INSEAD Blog by Zanat0s the INSEAD(er) @ Tokyo ! The Biggest among INSEAD MBA blogs. Insead is over, blogging not.

Best Marketers

The best marketers: are the employees themselves. When I used to work for fashion Company X I had a really good employee discount which I used it to my advantage. Why do you think companies offer staff discounts? There are 2 categories of these discounts: First is the discount on one own products’ and then discounts on other companies’ goods and services. What about the second one?

 Many companies give their employees a package of better prices for a variety of services and goods. Why? I met a greek guy on my way to Disneyland in January. His company had offered his a trip to Tokyo. Well one might ask isn’t that expensive? Actually it is cheaper than giving them money and on top of that money incentives may spoil employees. TO give cash is one of the worst ways to award good behavior. Money off for other services will be more valuable to the staff. The discounts can be attractive. I used to have a 50% off(which fell to 40% though) and in another company a friend of mine gets 20% of petrol(well THAT is important now). The providers of these services are more than satisfied. Increased revenue with less advertising. What happens if somebody abuses their discounts?

Buy a Dell PC cheaper and then sell it to another person for a profit? Or just “transfer” the discounts to one’s friend? Well I have no problem with that and it cannot be stopped. What if these discounts are on the companies; own products? It may a bit more complicated than the previous situation. Companies have motives for selling their staff their won goods at reduced rates. They want their employees to be “brand ambassadors”. Imagine if a friend of yours worked at Zegna but preferred to wear Armani!. But these discounts are also perks. Without them companies cannot rely on good employees. A way to recruit and retain people for the long term.

MBA poaching Nr 2

MBAs and Poaching 2!

 

Here is another subject: Poaching…. I have so many things to say about poaching. What do you do when a competitor snatches away your employees? What to do and What NOT to do? I was in a situation like that just before my MBA and although my position was challenged my previous boss confessed to me that he should have followed my advice.

 

When I left my previous job to do my MBA @ INSEAD I had notified my boss 4 months in advance(since he helped me pay for it). I found my replacement and trained him. At the same time another colleague had to leave for her pregnancy leave and her replacement got an offer to join another company. That lady was holding a crucial post whose replacement was never carefully considered and didn’t know what to do in case one person was away. That position was responsible for all the email communications between the company and its partners/suppliers. I had long argued unsuccessfully that this role should be shared by 2 people at least and use another method for going through emails.

 

My boss was under a lot of pressure during that time and he did the worst thing possible. She offered that lady a big increase in salary. A salary which she clearly didn’t deserve. Case in point offer salary increases only to people who cannot actually be replaced. A good way to do that is to cross train your employees so they can fill empty spots for a short time. What happened in the end? The girl eventually left and everybody had found out about her pay increase. Of course they demanded a higher increase in salary the next time their contract was up for renewal. My boss didn’t reveal to me all the details but probably she got her lesson. I hope it wasn’t very expensive.

 

Most organizations still have not grasped fully their ability to tilt pay negotiations in their favour by generating home-grown replacements. Threats to jump ship should be taken lightly. The organizations should put more effort in nurturing talent Lets look at AJAX the football club in the Netherlands. Ajax was by far the best “grocery” for football stars for the last 30 years. Every Dutch football start was an AJAX product. In World Cup 1998 most of the Dutch team were playing in foreign clubs but they all started from the same incubator: Ajax! Transfer fees from players is a good source for revenue

 

The lesson is that when someone tries to poach your best employees with a mouthwatering pay deal,  bosses should let them go. With the right approach to hirin and growing talent the organization will always have an abundance of gems. It is a lengthy process but one that organizations should start. Hey it is better to have competitors snapping away your people. It means something is getting done correctly, the problem is when they lose interest in the organization’s staff….

 

 

The rising importance of Education... By Zanat0s

 

The case for more open-liberal markets

 

Many Europeans(especially Greeks-unfortunately) believe liberal economic reforms are incompatible with social justice. The Anglo saxon countries, they purport, have more liberal(deregulated) markets which result in higher levels of poverty and inequality. There are 2 choices: Free their economies(anathema to the left) and accept the downsides or they can resist the only way to go forward. They call this model the Anglo-American neo-liberalism(can’t they come up with something simpler?).

 

I would like to quote Mr. Churchill here : The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of misery.

 

Before I continue let me say that inequality will always exist. You cannot have rich people otherwise. The issue is how to let people get more opportunities? One way is to letting the ones at the bottom of the pyramid with a viable way to the top, not by keeping everybody down.

 

There is no evidence whatsoever that liberalization contributes to social inequalities. The link between amount of liberalization and social outcomes is weak at its best. This pattern should be the same across the EU and not within a select group of countries.

 

Can this pattern be detected. The answer is crystal clear; NO! Well let me go throught the data. Which is the country with the lowest income inequality and at the same highest employment? Look north and you shall see; Denmark. Denmark offers a mix with quite liberal employment laws and open competition. On the other hand who are the champions of the worst social outcomes? Look South and you shall see! The dynamic(or should I say sclerotic) trio: Greece, Italy and Portugal. All three of them offer a complex web of arrangements and protected jobs. Try to fire somebody at Greece and probably you will find yourself at the court trying to justify his dismissal. One rational(rational means having the mental capacity to think and to be articulate) human being may discern that Liberalisation of an economy, bring ,instead of impairing social justice. Regulation is the real culprit.

 

If that is the case then what is the magic pill that boost countries and their economies? If I was in a classroom, a leftie would probably raise his/her hand and argue that high social spending/taxes is a must. Well the left’s instincts have never proved correct before(look at communism). TO be honest social spending is high in the egalitarian countries(Nordic) but it is more or less the same in countries like France and Greece. The Netherlands too have a big state. The UK the “European bastion of liberalism” is a place where the state is actually big.

 

Go back to the Nordic states and look elsewhere. Where should you look? If  you are an avid reader of my blog you should have known the answer by now… The answer lies at the heart of every country’s culture: Education. EDUCATION, EDUCATION and again EDUCATION.  The Nordic countries offer the best education. This is where the correlation is hidden; education and social outcomes. Low level of education or bad quality of education not only produce more irrational people(people without the ability to have a critical mind) but also increase the risk of poverty. Also better education increases employment opportunities.

 

Another leftie may say that education is provided by the state in those countries and education is too important to be left to individuals or private operators. Well wrong again. The Nordic educational systems are one of the most liberated in the world. The public school system emphasizes quality above all. Students in Nordic countries do not learn to memorize equations or texts( as greek and Italian students) but learn how to use their mind. The mind is a muscle it has to be exercised daily at least.

 

The UK has some of the best universities right? What is wrong? The public spending is 6 % around the EU average. The results at secondary education are disappointing. Well according to the FT 1 out of 4 children leave school before they graduate. The UK’s inequality has nothing to do with the privatization of the rail system or the phone operators but with the drop out rates from upper secondary education.

 

When I was 17 my math teacher taught me and my classmate an axiom(a proposition that is not proved or demonstrated but considered to be self-evident. Therefore, its truth is taken for granted, and serves as a starting point for deducing and inferring other truths.). “Stupidity is invincible”.  There is no way to beat stupidity as an ideology. The solution? Studying and opening your mind.

 

Ancient Greek(and not only them) realized that a thriving society needs an education- friendly environment to foster as a nation- and foster they did. Education has long been an important determinant of countries’ wealth and wealth being.  As China and India become more a part of the world economy and the division of labor proceeds the competition will increase. The only way to compete is with minds, open minds. Underperforming education systems will be the final tombstone…

 

I am an ardent believer of education and my heart bleeds when I see people desotrying the only way to go forward. More about this in my next posting.

Rules in Life are not the same as in school!

Original posted @ www.inseadblogger.com

I got this today and i think it is so true. Some people do not get it.

This should be posted in all schools and work places

Love him or hate him, he sure hits the nail on the head with this! Bill Gates recently gave a speech at a High School about 11 things they did not and will not learn in school. He talks about how feel-good, politically correct teachings created a generation of kids with no concept of reality and how this concept set them up for failure in the real world.

Rule 1: Life is not fair - get used to it!

Rule 2 : The world won't care about your self-esteem. The world will expect you to accomplish something BEFORE you feel good about yourself.

Rule 3 : You will NOT make $60,000 a year right out of high school. You won't be a vice-president with a car phone until you earn both.

Rule 4 : If you think your teacher is tough, wait till you get a boss.

Rule 5 : Flipping burgers is not beneath your dignity. Your Grandparents had a different word for burger flipping: they called it opportunity.

Rule 6: If you mess up, it's not your parents' fault, so don't whine about your mistakes, learn from them.

Rule 7: Before you were born, your parents weren't as boring as they are now. They got that way from paying your bills, cleaning your clothes and listening to you talk about how cool you thought you were. So before you save the rain forest from the parasites of your parents' generation, try delousing the closet in your own room.

Rule 8: Your school may have done away with winners and losers, but life HAS NOT. In some schools, they have abolished failing grades and they'll give you as MANY TIMES as you want to get the right answer. This doesn't bear the slightest resemblance to ANYTHING in real life.

Rule 9: Life is not divided into semesters. You don't get summers off and very few employers are interested in helping you FIND YOURSELF. Do that on your own time..

Rule 10: Television is NOT real life. In real life people actually have to leave the coffee shop and go to jobs.

Rule 11: Be nice to nerds. Chances are you'll end up working for one.

Should one trust the Under 30s?

uthor Mark Bauerlein aims to provoke in his new book, "The Dumbest Generation: How the Digital Age Stupefies Young Americans and Jeopardizes Our Future" (Tarcher/Penguin). Do you agree?

Personally i am under 30 and i will try to rebuff his saying. I think the author is just overdoing it and on the contrary only the young generation can be trusted now. One needs to look at how the world has changed and who might have the skills to survive. The 8 arguements will be discussed here and their validity will be tested.

They make excellent "Jaywalking'' targets

Bauerlein writes: "The ignorance is hard to believe ... It isn't enough to say that these young people are uninterested in world realities. They are actively cut off from them. ... They are encased in more immediate realities that shut out conditions beyond -- friends, work, clothes, cars, pop music, sitcoms, Facebook.''

On the contrary. The younger generations is more able to shift through different realitis/situation. They(we) have learned how to use our fantasy to bring innovation.  They have adapted to the new "reality" that there are many ways one can live his/her life.  The new generation travels more, speaks more foreign languages and on top of that is connected to the rest of the worlds.  The younger generation is more eager to explore but at the same time uses the new technologies to get ideas of the worlds to be explored.

2. They don't read books -- and don't want to, either

"It's a new attitude, this brazen disregard of books and reading. Earlier generations resented homework assignments, of course, and only a small segment of each dove into the intellectual currents of the time, but no generation trumpeted aliteracy ... as a valid behavior of their peers.''

Ok this may be a bit true. True the new generation reads less than the previous one.  It cannot be proven but it holds true(although the numbers of books sold and printed is steadily rising). On top of that we know during teenage years a lot of students are facing peer pressure to be less studious so they won't be called ners.

Now to fire back.  Maybe younrers are not reading literature, but they are reading politics, philosophy, business books and a lot of magazines. It is not that the young people scorn reading but they just have different reading habits. To be on the road all the time is sure taxing. Mobilityis the new lifestyle and the mobile is the book of choice.

3. They can't spell

Lack of capitalization and IM codes dominate online writing. Without spellcheck, folks are toast.

No rebuttal here. he got me cornered. but remember words and languages  change as time changes. Having said that I think this book is too one sided and should be taken with a pinch of salt.

The book also states that the young generation tends to forget easier, if that is the case it is because the amount of information one should process at our time has increased more than 400%.

IT is simple. some years ago one would only be interested in the develpments in his own country now he has to be aware even about Timor-leste.

I haven't finished the book so the reveiw will be cut short.

Cheers!

communication

i am now on my way to a meeting.the description was meet me at he foodcourt. wha he didnt tell me was that garden has 3 different foocourts. communication guyz never take anything forgranted.

The right time to do an MBA? THink again..

ok here it goes.

I mean some students have been complaining about the value of the dollar and the Euro. I guess that is life. But remember in 2002 when the euro was worth nothing. I didn't hear the Students complaining.

WHy was this paradox? Probably because they would work in the states or get paid in dollars post MBA. Why don't people want to work in Europe? I guess it has to with taxes. Taxes are evil, they are used(in most european countries) to pay for people who couldn't get a nice job in the private sector(that is a blunt statement).

Reflect back on the value of the dollar though. For the ones who have their earning in DOllars but their expenses in euros(expats in Europe) they get a rought treatment. On the other hand Expats in the USA from Europe (must feel like King).

I have my savings in Euros and i am a firm believer in the power of the Europ and Europe(although everytime i talk with british I receive shrugs). The Euro will win in the end and prove unbeatable.

In every game there is a loser and a winner. NOw Europeans belong to the winners. will this continue? look at the graph and make your pic!@

Insead Knowledge : Insead MBA Singapore

How to build a brand-Driven Business?

Every Year, Fortune and Businessweek publish influential research on high performing companies( Most Admired Companies and Best Global Brands). A lot of companies made it in both lists. Disney, Apple,  BP, Intel, Canon and others.

So what to these companies have in common? You can find the lists online by the way. All of these companies have demonstrated superior business performance and have established strong brands in the market. They are characterized by  Customer insight, Financial Performance and Global reach.

If one adds another layer of analysis then the story changes. Fortune also publishes a list of 100 best companies to work for. Out of curiosity would one guess which company topped the list? Google did. The internet behemoth who is unstoppable in its tracks. 

So is there a big overlap among the 3 lists? Believe it or not only 7 companies made it in all 7 lists. AMEX. Microsoft, Cisco, Nike, Yahoo, google, P&G and Starbucks.  What I find extremely interesting is that all 3 big internet behemoths are included. There are no Banks in the list nor any consultancy. I guess not being a good place to work has its financial rewards. No energy companies nor any non American companies(probably has to do with the fact that the research is done by 2 American publications

Back to our analysis, these companies understand and respect the power of their brands and have a brand strategy, storing leadership. Among other there is a culture that emphasizes the customer’s relationship with the brand, Focus on controlling critical interactions with customers and stakeholders. The measure and reward in a way that are based on proof. Above all thought the employees live the brand.

Lastly, one more layer will leave a King. The last survey was about the customer service champs. Starbucks was by far the only companies with an omnipotent presence. This can seem contradicting if one remembers last year that Mr. Schultz was afraid about watering down the experience? Why did he end up changing his CEO?

On the other hand, Jetblue a stalwart of customer service had one bad weekend and it lost immediately all of its good reputation. The importance of customer-service in building a brand-driven business is highlighted by the fact that 15 companies that performed the worst on a MSN money survey of cs had 3 year returns 8% on average below their industry service.

So all you preparing for an MBA should be ready to know the value of CS(customer support) when you graduate. It is easy to make a company good but you can never make the leap unless you transform your customers. Transform your customers and you will transform your business.

Outsourcing customer support may make financial sense, especially when it is back office. But is so trivial so that companies can transfer control to a 3 party? Even if it is back office operations one must never forget that the person offering the customer support, must be acquainted with the product/brand. If there is a misplace then the results can be onerous.

There are many examples where the contractor didn’t live up to the company’s exception and the following synergy resulted in brand devaluation. Companies that focus on outsource must find a way to add value without escalating the costs.

Remember a happy customer is a reccuring one

The amicable fool or the Obnoxious Genius? Make your pick!

The importance of being Likeable

I would like to point your attention to the American presidential elections. At the Republican party we had 5 candidates : Mccain, Romney, Huckabee, Gulianni and Thompson. There is no question who is going to be the nominee. But I will take a look at all the candidates. Gulianni lost because of his ultra stupid strategy. Thompson was just irrelevant and Romney didn’t connect with the people. All three of them had another common characteristic; They were not likeable enough, none of them. Romney may be a great administrator and Financier but probably his people skills need tweaking. Thompson is still irrelevant and Giuliani is one definition for obnoxious. On the other hand you see this guy(who believes evolution didn’t happen- maybe it left him behind) out of nowhere with no financial backing coming as a strong Nr2. What is wrong here? No rational person(at least in my perspective) would vote for a guy who has said that “bumblebees fly but we never ask why!”. It seems there are a lot of non-rational people out there. But huckabee is likeable, he can crack a joke, he can connect with people. If you read articles even non huckabee supporters like his way of behaving(playing the guitar) he is more relax more genuine when he is surrounded by common people. The same can be said for Mccain. Mccain is not so likeable but people like him because they see a trait in him they do not usually meet: Honesty and consistency.

Turn our attention to the democratic party. Mr. Obama a young guy has mesmerized half the county. Even his opponents(the republicans) cannot assault him because he is extremely likeable. I mean the more they try to attack him the more they damage themselves(Clinton included). Clinton on the other hand is one of the most polarizing figures in this election. She is an amazing woman, with probably the best chance to improve this country and revive the “Clinton years”, but at the same time she is hated by 50% of the populations. Obama a new kid on the block is loved and hasn’t attacked anyone yet. Obama support has to do a lot with his optimism. If you listen to him you get the idea of a better future and a better life(unlike the republicans who evoke fear and isolation). To my Greek readers let me remind you Karamanlis the Elder Vs Papandreou the womanizer. Who won? The 2^nd guy, why? Because he was full of shit!

Maybe if obama wins he may end up even worse than Bush. This though doesn’t change how likeable he is. People like to listen to him, to be associated with him(more or less like JFK). Now to the main point.

It is better to be the amicable fool rather than the obnoxious genius. In every social setting whether it is work, school, social activities people want to hung out with nice guys. Think about it for a moment. Remember at school? Probably you had a schoolmate who was a genius but at the same time he got on your nerves(not because he was better than you, just because he was a prick). What about work? All of us had to work with the genius person who could do anything in half the time,but would give you twice the headaches.  On the other hand I bet that most of you remember some guys who were just cool to spend time with(regardless of how skilled they were).

For the ones now going to INSEAD. Nobody likes the smart guy. Who is the smart guy you may ask; The one who is trying non-stop to prove that he has knowledge. If you have a guy at your class who is trying to answer every single question you know what kind of types I am referring to. Be friendly to your classmates do not see them as competitors who are after the same opportunities. When questions are asked do not try to show that you have all the answers. Believe me you may think that you are the cleverest person in the room but from a statistic viewpoint there is a 50% chance you are below average(deal with it). You will be surrounded by clever people. Show to them that you are wise

Knowledge must be like a pocket watch. Always in standby and taken out only when ones asks for the time.

Students should try to make connections with each other. Avoid the 2 most common mistakes. One cannot make friends with everybody. If ones tries then he has a problem and needs to see a doctor and fast on top of that. On the other hand people who never talk to anybody and are focused 105% to their reading these are to be avoided. They believe that success comes form books and readings. They miss the necessary people skills(probably one of the most important traits humans should aquire). The loners will never speak to other in class sand will go straight to the library. I remember that during INSEAD at my promotion we had a guy who NEVER spoke during class. It is telling that when we changed seating charts in P2 a greek friend of mine came to me and asked: Has the class changed? Who is this new guy? What is he doing here?

The sad part? He was right. The “ghost” had never participated in anything.

I would like to close this blog entry by letting you know that one should try to strike a balance, make some good friends and then keep connections with the rest of his ecosystem.

Zanat0s Out!

Agency THeory 1

Sunday I was asked by one person at a restaurant asked me about the agency theory. Why am I referring to this incident? First of all I was approached by a friend’s friend. She asked me out of the blue if I can tell her anything about agency theory.

Imagine my surprise at that time. I was enjoying my lunch (not very healthy though) with a friend of mine, while out of the blue I am approached by a person whom I know through a friend and only have seen once. After getting over the casual greetings she drops the bomb! What is the Agency theory about? Not only did she “ask” me to explain to her, but her main suggestion was to have this concept develop on my blog.

What else better can I do? Is there anything better than to dissipate knowledge? Before I start explaining the Agency theory I should try and analyze the root of it. More or less the theory is based on the Principal-agent problem. According to wikipedia “In political science and economics, the principal-agent problem treats the difficulties that arise under conditions of incomplete and asymmetric information when a principal hires an agent. Various mechanisms may be used to try to align the interests of the agent with those of the principal, such as piece rates/commissions, profit sharing, efficiency wages, the agent posting a bond, or fear of firing.”

The reason that employees are often paid according to hours of work rather than by direct measurement of results is that it is often more efficient to use indirect systems of controlling the quantity and quality of effort, due to a variety of informational and other issues (eg turnover costs, which determine the optimal minimum length of relationship between firm and employee). This means that methods such as deferred compensation and structures such as tournaments are often more suitable to create the incentives for employees to contribute what they can to output over longer periods (years rather than hours). These represent “pay-for-performance” systems in a looser, more extended sense, as workers who consistently work harder and better are more likely to be promoted (and usually paid more), compared to the narrow definition of “pay-for-performance”, such as piece rates.

Will be continued after 10 hours. Check back to read the solution.