Monday, December 22, 2008

Manufacturing Excellence Awards

With a focus on British manufacturing industry, the MX Awards (website here), provide a an insight on what are the key evaluation criteria in manufacturing in this early part of the 21st century. I am confident there will be change and in short order when economics may trump "ease of use" in favor of "fulfillment of need", or vice versa when the health of the global financial markets returns and credits begins to flow again.

The Manufacturing Awards magazine 2008 is an excellent read here.

The list of the award categories are:
  • PricewaterhouseCoopers Award for Customer Focus
  • Autodesk Award for Product Innovation
  • Institution of Mechanical Engineers Award for Process Innovation
  • WMG Award for Logistics and Resource Efficiency
  • DMG Award for Business Development & Change Management
  • Professional Engineering Award for People Effectiveness
  • BP Award for Best Partnership between Business and Education
  • National B2B Centre Award for Integrated e-Business
  • ERIKS Award for Financial Management
  • Arup Award for Sustainable Manufacturing
  • National Skills Academy for Manufacturing Award for Manufacturing Excellence Best Small or Medium Enterprise
  • BERR Manufacturing Advisory Service Award for Manufacturing Excellence Overall Winner

China: Consumerism, Reform and Growth in the Last 30 Years

"I remember when an absolute ludicrous sort of index of how things were progressing was there was a fad in the early eighties for high heeled men’s shoes as... the heels grew higher you knew the reforms were advancing.

States Mr. Orville Schell of the Asia Society in New York in an excellent Economist interview on the last 30 years of economic growth in China below:

Tuesday, December 16, 2008

Debunking "Wisdom of Crowds" Myth - Two Examples

Crowds are not wise... crowds are equivalent of herds. Communities formed by choice are ones that constitute anything close to wisdom. To clarify how I look at defining wisdom, please see the diagram below:

Wisdom is the country of gods!

I am providing two examples, and these are not anecdotes.

First example: Did Toyota Prius make economical sense? No! I will let the reader search through the plethora of data out showing how buying a used or a modern car was far more economical than buying a Prius in the short and long term. See graph below of a test conducted by Good Clean Tech.

Yet the crowds thronged to buy the Prius creating an instant back log. As soon as the oil price dropped, the Prius is lined up on Toyota's dealership lots.

USA's oil consumption is nicely creeping back up and steadily climbing, see here from CENIMAR. Now, would a "wise" crowd try to dig themselves into the same hole they just climbed out of?

Second example: Consider the recent case of the investment manager Bernard Madoff. Please read and hear details here on NPR. Unfortunately the financial markets are full of other similar concerns.

I rest my case!

Monday, December 15, 2008

Health Care Consumers - Choices?

By way of Mr. Harish Mamtani, an excellent article in WSJ "Outsourcing Health Care to India" here. This is a consumer service market place that has come to a head in deciding what direction it is going to take.

One of USA's leading companies in this sector is Indus Health (see here) founded by a good friend Mr. Rajesh Rao who currently is its CEO. Rajesh is a visionary entrepreneur with breakthrough successes to his name. While discussing Rajesh's proposition with folks in the USA in the last couple of years, I used to get the distinct impression that the health care service providers considered Rajesh to be ahead and early to market. Yet, I believe Rajesh has shown himself to be a true trail blazer... his perseverance and commitment has resulted in Indus Health perhaps defining the right path to successful implementation.

An article this month on Business World "In Sickness And Recession" here states:

"Rajesh Rao, CEO, of IndUShealth, a North Carolina-based company that facilitates medical travel of American patients to Indian hospitals, estimates that a company with 1,000 employees typically can hope to cut its healthcare costs by half a million dollars every year by outsourcing treatment options for its employees to India. Rao should know because even before the Serigraph announcement made headlines across the US, he has been helping American corporates send employees to India. Today, Rao, has at least 12 mid-sized employers availing his corporate programme (translating into 40,000-50,000 subscribers) and he says he has been tripling his volumes year on year since he started in 2005, when it was just a trickle."

Another article from Smart Money "As Health Costs Soar, More Find Care Overseas" provides an excellent overview of the "what" and "why" of outsourcing of health care, see here.

UPDATE: Upon reading my blog, Rajesh forwarded two excellent articles from the Economist weighing in on outsourcing Health Care.

In the article "Operating Profit" here, the Economist asks: "Why put up with expensive, run-of-the-mill health care at home when you can be treated just as well abroad?" A question every health care consumer is going to start asking if already not doing so. This article especially focuses on the costs associated with various medical procedures.

In any service model with a distributor going out to the end consumer, the consumers continuously strive for better value... just like WalMart did not run the mom and pop stores out of business necessarily - the small store did not have a competitive advantage or distinction that could compete with "Every Day Low Prices" equity and delivery on that equity of WalMart.

Similarly, the article concludes that:

"Medical tourism promises to be what Aetna’s Dr Cutler calls “a disruptive market force that improves cost and quality here in America.” Whether or not it turns out to be all its boosters wish for, it will be a force to be reckoned with."

The secret here is that the multi-nationals are not driven to become international, it is the consumer who will reach out if the corporation does not deliver on the need. It is true with products, it is true with services!

In the Economist article "Importing Competition" here, the Economist declares - "The coming boom in medical travel could help both rich and poor". This article highlights the issues with a health care system (i.e. US) which is not being repaired as the consumer is leaving it as they would a rusted out car for something new... and not improved, but a fundamental shift in how the service is organized and conducted, the anciliary opportunities for the distributor, the provider and finally the customer of it all. Hence, outsourcing health care to corporate while health tourism to the consumer.

In the end the consumer always wins! The one who delivers on the need successfully, is a bigger winner.

Green and Sustainable While Creating and Conducting Business

Learn From Dwellers of Dharavi (Asia's Biggest Slum) Who Know How To

I was involved in innovation related to sustainability in products and services with a hard green focus in Denmark in 2006 and early 2007 with Ms. Frederrike Kroon of MCS. Ms. Kroon's organization has developed fundamental breakthroughs in how to think about sustainability, see examples here. I can say with confidence that the Danish represent the highest level of thinking, acting and living sustainably in comparison to anywhere else in the world. Don't take my word for it, visit Denmark yourself!

Yet, due to the recent barge of the West in asking and trying to teach the East about green and living in harmony with nature, recycling, etc. including many of my friends, MBA students I have lectured, etc. I started to look back through my experiences in South Asia - to discover whether South Asia does or does not know how to recycle, to live while maximizing the value of manufactured products and returning them for reuse in new formats, etc.

Low and behold - the West, specifically the USA has a lot to learn from the East.

I would like to introduce Asia's biggest slum - Dharavi, ~430 acres in the suburbs of Mumbai, India. See details on Wikipedia here.

An article in the Economist "A Soul-Searching Business" here claims "The slum-dwellers of Dharavi are green". A quote from the article:

"Like Hindu souls, disposable plastic cups are many times reborn in Dharavi. In a spiralling continuum, they are discarded and gathered in, melted down to their polypropylene essence, and re-moulded in some new plastic form. Recycling is one of the slum's biggest industries. Thousands of tonnes of scrap plastic, metals, paper, cotton, soap and glass revolve through Dharavi each day."

See a dedicated to Dharavi website - showcasing all the small communities and commercial efforts here.

Dharavi is one example of similar communities spread across the South Asia that are hubs of innovation in business and recycling. See an excellent documentary on business there below.

I have stated before and I truly believe that "Satiated People Do Not Innovate". This has been the experience of my life. See an article from the Economist on the residents of Asia's biggest slum Dharavi thriving and creating new business out of hardship here. The article states:

"At 7am the early shift begins in Dharavi's 15,000 hutment factories. Typically, they consist of one or two jerry-built storeys, stuffed with boys and men sewing cotton, melting plastic, hammering iron and moulding clay. Indeed, it is for its industry, not its size, that Dharavi is most distinctive. The clothes, pots, toys and recycled materials its residents produce earn them millions of dollars in annual exports alone. As the sun climbs over Dharavi, a rising timpani of metal on metal, a whirring of small machinery, indicate that the working-day has begun."

See my previous post on alternate fuel based automotive in Pakistan here.

USA returning to focus on Science and Technology

"Most scientists consider the last eight years a tough era in Washington. But President-elect Barack Obama's reported picks for Secretary of Energy and EPA administrator and the creation of an "energy czar" signal a return to scientific principles in the decision-making process at the federal level."

States the Wired article "Science Born Again in the White House, and Not a Moment Too Soon" here. The new administration coming to the White House has selected a good and balanced set of individuals given their resumes.

Yet one thing should not be over looked that the current administration has pumped (or dumped based on your preference) funding into R&D via the intelligence services. As always the results of these inventions will spring new businesses in years to come when the successful or failed innovations are not a national security concern and can be made public.

Wednesday, December 3, 2008

Apple Ads

Apple: Our Ads Don't Lie, But You're a Fool if You Believe Them, see Wired article here. A 70 year old Mr. William Gillis, San Diego resident has filed a complaint alleging that Apple falsely advertised the iPhone 3G by calling it "twice as fast for half the price" compared with the original handset.

"Succeeding in a Volatile Market: 2018 The Future Value Chain"

A report brought to me by way of my friend and colleague Mr. Anthony Tsai, who currently is CEO – BHG Retail Innovation Institute and EVP Operations – The BJ Hualian Hypermarket Co., published jointly by Global Commerce Initiative, CapGemini, HP and SAP. Mr. Tsai is currently leading the development of Hualian Innovation Center in Beijing, see Mr. Franz Dill's blog on the subject here.

"Succeeding in a Volatile Market: 2018 The Future Value Chain" is report on global trends and a study developing a ten year vision of consumer goods and retail industry. It has a strong focus on Asian markets. It has been presented at the Global CEO Forum where its approach and outcomes found great reception. The report is not published on the internet yet but a similar report "Future of Supply Chain 2016: Serving Consumers in a Sustainable Way" is available for download here.

The highlight of the report for me is the focus in its recommendations on consumer insights - to learn and to know the latent need and satisfy it and to act on consumers concerns quickly, such as environment and sustainability.

A few conclusions from the study regarding CPG / FMCG market place are (1) given the continued economic volatility and environmental concerns, retailers and manufacturers have growth opportunities when focused on meeting the consumer needs better, (2) cooperation and collaboration among partners, retailers and manufacturers can help them face trends that are bound to hit the Asian markets currently faced in other parts of the world. These conclusions may be called obvious, yet one must note that the report was developed with competing manufacturers and retailers sitting side by side in GCI conducted workshops.

I personally liked the study's focus on the Asian low income consumer and tangible ideas put forth on how best to deliver to them products that fulfill their needs with the highest quality and the lowest cost - here is a challenge indeed. Yet, here is the market for pure growth versus value based returns.

Finally, a trends analysis usually is mired in details of what the future may be - this report goes further and provides an examination of, at times with deep scrutiny, the on-the-ground implications to consumers, retailers and manufacturers of the said trends.