Thursday, May 7, 2009

Clorox, Toyota and the Japanese Culture

Clorox just reported that they have achieved dominance in the premium/high-margin “green bleach” segment.

Bleach is among the least value-added household products, i.e., it is essentially water save for its active ingredient, hypochlorite. Clorox early on had to put on its thinking cap; it did not want the infamy of a failed brand especially after retailers developed their own store brands to compete with their more expensive Clorox brand.

Marketers have borrowed Maslow’s hierarchy of (human) needs to develop the product-architecture model to pursue product segmentation – the core of brand development, marketing and management. For instance, Clorox is generating greater margins from its “green bleach” than regular or low-end bleach; it is a higher or more premium segment responding and targeted to a higher consumer need: lifestyle.

But the model is not limited to human needs and consumer marketing. Singapore adopted it to move from light industry to high technology and in a parallel track, in financial services: from domestic to regional banking. The Philippines can adopt it too, i.e., move from producing intermediate to final products, say, in electronics, its biggest export business. Likewise the Philippines can develop the product architecture for each major export and figure how to move up to more competitive, premium and higher value-added products. But we may need to leverage global resources, capital and expertise to pursue and develop such products. We don’t have to go it alone, i.e., optimize our opportunity instead of being marginalized by the limitations in our resource capability?

There was also a report from Toyota. (The above model was also adopted by Toyota; moving up from the lame Toyopet of 1957 to its Lexus brand, the number one premium car brand in the U.S.) Toyota, while already the world’s number one auto company, is faced with declining sales – a fallout from the global financial crisis. To reassure the market and its investors, Toyota announced that they have tapped the grandson of the founder to run the company.

But his claim to fame goes beyond blood; he is U.S. educated (graduate school) and Wall Street-trained (investment banking) as well as the key player in the Toyota acquisition of a Chinese auto company.

What is Toyota signaling? As market leaders they cannot afford to be complacent, on cruise control but must be steps ahead of competition. They are likewise doing a self-criticism of Toyota’s cautious and bureaucratic culture and are shifting gear, namely, to become more aggressive!

And who is best to lead the company than one who cut his teeth in the highly competitive U.S. market? But is Toyota embracing Americana? Not necessarily; they are picking and choosing which makes sense within the U.S. culture. The mantra they learned from the quality evolution is: “to steal shamelessly”, i.e., always seek best-practice from the four corners of the world and adopt it like religion.

The auto industry today is experiencing overcapacity given the drop in global demand; and with China and India stepping up car manufacturing. Clearly Toyota is expecting consolidation like the world has seen in the financial services industry. It seems that Toyota has decided that they want someone who has done acquisitions to lead the new Toyota, not simply rely on organic growth.

Japan, the country, is one of the most conservative and traditionally wants to preserve its culture; yet recognizing that they have an ageing population they need to develop an immigration policy that would ensure continued workforce productivity. They have recognized the failed policy of the past of limiting immigration to people of Japanese descent although nationals of other countries, i.e., they do not necessarily espouse the Japanese work ethics.

If one is to bet, Toyota will succeed to change its culture before Japan as a country will. This is not a criticism of Japan; it also applies to the U.S. As American think tanks dissect the financial challenges of the country, there is now a growing sense within the Republic party that they must not be identified as “tyrants of dead ideas”. Human nature makes people slow to adapt; until they get a wakeup call, e.g., losing two successive election cycles.

The GOP is coming around to the realization that their extreme ideology, “taxes are bad for the economy” is simply that, extreme ideology. They are now acknowledging that the status quo is unsustainable, i.e., spending at 20% of GDP against revenue/taxes at 18.8%. They are recognizing that with the baby boomers piling up to claim retirement benefits soon, spending cannot be reduced drastically, something has to give.

They are now looking at the imperative of raising taxes up to 22 or even 24 or 25% of GDP. They still want to reduce income taxes for both individuals and corporations but they would propose raising taxes for consumption (another potential partisan battle, i.e., burden on lower-income Americans) and non-green energy sources like fossil fuels.

Not unlike Japan, it will not be easy for Americans to change especially to be predisposed to paying higher taxes.

We also have very strong cultural traits and beliefs. For instance, a noted Filipino writer pointed out that in support of our Filipino First policy, we were willing to see Filipinos go unemployed. How much of what we believe are we willing and prepared to examine in our heart? Where do we draw the line between our (Christian) values and our comfort zone, i.e., simply being resistant to change? What about the sense of urgency? Or have we not got our wakeup call yet?
What is the similarity between Ayala Avenue and Park Avenue in New York?

People cannot help being nostalgic when driving due south on Park Avenue; the supposedly venerable Pan Am sign has been replaced by Met Life. And in Rockefeller Plaza, the tower is now named GE!

Driving due south on Ayala Avenue, people cannot help being nostalgic: the Elizalde sign is no longer prominent, so is that of Tuazon, Sarmiento, Rufino, Puyat and Soriano. While an old name, Ayala given their vaunted progressive management practices has been able to leverage progress. And the names that are prominent today and frequently profiled in our dailies are those of the taipans.

The taipans hold the same Filipino values as the old names. But what is the difference between old and new? For instance, a couple of the taipans are bidding for Phil Am Life yet they have solicited foreign partners to co-own the acquired company – going it alone is a dead idea? If we are to significantly raise investments and elevate our GDP and join the ranks of developed countries?

No comments:

Post a Comment