Resilience. It’s a very apt word to describe South Africans and the same can be said about the businesses, organisations, and institutions that keep this great country of ours moving.
In the past few months, and even before that, IMM Graduate School has shown not only resilience, but also how much they care about their students and the success they will achieve. They’ve gone more than the extra mile. Years of constant innovation and drive to do better for their students have lead to IMM becoming front-runners in technology-enabled education, and during our age of Covid-19, it has proven to be exactly what their students need.
We had a quick chat with Charmaine du Plessis, Chief Marketing Officer at IMM, to find out how they’re supporting their students during Covid-19 and their recently launched BCom in International Supply Chain Management.
IMM has been around since 1960, and for the slightly older generation, we are the ‘household name’ for marketing qualifications. We currently offer 10 qualifications across higher certificates, diplomas, degrees, and postgrad. Our areas of expertise are marketing, business, and supply chain.
Focusing specifically on our marketing degree, these qualifications are fairly business-based, hence the BBA or BCom designation. The implication of this is that our curricula include modules such as financial management, business management, statistics, and a reasonable amount of quantitative work. Of course, the core theoretical marketing modules are in place, as well as various, very interesting, ‘applied’ marketing modules as you get to 2nd and 3rd year.
IMM is predominantly an online/distance/digital provider of qualifications. We have students from all over. There are almost 1 000 in Zimbabwe, but we also have various students in places such as the UK, Australia, India, and China. Our courses, content, and delivery model are set up to be able to support students remotely, which is ideal right now as you can imagine.
We also provide face-to-face tutorials for students who require additional help or prefer the discipline associated with a formal class schedule. Our largest Student Support Centre is in Stellenbosch, where we have over 500 students.
We like to define ourselves along 3 key dimensions:
Best-in-class qualifications: We have been offering degrees for many years, and we continually update. Many of the core principles remain constant but the case studies and applications are updated regularly.
Compelling delivery: We are probably the most flexible institution in terms of learning style. Simple yet compelling study guides, live and recorded webinars, digital interactive content, and face-to-face tutorials. We try to cater to all the various requirements and study styles.
Empathetic student support: This aspect is often overlooked by online education providers (in my opinion) and it is probably the biggest ‘gap’ between a traditional face-to-face university experience and online. Online is anonymous and it is difficult for lecturers to know when students are struggling. Because of this, we have implemented a series of interventions – not least of which is our help desk – where we are able to answer students’ questions within 15 minutes (during working hours) and slightly longer after hours. If you are to study remotely, this is a very important aspect to consider in any provider.
2. Covid-19 has changed the business landscape immeasurably. What steps will you take in the coming months to support your students?
Since 26 March, the IMM has been working non-stop to ensure that our students’ academic journey remains uninterrupted. Our various teams have not only been keeping the ‘engine going’ from home but are actually developing new products, content, platforms, and systems to make sure that our students look back at this semester as a successful experience and one that continues to push them toward their career objectives.
Our CEO, Dalein van Zyl, has been emailing students regular updates on all the important tweaks and changes to this semester’s schedule, emphasising some of the important items:
Assignments: Our assignment submission processes are ‘tried and tested’ and fully digital, or in other words, can be completed and submitted remotely, but the submission deadlines for most modules have been extended to allow a bit more flexibility for our students.
Examinations (Final Assessment): We decided to mitigate ongoing social distancing policies, so we have redesigned all the exams to allow for remote completion and submission. We’ve also put together memos and videos to help our students prepare and write an Open Book Assessment. The exam/final assessment schedule has also been tweaked and pushed out by 1 week.
Student support: Through our committed staff and our digital platforms, we have continued to provide support to our students almost 24/7.
3. Please share with us one of the courses you’re most excited about.
We recently launched our BCom International Supply Chain Management. It is an extremely relevant and interesting qualification that prepares students for the complex global trade and supply chain management sector. If you consider the most disruptive industries, as well as interesting businesses, it is not easy to ignore Amazon, one of the most valuable companies in the world. This qualification was mapped against industry standards and needs in order to develop skills that are job and industry relevant.
4. What are you looking forward to when it comes to the future of IMM Graduate School?
IMM Graduate School is at the forefront of technology-enabled education in South Africa. We have invested hugely over the last few years in systems and processes, and the result is a best-in-class combination of technology-enabled functionality with a human touch or support. We are able to offer our qualifications anywhere in the world and support students with equal intensity notwithstanding their location. At the same time, our talented and highly skilled faculty ensure that our curricula remain relevant to both graduates and future employers alike.
by Jani Grey . Q & A with IMM Graduate School – Leaders in technology-enabled education, Job Mail. Available here. [Accessed on 25 May 2020]
Euromonitor International: How is Covid-19 affecting the Top 10 Global Consumer Trends in 2020
It is May 2020. Students of the IMM Graduate School are busy writing their Final Assessments, not in a traditional examination venue, but rather on a computer, possibly at home. Now, in the midst of the coronavirus lockdown, the world has no idea how long the coronavirus will directly and indirectly affect us. What we do however know is that every individual, every company and every institution, has indeed been affected by the coronavirus in some way or another.
In this regard, Euromonitor International, a London based independent provider of strategic marketing research, did a comprehensive study to forecast how Covid-19 will possibly affect consumer trends over the medium to long term. To accomplish this, Euromonitor International re-analysed the 10 global consumer behaviour trends it identified for 2020, prior to the outbreak of the coronavirus pandemic. The objective was to potentially predict consumer behaviour once life return to (the new) normal. Below is a summary of the findings:
Trend 1: Beyond Human
According to Euromonitor (2020), prior to the outbreak of the coronavirus consumers looked at technology, including Artificial Intelligence (AI) and robots to take over certain human functions. Using a robot will certainly be welcomed by many families in completing mundane tasks such as washing dishes, ironing and even making a good cup of coffee. Companies were investigating how AI can be used in their long term strategies to improve efficiencies.
But now, during the pandemic, people are either in quarantine or lockdown, some choosing self-isolation. This has led to a need for contactless services and technology. There has been a rise in the selling of voice controlled technology, the use of chatbots (to obtain information) and the demand in smart speakers and – household devices.
Companies are now investing in robotic automation for example in some medical sectors. Walmart, is using robots to clean its floors. As people are increasingly becoming comfortable to use robots, robots are going to move from a novelty item to an essential item.
Example: Meituan Diaping (China)
Meituan Diaping, in Beijing, China, is a leading food delivery company. Since February 2020, it has been using autonomous vehicles to deliver its foods. Even though this was technology that the company was developing pre coronavirus, the pandemic forced Meituan Diaping to implement the technology sooner than originally anticipated. Their no-contact delivery has allowed it to respond to consumer demands firstly, but it also addresses environmental issues, as the vehicles ease traffic congestion and the electric cars are more environmentally friendly than normal fuel-operated cars.
Trend 2: Catch me in seconds
Through the internet and digital technology, consumers were used to receiving more content in less time. People were not interested in reading long-winded advertising messages. They were seeking personalised, authentic and appealing messages and communication channels. The consumers were expecting brands to identify the most useful content for them. They needed brands to reassure, to provide engaging narratives, and consumers therefore demanded short, speedy and multisensory messages.
Now, amidst the virus pandemic, social distancing and fewer face-to-face interactions have become part of our day-to-day lives. Consumers are worried by the virus and its implications. They are distracted by the merging of work-, home – and play life, all in the same physical space. When reaching out to consumers now, brands must rather be reassuring and supportive, as opposed to selling a product. Brands must show what they are doing to fight the virus and improve public health. Consumers want to be engaged and have fun with brands in these difficult times.
Companies would need to be agile and relevant to engage with people who are preoccupied and scared. This will place them in a good position post lockdown. The world is possibly going to face the worst recession ever, consumers are going to be extra careful on where they spend their money. Brands that were proactive during the lockdown will possibly stand out and be favoured above those that that did not engage in positive ways with their audiences.
Example: Giffgaff (UK)
Giffgaff is a mobile telephone network. The company launched an advertising campaign called ‘putting community first’ with the objective of providing people with the means to be there for each other and be able to share, through a mobile virtual network. Giffgaff went further to provide consumers with information and tips on how to deal with isolation and mental health concerns. Its focus on people rather than product or services allowed the company to build positive brand associations.
Trend 3: Frictionless mobility
People had the freedom to move around in congested cities. This has, in developed economies at least, shifted the consumer’s mind-set from ownership of some form of transport to access of transport. People had the freedom to move around and used apps and technology to access transport and pay for transport tickets.
The coronavirus has stalled this mind-set – people movement is limited and people are vigilant and cautious when it comes to mobility. People have moved away from sharing transport due to the inherent health risks, and in some cases are starting to use their owned transport again. There has been an uptake in cycling again – in Germany pop-up cycle lanes have been created, specifically designed to have enough space to allow for social distancing amongst cyclists.
Whilst consumers will slowly start resurfacing once the worst of the epidemic is over, flexible working hours will be more of the norm. Over the longer term, frictionless mobility will still be important, but maybe not to the extent as pre covid, i.e. rush hour traffic may be something of the past or at least the intensity of rush hour will be substantially reduced. Companies should be looking at investing into alternative sustainable solution, which include the removing or limitations of health threats that transport sharing brings about.
Example: Wheels (US)
Wheels, an electric bike start-up company, suffered huge losses due to the contamination scare. Wheels partnered with Nanoceptic, a company manufacturing self-cleaning service products. Nanoceptic develop a skin on scooters’ bike handles which continuously self-cleans. This allows Wheels to safely redeploy their fleet of scooters, and to adjust rental pricing plans for better deals with regular users.
The bottom line is that companies need to actively limit any health threats to their consumers.
Trend 4: Inclusive for all
Consumers were demanding that companies develop products and services that are accessible to all people, including those with physical or mental disabilities. Consumers wanted brands, products or marketing initiative which make inclusivity the foundation of their business – companies had to embrace people with disabilities, and actively try to understand the needs of such consumers. Business had to enable fully immersive opportunities for everyone.
Now, with the Covid 19 virus in full swing, this trend has become even stronger. Anxiety levels are high, especially for disabled people as they tend to have lower immune systems which makes their risk of catching the virus even more pronounced. Disabled people also requires carers, which makes social distancing impossible in some cases. It has become even more important for disabled people to have access to information. As the general public has a better understanding of the disabled’s world due to themselves being in isolation or lockdown, there has been an increase in community spirit. People are investing their own time in helping such people and putting pressure on companies to do more.
Disabled people, on the other hand, benefit from technology, for example, a greater ability to access virtual reality. Online communications enable more people to interact virtually and participate in a variety of activities. This certainly helps people with mental health problems as well as physical disabilities.
Example:UNESO World Heritage (Machu Piccu)
UNESCO, with their immersive virtual tours, allows all people, including those with physical disabilities, to access Machu Piccu in Peru. It allows viewers to really get a feel for the greatness of the site. Uvisit, the platform that UNESCO uses, enables any business to set up a virtual tour or event, allowing it to reach new audiences.
Trend 5: Minding myself
People were focused on mental wellbeing, including preventing the physiological effects of stress, worry and sleeplessness. Traditional stimulants such as alcohol and tobacco was used by practicing so-called ‘responsible stimulation’. Companies provided products and services enhancing mental wellbeing.
It has now become a matter of rebalancing, of creating a new normal. People need to manage their anxieties, therefore consumer behaviour will focus on self-care. Now, during Covid 19, people are secluded, and many are living in fear of the unknown and even claustrophobia due to living with family with no outlet for physical and/or mental space. People need to learn to live in the new state of unprecedented normality. As there are higher levels of anxiety levels due to the lockdown, people are using products and services that helped them manage their feelings and handle the severe emotional and physical situations. Herbal products and legal cannabis products are in higher demand. Social networks are used to fill the gap left by lockdown and social distancing. The uptake on relaxation and medication apps have increased.
Even after the dust of the coronavirus has settled, mental health will remain a focus. Consumption patterns will focus on the ‘self’ and good mental and physical health products will be in demand.
Example: Mindhope (Spain)
Mindhope provides mental health services. The company started a new therapy platform which connects consumers with psychologist. The platform also facilitates online appointment bookings, and is very easy to use. People who are already struggling can therefore easily cope with the use of the technology.
In general, mental wellness orientated solutions will become increasingly important as Covid-19 has already demonstrated its huge impact on physical and mental health – the ease of use and accessibility for all are key success ingredient.
Trend 6: Multifunctional homes
With the advent and growth of the coronavirus spread, people started cocooning themselves – home became a shelter from uncertainty. Businesses are actively exploring and implementing remote working and the world has seen a rise in the use of technology to make it easier to work, shop and play from home.
Now home equals the office. People are socialising in virtual space. Social media has replaced people’s previous social gatherings. Every day has become casual Friday as people are working in casual clothes from home.
School going children of all ages have moved online and people attend gym -, cooking -, and other classes online. People are now celebrating birthdays both alone and online. Consumers are using online platforms less to promote themselves, as in the past, but rather to stay connected with others. Livestream and video chats are increasingly being used by all.
Euromonitor (2020) predicts that the transition from home as the hub is here to stay. It may not be to the extreme that it is during the lockdown, but working from home will certainly become a greater reality. Consumers will furthermore change their at-home-habits – more working from home and more casual dressing will become the norm. Virtual lifestyles will run parallel with physical activities and – lifestyles when the world ‘comes out’ again.
Example: Zoom (US)
Zoom is a communications technology company. It provides functionality for companies, groups and individuals to create and attend virtual meetings. These services are offered free of charge to schools in some countries. It has become a social platform where people do remote video chatting, share drinks, do quizzes and party.
Companies need to invest in technology and other equipment to facilitate employees to effectively work from home.
Trend 7: Private personalisation
Early in 2020 consumers wanted to received tailored products and services. But there was a general hesitancy in providing personal information due to fears of who has access to data and how will such personal data be used. Business was forced to heavily invest in secure data collection methods in order to ensure privacy.
Now, people are more worried about the virus and more prepared to share data in the name of public health. Privacy concerns are put on hold in the short term. There will be a widespread increase in online ordering and payments, also amongst older people who tended to shy away from this previously, not trusting online shopping. Online shopping has become a necessity and is not a choice anymore. Companies would need to make privacy messages clear, especially for new audiences. Companies would furthermore need to review how they communicate to customers on the benefits of sharing personal data.
Example: Sentinel Health Care (US)
Sentinel is a health tech start-up that monitors consumers’ health remotely. It has launched a fever tracker application, enabled from a wireless thermometer, that sends real-time updates about an individuals’ health to healthcare systems, healthcare providers and so on. Sentinel identified a gap in the market which they were able to leverage by engaging with healthcare professionals to provide a personal solution that appeals to consumers’ desires to have a health monitor join the crisis. But consumers realised that they need to share personal data in order to be able to use Sentinel’s application. The benefits of sharing personal data, in this instance, far outweighed general fears of the potential mismanagement of data.
Trend 8: Proudly local going global
Consumers want products that both have both a local and national flavour. Covid-19 has catapulted this localisation. Consumers are searching for both national and local products and brands that highlights their local cultures, social norms, and traditional habits. Niche brands rode this wave by accentuating the localness of brands as part of their global marketing strategies. Businesses started increasingly to focus on local suppliers as borders were closed, whilst multinationals increasingly localised their overall operations. The virus has created a sense of ‘getting through this together’ through local business and communities support.
Post coronavirus consumers’ fear of contagion will still be strong enough to drive demand for local products. Local producers would need to provide stock and make the products that consumers want. Supply chains will become more transparent as consumers will want to know where their products are sourced. There will be a continued support of local business. The expected recessions after Covid- 19 will force multinational companies to invest even further in local manufacturing and supply chain services to provide more local products.
Example: Withies Delicatessen (UK)
Withies is a delicatessen in Somerset, United Kingdom, that offers local produce. With the outbreak of Covid, Withies started offering a new delivery service of freshly baked products to anxious or self-isolated consumers. Companies that adapt and introduce new services or products secure future trust and loyalty from consumers. In addition, they are expanding their reach to new consumers.
Trend 9: Reuse revolutionaries
Ethical consumers wanted a waste free future where products lasted longer and less waste was produced. Previously legislation surrounding the use of plastic shopping bags have changed in many countries, ranging from the banning of plastic bags under certain circumstances, to the consumer having to pay for plastic shopping backs in other. Such changes had led to the sharing and reuse of plastic in general. This trend lessened through Covid as people were afraid to touch products previously used, even if cleaned. There was a temporary move back to single use – and disposable products and staying healthy and safety.
Now, brands need to rethink – it is more about being clean than being green, as anxiety has moved consumer’s focus to health and safety. Over the medium term consumers will be worrying more about reinfection than green products.
But over the long term sustainability will still remain high on consumer’s agenda. Consumers will slowly return to sharing, reusing, renting and refilling. Companies will still need to embrace the reuse trend and educate consumers about the safety of reusable options. This will include clear instructions on how to reuse and recycle to avoid the spread of the virus.
Example: Refill APP (UK)
Refill APP allows consumers to refill their water bottles from a tap at specific points in the United Kingdom, free of charge. Water is generally found from either fountains or businesses which provide clean drinking water to the public. But now, with the close of many companies, Refill App’s listing has changed. For those companies, however, that can continue to safely provide drinking water, Refill still provides their locations on the app, but with an included message on health and hygiene.
Trend 10: We want clean air everywhere
Younger generations have increasingly raised concerns on air quality and demanded companies reduce emissions to provide these generations with a sustainable future. Awareness of air pollution impacted where consumers travelled and ate. Consumers favoured brands that were doing something about air quality. Companies globally continued to look towards technology to fight pollution.
Limited travel due to the coronavirus had a reversing effect on climate change. Furthermore, there is less room for eco-anxiety. Rather, the focus will shift to indoor pollution, where people will be anxious about their own health, and cleaning, washing hands, disinfecting things and so on will continue. As the lockdown loosens, consumers will refocus on sustainable living to the advantage of both people and the planet. There will be a combined focus on both the prevention of air pollution as well as being clean as the impact of pollution on people with respiratory problems will increase respiratory viral infection.
Consumers will seek solutions against pollution and require companies to actively innovate in their drive to prevent pollution.
Example: BYD (China)
BYD is the biggest electric vehicle manufacturer in China. With the coronavirus epidemic, BYD adjusted its production lines to supply face marks and hand sanitisers, to the volumes of five million face marks and 300 00 bottles of hand sanitisers produced per day. The switching of BYD’s production to manufacture protective equipment captured consumers’ hearts. Companies such as BYD may, post lockdown, be ahead in terms of consumer goodwill relative to companies who did not similar things during the virus spread.
As per Euromonitor International (2020), the coronavirus has to a greater or lesser degree, impacted all the pre-identified consumer trends for 2020:
The trends ‘multifunctional homes’, ‘beyond human’, ‘minding myself’, ‘proudly local’, ‘going global’ and ‘inclusive for all’ experienced an immediate spike as a result of the virus. This was followed by a long term shift in consumer behaviour relating to these trends.
‘Catch me in seconds’ experienced an immediate spike but is expected to follow its pre-covid patterns.
‘We want clean air everywhere’ has not changed, but may be even more pronounced due to the correlation between poor air quality, the coronavirus and respiratory problems.
‘Frictionless mobility’, ‘reuse revolutionaries’ and ‘private personalisation’ were trends that saw an immediate drop but which will expectedly recover after normalisation.
The key take-aways from this research conducted by Euromonitor (2020) are:
Currently, both consumers and business are dealing with extreme disruption, necessitating the need for rapid adaption. Brands need to be repurposed as being useful, helpful and supportive.
In the near term people and companies should use this time effectively to do tasks that they have not had time to do before. Planning should focus on returning to a new normal.
In the long term companies will be forced to reshape their future strategy planning, build in flexibility, prepare for multiple scenarios and possibilities and overall embrace technology.
Angus, A (2020). How is COVID-19 affecting the top 10 global consumer trends 2020?, webinar file in How is COVID-19 affecting the top 10 global consumer trends 2020?, Euromonitor International. Available here. [Accessed on 15 May 2020]
Coronavirus has shown how fragile our cost-driven, just-in-time processes really are. With practitioners adapting to survive while planning more resilient systems for the future, will procurement ever be the same?
When the first container ship arriving from China at the port of Vancouver was cancelled in January this year, it didn’t seem particularly significant. By mid-March, when China’s struggle with Covid-19, aka coronavirus, had become so all-consuming that 30 more journeys had been cancelled, Vancouver’s port officials were facing a crisis of historic magnitude.
That consumer goods weren’t being unloaded from China as per the schedule was less of a concern than the fact that Canada, which usually filled those containers with lentils and peas, had two months’ worth of crops stuck in port (historically, roughly a third of Canada’s crops have been exported in containers). Imports were also disrupted: one local food company had to pay a premium for spices from Thailand which arrived a month behind schedule. Brazil’s coffee makers suffered too as the missing containers made it hard for them to ship their products to China.
The problems of countries and companies along just one shipping route indicate why some economists, notably Simon MacAdam at consultancy Capital Economics, are predicting a 20% dip in trade volumes this year. That is significantly worse than the last recession in 2009, when volumes fell by 13%.
The bottlenecks in Vancouver did not grab headlines in the same way as various countries’ difficulties in speeding up production of ventilator kits. But as Professor Tim Benton, research director of the Chatham House think tank’s energy, environment and resources programme, says, they remind us: “We have created a global supply chain that, for all its financial efficiencies, has very little resilience.”
Coffee is a case in point. One industry estimate, cited by The Economist, suggests that 29 companies across 18 countries need to collaborate to make “one humble cup”. That may, Benton observes, work financially for the companies concerned – and for consumers who can buy their favourite brand at a lower cost – but it cannot, in any true sense of the word, be described as efficient. A hurricane, strike or outbreak of coronavirus at any of those 29 companies could severely disrupt the supply chain, and the spread of the virus into Latin America has already led to huge spikes in commodity prices as buyers anticipate lockdowns and shuttered businesses. And that’s without the kind of surge in consumer demand that led to a rise of more than 20% in British supermarket sales during March 2020.
All those photographs of empty shelves, explicitly condemning shoppers for panic buying and hoarding, obscure the fact, Benton says, that governments are hoarding too. “Kazakhstan banned exports of wheat flour, Thailand has stopped exporting eggs, Vietnam has suspended rice exports and Russia is talking about limiting grain exports to protect supplies,” he says. “It’s not clear how many more governments will follow suit, but if they keep putting their nation first, the situation can only get worse.” Protectionist policies, coupled with panic buying, could create a self-perpetuating cycle of rising food prices.
What many analysts referred to as the “hidden costs of globalisation” were becoming visible even before the pandemic struck. “There was a clear sense that we had reached peak globalisation,” says Andrew Missingham, the co-founder of creative management consultancy B+A. “The political shocks of 2016, protectionist trade policies and climate change were already asking fundamental questions about that model.” Some of the foundations which businesses took for granted no longer exist in a pandemic age. “If you look at a business like ours, for example, it was predicated on three factors – the internet, cheap flights and free movement of people – and two of those no longer apply,” says Missingham.
Since the last global economic crisis in 2007-2008, many parts of the procurement profession have performed Herculean labours, protecting profits, companies and jobs by cutting billions of dollars in cost from the world’s supply chains. They did that, primarily, by seeking out places where they could make things at the lowest cost – often in China – and minimising inventory by applying lean manufacturing or ‘just-in-time’ principles.
The result is a global supply chain that is interconnected, intricate and sometimes unfathomable. As Duncan Brock, group director, CIPS, says: “The interwoven nature of modern supply chains means it is almost impossible to say for certain just how reliant we are on China for manufacturing and assembly.” Companies that placed such trust in Chinese suppliers that they used single-sourcing now face severe disruption.
Diverse sourcing strategies
“One key lesson from the pandemic is the importance of spreading the risk,” says Tim Lawrence, supply chain expert at PA Consulting. “Companies should avoid clustering suppliers in one region and around similar supply chains, reconsider whether it makes sense to create isolated supply chains and understand the location risks in every tier of the supply chain. Your supply chain may not be as diverse as you like to think – for example, your alternative suppliers may themselves be reliant on tier 3 or tier 4 suppliers in the same region.”
The obvious, if laborious, way to avoid such problems is to map your supply chain. “It isn’t easy,” admits Lawrence.
“It took Airbus five years to do it with the A320 passenger aircraft. And supply chains change so fast that the map might be out of date on the day you complete it, but digital technologies – especially 5G, data analytics and artificial intelligence – are proving increasingly helpful. They can improve visibility and connectivity, generate early warnings, and help free up supply chain leaders to focus on the strategic issues.”
Strategic questions would include assessing when it makes sense to keep the supply chain within the business. “There are certain components that are so critical to the business that the most secure supply chain might be to vertically integrate them,” says Lawrence.
As global supply chains hit bottlenecks many neither envisaged or expected, Missingham predicts: “We will see a lot more decentralisation, regionalisation and localisation.” Some pundits have talked of a ‘great reset’, where reshoring becomes the new norm. In an increasingly automated workplace, labour costs are no longer as critical when locating factories. Last year, multinational toolmaker Stanley Black & Decker shifted production of its Craftsman tools from China to Fort Worth, Texas, without increasing costs.
Brock expects new sourcing strategies to emerge but warns that any ‘reset’ will take time: “This may be the last straw for global sourcing as supply chain managers look local but, to put this in context, 290 of Apple’s 800 suppliers are based in China so such a strategy would take years to implement.”
Diversifying a supplier base is not always straightforward. Companies may be required, Brock says, to form alliances within their sector to develop new sources of supply where choice is limited or existing suppliers are clustered in the same region. Unilever has opted to protect the suppliers it already has, announcing a £420m cashflow relief scheme to expedite payments to SMEs in its network and offering credit to small retailers.
Learning just in time
Just-in-time manufacturing – reducing inventories to 15-30 days of stock or even less – has been a multi-billion-dollar boon for the global economy. Lawrence does not foresee a wholesale rejection of just-in-time or lean, but a reappraisal based on a more realistic assessment of the potential cost to the business: “There will be certain components and materials where you decide that it is more efficient, in the broad sense, to have six to eight weeks’ stock than three or four.”
Popularised by Robert Hall in his 1987 book Zero Inventories, the just-in-time philosophy always sat uncomfortably alongside procurement’s cautious ‘just in case’ approach to buying inventory. Dazzled by the savings, many companies ignored the fact just-in-time made it much harder for procurement to understand how extensive, responsive and opaque supply chains really were. This truth came home in February when a South Carolina hospital ran out of surgical gowns. Its traditional supplier in China had contamination concerns over its stock – not related to coronavirus – but when managers tried to buy replacements, with the pandemic escalating, they struggled.
But in the middle of a crisis this severe, there is also a temptation to overestimate how profoundly our behaviour as individuals, companies and organisations will change. The 2007-2008 depression signalled, as so many people forecast at the time, the end of the road for a certain type of free market capitalism. It seemed a reasonable proposition at the time but it didn’t work out that way. The idea of getting back to ‘business as usual’ can induce a certain complacency.
In this crisis, many managers – not just in procurement – will argue that nobody could have seen this coming. That is true, up to a point. Nobody could have predicted how quickly and radically Covid-19 would change the way we live and work. Yet, for those companies which were paying attention, the signs were there to be interpreted.
The US grocery chain H-E-B began monitoring what was happening in China in the second week of January. After two weeks of analysing various sourcing reports and maintaining close, constant contact with companies in China, the retailer redrafted the disaster plans it had used for the swine flu outbreak in 2009 and Hurricane Harvey in 2017 to confront coronavirus.
As Craig Boyan, H-E-B’s president, told Texas Monthly: “Chinese retailers sent some pretty thorough information about the early days of the outbreak, how that affected grocery retail, how employees were addressing sanitisation and social distancing, how quarantine affected the supply chain, how shopping behaviour changed and what steps they wished they’d taken to get ahead earlier in the cycle.”
Using that information, H-E-B promptly took various steps: forming a remote working committee to coordinate policy and actions, reducing opening hours to give more time to put product on shelves, rationing certain product purchases and paying local beer distributors to bring eggs to its stores. Even so, Boyan admits, they did not resolve every challenge: “We’re still struggling to get eggs and we still have a hard time understanding why toilet rolls were the first things to go out of stock.”
Planning to fail
If the coronavirus is a black swan event, there is an obvious temptation to plan on the basis that it will never happen again – or at least not in our working lives. The call of the next quarter’s targets can often sound more compelling, but Lawrence says supply chain leaders need to change their mindset. “It is easy to focus on the small things that happen often, or may come up in the next three to six months, and plan scenarios for those, but to be honest you could delegate that task to the technology. As this pandemic shows, it would pay companies to look at the really big things that don’t happen very often and run scenarios for those.”
Understanding risk is partly about what supply chain leaders know but also, Missingham says, about what they do with what they know: “People working in supply chains are, in my experience, real experts in the people, challenges and opportunities they face – be that individual components or particular raw materials. The problem is that that knowledge is too narrowly held within organisations. In future, one of the important jobs for supply chain specialists will be to educate a broader part of the business.”
Covid-19 has shed an unforgiving light on every flaw in the world’s supply chain. The pandemic has shut factories, stalled shipments, fuelled labour shortages, closed borders and will, the United Nations estimates, cost the global economy at least $1trn. “In times of crisis and uncertainty, it is hard for businesses to plan but supply chain managers who act now and keep a close eye on such data as the purchasing managers indices as they make plans can mitigate the damage,” says Brock.
Yet in future, when supply chain leaders have the breathing space to think, let alone plan, for the long term, they might conclude that prevention is the best form of mitigation. Companies which neglect the opportunity to fundamentally rethink their supply chains do so at their own peril.
That is especially true, Benton argues, when it comes to defining a more sustainable, healthy and environmentally friendly food production system.
As he says: “The question is not ‘will it happen?’ The question is ‘when will it happen?’ We could have started to create a sustainable, equitable and nutritious food system in 2003, after the outbreak of SARS. It could happen now or it could happen in 10 years’ time when the next crisis occurs, but for the sake of our health, and the health of our planet, it cannot not happen.” What goes for the food industry, you suspect, goes for the other sectors of the global economy.
The competition is no longer between brands or even between companies; it is between supply chains (networks). Supply chains in the time of coronavirus have changed, possibly forever. MARZIA STORPIOLI reports.
Supply chain management has been likened to a philosophy, a concept rather than an essential service.
Historically, companies relied on strong brands and good products to win over the consumer. Competitive advantage was gained by the organisation based on the strength of its brands and its reputation for quality products.
But as the COVID-19 pandemic continues its inexorable march across the globe, supply chain management is no longer being considered merely a concept, but rather a life-saving essential service used for the cohesion of all supply chains so that they may work in concert with one another in order to satiate the needs and wants of people and businesses at all times, including times of crises.
It’s useful to remember wars have been won and lost by the implementation and control of either effective and efficient supply chain management, or the lack of using it to its full potential, as was experienced during the Napoleonic Wars and World War ll. There is little doubt that the post-COVID-19 world will be decidedly different to life as we knew it prior to this scourge befalling us.
There’s no doubt most nations were caught unprepared by its rapid advance. In South Africa, consumers – like those across the globe – adapted their buying behaviour to “cope with this rapidly evolving situation”, as Nielsen researchers put it.
Retail outlets – supermarkets, pharmacies and wholesalers – were unable to satisfy consumer demand for sanitiser products, demonstrating the inability of supply chains within South Africa, and globally, to respond to a meteoric increase in demand for hand washes and sanitiser products, household and industrial bleaches and surface cleaning solutions driven by the global crisis.
Just-in-time (JIT) and lean manufacturing, once seen as the pinnacle of achievement in supply chain performance, may no longer be effective. They were implemented across most global supply chains in the face of mounting pressure to reduce supply chain costs – the aim being to continually strive for increasing levels of efficiency while reducing costs overall.
Efficient, but not robust
These supply chains are operating on razor-thin margins, so much so that they are no longer robust and unable to respond to ‘shocks’ in the system, and have limited capacity to respond to disruption in their supply chains. They are efficient, but they are not robust.
If the disruption continues, eventually these supply chains will stall – manufacturing will stop due to a lack of raw materials or spare parts.
Today, companies that achieve a sustained competitive advantage (Zara, 3M and Dell) are those who have invested significantly in developing responsive logistics capabilities. They are demand-driven and designed from the customer backwards (rather than from operational capability forward – forecast driven). Their supply chains are agile and responsive to changes in consumer behaviour.
Talking of consumer behaviour, self-preservation reigned ahead of South Africa’s national lockdown as the ‘haves’ stockpiled goods at the expense of the poor, the needy, the aged and the sick.
Imagine if the world did not have an effective and efficiently run supply chain to constantly channel food, fuel and other essentials to replace those that have been exhausted because of this ‘feeding frenzy’. There would be further chaos, indescribable misery, an uncontrolled mortality rate and above all, a world economic recession that would surpass the 1929 financial crash!
With the pandemic spreading to South Africa a few months after the initial outbreak in China, Nielsen was able to research global markets, delivering insights into how retailers are dealing with challenges brought about by coronavirus.
Turning a crisis into an opportunity
The research shows that retailers are facing three primary challenges: insufficient inventory of some categories, difficulty in logistics and distribution, and inadequate staff to deliver orders.
Those able to organise resources and respond actively to the epidemic and launch measures to “help turn crisis into opportunity” will thrive. These, Nielsen reported, included “flexible co-ordination of participants in the supply chain, ensuring the efficiency of product supply, showing care and concern for employees, rationally deploying staff, adjusting the store’s operating hours, expanding businesses through online channels and in community and strengthening corporate brand marketing to enhance consumers’ trust and creating a favourable impression”.
Nielsen has identified six key consumer behaviour threshold levels that tie directly to “concerns around the novel coronavirus outbreak. These thresholds offer signals of spending patterns, particularly for emergency pantry items and health supplies with these patterns being mirrored across multiple markets”.
As African countries such as South Africa and Kenya announced their country-specific responses to the outbreak, Nielsen found that global consumers were adapting their purchase behaviour to cope with the rapidly evolving situation.
“As patterns begin to emerge in response to news events of this nature, it will be imperative for companies to learn from these scenarios so they can sustain growth even in times where COVID-19 is deeply impacting people’s lives. These patterns will help provide leading and trailing indicators to those trying to understand how people will respond as developments continue to play out at different times in different countries,” said Scott McKenzie, Nielsen’s global intelligence leader, adding that this would be critical to understand as stores worked to maintain supply levels of in-demand items.
South Africans entered threshold #5 ‘Restricted Living’ on Friday 27 March 2020. Consumer behaviour at this stage was characterised by severely restricted shopping and constraints due to supply shortages, delivery fulfilment challenges and caps on product quantities, Nielsen reported.
The lessons learned
Of the retailers surveyed by Nielsen on their attitudes towards business for the rest of the year, 67% said they would make efforts to expand online channels and accelerate home-based business / retail warehouse layout.
“Fifty-three [percent] said they would change their product mix according to the shopping habits of consumers and increase the inventory and on-shelf number of health, disinfectant and protection products,” Nielsen reported. “Forty-three percent of the retailers say that they would work on their supply chains, especially those for fresh food, strengthen the ties with various brands and enhance communication efficiency.”
Robots vs Humans: A compelling story of a powerful and impactful experience
Ads24 won a bronze in the 2019 Assegai Integrated Marketing Awards for its Food for Thought experiential media campaign. In its third year, the 2019 event was themed Robots vs Humans. This is the case study on how the award-winning activation was conceptualised and rolled out.
To cut through the plethora of activations and events aimed at media agencies and advertisers, Ads24 required a single-minded reason for its existence. It was out of this that Food for Thought was conceptualised, packaged and promoted to inspire and inform targeted individuals about cutting edge developments impacting on their careers and their lives.
In Food for Thought, Ads24 created a brand and a vehicle for giving back in an impactful and memorable way, with a healthy return on effort and investment.
In an industry consistently exposed to trends, strategies and knowledge about its field of expertise i.e. media and advertising, Ads24 wanted to create a campaign in which it could influence business and leadership thinking as well as refocus attention to the critical role media owners, brand owners and advertisers play in bridging the gap in the minds of consumers between the now and the future.
The objective of the campaign was to position Ads24 as tribe leaders and critical business influencers within the communication space. It should strengthen business relationships and encourage collaboration through a powerful and impactful experience while reminding key industry advertising leaders about the influential nature of media. Ultimately, the company wanted to grow high-level involvement with top decision makers at media agencies and direct advertiser clients.
The strategy was to ensure Food for Thought stood out from industry clutter via a media industry event that encouraged progressive learning as well as debate around the economic, political, environmental and technological forces shaping the future of business in South Africa. Ads24 had to ensure that the event challenged everyone’s thinking and drove curiosity in an impactful way.
Enormous attention was paid to creating details that provided a full sensory experience. Tactics used to achieve this was through a hyper-personalised and carefully planned invitation process; creating a thought-provoking experience and journey on the day for all attendees; developing an integrated PR plan during and post-event, and maximising social media during and post-event
The big idea and its implementation
The world and its economies are experiencing unprecedented times. In every aspect of life, humans face a complex array of sensitive challenges that call for extraordinary responses and creative leadership. There is a massive shift in consumer mentality and media organisations need to proactively adapt to lead this dynamic environment.
Ads24 created an event positioned between a world dominated by artificial intelligence and technology, and one desperate for human connection.
The invitation was issued in the form of a book written by one of the speakers called We Are Still Human, by Brad Shorkend and Andy Golding. The book led to a hidden message in one of its pages, creating engagement and appealing to the natural human inquisitiveness. It also led to another very important feature: the RSVP
For this, Ads24 used hyper-personalisation by using real time data and leveraging of artificial intelligence to deliver a more relevant and surprising experience for the audience. This was done through creating an algorithm as part of the RSVP which predicted a personal surprise for guests to take home, further illustrating the impact of personal consumer centered communication.
This event was designed from start to finish to engage every sense and challenge thinking. Every aspect was created to juxtapose the human touch with robotic interpretations. The starting point was a taste bud hack. Each person was invited to take a pill made from the ‘miracle berry’, synsepalum dulcificum. A glass of freshly squeezed lemon juice was then offered. The pill had the ability to mask taste and instead of eye-watering, tart lemon, each person experienced a sweet orange juice flavour.
This served as a metaphor on how we consume news and how easily we are fooled to digest fake news – the very opposite of what we pride ourselves in – the facts, the news and the search for truth.
Each food experience contrasted artisanal, handmade delights with a robotic version of the same. Fresh flapjacks topped with creamy mascarpone cheese and rich berry jam was paired with 3D-printed mascarpone cheese on spirulina-infused flapjacks with pipettes of berry compote. The delicious aroma of fresh-pressed coffee was served side-by-side with coffee cubes.
Each table setting was also designed to represent robots or humans and each attendee was assigned one or the other version of the main meal. Although the outcome of the meal was the same, each component was created by hand or by machine. This created an exciting atmosphere of curiousity and experimentation, culminating in desserts delivered by drones.
Content and speakers
Ads24 focused on different aspects of the future by looking at the incredible pace of AI and technology and how it’s reshaping our existence in an increasingly automated economy. With so many areas in which the media and communication is changing, from how we consume news to social media, fake news, hyper-personalisation and programmatic buying, if we don’t keep pace and remain agile to these changes, we face professional extinction.
The line-up included public speaker, entrepreneur and author of the best-selling business book, Legacide, Richard Mulholland, Brad Shorkend, one of the authors of We Are Still Human, and computer scientist, Rapelang Rabana.
Each shared their views on how to stay ahead of the game in a world where the word, ‘phigital’ (physical and digital), is the new normal. Comedian, author and speaker, Don Packett, refereed the debate by posing the questions: Where are we today in the fight between humans and robots? Where will our businesses be by 2030? And, how do we prepare for the journey? We explored the dangers of legacy thinking, how AI can be a tool to advance civilisation and how to be a good human in a technologically shifting world. They raised a few eyebrows, challenged the way we see our industry and our world, and opened the door to a spirited conversation around the future of media in 2030.
PR and social media
A series of thought leadership pieces were created based on each of the topics discussed at the event. Every week, for four weeks, a piece was circulated to media. Included in the pieces was a short 30-second video taken at the event relating back to the specific speaker/topic. This insured that when the article was published, readers would have full context to what was discussed/debated at the event.
Key messages were taken and posted on social media with either images or short 30-second videos from the event.
Return on investment
Ads24 Food for Thought 2019 provided insight into a world where human connection and artificial intelligence create new opportunities and challenges for the media industry and our world. The event solidified Ads24 as a thought leader among influential media partners and as a competitive media owner in a dynamic and constantly evolving industry.
73 % of those invited attended the event
80% gave us a perfect score for relevant content
Organic Social media engagement on the day of the event increased to 6.2% compared to the average rate for May of 1.8%.
Content series allowed for further organic reach:
Post reach increased by 107%
Post engagement increased by 300%
Page likes increased by 23%
Page views increased by 78%
Page followers increased by 14%
Average time spent on integrated content: 3 minutes
We achieved an overall PR value average of R6.8 million
The ins and outs of successful rewards and loyalty programmes
Research has shown middle-income South Africans are members of at least nine loyalty plans, while membership is set to grow as smartphones penetrate more of the market. JUSTIN BROWN finds out more about what makes a rewards programme successful, and where opportunities lie.
Over 24 million South Africans are members of rewards and loyalty programmes, of which there are more than 100 in existence.
The most popular schemes are those offered by grocery, health and beauty retailers.
Steve Burnstone, CEO of Eighty20, a Cape Town-based consultancy, says his company’s research found that middle-income South Africans were members of, on average, nine loyalty plans.
Burnstone believes rewards plan memberships will rise significantly as smartphone penetration increases in South Africa.
A key consideration in South Africa is how to provide loyalty offerings to low-income consumers, he says. If a customer does not spend much, then it is hard to reward them, but Burnstone believes it is possible to reward all types of customers.
But rewards programmes are crucial, no matter what the economic circumstances.
“In good times they help grow the business beyond what would normally be possible; in more difficult economic times they should help to defend existing profitability,” he says.
One of the key benefits of any loyalty plan is data analysis and the segmentation opportunities that arise.
For a grocery retailer, a rewards member will swipe their card more than 80% of the time when they shop, giving a detailed view of how that customer is spending their money, Burnstone explains.
A loyalty scheme can provide a lot more information about customers (e.g. birthday, lifestyle preferences, life stage, etc.), he adds.
eBucks Rewards CEO, Johan Moolman, explains eBucks’ segmented rewards plan in which different sub-segments have been developed using specific criteria.
It is worth noting that eBucks, the loyalty programme for First National Bank (FNB) and Rand Merchant Bank (RMB) Private Bank, started almost 20 years ago in the year 2000.
“There are 6.5 million customers that have got eBucks accounts of which between 2.7 million and 2.8 million members are active,” he says.
eBucks pays out close to R2.5 billion in rewards each year, and since its inception, has paid R13 billion to its members, Moolman says.
Yumna Frizlar-Wyngaard, Kauai marketing manager, outlines how the company’s loyalty plan allows for segmentation by geographical region, by demographics and by behaviour. Kauai, which has 162 stores, has over 100 000 people signed up to its scheme.
Rachel Wrigglesworth, Clicks chief commercial officer, says the data gathered from the Clicks ClubCard members allows the company to enhance its customer experience. To put ClubCard in perspective, Wrigglesworth says that at the end of August last year, the offering had eight million active members.
Clicks introduced ClubCard to the Western Cape in 1995, and in 1996 it was launched nationally.
A rewards programme can generate extra revenue, through advertising for example, but eBucks and Kauai haven’t gone this route.
Moolman says: “eBucks is there to gain new customers, entrench customers and cross-sell [for FNB and RMB]. eBucks is not there to make money.”
Given the insights that loyalty plans provide, there is an opportunity for a company to cut costs or hike revenue by bringing about change to clients’ behaviour, he explains.
“There are massive cost savings to be had by getting a customer to take up a product digitally rather than going into a branch,” he says.
A big plus for the retailer offering a rewards scheme is the ability to move stock or products quickly by special offers aimed at loyal customers. Burnstone agrees that this is a benefit but warns that these offers need to be relevant, otherwise customers will feel spammed and will disengage.
Kauai rewards programme offers its loyal customers specific promotions, says Frizlar-Wyngaard. The power of a loyalty plan is that it enables the owner of the plan to communicate swiftly with members. Kauai has the ability to reach its customers through its app, via texts and e-mail. “This allows us to be agile and keep customers informed,” she adds.
The personalisation touch
Another opportunity offered by a rewards plan is personalisation for each member, a key trend in the rewards industry. Mobile convenience is another important trend, says Wrigglesworth.
“Loyalty programmes must be accessible on mobile. This requirement will become increasingly important, especially with the advent of mobile payment,” she adds.
It is vital that rewards and incentives are individualised and relevant to the consumer. A report by US market research company Forrester, released in January this year, says that personalisation implemented by rewards schemes are usually too obsessed with the purchases that members make.
Loyalty schemes must ensure that marketing personalisation delivers relevance, builds resonance, and shows resilience to get the attention of customers, according to Forrester.
The best place to improve personalisation is with a rewards schemes’ best customers, the report adds.
Burnstone says he has seen an increase in attempts at personalisation by loyalty plans.
“App-based programmes have an advantage here as they can be used by businesses to set targets or challenges for customers with a range of relevant rewards available,” he says.
Frizlar-Wyngaard says that Kauai includes personalisation in its loyalty scheme. These campaigns include compensating customers when they move up to the next loyalty tier and rewarding them on their birthday. “Customers are seeking personalised messages more than ever,” she adds.
The bottom line
Rewards schemes build loyalty within a company’s customer base, and this has a positive impact on a company’s bottom line.
Burnstone says that his company’s research showed that members of rewards plans acknowledged that specific programmes helped changed their behaviour.
For effective schemes there was often as much as five to 10% increase in turnover from members while some plans see around 10% uplift, he adds.
“We believe this then makes an incredibly compelling case for loyalty programmes,” Burnstone says.
Wrigglesworth believes a benefit of loyalty is that Clicks ClubCard customers shop more frequently and will spend on average more on each trip to the shop than an ordinary Clicks customer.
What had proved successful for loyalty programmes was the fact that they deliver transparent financial rewards, she says.
Turning to what has been successful, Moolman says digital enablement of rewards had worked well for eBucks.
POPIA and privacy
Part of running a loyalty programme is complying with the Protection of Personal Information Act (POPIA).
Burnstone says that he has found that South African corporates tend to be very eager to comply.
In addition, most of Eighty20’s clients look to the European Union’s General Data Protection Regulation as a guideline about how to treat customer information.
Moolman says that eBucks takes all laws seriously. “The security of that data is of the utmost importance to us.”
Kauai consulted with a POPIA specialist when setting up its app, and ensured that the terms and conditions clearly state how the company will use customers’ data, Frizlar-Wyngaard says.
Kauai does not sell customer data or share it with third parties, while Clicks ClubCard continues to follow stringent guidelines relating to customer data.
Don’t be distracted by the ‘shiny new objects’ arising from the advance of technology
The ‘father of open innovation’, Henry Chesbrough, has just published a follow-up to his ground-breaking first book. He believes business must extend beyond the creation of new technologies, to also include their broad dissemination and deep absorption, in order to prosper from new technologies. GLENDA NEVILL reports.
‘Open innovation is a term used to promote an information age mind-set toward innovation that runs counter to the secrecy and silo mentality of traditional corporate research labs.’ ~ Wikipedia
Right now, think tanks and scientists and researchers across the globe are collaborating in the search for a coronavirus vaccine (or cure).
This is a timeous reminder, says Irving Wladawsky-Berger, Research Affiliate at MIT’s Sloan School of Management and Fellow of the Initiative on the Digital Economy and of the MIT Connection Science initiative, that the open innovation model is “the perfect vehicle for today’s fast-moving environment, which includes the current race for a coronavirus vaccine”.
Wladawsky-Berger was blogging about adjunct professor and the faculty director of the Garwood Centre for Corporate Innovation at the Haas School of Business at the University of California, Berkeley, Henry Chesbrough’s second book (the first was Open Innovation: The New Imperative for Creating and Profiting from Technology, published in 2003). Seventeen years after his groundbreaking publication first hit the stands, Chesbrough authored the follow-up, Open Innovation Results: Going Beyond the Hype and Getting Down to Business.
In it, he writes: “We must extend beyond the creation of new technologies, to also include their broad dissemination and deep absorption, in order to prosper from new technologies. We distract ourselves with the ‘shiny new objects’ that arise from the advance of technology.
“All too often, the front end of the innovation process is not connected to the businesses that are to commercialise any new technologies. To realise the potential from exponential technologies, we must refocus our attention on the things that really matter in innovation (instead of simply starting another one and blithely ignoring what happens afterwards). That will require us to rethink innovation, both inside organisations and in society as a whole.”
Essentially, he argues that generating technology alone is not enough. It must also be broadly disseminated, and then absorbed and put to work before its full value is realised. The three facets of innovation, he says, are generation, dissemination and absorption. He uses real examples of global businesses to illustrate both successes and failures of open innovation.
Closed innovation principles
Open innovation principles
The smart people in the field work for us.
Not all the smart people work for us, so we must find and tap into the knowledge and expertise of bright individuals outside our company.
To profit from R&D, we must discover it, develop it, and ship it ourselves.
External R&D can create significant value: internal R&D is needed to claim some portion of that value.
If we discover it ourselves, we will get it to the market first.
We don’t have to originate the research to profit from it.
The company that gets an innovation to the market first will win.
Building a better business model is better than getting to the market first.
If we create the most and the best ideas in the industry, we will win.
If we make the best use of internal and external ideas, we will win.
We should control our intellectual property (IP) so that our competitors don’t profit from our ideas
We should profit from others’ use of our IP, and we should buy others’ IP whenever it advances our business model.
The H&M story
The global fashion brand and its foundation wanted to reinvent the fashion industry (a ‘planet intensive’ industry), and turn it into one that eliminates waste. H&M collaborated with Accenture and KTH Royal Institute of Technology in Stockholm to apply and accelerate innovation at scale through a Global Change Award. It offers an innovation accelerator and coaching to help the winners turn their ideas into reality, while Accenture delivers knowledge and insights into the future of fashion and retail. Analytics and thought leadership are used to identify the trends shaping sustainable fashion, and Accenture creates reports on the trends in circular fashion and open innovation to share with the broad industry.
Keeping within the concept of open innovation, H&M has also opened up its supply chain to rivals. Using Treadler, its B2B service that helps clients “accelerate sustainable change”, it will “enable its clients to benefit from H&M Group’s expertise, long-term supplier partnerships and strategic sustainability work, thereby helping them to overcome initial business barriers and accelerate sustainable change”.
“We see the opportunity to utilise the full potential of H&M Group’s extensive investments and progressive sustainability work by catering to clients’ needs and contributing to driving long-term growth for H&M Group, while driving change in our industry. In discussions with other companies, we have experienced a demand for these kinds of services,” said Gustaf Asp, managing director of Treadler, in March. Treadler will “initially work on a small scale and provide a service that is tailored to suit the need of each client, covering all steps from product development to sourcing, production and logistics”.
The Amazon story
Amazon relied on open source innovation to build the capability of its cloud based voice service platform, Alexa. In an article on Open Innovation within Business Ecosystems: A Tale from Amazon.com, published on researchgate.net, writers Isckia Thierry and Denis Lescop detail how the massive tech and ecommerce company used outside developers to create “more than 30 000 skills for Alexa, allowing the customers to control more than 4 000 smart home devices offered by 1 200 unique brands”. Amazon, they point out, “has to rely on open source innovation to ensure widespread adoption of the platform”.
Recently, Amazon opened a 966 square metre cashier free grocery store in Seattle. As the Wall Street Journal reported, the store will “serve as a showcase for its technology as it seeks to sell its system to other businesses”. The technology would likely be offered as a service, either under a licensing or profit sharing model. Currently, twenty-five smaller Amazon Go stores operate in the US.
The Philips story
Back in 1998, Philips established the Philips High Tech Campus. The idea was to centralise its research and development in one place. Later, it was renamed High Tech Campus Eindhoven after Philips allowed access to other companies and a technical university. Philips was able to use knowledge and insights from other experts, a “fruitful and intriguing experiment in open innovation”, as Atte Isomäki wrote in a blog on the Viima platform.
As an example of useful open innovation collaboration, Philips launched a joint venture with the technical university and other organisations to tackle major challenges such as affordable access to high-quality healthcare and energy-efficient lighting for densely populated cities. “This is a great example of open collaboration between the private and public sectors in order to cross-link research topics and knowledge to make amazing discoveries,” Isomäki wrote.
It also has MiPlaza, an open innovation lab where companies can develop applications using Philips research. In return, Philips can use the lab inventions to improve its own products.
The Netflix story
Back in 2006, Netflix launched an open innovation challenge, the Netflix Prize, open to the public. It wanted to find a filtering algorithm to improve user movie or series suggestions by 10%. There was a $1 million prize attached. Forty thousand teams from 186 countries entered.
In just under three years, two teams managed to live up to the challenge. “However, as the algorithm of the grand-prize-winning team was too costly to engineer, Netflix decided to go with one of the runner ups instead who had an improvement rate of 8.43%,” Isomäki reported.
“Netflix’s R&D open innovation challenge targeting the public and professionals on the field was quite successful in the end,” he reckoned. “The only problem was that the original execution of the challenge did not appropriately account for potential privacy concerns. On a positive note, Netflix were also able to find talented programmers and market their product and new suggestion feature.”
So what of marketing and open innovation? Certainly from a PR perspective, the wider outreach is a major plus. And for brands, there is recognition in a positive light, which increases brand value, something vitally important in competitive markets.
Back to Chesbrough and his new book. Last word goes to Carlos Moedas, EU Commissioner for Research, Science and Innovation, who wrote: “Henry Chesbrough has this unique ability to transform complex concepts into messages that everyone can relate to. Open Innovation Results links for the first time the effects of the financial crisis on innovation and therefore on long-term productivity. It is a must read for politicians, policy-makers and business leaders that want to make a difference by designing the right policies that drive not only the generation of new ideas but more importantly their broad dissemination and adoption by society.”
If you were to ask consumers regarding whether or not they value their personal information, the answer will undoubtedly be yes. Consumers are no longer naive about how their personal information should be protected and they are starting to expect businesses to respect their constitutional right to privacy.
When the POPI act comes into full affect this year, customers will assume that their information will be more secure than ever before. This Act has been developed with the intention to place significantly more restrictions on how information is gathered by businesses and what can and can’t be done with it once it is gathered, for the sake and protection of the South African consumer.
What exactly is the POPI Act ?
The Protection of Personal Information Act (POPIA), also referred to as the POPI Act, is a mandatory code of conduct signed into law in November 2013. It was put into place to ensure that all South African organisations act responsibly when collecting and handling a public or private citizen’s personal information.
It acknowledges the value attached to such information by granting South Africa’s “data subjects” more control over their data in terms of when and how it will be collected, used, and shared.
In short, its purpose is to prevent the collection of personal information without the subject’s prior knowledge and consent. It safeguards every South African’s constitutional right to privacy by ensuring that, if and when their personal data is collected and processed, it is done so fairly, securely, and responsibly.
But how does this impact business?
When you look at it from a marketer’s perspective, it might not receive such a warm welcome. It’s not that marketers disagree that personal data must be protected, it’s just that data collection is such a vital part of the marketing process and limitations to its collection could have far reaching consequences to some companies’ marketing strategies.
In fact, database marketing strategies are based entirely on the collection and analysis of data, so let’s take a look at how they will be impacted.
Although the POPI Act ultimately applies to anyone who collects data for any reason, it zeros in on database marketing with dedicated sections (Sections 69 through to 72) regarding the regulation of the information-handling process – from the moment the information is collected to when it’s been disposed of.
These regulations don’t ban email and database marketing entirely, but it might affect the industry’s dependence on these platforms as the act prohibits the collection of personal information without obtaining prior consent from the subject.
Right now, marketers are essentially free to send marketing messages to anyone, whether it’s via email or SMS, as long as the recipient is given a clear point of exit (the option to opt-out).
However, a few things will need to change once the POPI act comes into full effect.
To keep their databases fully compliant, marketers must receive the subject’s expressed permission before adding them to the communications list.
When it comes to unsubscribing from a mailing list, email and SMS recipients must be given a clear, easy, and most importantly, penalty-free opt-out method.
To make sure that data is collected and processed legally, public and private entities are required to comply with these 8 conditions:
Liability – the individual or organisation collecting the information must abide by all the rules set out by the act.
Boundaries to data collection – Data must be handled in a way that won’t negatively impact the subject’s privacy. This must be done by obtaining their prior consent as well as only collecting the least amount of data needed to complete the task.
Intent – Before collecting information, the subject must first be made aware of what it will be used for.
Additional processing limitations – a subject’s personal information may only be processed further if the current task is relevant to its original purpose.
Data quality – All accumulated data must be kept up to date and accurate at all times, while also keeping in mind its original purpose,
Transparency – all related methods and reasoning pertaining to the collection of data must be properly documented and the subject must always be made aware of when and why their information is being collected.
Data Safety – all personal data must be protected against, among other threats, unauthorised access, loss or damage, and inaccurate modifications to ensure that it stays confidential. Should the data be compromised, the subject must be notified immediately.
Subject participation – subjects whose data has been collected in the past are entitled to ask for details surrounding the collection and use of their information, provided they are able to produce some form of identity.
When will it come into effect?
This part is still unclear. Despite rumours that POPIA will come into effect in April 2020, no one is 100% sure when it will be fully implemented. It has, however, been released in segments since its announcement in 2013. This uncertainty leaves businesses and marketers in a somewhat panicked state since many business practices rely on the collection of user data to improve operations.
One thing is for sure though, following its release date, businesses will have 12 months (1 year) to get their ducks in a row.
How far is SA from being fully compliant?
A survey conducted by Sophos, a frontrunner in global network security, says that only 34% of South Africa’s organisations are prepared to fully comply before the deadline.
Regional manager of Sophos South Africa, Pieter Nel, says that the best way to prepare for the POPI Act is to “implement a solid data protection strategy that guards against loss of data whether through malicious or accidental methods.”
Nel warns that “creating a data protection strategy can be a daunting process, especially if it hasn’t previously been a focus area for organisations. Securing against major threats that cause data breaches is a great place to begin.”
What will happen if businesses don’t comply?
In short, anyone found guilty of misusing this information will be held liable to pay a fine of up to – brace yourself – R10 million and/or serve a prison sentence of up to 10 years.
It may not seem like it now, but marketers that comply with the POPI act will not only see an increase in engagement and ROI due to increased trust and the fact that their marketing efforts will only be directed at prospects that have indicated an interest, but they will also be able to streamline their data collection process