After reading Mariska Aloudella’s blog about how she believes Google Docs was going to overtake Microsoft’s strong foothold in the productivity market, it made me think about what causes businesses to fall to their competitors.  Businesses often fail due to a lack of innovation but what aspects of a corporate culture breed innovation?  Many firms have success in innovation when their employees are encouraged to try new things and be experimental.  Innovation fostering cultures are ones that see value in intrinsic reward systems for employees, encouraging them to stay involved and absorbed in their work.  They don’t necessarily compensate for ideas but realize how important it is to keep employees engaged, and recognize innovative ideas.  A sustainable competitive advantage comes from ensuring innovation is part of its culture and operations, not an erratic process with only occasional success.

How can one company shift to nurture innovation?  If senior management adopts the viewpoints above and not only speak about it but put them into action, the company will have greater success.  They need to develop a less rigid company structure, appreciate new ideas, acknowledge mistakes may happen and give employees the tools and the power to put their ideas to work.

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Sources:

http://www.businessweek.com/articles/2013-10-23/jumpstart-innovation-by-transforming-corporate-culture

Will Google Docs kill off Microsoft Office?

In Los Angeles, regulations have been enacted that has forced the porn industry to have their male actors wear condoms.  This regulation has caused the amount of permits filed in the county to drop close to 95%. “Larger filmmakers who make their movies on closed sets and not in private residences are exempt from the measure.”  The law was supposed to reduce STDs among porn actors but if the larger companies are exempt, it seems like this law is an attempt for larger porn companies to create greater barriers to entry.

Is this a strategy that is ethical?  I don’t believe so.  Larger companies should not be padding the pockets of politicians in order to attempt to give themselves a competitive advantage.  It is akin to the 2008 financial crisis when government lobbying created a large amount of deregulation, which ended up causing a global financial catastrophe.

Instead of focusing on undemocratic ways of sustaining an advantage in the market, companies should focus that energy on creating better value propositions and sustaining advantages by attracting customers.  If companies push away start-ups, it causes a stunt in the growth of innovation of an industry, which is bad for all the players in the market.

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Source:

http://www.sacbee.com/2013/11/15/5915467/after-condom-law-la-county-porn.html

While reading Olya Kubily’s blog about Whole Foods and how they are creating shared value by having “complete genetically modified organism transparency”, it caused me to think about the benefits of creating loyalty with a customer.  Whole Foods is showing the public that they can be trusted and are a very reputable company, while simultaneously providing consumers a choice of what foods they would like to consume.  These are the types of win-win scenarios that are important for companies to create in order to maintain an advantage over competitors.

Another great example of creating shared value is Starbucks ‘Create Jobs for USA’.  Starbucks examined their sales and knew they were dependent on local businesses doing well in order to attract more customers to the store.  Much of corporate social responsibility (CSR) is too focused on the “need” to give back.  Shared value erases that need with a want, because instead of thinking of it as “giving back”, the company will know that it also helps them in the long run.

Shared value is something unlike any other CSR projects and is a way innovative companies are distancing themselves from others.

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Sources:

https://blogs.ubc.ca/olgakubliy/

http://www.starbucks.com/responsibility/community/create-jobs-for-usa-program

What exactly makes an excellent entrepreneur?  Is it a problem solver?  A hard-worker?  A genius?  Well to be honest, it can be all of those things.  The success of an entrepreneur depends on his or her passion.  Entrepreneurs are like the gamblers of business people; they have very little job security but have the chance to win it extremely big.  It is a high risk, high reward, high skill, high workload profession where usually only the great will succeed.  I think that the competitive nature of the job is what attracts many people but it takes a special mind to be able to adapt and stick to that lifestyle.

Entrepreneurs see opportunities where others see problems.  A good example of this would be Lucinda Duncalfe, who created a healthy food meal-delivery service in Philadelphia called Real Food Works.  When she was just starting up, her service was lacking in qualified cooks, so to fix the problem she recruited restaurants to make her food during their downtime.  Creating a benefit for both the restaurant and her business was key to an effective solution.  Lucinda is a true entrepreneur, which is shown by how she solved a problem with a very creative solution that most people would not think of.

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Source:

https://www.realfoodworks.com/partners/

While executive pay has been rising and the average worker pay has seen better days, some companies are going against the curve to develop what they see as a “more profitable” business strategy in the long run.  Costco pays its workers almost 3 times the minimum wage because it believes its employees are more important to keep in the long run, and they forgo the short run profits of a lower wage.  They believe this can develop an excellent corporate culture.   It allows them to spend less of their money on employees who aren’t meeting performance standards and instead groom their employees to be productive, dedicated and loyal.  Another example of this would be Wholesale foods, which has kept a CEO to median pay that never exceeds 19:1.

Governments around the world have even started to place regulations on this ratio such as in Switzerland, where the ratio that must be met is 12:1.  As there has been a public backlash to such a private issue as this, it is time for other companies to follow in Costco’s footsteps and increase the wages of their employees to promote more commitment to the company.

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Source:

http://www.theglobeandmail.com/news/national/time-to-lead/how-one-company-levels-the-pay-slope-of-executives-and-workers/article15472738/

Lululemon has recently been caught up in some controversy over an extremely ill-advised and ludicrous statement made by co-founder and Chairman, Chip Wilson.  His comment was “Frankly some women’s bodies just don’t actually work for [the pants]”.  Obviously the reaction that followed was consumers being outraged, as they should have been.  Instead of Chip taking responsibility that there was a problem with their pants, he blamed it on the bodies of the women.  But is a company that has steadily built up its stock value for the past few years going to vanish as some people are predicting?  I don’t think so.

From a marketing standpoint, this is clearly a disaster, but for people to suggest that the company is coming to an end because of a misguided statement from an executive is more distorted than the statement itself.  One example of a company getting away with really unpopular statements is Ryan Air, when the CEO O’Leary talked about their customers forgetting their boarding passes, “We think [they] should pay 60 euros for being so stupid.” And Ryan Air remains profitable.

Lululemon has been seeing an increased amount of criticism of their actual product.  This would be a reason for the company to fail, not one single (but ill-advised) statement of an executive.

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Sources:

http://www.telegraph.co.uk/travel/travelnews/9522319/Michael-OLearys-most-memorable-quotes.html

http://globalnews.ca/news/970904/petition-asks-lululemon-founder-to-apologize-and-make-clothes-for-women-of-all-sizes/

http://www.huffingtonpost.com/2013/11/14/lululemon-alienating-customers_n_4275842.html?utm_hp_ref=canada-business&ir=Canada%20Business