Nestlé mise sur le bien-être avec Nesfluid

Nouvelle usine Le 22 septembre 2010

© Nestlé

Alors que son concurrent Danone a renoncé à lancer en France son yaourt aux allégations santé, Densia, Nestlé a annoncé la commercialisation d’une nouvelle boisson baptisée Nesfluid dans l’Hexagone. Sa particularité ? Elle se positionne sur le segment du bien-être.

Le nouveau cocktail de Nestlé, Nesfluid, est composé d’un mélange d’eau de coco et de lactosérum qui entre pour moitié dans chaque recette, ainsi que de jus de fruits et d’autres ingrédients naturels variant selon la cible choisie. Le tout étant destiné à « l’hydraNutrition » ou comment bien s’hydrater et se nourrir en même temps. « C’est un produit de plus qui réconcilie plaisir et bien-être », a déclaré Martial Rolland, PDG de Nestlé France.

Le produit, fabriqué en Allemagne, a été lancé par une équipe d’une dizaine de personnes au sein de Nestlé France. « Nous fonctionnons comme une petite PME à l’intérieur de Nestlé », explique Astrid Labro-Boutaud, directrice générale de cette nouvelle « business unit ».

La santé en retrait

Le groupe joue davantage sur l’argument bien-être que sur celui de la santé, sur lequel le groupe est relativement prudent. « Nous sommes partis d’une logique nouvelle : nous avons développé ces produits autour d’allégations génériques qui font l’objet d’un consensus professionnel et qui sont autorisées par la Commission européenne, indique-t-on chez Nestlé. Certaines allégations, comme celle relative à l’hydratation, sont encore en cours d’examen à Bruxelles. » Ainsi, le discours santé se limite à une allégation concernant les vertus des ingrédients composant la boisson sur le côté de la bouteille de 25cl.

Dans le détail, le groupe a décliné sa gamme en six saveurs différentes (dont les noms flirtent avec la promesse santé : Renforce, Vitalise, Equilibre, Rayonne, Body, Protect). Vitalise est ainsi enrichie en vitamine C et en caféine pour les adultes actifs et Rayonne contient des polyphénols de fruits rouges et étudié surtout pour les femmes.

« Nous voulons créer un univers bien-être au sein des rayons jus de fruit ambiant des supermarché », explique Astrid Labro-Boutaud. Nestlé espère atteindre 100 millions d’euros de chiffre d’affaires d’ici cinq ans avec ce qu’il qualifie de « plus gros lancement de l’année » pour la France. En cas de succès, il pourrait proposer sa boisson à d’autres marchés.

Patrick Déniel et Barbara Leblanc

Unilever se dote d'un outil pour influencer le merchandising des hypers en sa faveur

la Tribune 21.09.10

Imaginez un écran circulaire de plus de 20 mètres carrés reproduisant fidèlement un hypermarché Carrefour ou Leclerc et dans lequel le spectateur peut circuler virtuellement, modifier la couleur des sols, faire apparaître ou disparaître des têtes de gondole ou encore changer la disposition de tous les produits d'un rayon. Non, il ne s'agit pas de la dernière attraction du Futuroscope, mais d'un petit bijou technologique dont vient de se doter Unilever pour séduire ses clients distributeurs. « Nous voulons changer la nature de la relation avec la distribution en nous adaptant aux contraintes et recommandations de chaque client », explique Bruno Witvoët, président d'Unilever France, arrivé enjanvier. Un bon moyen pour mettre ses marques en avant et gagner des parts de marché, notamment dans les catégories, comme les déodorants, les margarines ou les lessives, dans lesquelles Unilever est leader ou numéro deux.

Situé au rez-de-chaussée du siège de Rueil-Malmaison, ce laboratoire futuriste baptisé Ciîc (<< Customer insight and innovation center ») reçoit chaque distributeur un à un.

Dans une première salle, l'équipe invitée peutvisualiserson propre rayon de thé ou de beurre sur un écran tactile digne de Matrix. Du bout du doigt, le manageur de catégorie d'Unilever déplace les produits et simule différents plans merchandising. Puis vient la salle avecle grand écran façon Géode pour vivre la nouvelle implantation en 3D et ajouter tous les décorspossibles.Aupréalable, le vrai rayon dudistributeur aura étéfilmé en magasin etreproduit en « réalité virtuelle ». « Les clients prennent des décisions bien plus vite devant cette mise en scène », se félicite la directrice du Ciic, Vera Markl-Moser.

Son laboratoire, où les produits bien réels peuvent être visualisés et déplacés sur de vraies étagères de supermarché. Enfin, une cuisine toute équipée permet de goûter les dernières innovations maison avec le distributeur mais aussi pour les équipes marketing internes.

Depuis l'ouverture de ce centre en juin, les cinq centrales françaises ont déjà arpenté les différentes salles, certaines plusieurs fois, lors de réunions allant d'une heure à deux jours complets. Des enseignes indiennes et néerlandaises ont même fait le déplacement, malgré des centres identiques déjà présents dans les filiales de Londres, New York, Shanghai et bientôt Sâo Paulo. Des laboratoires de ce type existent chez les concurrents Nestlé ou Procter GambIe. Mais celui d'Unilever semble avoir une longueur d'avance technologique. Un avantage certain alors que des négociations tarifaires rendues très difficiles par la flambée des matières premières vont s'engager. Mais Unilever France aura un autre argument de poids à mettre en avant : après cinq années de recul, ses ventes devraient finir l'année en croissance, les deux tiers de ses catégories ayant gagné des parts de marché depuis le début de l'année.

Can corporate giants also be innovators?

New Nutrition Business

September 2010

How do you measure the success of an

innovation? Part of the answer to that

question depends on who is doing the

measuring. How else, for example, could

two companies launch innovative snack

products that achieve similar levels of

retail sales, yet one company describes its

brand as a success and the basis for future

growth while the other sees it as a

disappointment and decides to withdraw

support from its brand.

The difference in perspective is, in this

case, accounted for by the fact that one of

these companies is an entrepreneurial startup

and the other an established corporate

giant. As [the] case study of Popchips and

PepsiCo’s Flat Earth [chips] show, both

the entrepreneurs behind Popchips and the

corporate giant behind Flat Earth

(PepsiCo’s Frito-Lay business, which

launched Flat Earth, is the world’s biggest

snack company) were targeting the same

consumer need. That need is for snacks

that have good taste and are healthy, lower

in calories, sodium and saturated fat, and

interesting for restless consumers who are

always on the look-out for variety and

something new in their snack choices.

Both used technological innovations –

PepsiCo with ingredients such as

vegetables and fruit which produce a very

different chip from conventional potato

chips, and Popchips with a processing

technique which produces a potato chip,

but one that’s different from anything

previously seen in the snack aisle.

[…] Both innovations quickly achieved

very respectable levels of sales. The

difference in perspective is attributable to

the very different innovation criteria of the

two companies.

The late Professor Peter Drucker of

Harvard Business School was one of the

best-known writers on innovation of the

20th century and his book, Principles of

Innovation, is a standard textbook. Among

the criteria Drucker sets out for successful

innovation are some which, it seems, will

almost always trip up large companies and

which explain why innovations in food and

health usually come from small start-ups.

Innovations, says Drucker, should be

capable of being started small and should

be aimed at “only a small limited market”.

Taking an innovation to market, he adds,

requires patience because you will need

time to make the adjustments and changes

to your product, because at first

“innovations rarely are more than almost

right”. The necessary changes can be made

only if the scale is small.

The other conditions Drucker says are

essential for success are diligence,

persistence, and commitment.

Popchips seems to perform well against all

of Drucker’s criteria. And while it’s true

that with Flat Earth PepsiCo was

seemingly attempting to act like an

entrepreneurial innovator (for example,

making adjustments and changes to the

product soon after launch) it’s nevertheless

difficult, perhaps impossible, for a

company of PepsiCo’s size to “start small”

and then persist.

That’s not because it lacks the skills – it’s a

company with an abundance of talented

and entrepreneurial individuals – but

because top management in all large

enterprises is impatient for fast results. So

investing to patiently building up a brand

to $100 million in sales over five or 10

years is, in the eyes of most CEOs, a

failure. But for a start-up company such a

long road is usually built into the business

plan – and achieving even half that number

would be the proof of success.

The qualities of “persistence” and

“commitment” hold no value the moment

that your boss’s number one success

criteria becomes “become a big success,

fast”. And until the current generation of

boards of directors grasps that the

landscape of the food and beverage

industry has changed, that creating a

successful mass brand – as was a common

and viable goal 20 years ago – is now the

(near-unattainable) exception, and that a

landscape that is filled with a plethora of

niche brands is the “new normal”, many

innovations will founder. They will

founder not because the products and

brands weren’t good enough, but because

the CEO insisted on sailing the innovation

ship towards the rocks and shoals of the

coast of unrealistic expectation.

It seems that few large companies create

new categories or commercialise

innovations – the energy drink market, for

example, was not created by a householdname

company or a corporate giant but by

an entrepreneurial company, Red Bull,

which was a 10-person start-up back in the

late 1980s.

Red Bull began by aiming at a limited

market – 18-25-year-olds in bars and

night-clubs – and slowly grew its

popularity with diligence, patience and

single-minded commitment. Only much

later – some 10 years after Red Bull

debuted in the West – did the big beverage

groups enter the energy market, and by the

time they had they were unable to dislodge

Red Bull from its established market

leadership.

Big beverage groups played no part in

creating the energy drink market, nor did

they create the energy shot market (which

was pioneered in the US by 5-Hour

Energy, a small entrepreneurial company

which defined and still leads the category).

Nor, it seems, will they play any part in the

development of a “relaxation drink”

market, even though what that market

needs is a breakthrough in innovation in

ingredients that can deliver the benefit

better than anything that’s currently

available – an area in which well-resourced

corporates should have an advantage.

As a cautionary tale, the case study of

Slim-Fast illustrates what happens when

the tendency of a large company (in this

case Unilever) to “play it safe” becomes its

dominant characteristic.

In its 12-year ownership of the Slim-Fast

brand Unilever has managed only one

significant innovation, the creation of a

variant, called Optima, offering a satiety

benefit. As the Chart on page 18 shows,

Optima hasn’t arrested Slim-Fast’s decline,

but it has at least slowed the pace of the

decline and without Optima Slim-Fast

would already be history. Optima aside,

Slim-Fast has retained broadly the same

image, packaging design and product

formats which were already looking

severely dated when Unilever bought the

brand back in 1998.

Slim-Fast shows what conservatism can do

in the long run – it can leave a company

unable to keep up with shifts in the market.

Combine corporates’ tendency to play it

safe with their expectations of rapid and

large returns and you have a recipe for

disappointment.

But should corporates even try to innovate

like entrepreneurs? In truth, innovation is

an essential part of how any business, even

the largest, must renew itself if it’s not to

end up like Slim-Fast. But one thing that’s

clear is that in most large companies there

needs to be a shift in attitude to risk and

innovation – and a willingness to embrace

“starting small”, coupled with Drucker’s

virtues of diligence, persistence and

commitment.

Danone: «Les Etats-Unis sont notre plus grand marché émergent»

Le Temps (Suisse)

Jeudi 23 septembre 2010

Philippe Gumy

Franck Riboud, patron du numéro un mondial des produits laitiers, a vanté mercredi lors

d’une conférence à l’Ecole hôtelière de Lausanne l’alliance du développement durable et de

la rentabilité

«Dans les produits laitiers, les Etats-Unis sont le premier pays émergent, car l’Américain moyen ne consomme que 4 kilos de ces denrées par an contre 30 kilos en Suisse ou en France.» Franck Riboud, le président et directeur général du groupe alimentaire français Danone, n’a pas peur de surprendre, titiller, provoquer parfois, pour captiver son auditoire. Mercredi, invité par l’Ecole hôtelière de Lausanne (EHL), l’homme n’a pas failli à sa réputation de patron atypique.

S’exprimant dans le cadre de l’inauguration de «l’année du développement durable et de la responsabilité sociétale» initiée par la haute école – où ces thèmes deviendront le fil rouge de tous les cours dispensés aux quelque 1800 étudiants –, Franck Riboud a résumé sa philosophie en quelques formules bien ramassées. «Il n’y a pas derésultats économiques sans résultats

sociaux. Mais je ne suis pas naïf, je veux faire des affaires, pas la charité. Car la charité n’est pas durable», a-t-il lancé.

L’exemple de l’eau d’Evian

Santé, commerce durable: le numéro un mondial des produits laitiers a fait de ces arguments sa marque de fabrique. Quel est le produit le plus durable de Danone? «Notre eau minérale Evian, et cela tant d’un point de vue social, environnemental qu’économique», a répondu sans hésiter Franck Riboud. Le PET n’est-il pas constitué de pétrole? «Oui, mais nous

diminuons le poids des bouteilles et cette matière est recyclable. Nos produits sont transportés à plus de 80% par le train. Dès 2012, notre bilan CO2 sera totalement neutre sur ce produit grâce à notre compensation via la plantation de mangroves au Sénégal. Il faut toujours considérer le phénomène de manière globale», a encore argumenté le dirigeant, diplômé de l’Ecole polytechnique fédérale de Lausanne. Du pur marketing? Franck Riboud ne s’en cache pas: la publicité est le nerf de son domaine d’activité. L’objectif est de convaincre de la sincérité du slogan selon lequel «la nature fait partie intégrante de l’ADN de Danone». Autre mantra sur lequel Franck Riboud est intarissable: «Nous voulons apporter la santé par l’alimentation au plus grand nombre.»Avec des produits laitiers frais, comme lesyaourts Activia et Actimel. Et tant pis si l’EFSA, l’Autorité européenne de sécurité des aliments, n’accepte plus depuis le printemps dernier que ces deux produits soient vendus avec une mention assurant qu’ils sont bénéfiques pour le transit intestinal. «Ils le sont toujours, nous n’avons jamais avancé un argument qui ne soit pas vrai. Nous devons simplement trouver le moyen de communiquer

autrement au consommateur», a expliqué Franck Riboud au Temps, en marge de sa conférence. Pour lui, le travail de l’EFSA est d’ailleurs profitable à l’ensemble de la branche – même «si des réglages sont encore nécessaires, un processus normal avec une jeune institution» –, car elle pose «des règles valables pour tous».

Une mue complète

Danone n’a pas lésiné sur les moyens pour peaufiner son image actuelle. Exemple: la multinationale s’est séparée notamment de son secteur biscuit. «Trop associé aux problèmes d’obésité», selon Franck Riboud.

Côté commercial, la multinationale ne réalise plus que 10% de son chiffre d’affaires en France aujourd’hui, contre 45% il y a quinze ans. Les pays émergents, où elle n’était pas présente en 1995, ont contribué à 45% de ses 15,2 milliards d’euros (20 milliards de francs, soit un cinquième de son concurrent Nestlé) de ventes en 2009. Et sont appelés à rester un

moteur de la croissance. D’autant plus si l’on y intègre le marché américain.

The "new normal" requires a new mindset

Economist Intelligence Unit - Executive Briefing

September 17, 2010

By David Rhodes and Daniel Stelter

As the world fitfully rebounds from the Great Recession, many global managers are confronting a ―new normal:‖ the prospect of slow growth for many years to come. Managing in this new era will be different – and much will rest on how willing CEOs and their executive teams are to stray from their comfort zone and challenge their traditional ways.

For the past two decades it has been possible (if not always achievable) to be successful simply by riding market growth. For most companies, those days are over.

Our base assumption, as we write this, is that economic growth over the next several years will be wildly uneven, with most western economies – including those of the United States, the Euro zone, the UK and Japan – growing modestly, or not at all. At the same time, China, India and other developing economies will continue to grow as much as 8 percent to 10 percent per year. Moreover, there will be intense competition everywhere.

To cope with these challenges, executives will need to question, reassess, and redefine their managerial thinking. They will have to reexamine the context in which they make decisions. Some basic beliefs and received managerial wisdoms will need to be challenged.

Managing in a more uncertain environment will be a new test for most executives. But others before them have been successful in far-more-challenging times. For example, during the Great Depression, companies such as DuPont, General Electric, IBM and Procter & Gamble defied the odds, churning out profits and growth while competitors went under. More recent examples are stagflation in the U.S. during the 1970s or Japan’s Lost Decade. In this article, we describe some of the challenges leaders will have to contend with in the years ahead and suggest strategies that will help meet those challenges.

Globalization will intensify

Globalization will continue to drive many management decisions, as it has for the past two decades. The liberalization of many of the world’s economies and the incredible speed at which China and India have been growing contributed significantly to the pre-recession boom years. Thanks to rising demand and globalized production, many companies achieved record-high levels of profitability.

Although the new era will be marked by increased protectionism, the trend toward further global integration will continue. It might slow down and certainly will change. Asian, Latin American and East European countries previously seen only as sources of cheap labor are emerging as significant markets with hundreds of millions of consumers, some new to the marketplace and others that are working their way up to the middle class. This ―next billion‖ market – which will be intensely contested -- will be among the rare growth opportunities ahead.

The rapidly developing economies also will spawn a new generation of competitors, or global challengers. Even before the Great Recession, many companies in developing economies had built a powerful international presence. In the wake of the crisis, many of these same

companies are emerging more powerful than before. They have the advantage of being based in comparatively fast-growing markets that haven’t suffered the same kind of damage as most developed nations. Building on their cost advantage and growing technological capabilities, these global challengers will increase the competitive pressures they exert on established brands. Traditional multinational companies from the industrialized countries shouldn’t underestimate them. Indeed, they need to take action, as General Electric and other smart companies already are doing.

An example of GE’s approach, known internally as ―glocalization,‖ can be seen in the conglomerate’s health care innovation program. It has already produced two significant inventions tailor-made for developing economies: a $1,000 handheld electrocardiogram (ECG) device, and a portable ultrasound machine selling for around $15,000. Designed to be small and comparatively inexpensive (the ECG device for rural India and the ultrasound machine for rural China), both inventions are now being sold in North America as well.

The changing nature of globalization will require managers to rethink their entire approach to business—from research and development and product design to manufacturing, sales, marketing and even government relations. Long-standing prejudices about business models will have to be jettisoned and a flexible quick-response mindset, capable of responding to the challenges of rapidly transforming global markets will need to be developed.

Other challenges

Continuing, rapid globalization and low-cost competition from companies based in fast-developing countries are not the only serious management challenges executives will face. They also will need to recalibrate the importance of government relations, as government becomes more involved in purchasing and economic decision-making. They will have to become more aware of changing customer behaviors and attitudes. They will also have to accept that fact that virtually everything they do will be done in a ‖fish bowl,‖ as heightened governance standards become the norm. And they will have to rethink such business fundamentals as shareholder value. That a seismic shift is taking place became clear when Jack Welch, former chairman and CEO of GE, told the Financial Times that ―on the face of it, shareholder value is the dumbest idea in the world.‖ This from a man who is famous for his commitment to managing for shareholder value and for his company’s performance against earnings estimates quarter-after-quarter, year-after- year.

If Welch’s view becomes more prevalent, it would underline a relative loss of influence for investors—something that we expect will intensify over the coming years. It would also signify a broader shift in management priorities, from the tyranny of managing for short-term results to a medium- to long-term focus. This would enable executives to more effectively balance longer-term investment against shorter-term, revenue-generating actions.

As experience shows, this is how true and lasting value is created—even for shareholders. Optimizing for the short term is not the way to create sustainable competitive advantage. So in this respect, at least, there may be a positive outcome from the Great Recession.

Learning from success

It is often said (correctly) that we must learn from past mistakes so we don’t repeat them. Less said, but equally valid, is that we need to learn from past successes. We have studied past recessions—as well corporate crises and successes— and have

distilled what we learned into seven lessons for today’s leaders as they face the new era.

1. Go on the offensive. Invest in success. We know times have been tough, but the best time to go on the offensive is when your competitors are weak. Consider IBM. During the Great Depression, business machine production fell precipitously, declining 60 percent from 1929 to 1932. At the time, IBM was a small player in the industry. But CEO Thomas B. Watson was convinced of two things: that the industry had a strong future, and that companies that were cash-strapped would turn to automation for cost savings.

Instead of cutting back, as most of its competitors did, IBM accelerated the development of a new, state-of-the-art accounting machine, launching it in 1930 (and a scaled-back, less-expensive model a year later). Starting in 1932, IBM committed 6 percent of total revenue to R&D and built America’s first corporate research laboratory. The company also added leasing to its arsenal, in turn adding legions of new customers who needed, but couldn’t afford to purchase machines. The investments paid off. During the 1930s, IBM launched three times as many products as it had in the previous decade. These and other Depression-era decisions gave the company a decisive, long-lasting advantage over its competitors. Its revenues doubled between 1928 and 1938, while industry revenues overall declined 2 percent. By 1938, IBM had leapfrogged from a distant fourth place in the business-machine industry to a close second, behind the now virtually forgotten Remington Rand.

2. Focus on customers. The market research techniques we take for granted today didn’t exist in any meaningful way prior to the Great Depression. That was when Procter & Gamble pioneered the techniques that became the industry standard. Since then, many managers have cut their R&D and product development budgets during tough times, as well as market research. Such cuts can put their companies at a serious disadvantage.

The flip side is also true: A deep understanding of how consumers are responding to a prolonged downturn can lead a company to go beyond new-product innovation and change its fundamental business model, giving the company a decisive edge. Had Kimberly-Clark not continually monitored how consumers thought and behaved during the stagflation of the late 1970s, it never would have launched the Huggies brand of disposable diapers in 1977. The diapers became the top-selling brand by 1985. Similarly, during Japan’s Lost Decade, consumers turned more to discounters and mass merchandisers, a trend that Asahi Breweries rode to success. Tough times will focus your customers’ minds; you need to focus on your customers so you can take advantage of their changing attitudes and behaviors. If anything, a slow-growth period is when you need to increase market research.

3. Unleash advertising and marketing power. In tough times, advertising and marketing expenses – classified as discretionary – are usually among the first to get slashed, even before market research and R&D. The irony is that because so many firms cut their advertising budgets, advertising costs tend to fall during recessions – meaning that the few companies that advertise aggressively get much more attention at a significantly reduced price.

This increased attention at relatively low cost can be a powerful tool, as P&G again found during the Depression. Seeing an opportunity to reach its core customers – then referred to as ―housewives‖ – by advertising on radio, the company launched the first daytime serial radio

program in 1933, a genre that became known as ―soap operas,‖ since P&G was advertising soap. Today, when competitors start to spend and try to catch up as better times return, it is either too late or very expensive.

4. Invest in the future through opportunistic mergers and acquisitions and strategic divestments. A Boston Consulting Group study found that M&A deals completed during downturns – when premiums are lower and opportunities richer – outperform those completed during upturns by an average of 14 percentage points, relative to total shareholder return. To expand its leadership in the soap market, Procter & Gamble acquired 12 brands during the 1920s; it was preparing for more acquisitions when the Depression hit. Rather than abandon its plans, P&G pushed ahead – acquiring additional brands in the United States, Britain, France and Japan. P&G introduced more successful products during the 1930s than in the previous or subsequent decades.

DuPont followed a somewhat different path. With many of its suppliers failing, the company was faced with possible shortages of raw material. So it purchased one of the suppliers facing bankruptcy. This acquisition not only helped DuPont secure the raw materials it needed, it also provided DuPont with a range of specialized chemicals that enabled it to enter new markets -- electroplating, refrigeration, bleaching, disinfectants and pesticides.

5. Employ game-changing strategies. With customers trading down and businesses cutting back, now might be the right time to develop a low-cost business model. It also might be the time to shift from selling products to selling services, or outcomes. Or a time to reinvent the business. IBM’s offer to lease accounting machines during the Depression was a game changer, reducing customers’ up-front capital expenditures, while building the customer base. To make the leasing business work, however, IBM had to develop an entirely new cash-flow equation, a different pricing and sales process (which involved making money on the machine card stock – rather like printer peripherals today), and a different approach to residual value and inventory management.

6. Be a leader. Successful leaders during the 1930s put significant emphasis on being visible to people at all levels in their companies. Richard Deupree of P&G spent significant time ensuring that employees understood the challenges facing the company and the approaches being taken to solve them. In tough times, employees are hungry for information and leadership. In an information vacuum, they will connect the dots in the worst ways imaginable.

Leaders set clear expectations. They mobilize the extended leadership team. They keep it real. And they drive results. Motivating the organization when tough decisions have to be made will require a well-balanced approach. Initiatives need clearly established milestones and metrics—and unambiguous ownership. Leaders need to track progress rigorously against those metrics and milestones, intervene when necessary, and communicate any changes in direction. Leaders also need to celebrate success and recognize team members who achieve the best results.

7. Invest in people. Retaining the best talent will become an even bigger challenge as slow growth limits career advancement opportunities. It is important to actively manage the attrition of lower-performing employees in order to ensure that there are career opportunities for the most talented people. In the 1930s, leaders focused on securing jobs for the most skilled workers, mainly by reducing the

number of working hours and, when necessary, shifting high-skilled labor to lower-skilled jobs to keep them on the payroll. They also added social benefits that in part compensated for lower wages. Today’s leaders will have to come up with innovative approaches that address not only compensation and advancement, but also solutions for issues as work-life balance and changing demographics.

Mobilizing for growth

Management teams are acutely aware of the increased pressure that comes with an economic slowdown. If anything, however, this reinforces defensive tendencies and promotes a mindset inclined to explain why growth is hard to achieve—rather than an attitude of actively seeking growth and a disproportionate share of the market.

This ―crisis mode‖ reinforces attitudes that impede growth even in normal times. These attitudes promote a risk-averse culture that increases in parallel with the increasing cost of failure for any individual. Such attitudes also slow down decision making as managers seek extra reassurance before taking action and make leaders more reluctant to empower their top managers.

So then, how can companies overcome these obstacles? Strong leadership—which creates a climate in which the risk of failure does not overwhelm real opportunities—obviously helps. Even when funds are short, it is important to allow, and even encourage, experiments and pilot programs. Keep in mind that every dollar invested has even more impact as the competition scales back. The difference between success and failure, even in the best of times, often depends on knowledge. How well does the company understand the potential of new markets for existing products? Does the company understand how the recession has affected customers? Do recent economic developments and the emergence of a ―new normal‖ mean it’s time to challenge the conventional industry wisdom and elements of business economics? Remember, the simple act of challenging business economics has led to innovative business models such as low-cost airlines, overnight delivery and online sales.

The Great Recession may be over, but an era of slow growth has begun and the new realities of business life have started to emerge. As with other major crises, the fallout from the Great Recession—and the financial meltdown that preceded it—will influence the global economy and the way business is done for decades.

But this is not necessarily bad news for all companies. Companies and their leaders will have to get used to heightened competition. Those who take the initiative, respond decisively to the challenge, differentiate themselves from less fleet-footed competitors, and execute their strategies with single-minded determination can still expect to grow. For those companies, the Great Recession and its new realities present a once-in-a-lifetime opportunity.

by David Rhodes and Daniel Stelter

David Rhodes is a London-based, senior partner of The Boston Consulting Group and the global leader of its Financial Institutions practice.

Daniel Stelter is a Berlin-based, senior partner of BCG and the global leader of its Corporate Development practice.

They are co-authors of Accelerating Out of the Great Recession: How to Win in a Slow-Growth Economy (McGraw-Hill, 2010). This article is based on the book.

Brands Bounce Back, With Some Casualties

Brands Bounce Back, With Some Casualties

Wall Street Journal

September 16, 2010

By Suzanne Vranica

As the economy begins to mend, brands are making a comeback. But a spate of high-profile corporate crises has taken a bite out of the value of some well-known brand names. According to Interbrand's annual list of the top 100 global brands, BP PLC and Toyota Motor Corp. are among those whose brand value tumbled over the past year in the face of public-relations debacles. "It was a significant year for brand-reputation travails, which hurt the value of many brands," said Stephen A. Greyser, a Harvard business-school professor specializing in brand reputation.

Interbrand, a branding firm owned by New York-based ad giant Omnicom Group Inc., has released its rankings since 1999. It says they reflect its assessment of a company's financial condition, using a formula based on net operating profit after tax. The rankings also reflect consumer-polling data on brand preferences compiled by other firms, coupled with the opinions of its own specialists. Interbrand ranks the strength of individual brands, not portfolios of brands, which is why companies like General Motors Co. and Procter & Gamble Co. don't make the list. It uses the annual rankings in part as a tool to attract new clients.

The value of the world's top 100 brands rose by a collective 4% this year to $1.20 trillion, rebounding from a 4.6% decline the previous year amid the harsh economic climate. Coca-Cola Co. retained the No.1 spot it has held for the past 11 years, and International Business Machines Corp., Microsoft Corp., Google Inc. and General Electric Co. rounded out the top five.

Interbrand does consulting work for some of the world's biggest brands, but a spokeswoman said its rankings aren't biased toward clients. "This report is based on public data and equal weighting is given to all brands," she added. None of this year's top-five brands is currently an Interbrand client, but the firm has worked for Microsoft and GE in the past. Out of the 100 brands on the list, Interbrand currently works with 20, but worked for most of them in the past. Many of this year's biggest gainers were technology companies. Internet-search giant Google's brand value rose 36%, according to Interbrand. The firm said Google's strong financial performance played a major role in the outcome, but that Google has also "solidified its brand with consumers by always updating and improving its products." Interbrand said brand value increased 23% at online retailer Amazon.com Inc. and 37% at consumer-electronics maker Apple Inc.

While Google and Amazon spend comparatively little on advertising their brands, Interbrand says the growing role that technology plays in people's lives is buoying their brand value. The biggest decliner in the study was Harley-Davidson Inc., whose brand value sank 24%, falling to No. 98 on the list from No. 73 a year ago. Interbrand said the motorcycle maker's brand value underwent a "rapid decline" as consumer's discretionary spending shriveled during the recession. "Given the financial focus of the Interbrand study these results are to be expected in light of what has gone on in the economy," said a spokesman for Harley-Davidson, which posted a steep loss for 2009 as its revenue plunged. "Based on all the other marketing research that we have, we know that the Harley-Davidson brand is among the strongest globally,"he added.

BP, besieged by bad publicity after the Deepwater Horizon oil spill, fell off Interbrand's top-100 list. The oil company, long considered one of the world's premier brands, had been on the list for nine years, and ranked as the world's 83rd most valuable brand last year.

BP has been aggressive in trying to repair its tarnished image, spending millions on ads that show BP employees vowing to clean up and restore the Gulf Coast. "We do not comment on external benchmarking studies," said a BP spokesman. Interbrand said Toyota's brand value fell 16% this year as the auto maker recalled millions of vehicles for potentially dangerous defects. Seeking to repair the damage, the auto maker, whose ranking slipped to No. 11 from No. 8 the previous year, has been running ads emphasizing its commitment to safety. "While we haven't seen the results of this year's study, Toyota remains the [auto] industry's best-selling retail brand year to date, which reflects our customers' continued confidence in the safety and reliability of our products and their trust in our brand," said Tim Morrison, corporate manager of marketing communications at Toyota Motor Sales USA Inc., in a statement. Interbrand said Toyota's brand is on the mend, but it will take BP's brand more time and effort to recover its reputation in Washington circles. "Consumers have a shorter memory than politicians," and BP's business "hinges on government trust," said Jez Frampton, chief executive of Interbrand.

Goldman Sachs Group Inc.'s brand value grew just 1% this year, Interbrand said, amid image problems stemming from the financial crisis; in the previous year it fell 10%. Goldman Sachs declined to comment. Among brands battered by the financial meltdown last year, Citigroup Inc. has begun to rebound but its brand value still decreased this year by 13%. American Express Co., which lost about 32% of its value last year, slipped 7% this year. American Express declined to comment, while a spokesman for Citigroup said "Citi is now very well positioned to regain both its business momentum and its traditional brand power. Our brand continues to be particularly strong outside the U.S."

In a bid to repair their image, financial companies have begun to reinvest in marketing their brands after cutting back on ad spending during the recession. For many brands, making up lost ground won't be easy. Consumers have been slow to abandon bargain-hunting habits they adopted during the recession, and are reluctant to pay a premium for branded products. While the improving economy has helped rebuild consumer's trust in business, it is far from a full recovery, especially in the U.S., according to an annual survey from New York public-relations firm Edelman. "Consumers are more skeptical since the shock of September 2008," said Richard Edelman, the firm's chief executive. Companies "really have to prove they have changed," and doing that nowadays takes a lot more than just advertising, he said.