Competitive advantage, challenges and adversity

an excellent excerpt from Michael Porter´s Competitive Advantage of Nations  (page 174) to start the 2009 at full speed.

“Competitive advantage emerges from pressure, challenge, and adversity, rarely from an easy life. Selective factor disadvantages, powerful local buyers, stringent local needs, earlysaturation, capable and international suppliers, and intense local rivalrly can be all essential to creating and sustaining advantage. Pressure and adversity are powerful motivators for change and innovation.”

The growing importance of emerging markets and the BRIC

The BRIC is the acronym that defines the emerging countries Brasil, Russia, India and China.
Daniel Thornley, Senior Vice President at the Economist, works at the Economist Intelligence Unit and he is an expert on emerging markets.
I was at one of his presentation and it was very interesting.

Some of the slides on China are below:

Daniel is also the author of the book Emerging Markets: Lessons for Business Success and the Outlook for Different Markets

Sound-bites for cocktail parties and Board presentations:

  • China is the key growth economy in the world (25% of world growth in 2007)
  • Over the last five years China has accounted for 20% of global growth
  • China is the world’s fourth largest economy and will become the third largest in 2008 surpassing Germany
  • It is the magnet for foreign direct investment ($96bn in 2007)
  • Second largest market in world for Coca-Cola
  • Now a bigger market than the US for mobile phones
  • China has the second largest currency reserves in the world at $1.7 trillion
  • Reserves rising from one trillion dollars in 2006 to two trillion in 2009!
  • China accounts for 25% of the US trade deficit, but only runs a modest surplus with Europe
  • Some 60% of its exports are generated by companies with FDI
  • It is the world’s largest exporter in 2008 with 1.5 trillion dollars in exports (in 2005 fourth largest exporter)
  • Imports have been rising at 40% per annum
  • Last year, it consumed 25% of the world’s steel and zinc, 40% of cement and one third of the growth in global oil consumption
  • China overtook Japan in 2005 as the world’s second largest importer of oil after the US
  • Retail is booming and China is adding each year the retail market capacity of Argentina!
  • Wal-Mart imported $25 billion of cheap products from China in 2007, helping keep down US inflation
  • One for the future: in 2009 the Chinese language Internet will be larger than its English-language counterpart
  • The move of peasants to the cities in the last ten years is the greatest migration in human history

The Price of Forgoing Basic Research

I cannot agree more with the article  The Price of Forgoing Basic Research of Bill Buxton (Principal Scientist at Microsoft Research) on BusinessWeek.

An excerpt:

“But since about 1970, we have been on a path where industry’s investment in basic research has been in decline. At the same time, there has been a significant shift toward applied, “industry-relevant” research within academia. I believe that these trends do not augur well for the future of industry, academia, or society as a whole.”

“The real question is not Can I afford to invest in research? It is, How can I afford not to?”

Nokia forecasts 5% drop in mobile phone market in 2009

At the Nokia Capital Markets Day  (4 Dec. 2008)  the Finnish handset market expects the market to show a volume decline of 5 percent or more in 2009 due to the global slowdown in consumer spending, currency devaluation, credit tightness and channel destocking (see Rick Simonson, Chief Financial Officer, presentation 2008).

At the same time, Nokia has drastically scaled back its outlook for the mobile internet services market, where it has been launching a range of services in music, games, messaging and maps.

Whereas the company previously forecast the market for all internet services to be worth EUR 100 billion in 2010 (See Rick Simonson, Chief Financial Officer, presentation 2007) , it now expects a value for its targeted segments of just EUR 40 billion in 2011 (Niklas Savander, EVP, Services and Software, presentation 2008). Its own sales from internet services and software are expected to reach EUR 2 billion or more in 2011 and attract 300 million users by 2012. A summary is given at

We should not expect an easy path ahead. However, Nokia is still a solid and strong player with 40% market share in the mobile market, with a strong brand (#5 worldwide, #1 in Asia and #1 Europe), with a world leading position in manufacturing and logistics, substantial lead in China, India, and MEA and cost & IPR advantage (see Rick Simonson, Chief Financial Officer, presentation 2008).

Culture, Organizational culture

Culture is the collective programming of the mind that distinguishes the members of one group or category of people from others. The manifestation of culture is well described by the terms: symbols, heroes, rituals and values (Hofstede, Cultures and Organizations)

Culture is learned, not innate and is derived from the environment a person lives in. Following this reasoning, different people living in different countries have a different culture. Hofstede, a professor of anthropology at Maastricht University, in the Netherlands, has classified cultural differences along 5 dimensions (power distance, individualism, masculinity, uncertainty avoidance, long-term orientation). 

Culture is not specific of countries and an organization has a culture through the shared set of norms and values of its employees (Schein Organizational Culture and Leadership) .  Schein divides an organizational culture in three levels: underlying assumptions, espoused beliefs and values, and artifacts.

To summarize, individuals in different countries have cultural differences that have been classified along 5 dimensions. This does not mean that each individual in a specific country fits perfectly the classification, but we would expect a tendency toward the common characteristics of his/her culture. People from the same culture have been exposed to the same environment and therefore, are able to understand each other better.  Additionally, to the country cultural differences, we have added the concept of organizational culture. Individuals in a certain company share a set of values, norms, beliefs and assumptions. These individuals may experience cultural mismatches when in contact with persons from another company, even when they both come from the same country.

Working in a multicultural team presents several challenges.  According to Brett Jeannethe (Negotiating Globally) reason for the conflicts comes from the difficulty of the tasks (task conflict), from the need to negotiate on how to do the task (procedural conflict) and from how task and procedural conflicts often morph into interpersonal conflicts. However, when these issues are managed properly, according to Brett Jeannethe, multicultural teams are able to achieve better performance, especially in tasks that involve making decisions under conditions of uncertainty.

Perpetual learning in an organization

As the world is becoming more complex and unpredictable, flexibily and continous learning are essential.

Schein in (Organizational Culture and Leadership) lists some of the assumptions of a learning culture in an organization:

  • The world can be managed
  • It is appropriate for humans to be proactive problem solvers
  • Reality and truth must be pragmatically discovered
  • Human nature is basically good and in any case mutable
  • The best kind of time horizon is somewhere between far and near future
  • The best kinds of units of time are medium-length ones
  • Accurate and relevant information must be capable of flowing freely in a fully connected network
  • Diverse but connected units are desiderable

Clayton Christensen on business model innovations

Clayton Christensen interview on business model innovations on HBR

Check also Christensen recent articles:

Some of the most known books by Christensen:

Google zeitgeist 2008, search patterns and trends

Google Zeitgeist:

Zeitgeist” means “the spirit of the times”, and Google reveals this spirit through the aggregation of millions of search queries we receive every day. We have several tools that give insight into global, regional, past and present search trends. These tools are available for you to play with, explore, and learn from. Use them for everything from business research to trivia answers.

Since 2001 Google has presented the search patterns, trends, and surprises of the year.

Check about 2008 at the following link.

To understand trends check also:

  • Google Trends – For a broad look at search query data, enter up to five search terms to see relative popularity over time.
  • Trends for Websites – Google Trends for website traffic data. Type in a website address to see visitors by region and related sites visited.
  • Insights for Search – A deeper dive into search query data for marketers and power users. Create your own lists of “most popular” and “fastest rising” queries for different geographic regions over time and by topic.
  • Hot Trends – The top 100 fastest-rising search queries right now (U.S. only). Updates throughout the day.