Thursday, June 6, 2013

From External Environment to Localization

The topic for this week is "Analyzing the External Strategic Environment and Evaluating Industry Dynamics". From another perspective, we could understand as company should operate business deeply consider the correspondent market and customers.

In a reading assignment this week, I enjoy this quote very much "In this complex, multipolar, and interconnected world, the biggest challenge facing businesses isn’t responding to their known competitors, but learning how to respond to a world in which the frame and basis of competition are always changing".   

In a macroeconomic level there are some possible trend we could notice in the McKinsey quarterly's article "Five crucibles of innovation that will shape the coming decade", McK has pointed out some possible trends:
     1 The Great Rebalancing: Emerging markets will increasingly become the locus of growth in consumption, production, and—most of all—innovation. More and more, global leadership will dependonwinningintheemergingmarketsfirst.
     2 The productivity imperative: In this new age, the real game changers will be breakthrough innovations created by companies: history shows that a majority of productivity growth—more than two-thirds—comes from product and process innovation.
     3 The global grid: Money, goods, data, and people now cross borders in huge volumes and at unprecedented velocity; Volatility is here to stay. Learn to recognize it, prepare for it, adapt to it, manage it, and profit from it. But don’t ignore it.

The analysis is great, it captures the main ideas of the possible changes in the coming years and how we should prepare to deal with them. Anyone who does not capture the trends of the era will be feeling like swimming against the streams.

Identifying external environment is not only about the global trends, identifying the local market and customers are also extremely important. And, interestingly, in talking about how to identify the industry dynamics in China and its local customers, McKinsey haven't done a great job. We have to admit McKinsey is one the greatest strategic consulting company in the world with proven successful record, but there are some famous failures cases in China like the Robust Group case, Nanjing Rd case and Konka Company case. One of the representative is Wangfujing Store(similar with Macy's): The Wangfujing Store asked McKinsey to import "advanced management experience and mechanism", which includes foreign managers and JDA softwares then. But it turned our not working at all and the execution is horrible… and that proposal is still in the archives...

The reasons for the possible failures of McK consulting in China are mainly because of their inadequate understating of how Chinese people do things and their kind of unspoken rules when doing business.

So in a broader perspective, how to identify the real needs of the customer in a local market is a really important topic in the world of globalization. The success of the expansion is deeply dependent on it. I also joined a team consists of multinational education background to build product for US customers; also in future I will go back to china in the future to implement what I learned in the US to build company in China. So how can we get the requirements of the customer then?

I think it mainly consist of three parts of understanding the local customers: from understanding their behaviors, to understand their thoughts and preferences, finally create products that they like. By how? Here are some tips I found according to my personal experience:

1 Enjoy & explore the local life there.
One thing I really enjoy is discovering their tools in the normal life because tools they use in the daily life could  somehow mapped their preference of using internet products. And I discovered Americans really like using highly specific tools to increase their efficiency in life: they have a specific tools for peeling off the pineapple which in contrast the Chinese would peel them off by their hands. Also, the products catalog on the airplane could also indicate the trends of the products people want to use.
What's more,  deep friendship with local friends in the US from different background and ethics would definitely give you deeper and broader vision of thinking which will help a lot. Many truths just come out in the details of your daily life, you should have a heart to actively observe and learn them.

2 Use the Customer-Problem-Solution model, make some real interview to find solutions for specific problems
Because the product would only create value once the users find it useful. So just go to the customers with problems and see whether they are satisfied with your solutions! The attached is excerpt my interview with customers for NoWait - Text Message Wait List for Restaurants:

Hypothesis 1:
Customer: Guests
Problem: Guests have very boring experience of having a pager in hand waiting in the line and sometimes they just go away.
Solution: Leave the phone number and then you can go around. You could consult the queue info any time and when would inform you via text message.
Interview 1:
People: Peter Zhe, students from INI, CMU
Main notes:
1 Willing to give the phone number to restaurants for future information
2 Worried about the sanitary problems of the pagers in restaurants
3 Feel boring and impatient waiting in the restaurants don't know how long have to wait.
For hypothesis 1, customer seems to looking forward to our application because seems much improved experience:
1 Don’t have to stay in the restaurant to wait
2 Can get the waiting line info anytime

3 Some community to review their feedback
There are many communities like Digg & reddit with warmed hearted local people who are really willing to try our products and they would definitely give some helpful review and suggestions which is a useful way for us to improve ourself. The founder of Dropbox just gave us a vivid example of how he get the feedback from people in 2005 and make the dropbox really successful right now: 

So are there any others ideas to make the localization smooth and successful?

1 What happens next? Five crucibles of innovation that will shape the coming decade (McK)

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