe necessary content to support growth? In short. Its crea-tives. Yet many of them face a bleak and uncertain future ofhigher sporadic unemployment than historically documented.And the question is, why? Why don’t we as a global commu-nity, acknowledge the valuable contribution creatives make tosociety. One answer is. We don’t place enough social capitalon creatives and often disadvantage them in the central areaof education.

For those who studied a creative discipline in a vocational or higher educational environment, curriculum rarely edu-cates creatives on how to build and manage a business around their intellectual property. Contrarily, in business studies, it’s the opposite. Students study the fundamentals that under-pin business and usually apply them within the course of their degree program. Sometimes the theories are tested in research or industry-based environments allowing students to gain insight into their practical applications. It equips them with a sound overview of the depth and diversity of fun-damentals such as consumerism and provides them with a platform for growth.

However, the majority of students studying disciplines that sit neatly in the creative economy are only generally encour-aged to leverage their intellectual property to develop a creative outcome that ‘may’ appeal to an audience ‘somewhere’ and that’s where the responsibility ends.

Entrepreneurial Fundamentals KEY ENTREPRENEURIAL SKILLS REQUIRED TO NAVIGATE IN THE CREATIVE INDUSTRIES

C

Majority of students studying disciplines that sit neatly in the creative economy are only generally encouraged to leverage their intellectual property to develop a creative outcome that ‘may’ appeal to an audience ‘somewhere’ and that’s where the responsibility ends.

Entreprenuership


remember that you’re fundamentally exploiting someone’s intellectual property for your gain.

Therefore, it’s always best to rediscover your moral compass and navigate towards an ethical solution. Additionally, there’s no cut and dry answer for this, so take the time to research and whatever you do, don’t pluck a random value out of thin air. It will come back to bite you, especially if you’re unable to quantify the fi gure rationally to potential customers, or worse, investors.

Economic Values: Determining your ‹Economic Value› is another vital piece of the equation. What value does your potential customer place on your offering other than a monetary fi gure? Here is where the idea of ‹affordable luxury› comes into play. Essentially the notion of affordable luxury is a deci-sion driven by emotion. Is your offering a necessity or an affordable luxury? What emotional value is your customer willing to place on your offering?

Shadow Testing: Testing your offering with friends and family is safe, but can they provide the non-biased feedback you need to refl ect critically on your offering? Feedback doesn›t have to hurt, so don›t shy away from

Sadly, the diversity of curriculum within the Creative Industries typically fails to educate individ-uals on how to strategise, promote, manage or even scale their intellectual property, and this fundamental gap in knowledge is where these incredibly talented individuals are disadvantaged.

In professional educational contexts, academia is too often responsible for lack of purposeful and diverse curriculum design around the creative disci-plines. Failure to acknowledge that encouraging individuals to develop and leverage their intellectual property is encouraging an entrepreneurial mindset and therefore requires the accompanying business skills to support any future ventures. There needs to be a conduit between the entrepreneurial process of fi nishing an offering and reaching the market place to engage in audiences. The responsibility lays with professional education environments in offering the necessary education that not only educates individ-ual’s how to leverage intellectual property, but how to manage it.

The following headings outline some of the more critical entrepreneurial skills required to navigate in the Creative Industries and better negotiate an already exploitative and refl ective consumer industry.

Acquiring a sound understanding of fundamentals such as Value Creation, Marketing, Sales and Finance, are not only essential for entrepreneurship but neces-sary skills to manage intellectual property successfully. Additionally, some of the subheadings will encourage critical refl ection about fl exibility and ultimately, how to leverage its advantages.

VALUE CREATIONPerceived Value: For many entrepreneurs in the creative industries, ‘perceived value’ poses a tricky fundamental to navigate, namely because, an indi-vidual’s interpretation of what perceived value is often quite different from reality. Perceived Value determines how much your customer will be willing to pay for your offering (Kaufman, 2019). Factors to consider are. Is there a precedent or market value for your offering? Are you leveraging any form of Intellectual Property? If so, is it yours or in the case of a musician/band covering songs, does it belong to someone else? If it’s yours, factor in the time and resources it takes to manufacture your offering and even imagine what you’d be willing to pay for a similar offering. If it belongs to someone else,

Acquiring a sound understanding of fundamentals such as Value Creation, Marketing, Sales and Finance, are not only essential for entrepreneurship but necessary skills to manage intellectual property successfully.

There needs to be a conduit between the entrepreneurial process of fi nishing an offering and reaching the market place to engage in audiences.


is how much revenue you have left after minus the cost of goods sold. Although this shortest overview, it’s essential to know, as it will help determine what

Profi t Margins: Is the difference between how much revenue you capture and how much you spend to capture your offering, expressed in percentage terms. The results (Revenue-Cost)/Revenue) x 100 = % Profi t Margin (Kaufman, 2019 p.164).

Overheads: This represents the minimum ongoing resources required for a business to continue operation. It includes all of the things you need to run your business every month, regardless of whether you sell anything: salaries, rent, utilities, equipment repair and so on (Kaufman, 2019 p.185).

More and more creative entrepreneurs and insti-tutions are looking towards the future, intending to better equip the entrepreneurial mindset with the necessary skills for success. However, those institutions that focus on advertising, architecture, art, crafts, design, fashion, fi lm, music, performing arts, publishing, R&D, software, toys & games, TV, radio and video games, that have yet to do so are in the crosshairs of survival. Those that have yet to subscribe to greater responsibility will simply need to re-evaluate the strength and diversity of their offer-ings and fi nd the ‘value-add’. The Entrepreneurial Revolution is well in motion.

References• Beech, M. (2020, March 25). COVID-19 Pushes Up Internet Use 70% And

Streaming More Than 12%, First Figures Reveal. Forbes. https://www.forbes.com/sites/markbeech/2020/03/25/covid-19-pushes-up-internet-use-70-streaming-more-than-12-fi rst-fi gures-reveal/#1df954593104

• Kaufman, J. (2019). The Personal MBA: a world-class business education in a single volume. Penguin Business. www.personalmba.com. UK

• Kristin Wescott Grant, & Viner, J. (2020, May 16). The Future Of Music Streaming: How COVID-19 Has Amplifi ed Emerging Forms Of Music Consumption. Forbes. https://www.forbes.com/sites/kristinwestcottgrant/2020/05/16/the-future-of-music-streaming-how-covid-19-has-amplifi ed-emerging-forms-of-music-consumption/#412b338e444a

it. Think of it as information or data. The more information/

data you collect, the more resources

MARKETINGHook: What is your Unique Selling

Proposition (USP)? A ‹Hook› is a single phrase or sentence that describes an offering›s

primary benefi t. Sometimes the Hook is a title, and sometimes it›s a short tag line. Regardless it

conveys the reason someone would want what you›re selling (Kaufman, 2019 p.105). Additionally, devel-oping a ‘Hook’ can also help clarify to other’s what you do shortly and succinctly.

Narrative: What is your story, and is it relat-able? Remember, if it›s out of reach for the general consumer, then they can›t relate to it.

Does your narrative require the empathy/sympathy of your customer, or does it just need to make sense? You’re aiming to leverage the focus and emotion of the consumer, and if it’s too hard, they’ll walk away. It is your responsibility to make the narrative as clear and relatable as possible.

SALESTransaction: How will you sell it? Where will you sell it? Do you require an online platform for distribu-tion? If so, who will distribute it? Additionally, what percentage of sales is the distributor entitled to receive from each transaction? These are essential questions, and this is where ‘NET and GROSS’ profi t start to factor into the overall operation of your business. I’ll touch on this shortly.

Value-Based Selling: How do you add value to your offering? If it’s a book, do you have a website for the book where consumers can access more infor-mation about you and a suite of publications? Does the book serve as a precursor to specialised courses and instructional content? Value-Based Selling exists at all levels of consumerism and is about leveraging additional elements to ‘add value’.

FINANCEProfi t: Profi t is about how much you get to keep from your offering. There is a difference between ‘NET’ profi t and ‘GROSS’ profi t, and it’s essential to know the difference. ‘NET’ profi t is how much you have at the end of the day once you have paid all operating, interest and tax expenses. ‘GROSS’ profi t

More andmore creative entrepreneurs and institutions are looking towards the future, intending to better equip the entrepreneurial mindset with the necessary skills for success.

Dr Gene Shill is Assistant Professor in Creative Entrepreneurship and Practice at Hong Kong Baptist University. With a background in entrepreneurship and intellectual property law in the global creative industries, he is also an estab-lished contemporary saxophonist and record producer of the alias ST. AMANT.

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