Catalyst Content Briefing

In this week's look at what else is new and interesting:

•         Developing external knowledge sources and the importance of internal connections
•         The effect of population decline on the economy and the labor force
•         A performance culture does not necessarily drive strategy execution
•         Developing and nurturing a successful intrapreneurship process
•         Facebook develops tool allowing advertisers to monitor, determine relevance of ads
•         Marketers take notice of sensory-based marketing

Developing external knowledge sources and the importance of internal connections
February 11, 2015
To maintain a competitive advantage in a global economy, it is increasingly important that multinational corporations (MNCs) tap into new ideas and technologies beyond their boundaries. Many MNCs have begun forming boundary spanning units - setting up corporate venture divisions, business development offices or technology scouting units - employing people whose job it is to identify innovative ideas or technologies in targeted knowledge hotspots and bring them inside. These "scouts" need to know what the different departments within their organization are seeking to achieve, as well as be able to identify how these new ideas and technologies can help them attain it. Four distinct processes were identified that can add value to global knowledge sourcing, which scouts can develop and companies can nurture.

  • Channeling - Channeling is the initial process, generally adopted by firms when they start an open innovation initiative. In this stage, the agent acts as a transmission channel, passing on information about people or new technologies without a precise idea of what it is the company really needs.
  • Translating - As scouts gain a greater understanding of what the company is seeking they are able to translate, or reframe, the new ideas and technology they are seeing in a way the company understands.
  • Match-making - As scouts develop their networks and relationships, both within the organization and in the target region, they are able to invest this social capital with both sides, identifying people who are able to add value to the firm and linking them with the appropriate executive back home.
  • Transforming - Making strong use of the knowledge and social capital they have developed (both internally and externally) scouts are able to really push back, and have input into decisions by transforming the problem definition and offering advice to internal units. This requires the same filtering and framing activities used during the translating process and draws on the networks and skills used in match-making.


source: Knowledge
The effect of population decline on the economy and the labor force
February 17, 2015
Population, as we know it, is on the decline, with birthrates expected to fall below average across the board between 2040 and 2050. Further, the process is essentially irreversible as society becomes more urbanized. While the decline will affect nearly every aspect of the world, it will have a tremendous impact on the economy in terms of labor and capital. With fewer people being born, the labor force will constrict and the price of all sorts of labor will increase. It means that we will be entering a period where money will be cheap and labor increasingly expensive. Population decline will significantly transform the functioning of economies, but in the advanced industrial world it will not represent a catastrophe, just a tangible change. Perhaps the most important change will be that where for the past 500 years bankers and financiers have held the upper hand, in a labor-scarce society having pools of labor to broker will be key.

In addition to labor, changes could leak into other aspects of the economy. The value of land has been moving in some relationship to population, so a decline in population would result in the demand for land contracting, lowering the cost of housing and further increasing the value of per capita GDP. The decline in the value of housing will put the net worth of the middle and upper classes at risk, however. Adjusting to a world where interest rates are perpetually lower than they were in the first era of capitalism could run counter to expectations and therefore lead financial markets down dark alleys. While this wouldn't happen at exactly the same in every country, results would be similar worldwide.
source: Statfor, via Forbes

A performance culture does not necessarily drive strategy execution                                                       
March 1, 2015
According to a recent survey of more than 400 global CEOs, executional excellence is the number one challenge facing corporate leaders in Asia, Europe and the U.S., beating out other issues like innovation, geopolitical instability and top-line growth. This Harvard Business Review article, authored by Donald Sull, Rebecca Homkes and Charles Sull, claims many widely held beliefs about how to implement strategy – for example, execution equals alignment, execution means sticking to the plan, communication equals understanding and that execution should be driven from the top – are "just plain wrong." The article also addresses the conventional wisdom that a performance culture drives execution.

When companies fail to translate strategy into results, many executives point to a weak performance culture as the failure's root cause, however, the HBR data shows otherwise. While a focus on performance does shape behavior on a day-to-day basis, a culture that supports execution must recognize and reward other things as well, such as agility, teamwork and ambition. "Agility requires a willingness to experiment, and many managers avoid experimentation because they fear the consequences of failure," states the article. HBR's survey found half of the managers polled believe their careers would suffer if they pursued but failed at novel opportunities or innovations. An excessive focus on performance can impair execution as it prompts managers to believe that hitting their numbers trumps everything else, leading them to make conservative performance commitments. "Performance is critical, of course, but if it comes at the expense of coordination, it can undermine execution," says HBR.

source: Harvard Business Review
Developing and nurturing a successful intrapreneurship process
February 11, 2015
Corporate entrepreneurship, sometimes referred to as intrapreneurship, is the process of initiating new ventures or creating new sources of value within an established organization. Developing successful corporate entrepreneurship initiatives is particularly important because it offers organizations a strategy for profitable growth and serves an attractive alternative to old, acquisition-led, inorganic growth strategies. The challenges of achieving this can be daunting, especially for those in the entrepreneurial team itself, but the following steps can help companies overcome potential hurdles:

Do first things first: Don't waste time drafting an exhaustive business plan before going public with the business idea. Before diving into cash-flow forecasts, validate others' interest in the idea – with colleagues who could serve as potential recruits for the team, as well as with customers who express interest in new products or services.

Align with corporate strategy: Some corporate entrepreneurs gain support when others don't because each time they present the idea they emphasize the new project's alignment with company's overall strategy.
Deliver performance metrics that matter: Corporate entrepreneurs need to know which business performance criteria matter most to senior executives. Some of these criteria are expressed in numbers – revenue growth objectives, profit margins, return on invested capital – or as market share.
source: Forbes

Facebook develops tool allowing advertisers to monitor, determine relevance of ads
February 11, 2015
Facebook is giving advertisers a new tool to better compete for the social network's expensive and scarce ad slots by allowing them to monitor their scores and tweak less relevant ads, potentially boosting the ad's performance and lowering its price. Facebook will score an ad's relevance on a scale from 1 to 10, with 10 meaning the ad is highly relevant to its target audience. An ad's relevance will be measured by how positively or negatively its target audience may respond to it, which in turn will affect its price.

When determining which ads to show people, Facebook's ad-delivery system weighs factors like how much money the advertiser is willing to pay to show its ad to those people. The relevance score will have the biggest impact on advertisers looking to get people to do something, like click on the ad to navigate to a brand's site or to install a brand's app. Brand advertisers aiming for attention, not interaction, will see "a smaller impact on cost and delivery," according to a Facebook blog post announcing the relevance score. Ads bought on a guaranteed basis - with Facebook pledging to deliver an agreed-upon number of impressions - won't be impacted.
source: Advertising Age

Marketers take notice of sensory-based marketing
March 1, 2015
Marketing researchers are starting to realize the importance of nonconscious stimuli. New research suggests more consumer products companies will start taking advantage of sense-based marketing, with much of the research centering around "embodied cognition" – the idea that without our conscious awareness, our bodily sensations help determine the decisions we make.

Aradhna Krishna, who is considered the foremost expert on the subject, directs the Sensory Marketing Laboratory at the University of Michigan and authored the 2013 book Customer Sense: How the 5 Senses Influence Buying Behavior. She says many companies are just starting to recognize how strongly the senses affect the deepest parts of our brains. Krishna entered the field because of a fascination with certain questions like: Why does wine taste better in a wine glass than in a water glass? Why is an ad showing a piece of cake more engaging when the fork is placed to the right of the cake? Why does the smell of cinnamon make a heating pad seem to work better? She realized that the senses amplify each other when they are congruent in some way, and since they are subtle, consumers don't perceive them as marketing messages, and therefore don't react with a resistance to the ads or promotions.

While some consumer industries – predominately food, cosmetics and hospitality – have tapped into the use of sensory marketing, there are still many consumer industries that continue to only focus on visual attributes of their marketing, and give little thought to other sensory effects.

"In the past, communications with customers were essentially monologues—companies just talked at consumers," said Krishna. "Then they evolved into dialogues, with customers providing feedback. Now they're becoming multidimensional conversations, with products finding their own voices and consumers responding viscerally and subconsciously to them."
source: Harvard Business Review

Technology, time horizons, and global growth

Can you have too much team cohesion?