Innovation from Volkswagen - the levitating car

Customer service by the bank

This is a letter written by an 86-year old lady to a bank.

Dear Sir:

I am  writing to thank you for bouncing my cheque with which I  endeavoured to pay my plumber last month.

By my  calculations, three nanoseconds must have elapsed  between his presenting the cheque and the arrival in my  account of the funds needed to honor it.

I  refer, of course, to the automatic monthly deposit of my  entire pension, an arrangement which, I admit, has been  in place for only eight years.

You are to be  commended for seizing that brief window of opportunity,  and also for debiting my account $30 by way of penalty  for the inconvenience caused to your bank.

My  thankfulness springs from the manner in which this  incident has caused me to rethink my errant financial  ways. I noticed that whereas I personally answer your  telephone calls and letters, --- when I try to contact  you, I am confronted by the impersonal, overcharging,  pre-recorded, faceless entity which your bank has  become.

From now on, I, like you, choose only to  deal with a flesh-and-blood person.

My mortgage  and loan repayments will therefore and hereafter no  longer be automatic, but will arrive at your bank, by  cheque, addressed personally and confidentially to an  employee at your bank whom you must nominate.

Be  aware that it is an OFFENSE under the Postal Act for any  other person to open such an envelope.

Please  find attached an Application Contact which I require  your chosen employee to complete.

I am sorry it  runs to eight pages, but in order that I know as much  about him or her as your bank knows about me, there is  no alternative.

Please note that all copies of  his or her medical history must be countersigned by a  Notary Public figure, and the mandatory details of  his/her financial situation (income, debts, assets and  liabilities) must be accompanied by documented  proof.

In due course, at MY convenience, I will  issue your employee with a PIN number which he/she must  quote in dealings with me.

I regret that it  cannot be shorter than 28 digits but, again, I have  modelled it on the number of button presses required of  me to access my account balance on your phone bank  service.

As they say, imitation is the sincerest  form of flattery.

Let me level the playing field  even further.

When you call me, press buttons as  follows:

IMMEDIATELY AFTER DIALING, PRESS THE  STAR (*) BUTTON FOR ENGLISH

#1. To make an  appointment to see me

#2. To query a missing  payment.

#3. To transfer the call to my living  room in case I am there.

#4 To transfer the call  to my bedroom in case I am sleeping.

#5. To  transfer the call to my toilet in case I am attending to  nature.

#6. To transfer the call to my mobile  phone if I am not at home.

#7. To leave a message  on my computer, a password to access my computer is  required.

Password will be communicated to you at  a later date to that Authorized Contact mentioned  earlier.

#8. To return to the main menu and to  listen to options 1 to 9

#9. To make a  general complaint or inquiry.

The contact will  then be put on hold, pending the attention of my  automated answering service.

While this may, on  occasion, involve a lengthy wait, uplifting music will  play for the duration of the call.

Regrettably,  but again following your example, I must also levy an  establishment fee to cover the setting up of this new  arrangement.

May I wish you a happy, if ever so  slightly less prosperous New Year?

Your Humble  Client

Are You Committed?

"Five frogs are sitting on a log. Four decide to jump off. How many are left? Five, because deciding is different than doing.”

Decisions are worthless … unless you turn them into commitments.

In a business conversation, your counterpart's decision states his intention, but a commitment holds him accountable. Although a commitment does not guarantee delivery, it’s far more reliable than a decision. More importantly, when managed properly, it allows you to handle breakdowns with effectiveness, trust and integrity.

Have you been in meetings where lots of decisions are made but nothing gets done andnobody is held accountable? Unless you finish the meeting with commitments about “who will do what by when,” you’ve just built 90% of a bridge.

Broken commitments damage tasks, relationships, and culture. They bring about inefficiencies, mistrust, and corruption. Coordination suffers, collaboration suffers, and cohesion suffers. You can avoid this suffering – if you finish every conversation with clear commitments.

Ask and You Shall Receive

Commitment conversations begin with a request: “Can you bring the financials to the meeting?” “Please ship the order to my new address.” Things can go off track at this early point, especially if you ask without really asking.

I once coached a production manager who was put on a performance-improvement plan for failing to meet a crucial deadline. Weeks before the date, my client figured he had to add a shift to finish the job on time. He needed approval from his boss for the overtime, but he didn’t want to ask. He had heard the plant manager complain that corporate was breathing down his neck about costs.

He decided to use a soft approach. During a staff meeting he mentioned that his project could really use a second shift. The plant manager acknowledged it was a tough deadline; he said he would see what he could do. The production manager believed he had gotten the much-needed help. He waited for his boss to call him after the meeting to implement the second shift, but to no avail. Disappointed, he assumed that a delay was better than a cost overrun. He finished the job late. Imagine his outrage when he got chewed out!

Like many of us, the production manager tried to ask without asking. His indirect approach avoided a confrontation, but it also prevented a frank discussion of the tradeoff between additional labor costs and the delay. As I described in my previous posts on schizorganizationand discussing the un-discussable, it is impossible to preserve sanity at work without open communication.

The typical way to avoid making a clear request is to make a muddled one. Do you recognize any of these examples?

• It would be great if…
• Someone should…
• Do we all agree to…?
• Can you try to…?
• The boss wants...

To make a clear request you must utter it in the first person, using direct language and addressing it to a specific person. You must specify observable conditions of satisfaction, including time. It helps if you explain your purpose for asking, and, if and when you arrive at an oral contract, always ask the other sign it.

Although there are many ways to ask, the most effective ones follow a common pattern:

1. In order to get A (a want or need),
2. I ask that you deliver B by C.
3. Can you commit to that?

It may sound odd to ask like this; you can adjust your language to suit your culture. For example, the production manager might have addressed the plant manager as follows: “I am running behind schedule. I don’t see how to catch up without some extra help. In order to finish the job I need some overtime. Can you authorize a second shift for the next three weeks?”

Time to Commit

A well-formed request demands a clear response. There are only three possible answers:

1. Yes, I commit.
2. No, I decline.
3. I can’t commit yet because,
   a. I need clarification.
   b. I need to check; I promise to respond by X.
   c. I want to propose an alternative.
   d. I can make it only if I get Y by Z.

Anything else is a weasel promise. Here are some interesting ways by which people often say, “No, I don’t commit.”

• Yes, I’ll try.
• OK, let me see what I can do.
• Seems doable.
• Let me check into it.
• Someone will take care of it.

When you declare, “I commit,” you assume the responsibility to honor your wordunconditionally. You take on an obligation to deliver on your promise; or if you can’t, to do your best to take care of the requestor.

When you declare, “I decline,” you might still try to do what you were asked, but you don’t commit. You do not give the requestor the right to hold you accountable. It is much better to have a clear “no” than to get bogged down in a wishy-washy “I’ll do my best.”

There are many good reasons to decline. You may not have the resources; you may not have the skills; you may have a conflict with a previous commitment; you may anticipate problems; or you may just not want to do it.

When you are not ready to say “yes” or “no” right away, you may:

• Ask for clarification if the request is unclear to you. For example, if I ask you to help me with a project, you might ask, “What kind of help do you need?” or, “When do you need my help?”

• Promise to respond by a certain time if you need to check your resources, obtain commitments from others, or assess whether you can deliver to specifications. For example, if I ask you to prepare a report, you might answer, “Let me check if I have the information available. I’ll get back to you in an hour.”

• Counteroffer with an alternative proposal to satisfy the need behind the request. For example, if I ask you to meet today, you might respond: “I am not available today. Could we meet tomorrow? Or if it’s urgent, we could speak by phone.”

• Commit conditionally if your commitment depends on factors outside of your control. For example, if I ask you deliver a rush order, you can commit to do it only if I authorize overtime.

Clear commitments don’t mean that everything will work out. Life is unpredictable, so even the most impeccable commitments can break down. In my next post, I will explain how you can preserve effectiveness, trust, and integrity even when you can’t fulfill your promise.

Do or do not ... there is no try.” -- Yoda

Contributor:
[ Fred Kofman, PhD. in Economics, is Professor of Leadership and Coaching at the Conscious Business Center of the University Francisco Marroquín anda faculty member of Lean In. He is the author of Conscious Business, How to Build Value Through Values (also available as an audio program]

Developing winning products for emerging markets

A large automaker designed, developed, and—with appropriate fanfare—launched a commercial truck in India’s burgeoning and highly competitive market. The vehicle was engineered to let owners in a range of emerging markets run the trucks longer and faster, and at a relatively low operating cost. Higher asset utilization, company leaders believed, would improve profits for truck owners and, ultimately, the automaker.

The truck was a disappointment. The company hadn’t adequately accounted for India’s poor roads and infrastructure, which often prevent vehicles from maintaining the most efficient operating speeds. Even though the truck’s price was competitive against local offerings—and half that of a comparable vehicle in developed markets—in the buyers’ eyes the potentially higher utilization wasn’t worth the expense.

Think this was a ham-fisted multinational dabbling in a market it didn’t fully understand? Think again: the automaker was based in India. To be sure, multinationals tend to suffer such setbacks more often than local players do, but this company’s example underscores the difficulty of understanding customer needs in fast-changing emerging markets.

Indeed, around the same time, another domestic competitor suffered a similar fate. That company’s commercial vehicle, offered at an even lower price, was also tailored for India; it featured a lower-capacity, low-cost engine well-suited to run efficiently on the country’s grid-locked roads. Yet it too proved a letdown. The cause: an unfairly earned reputation for unreliability that the company ultimately attributed to owner–operators who, to maximize profits, overloaded the trucks far beyond recommended weight limits. Within a couple of years, the overloaded engines began to malfunction, customers became angry, and the vehicle’s sales plummeted.

Such cases underscore the challenges of designing, developing, and manufacturing products for fast-changing emerging markets—environments where customers are both extremely price conscious and demanding. Against this backdrop, a growing number of companies find that they must reexamine their traditional approaches to product development and tailor them to these realities. We call this process “design to value.” In some cases, designing to value means applying traditional tools in new ways, in others adopting a new mind-set about what customers want and how to deliver it.

It’s still early days in this space, and no organization has yet mastered the challenges. But a look at the practices that leading product developers use offers at least three lessons for companies wrestling with the extremes of competition in emerging markets. The urgency to adapt will only increase as consumption in these markets contributes a growing share of global economic growth in the decade ahead.¹

1. Shake up your thinking

The combination of rapid change and heightened competition in emerging markets puts a premium on useful customer insights, even as they become harder to get. Indeed, poor infrastructure, vast distances, and fast-changing customer segments make traditional fact-gathering approaches (such as ethnographic research or even focus groups) expensive and time-consuming. Therefore, top companies don’t pass up any opportunity, however modest, to sharpen their understanding of customer needs.

Collision workshops—which might include customers but primarily convene suppliers, marketers, product engineers, and other company representatives— can help. They offer a low-tech way of quickly generating and discussing customer insights and a forum to identify hypotheses that companies can later test more traditionally. To some extent, these meetings represent a cheaper and more flexible way of generating the kinds of insights that R&D pioneers such as Bell Labs and IBM’s Watson Research Group achieved through formal, multidisciplinary R&D labs. As with these venerable examples, an important goal of collision workshops is to challenge ingrained habits of thought by pulling together representatives from functional groups that normally don’t interact.²

The resulting insights can be quite useful. An automotive-parts manufacturer in a fast-growing Asian market used a collision workshop to identify a new niche in its wheel business. During a discussion about products for passenger vehicles, a marketer mentioned that the company’s wheels were heavy—an observation he’d heard from a customer. This comment, made in passing, intrigued the engineers in the room, who went on to sketch out a counterintuitive proposal that the company ultimately refined and adopted: using a slightly higher grade of steel to make wheels lighter and more fuel efficient. Even though the new steel was more expensive, the company lowered its total costs because the wheels now required less steel than they had before.

A large telecommunications and data-services provider used a collision workshop to discuss how B2B customers in smaller, tier-two and -three cities differed from those in the largest urban areas. The “aha moment” came when marketing and pricing experts teamed up with product engineers to ask whether the company might offer price discounts to some customers in smaller cities in exchange for slightly lower network uptime than the near-100 percent guaranteed to commercial customers in major metropolitan areas. The company ultimately found it could lower its price for some customers in tier-two cities, making its offer highly competitive there, while slashing the cost to serve by a factor of four through the use of a different network architecture and a simpler, redesigned version of its standard network-switching equipment.

Another way companies shake up their thinking is to look beyond traditional competitors for design ideas. A low-cost appliance maker learned of a more high-tech approach for coating its fans by studying painting techniques developed in the automotive industry. The fan maker’s executives had always resisted technological solutions, preferring to substitute labor for capital because of low workforce costs. But after studying the automakers’ approach, which kept the thickness of each coat of paint to specified levels, the executives changed their minds. Ultimately, a 4 percent savings in paint costs more than offset the expense of new equipment.

Similarly, a global farm-equipment manufacturer looked to an adjacent vehicle category in which it didn’t compete to create a simpler, cheaper design for the claw mechanism in a new low-cost rice-transplanting machine. By applying this thinking to other products, the company also identified comparable improvements in a different low cost product line.

2. Start from scratch

By now, most companies recognize that trying to interest discerning emerging-market consumers in stripped-down, low-cost versions of the products they sell globally is a recipe for letdown. Yet many companies still aren’t fully aware of how far they must go to differentiate their products for these customers. Top companies, by contrast, are highly disciplined, even relentless, about setting priorities and putting aside existing assumptions. Leaders start by identifying the most important feature or two and focusing heavily on them (exhibit). This approach is quite different from the one that many companies tend to have: regarding all features as equally valuable and preferring more rather than fewer of them—an attitude deeply ingrained in some engineering cultures.

Exhibit

• Enlarge

The farm-equipment maker started with a feature that its analysis showed mattered most to small-scale farmers: the durability of tires. Farming in one region required considerable back-and-forth driving in mixed terrain (tar roads and soil). By redesigning tires to maximize their useful life, the company made its vehicle far more appealing to local customers. This company’s crucial willingness to challenge its assumptions ultimately led to a broader set of improvements.³

By contrast, companies that fail to reexamine the assumptions inherent in their product designs risk making ill-informed decisions. A global maker of electrical products learned this the hard way when it introduced a mini-circuit-breaker system to offer customers in India better protection from the country’s frequent power fluctuations and brownouts. The product, adapted from a comparable developed-world model, was technically sound and arguably superior to the alternatives. Yet sales suffered as customers turned to products from competitors offering an older—and cheaper—“use and throw” fuse technology. Not until the company started over with a new design incorporating the older technology did the product became competitive.

A handful of leading companies extend this thinking further still, approaching their product portfolios with a “zero-based design” mentality. The benefits can be profound. A global consumer-products company, for example, was losing share in an important Asian market to a domestic competitor offering a lower price for a common personal-care product. Instead of responding with a marketing push or a price cut, the consumer-goods maker ran a head-to-head comparison of the two products—including a sophisticated analysis of chemical ingredients. This investigation showed that the low-cost company, using a formulation that was half as costly as the global player’s, was achieving the same levels of efficacy. What’s more, the rival’s pump bottle maximized margins by delivering 10 percent more “product per pump.” After receiving this wake-up call, the global company redesigned its product from the ground up, ultimately changing the formulation, packaging, and even design of its pump bottle. The rejuvenated product, vastly cheaper to produce and no less effective than its predecessor, generated a 40 percent margin improvement.

Similarly, the telecommunications and data-services provider recognized that its mobile-phone towers were overdesigned compared with those of its competitors. By starting over from scratch, the company lowered its cost to build each tower by almost 30 percent, while still meeting or exceeding local safety regulations.

3. Design for manufacturability

A final way top product makers separate themselves from the competition is to go on challenging their assumptions well into the manufacturing process. Surprisingly, perhaps, though most global companies have manufactured products in emerging markets for years, they typically don’t go as far as they could to design them with emerging-market customers and workers in mind. By contrast, clever product makers look for easy opportunities to tweak their products and processes further and thereby lower their capital costs. To be sure, this is good practice anyplace companies operate, but an especially important one in emerging markets given the fierce levels of competition there.

For example, a large producer of engines and industrial equipment recognized that by making straightforward design changes to one of its drive-shaft assemblies, it could reduce the complexity of the machines needed to build them. Just allowing for more generous radii and bends in a few key spots would make it possible to produce the components with hot forging hammers, a cheaper technology than the high-speed cold-forging machines the company used at home. The changes helped reduce costs for materials by 10 percent, in part by enabling the company to source more goods and equipment from local suppliers.

The farm-equipment maker lowered its costs in a similar fashion by identifying places where its frontline workers could replace expensive fasteners with cheaper welds during product assembly. This reduced not only the company’s manufacturing costs but also the cost of maintenance for farmers, who otherwise had to replace the fasteners as they fell off.

Traditional approaches to product development are coming under strain as emerging markets start to dominate the global economy. Companies that learn to shake up their thinking and effectively challenge the assumptions about how they design, develop, and manufacture products are more likely to master the extremes of this new competitive landscape.

Source:

Sauri Gudlavalleti is a consultant in McKinsey’s Delhi office, Shivanshu Gupta is a principal in the Bangalore office, and Ananth Narayanan is a principal in the Chennai office.