Monday, May 11, 2009

Respecting time and space

When we talk about pushing competitiveness or fighting corruption is there something fundamental – i.e., a core value like respect for time and space – that can either drive (when present) or hinder (when absent) our efforts? Even one’s (false) sense of entitlement may have the same roots?

Filipinos who have traveled to Tokyo or Los Angeles would most likely have visited Disneyland. Disney is acknowledged the gold standard in customer service and a large piece of that comes from respecting time and space. And it positively impacts efficiency and productivity as well as revenues and profits.

Disneyland can entertain upwards of half-a-million guests at any given time and the whole system just hums without much of a hiccup.

Guests would grin and keep their smile: from the moment they get into Disney’s parking lot where they are directed to designated-parking slots and then board the tram that takes them to the entrance in no time, and until they drive out of the amusement park, with the pleasant and wholesome experience reflected in their smiles.

And it is principally respect for time and space that drives Disney’s competitive advantage – treating every person as a guest. (Yet given our Filipino culture we may instinctively do one better: offering the best room in our home to guests has become trademark-tradition that visitors marvel about.)

The culture at Disney has become a “best practice” such that other companies go on a pilgrimage to Disneyland to seek and learn it. And Disney obliges by conducting programs for their benefit. (A relatively young company, Zappos – an online shoe store with revenues of over a billion dollars – similarly shares their culture with others; and Fortune magazine recently named Zappos as one of the best companies to work for.) The moral of the story: when transparency rules growth and success triumph because great ideas freely bloom and get nurtured; when transparency is suspect – as in a culture of corruption – chaos reigns.

Disney is open and transparent; and confident of its competitive advantage that it openly shares what for others would most likely be corporate secrets.

Friends were talking to this writer (on his most recent trip to the Philippines) rather animatedly about an ongoing premier real estate development in Metro Manila that visually looks world-class until one drives into the outdoor parking area: the supposed “brand image” becomes suspect. Respect for time and space is absent or lacking? The same can be said of the basement parking.

The development must have been in a profit margin-enhancing mode when they designed the parking facility. Unfortunately, such a mindset could create and reinforce a culture within an organization that runs counter to attaining efficiency and productivity at competitive levels. This is one of the learnings from the seminar Disney runs for other companies. (And hence it is not surprising that at Proctor & Gamble their culture demands of everyone to obtain the best fragrance and quality across the board . . . that is the foundation of their competitive advantage.)

When a troubled organization examines why it is lagging in revenues and profits they struggle to figure out what the negative or restraining forces are – because a culture is so abstract and intangible yet pervasive.

For instance, it appears that even the parking allotted for potential buyers in the sales office of the development are likewise inadequate. A premium development like a premium brand must constantly drive every element of the brand image it wants to sell, e.g., anyone visiting a Lexus show room would see and feel what premium means.

Makati was once viewed as a promising, premier development and municipality. Today it is a microcosm of the density that is Metro Manila. And density does not equate to premier or premium; time and space do!

Individuals like organizations may carry a sense of entitlement or the absence of a core value: “I am the owner of this lot; I can maximize its use” – ignoring basic easement rules. “I live in a premier gated community, I am entitled to get in and out of the community ahead of outsiders” – ignoring that a red light means stop.

And so corruption finds fertile grounds: “You’re required by law to keep a 3-meter easement between the street and your house” . . . so says the inspector from City Hall; and what happens next is all too common. “You ran a red light” . . . so says the traffic cop; what happens next is all too common.

Which comes first, the chicken or the egg? In an earlier article the writer raised the challenge that confronting corruption is an inside-out process? That means we have to step up to the imperative of individual responsibility? Because corruption is a Filipino cancer and no one else can cure it for us? Of course we have institutions that can play a lead role; and they must – and we must hold them accountable? But just like the reaction of the couple of Filipino Ivy League students (see that spoon-feeding was apparent in a typical class in one of our premier universities; no one can spoon-feed us out of corruption? But we can be our brother’s keeper?

On a more positive note, residents of one condominium have asked their building management company to upgrade their basement parking – to match the quality of another development. They realized that while their parking facility had ample space, quality-wise it paled in comparison to the one they wanted to copy – where the facility was spanking and pleasant. They realized that they could enhance the value of their property if they could upgrade their parking facility.

To drive competitive advantage does not require complex efforts. Keeping it simple (which is facilitated when the undertaking is founded on a core value like respect for time and space) is the mantra of time-tested, successful enterprises doing business on a global scale. An excellent example is McDonald’s: it is the simplicity of the whole undertaking that is the genius. (This simplicity must have been obvious to Jollibee that they were able to replicate the model beyond the Philippines.)

The value-added that is McDonald’s competitive advantage is not fine food or fine dining but lifestyle, i.e., fast and convenient (another translation of respect for time and space) for “people on the go”. And as globalization was raising the standard of living and drastically reducing poverty in many parts of the world, it meant more people were now on the go. And as the global financial crisis has deepened, their value-pricing coupled with their lifestyle positioning have resulted in unprecedented revenue growth.

Complex on the other hand – at either the country or global level – is the natural outcome of lack of clarity in the object and mechanics of the undertaking (which fundamentally connotes a leadership vacuum) such that the various pieces instead of being one synergistic whole are at cross purposes; and consequently transparency becomes elusive as silos and kingdoms emerge . . . and in the final analysis chaos reigns.

An unfortunate example is Fortis, the giant financial institution and the largest employer in Belgium, who entered the derivatives business with the view to accelerating profitability in order to maintain its growth momentum (a reward from their earlier M&A initiatives yet envious of how their US counterparts were raking it in with highly engineered financial products) without the requisite core competency to begin with. And hence they had to hire away recognized experts from competitors. The newcomers effectively gained free rein with Fortis new to the business. And the rest is now history: their portfolio of toxic CDOs sank Fortis and quite deservedly together with their US counterparts.

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