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HEALTHY NETWORK EFFECTS: Introducing the KFit Platform Case*

8/22/2016

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What do Taxi Meters and Fitness Club Memberships have in common? Nothing much at first glance. But most likely both of them are destined to join Photographic Film in the Permanent Exhibition of Business Relics at the Museum of Disrupted Industries.
​Taximeters are demoted into antiques by the rideshare apps, like Uber, Grab(car), and Didi Chuxing (formerly Didi Kuaidi), who successfully disrupted the taxi business. Their conquest is now turning into a throat-cutting Ride Wars. But what makes the Ride Wars truly fascinating is that the apps revolutionized a traditional inefficient industry into a community-based platform business that centers on optimally and timely matching both drivers and riders.
 
Similarly, rising from Kuala Lumpur (KL), a new young platform business is determined to fulfill its mission of creating healthy network effects in Asia: KFit (‘Keep Fit’) offers subscribers cheap, convenient health and wellness options. The 1-year-old born global from Malaysia is regarded as one startup from Asia to watch closely. The company raised over US$15 million in less than a year and is backed by high-profile investors Sequoia Capital and 500 Startups, among others. It has also broadened the scope of its business: it started out simply offering unlimited gym classes – akin to US-based Classpass – but now covers massage services, spas, and salons as well (TechCrunch, 2016).
 
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How It Started

It was early morning 6 a.m., in March 2015, when Chen Chow Yeoh received a phone call from his business partner, serial entrepreneur Joel Neoh. Joel was calling from a ski-resort in Japan, where he was spending his winter holidays. He and Danny Yeung, former CEO of Groupon Hong Kong, currently CEO of Prenetics and a personal friend, had been talking through the previous night about an extremely exciting new business opportunity. The opportunity excited him, as the ‘Uber of the Fitness Market’ could well disrupt the whole traditional gym industry.
 
“Hardly 4% of the population has a gym membership.” In his analysis of more and more health-conscience societies, the fitness membership still gives consumers a lot of headaches: generally these are seen as expensive, inflexible and too much locked-in, and a poor user experience, which was also unsociable for many people. “While 40% of customers like going to the gym with their friends” (Video Wilddigital, September 2016).
 
Furthermore, perhaps as a consequence of failing to offer what most people desire, the fitness clubs themselves operated suboptimally; often with dramatically low occupancy rates, some lower than 10%. Whereas service industries like hotels and airlines work with averages of 80+%. To fight the low occupancy rates, excess capacity, and customer churn, the clubs are accustomed to compensate by putting a lot of efforts on customer acquisition resulting in high CAC (customer acquisition costs). Joel:
 
“For a consumer to get into a gym, you had to subscribe for a year. At the same time the Classpass model was doing very well [in the US], it had just raised US$40 million and I thought it would work here” (Tech in Asia, 2015)
 
In their discussions it had become clear to both Joel and Danny that to make this concept a success, it required a quick international rollout and smooth operations. Almost immediately upon Joel’s return to Malaysia, he and Chen Chow started their next entrepreneurial venture. KFit (from ‘Keep Fit’) was created as a platform to connect users to fitness studios, classes and gyms. In order to quickly claim key cities across the Asia-Pacific, the duo successfully raised seven-figures, in US dollars, in a seed-funding round from both 500 Startups and SXE Ventures. Two angel investors also joined in — Daniel Shin, founder and CEO of Ticket Monster and Danny Yeung. The team believed fitness to be largely an untapped category in Asia and the challenge of building something greatly appealed to them.
Rapid International Expansion

​Within the short time span of six months, KFit employed over 100 people as it expanded operations into eight Asia-Pacific (APAC) markets. The first launch of the App was mid-April in KL, the company’s home market. Then, a few weeks later, KFit stepped into the international markets of Singapore in early May; Melbourne in mid-May; and, Hong Kong in late May. This was followed by Sydney in June; Taipei and Auckland in July; Perth and Manila in August; and finally, Seoul in September.

 
The KFit organization is built around a hub-spoke model, with the hub in KL hosting the core leadership group with eight functional teams (Technical Development, Data Science, Customer Service, Partner Management, CRM and Regional Marketing based in KL, along with other supporting functions like HR and Finance). The spokes with teams for Business Development teams, Corporate Sales and Local Marketing are located in the local country markets and focused on the acquisition of gyms. Of all of these KFit employees, about 30% work as sales reps, knocking on gym doors in order to sign them on to the App. The pace at which markets were entered was determined primarily by the hires that the two co-founders were able to recruit. During the team’s hyper-growth phase, Chen Chow explained:
 
“It is all about hire fast and fire even faster. We can’t afford to slow down. Our business strategy requires new hires that can keep up with our speed of doing business.”
 
Typically, Joel and Chen Chow would go into a new market for about five days, having already set up interviews for up to six people per day. This way they would manage to clear 30 candidates relatively quickly. Subsequently, they would make suitable candidates offers and ask the ones hired for key positions to join them in KL to work for three days with the core team. This provided them with the necessary insight as to whether there was a good fit between the candidate and the team’s fast-paced decision-making methods.
 
As testing and tweaking became a major part of KFit’s business approach, in order to adapt quickly to new and different markets, Chen Chow stimulates his people to conduct focus groups and perform small experiments. He wants them to be able to convince him with data-based evidence before they could successfully scale up:
 
“Because I look at the numbers, all my evaluations are metrics-based. What’s important to realize is that major improvements can already be achieved with seemingly small steps. For instance, just an increase in the number of daily visits by our sales reps from an average of four, to six per day, which we think is a good number, translates to an increase of 25-50%. On the scale of the whole team, that is impressive.”
 
Each day the KFit management receives reports on 150 variables, focusing primarily on a set of 15 key metrics. The weekly business review with all of the country managers begins with a review of these metrics, rather than an activities debriefing. Daily growth meetings are with the local teams, where radical ideas for “nearly zero-budget” guerilla marketing tactics are rewarded, such as a KFit fitness instructors wearing black KFit t-shirts planning to ‘photobomb’ the public appearances of celebrities or well-known politicians during events where fitness exercises are demonstrated. Another low-cost tactic example was local KFit teams joining the popular five-kilometer Color Run races. The teams were running with large Smart-phones on their backs advertising the KFit app.

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Analysis: Pipeline versus Platform

Much of the initial success and promise of KFit lies in engineering their business model into a Platform. And not into a Pipeline business, which is the prevailing format for Fitness clubs. Pipeline businesses create value by controlling a linear series of activities—the classic value-chain model. Inputs at one end of the chain (say, materials from suppliers) undergo a series of steps that transform them into an output that’s worth more: the finished product. Clubs create value by owning a gym, having the fitness equipment and employing skilled employees/trainers. They have members that ‘consume’ at the end of the value chain. ​

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However, the strengths of the platform-based businesses, as opposed to Pipelines, are fundamentally different. Three Fellows at the MIT Initiative on the Digital Economy – Boston University professor Marshall Van Alstyne, Tulane University professor Geoffrey Parker and C-level advisor Sangeet Paul Choudary – identify that the move from Pipeline to Platform involves three key interrelated shifts: ​

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(1) competitive advantage is no longer gained from controlling resources, but by orchestrating the community of resource owners; (2) organizational focus needs to shift from internal organization to external interaction; and finally (3) from a focus on customer value to focus on eco-system value.

​The MIT-engaged researchers conducted case-based research in order to distinguish four areas where platforms perform differently from pipelines: forces, focus, access and governance and metrics. Their findings are reported in their recent 
Harvard Business Review article (April 2016), in which they primarily compared Apple and Google versus mobile phone manufacturers, Uber to taxi companies. Here, we will draw a similar comparison but then apply to KFit as a platform business revolutionizing the fitness industry.

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​First off, platforms are not new. They have existed for years: malls link consumers and merchants; newspapers connect subscribers and advertisers. What Van Alstyne et.al. observe is that: “What’s changed in this century is that information technology has profoundly reduced the need to own physical infrastructure and assets. IT makes building and scaling up platforms vastly simpler and cheaper, allows nearly frictionless participation that strengthens network effects, and enhances the ability to capture, analyze, and exchange huge amounts of data that increase the platform’s value to all. You don’t need to look far to see examples of platform businesses, from Uber to Alibaba to Airbnb, whose spectacular growth abruptly upended their industries.”
 

In essence, platforms all have an ecosystem with the same basic structure, comprising four types of actors: owners, providers, producers and consumers. The owners of platforms control their intellectual property and governance; in this case, KFit. KFit also plays a role as an interface provider by having developed the mobile apps and website to serve as the platforms’ interface with users. Equally gyms, clubs and hotel fitness spaces, who make their physical infrastructure available for the gym classes are Providers. Finally, fitness instructors have the role of producers in creating and delivering their offerings to consumers who use those offerings.


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​In creating a platform, KFit had to adopt a different set of new strategic rules in order to compete. First, a platform owner needs to be aware of the competitive dynamics within its ecosystem: platform participants are involved on relatively voluntary basis and may defect if they believe their needs can be met better elsewhere. 

As a consequence, KFit as a platform must constantly encourage accretive activity within their ecosystem while monitoring participants’ activity that may prove depletive. If platforms are managed well, it is very easy to move into what were once considered separate industries – like Google has moved from web search into mapping, mobile operating systems, home automation, and driverless cars. Similarly, KFit smoothly expanded its offerings by adding beauty and massage treatments.

Secondly, the focus of a platform business is different. While gyms are a pipeline business concentrating on growing sales and class attendance, the fitness platform KFit mainly looks at the value created by the whole community of exercisers/users and fitness providers; therefore its focus is on attracting both sides of the market. 


​Thirdly related to access and governance, platforms relentlessly seek to increase participation by eliminating barriers to production and consumption. KFit encourages the growth of the fitness providers and provides information to improve their class offerings. Gym clubs, however, given by their nature of being a pipeline business, have preference to create entry barriers to others joining their industry. Lastly and fourthly, the set of metrics to monitor the health of their business changes for Platforms too. Traditionally, leaders of pipeline enterprises have long focused on a narrow set of metrics – since pipelines grow by optimizing processes and opening bottlenecks. The inventory turnover is, for them, the metric to watch and manage. Platform businesses in managing their ecosystem take a large set of metrics into consideration: they focus on interaction failures (and fixing them), engagement levels of participants, the quality of the matches being made, and preventing/reducing behaviors which have negative network effects.
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The ASB Case on KFIT
In our eyes, the match of KFit with ASB is an obvious one: both possess the mission and passion to make a lasting impact and aim to be a Platform for Change. Both changemakers have an international outlook from the start, and nurture talent development and a culture for learning, testing and experimenting. Furthermore, the two parties also leverage the powers of combining collaboration and competition. All with healthy network effects.
ASB Professors Willem Smit and Ray Fung recently wrote an MBA case on KFit. This teaching case features a critical decision moment in the very early international expansion phase, in September 2015, when KFit got challenged by the US-based competitor ClassPass. The global market leader with international operations in more than 30 cities had just announced the entry into the Australian market – one of KFit’s strongholds. After an unbroken series of victories in the first months, it seemed that the company’s first real competitive challenge had presented itself. What would be best for KFit? What would be an appropriate response to their new international rival? Because, one thing was clear: Australia and New Zealand were an integral part of KFit’s international expansion efforts. , and defending and growing its position over there was key, even though these markets were completely different from other KFit markets, both culturally and economically.
This ASB MBA case has been written for learning purposes. In particular, its purpose is to teach about the different types of business models, international marketing and competitive response strategies. If you are interested in obtaining an inspection copy of the case, please write to willem.smit@asb.edu.my
 

The MIT Initiative on the Digital Economy
Last but not least, the KFit case illustrates very well how MIT’s thinking on the digital economy is put into practice. At the MIT Sloan School of Management, the MIT Initiative on the Digital Economy (IDE) consists of a team of visionary, internationally recognized, thought leaders and researchers examining how people and businesses work, interact, and will ultimately prosper in a time of rapid digital transformation. IDE is led by MIT Sloan’s Erik Brynjolfsson and Andrew McAfee, who have co-authored several highly respected publications detailing the interaction of digital technology and employment. These include Race Against the Machine and The Second Machine Age.
 
 
References
Husain, Osman (2016). How Kfit got to where it is today. Tech in Asia. 5:51 AM on Apr 12, 2016. https://www.techinasia.com/story-of-kfit
 
WildDigital (2015). Mobile Revolution – KFit, Joel Neoh. YouTube Video Posted on Sept 25, 2015 - https://www.youtube.com/watch?v=PBJKhRd0QJk
 
Van Alstyne, Marshall W., Geoffrey G. ParkerSangeet Paul Choudary (2016). Pipelines, Platforms, and the New Rules of Strategy. Harvard Business Review. April 2016. https://hbr.org/2016/04/pipelines-platforms-and-the-new-rules-of-strategy
 
Russell, Jon (2016). Asia-Focused KFit Lands $12 Million To Expand Beyond Fitness Services, TechCrunch. Posted Jan 31, 2016 http://techcrunch.com/2016/01/31/kfit-series-a/
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BONNE CHANCE A L'EURO 2016, ADIDAS!

6/10/2016

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Dear Adidas, Bienvenue on Nike’s home turf! For the very first time in UEFA Euro history, this tournament is really Nike’s chance to steal your Euro Trophy. Compared to four years ago, Nike’s chances almost doubled from 23% to 43%, yours dropped from 60% to 45%.
 
It is important to win – for financial reasons but also for brand building. Each shirt supplier wants the picture-perfect moment of their team holding the trophy: great brand exposure that is guaranteed to go viral via social media and be repeated endlessly.
 
With the exception of one freak year in 1992 when the Danes dressed in Hummel won, the Euro Cup has been adidas’ territory for more than 40 years ever since 1972. But now with France hosting the tournament, it looks like the chances for a Nike-sponsored team look better than ever!
 
TABLE 1
EURO WINNERS 1972 - 2012
2012   Spain (adidas)
2008   Spain (adidas)
2004   Greece (adidas)
2000   France (adidas)
1996   Germany (adidas)
1992   Denmark (Hummel)
1988   Netherlands (adidas)
1984   France (adidas)
1980   Germany (adidas)
1976   Czech Republic (adidas)
1972   Germany (adidas)

In a portfolio analysis four years ago, IMD Professor Arturo Bris and I analyzed the chances for Adidas to keep the cup. And so it did: adidas’ Spain won the finals at the expense of Puma’s Italy. Nike’s top teams then were Portugal (losing from Spain on penalties) and France (reaching the quarterfinals). This time Nike’s hope is to have one of its teams enter the Final at the Stade de France on Sunday July 10th . Ideally, with Les Bleus, the french Nike hosts themselves. Even with them ultimately holding the Trophy as a Golden Dream. And today, the first Nike team qualified for the next round, the Round of 16.
 
Rules changed, so did the chances
In anticipation of Nike’s ambition and home advantage, adidas took extra measures to defend its cup. Like four years ago, the fight for sponsoring the best and winning teams had again intensified. Partly helped by the change of rules: UEFA made the tournament bigger and longer. One whole month with one week longer; and it allowed eight more teams to – instead of 16 in 2012, 24 teams have entered this year’s EURO. So, adidas in its effort to defend its football domain recruited five new teams: Belgium, Slovakia, Hungary and Northern Ireland. Of which only the first one is expected to have a higher than fair-share chance of getting far. These extra teams are to compensate for the loss in strength of its old EURO 2012 team portfolio. Mainly Spain (-15%) and Germany (-4%) have lower expectations to win. Sweden was converted from Umbro (currently a Nike subsidiary).
 
Nike has 6 teams in this year’s tournament, one team more. The dramatic increase in its chances mainly comes from better chances for its existing teams – first France, followed by Croatia, Poland, and Portugal. England exchanged its Umbro kit for Nike’s. Puma retained its strongholds: Italy and Czech Republic.
 

© copyright 2016 Willem Smit – Asia School of Business in collaboration with MIT Sloan

Picture credits: IMD http://www.imd.org/research/challenges/euro-2012-sports-brands-arturo-bris-willem-smit.cfm

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Source: probabilities to win come from the betting odds averages over  26 different English bookies -- http://www.oddschecker.com/football/euro-2016/winner

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CHIEF GAME CHANGE OFFICERS: REFINING RULES, BUILDING CAPABILITIES, INCREASING STAKES

10/21/2014

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We live in a changing and uncertain world. We live in a branded world. We live in a world where brands are continuously seeking to engage better with people whose needs and desires, in turn, keep on changing. We live in a world where brands need at least to respond to changes -- small as well as big -- in order to stay meaningfully relevant. Brands and Changes can therefore not be seen in isolation; they are inseparately connected. But should it be that Changes dictate Brands? Are there Brands that can turn the table, Change the Game and lead the way?
            To understand more about the different strategies incumbent brands pursue in leading a Game Change, this year’s CMO Conference brought together marketing thought leaders, from a wide range of famous brands: Xavier Burgat (Airbus), Tim Sayler (Audemars-Piquet), Javier Sanchez Lamelas (Coca Cola), Hans-Kristian Hoejsgaard (Davidoff), Hubertus Devroye (Dow), Pete Blackshaw (Nestle), Stefan Krucker (Mars), Malcolm Hett (Mondelez), Tim Alexander (Swisscom), and Michael Arnold (WWF). Although they are from many different industries, they share the strong belief that the connection between Brands and Changes goes beyond followership. We have grouped the strategies of their unique cases according to the main method their brands use in pro-actively shaping the future. They decided to change their Game: 

  1. Redefining the Rules (Audemars-Piguet, Davidoff, and Coke) 
  2. Building the Capabilities (Nestle, Dow Chemicals, and Airbus) 
  3. Increasing the Stakes (WWF, Mars, Swisscom, Mondelez)
 
 
Redefining rules 
The first Game Change strategy to favorably influence the odds of winning is to redefine the rules. The rules to win in an industry are set by the expectations of the stakeholders involved. Luxury watch brand Audemars-Piquet and cigars brand Davidoff revitalized their brands by reshaping the rules of luxury: as the consumer purchase of a prestigious brand should no longer be about showing (off), proclaiming a status, presenting logos and monograms, and just looking expensive. Instead, both brands advocate the idea that the acquisition of modern luxury brands has come to stand for a restless pursuit by a connoisseur who really knows and appreciates the effort it takes to discover and understand the true craftsmanship of the brand. By setting higher standards, Audemars-Piguet and Davidoff and their respective repositionings emphasised their unique origins: the rustique of Le Brasus in Switzerland, and the notion of having precious “Time Beautifully Filled”. Both Swiss brands have forged a stronger alliance with art and moved away from more popularized sports sponsorships.
Like any other marketing organization, media fragmentation has made it a struggle for Coke to capture consumers’ attention. Traditional paid media channels made the world’s most valuable beverage brand rethink how to communicate and engage its consumers. In Mexico, its greatest success in this respect was setting up its owned-media channels: Coke.fm, also giving people free wifi-access to enjoy the channel.
 
Building capabilities
The second way to increase the chance of winning and lead the way in periods of change is acquiring and improving capabilities and skills to win. Nestle’s Digital transformation is an excellent example of  how a large multi-national is pursuing a digital ambition and developing new capabilities: through a Digital Acceleration Team (DAT) as a center of excellence made up of marketing executives from around the world who participate in an 8-month training program in digital and social media. The program puts them through three disciplines of Listening, engaging and inspiring & transformation – and after the DAT induction period, the participants return to their own local markets to further implement and diffuse the digital capabilities. Symbolic is how Social ROI was made visible in the Social Media Room on large Screens at the Vevey Headquarters.  
The second largest chemical producer, DOW, is a B2B player who is  a very science-based organization where originally marketing was viewed as “tools and training.” In the last 2 years, the company pursued a renewed efforts in building modern marketing capabilities – networking with customers and markets, through very advanced multi-touch campaigns but also with the help of more basic tactics like an intergrated sample followup management system.
Europe’s largest airplane manufacturer, Airbus, gave examples of how to assist customers in acquiring new capabilities and routines to innovate – particular in improving the comfort, enjoyment and personalizating of the in-flight experience: cabin crew with Google glasses to identify frequent flyers, lobbying for a minimum width for the seat, and designing the cabin experience.
 


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Increasing the stakes
A third strategy of Game Change is to increase what’s really at stake. These game changers put their brands in action to ignite positive Social Change and promote the Sustainability movement. The international NGO, World Wide Fund for Nature (WWF) pointed out the urgency and impartance of the sustainability challenge.If nothing changes and we continue as we are doing now “by 2030 we will need two plants to support the way we are living.”And it is also important: with natural resources becoming more scarce, supply chains are threatened and shortages lead to surging costs and hurting profits. 87% of global consumers believe that business needs to place at least equal weight on society’s interests as on business’ interests. Less than a third believe business is performing well in addressing societal issues (source: Edelman Good Purpose study 2012). The key question for brand wanting to raise the stakes is: “how can sustainability be integrated in brand purpose and brand communications.”
Cat food brand Whiskas of family-owned Mars joined forces with WWF in order to increase the stakes by helping to protect wild tigers, their habitat and future. Whiskas shared the customer insight that cats whatever their size are the same in instinct and behavior. Therefore, Whiskas buyers care about tigers as the biggest of all cat species. It's also one of the most threatened. In February 2013, Whiskas launched their 'Big Cat Little Cat' campaign in the UK. Other countries like Switzerland followed this year.
With the new CSR campaign “Land of Possibilities”, Swisscom envisages a Switzerland where future generations will be able to enjoy the same chances and opportunities as they do today. The responsibility Switzerland’s main telecom provider feels is focused on six themes: climate protection, flexible working, media expertise, attractive employer, fair supply chain, and a networked Switzerland.
Mondelez Coffee had a range of motivations to invest in sustainability: from basically securing the quality and quantity of supply (of coffee), contributing to the reputation and influence of the corporate brand, to finally building trust and responsibility for its individual brands. And last but not least, sustainability can offer an engaging story to tell. For example, UK brand Kenco began first modestly by offering some sustainable coffee niche products in 2005. Three years later it relaunched  a full range mass-market offerings. Now it enagages consumers with the brand’s message on “Coffee-versus-Gangs.” to provide youngsters with a brighter future than a life of drugs crime has to offer. Their aim is to create 1 million coffee entrepreneurs by 2020.
 
Some final thoughts
Thanks to the wide variety in cases presented at the 7th CMO Conference, we discovered a Game Change Strategy Typology. The three Game Change strategies identified do by no means imply that the strategies are mutually exclusive. On the contrary, they are best consistently implemented in conjunction with each other. Increasing the stakes may require to change the rules and expectations of some stakeholders and customer groups. New rules may have consequences for the acquisition and development of new capabilities.
            Industry disruptions are often caused by newcomers[1], seldom by incumbents. Existing players with well-established brands have a direct benefit of preserving the status quo. For an incumbent brand to become a Game Changer, there are additional costs and risks involved to lead the way of change: overcoming myopia, solving routine rigidity, and daring to take more risks.


[1] For a good overview, Peter Fisk’s next book "Gamechangers: Are you ready to change the world?" includes 120 case studies of newcomers entering the stage.
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STRATEGIES FOR AN UNCERTAIN 2013

12/5/2012

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​How Chief Marketing Officers are approaching another "VUCA" year

By Dominqye Turpin and Willem Smit

Back in 2007 Main Street had never heard of Lehman Brothers. Greek government bond yields were comparable to Germany's, and Italy's state debt relative to GDP was at a historical low. Kodak reported a profit of $676 million and Facebook had only 50 million members. Consumer confidence ratings in the US and Europe were at their peak.  
Looking back, two conclusions can be drawn. Firstly, we are still lousy at predictions. Secondly, in an ever more volatile, uncertain, complex and ambiguous (VUCA) world, business success will increasingly depend on being able to respond rapidly to change. With many economies experiencing a double-dip recession, this will remain the case in 2013.  
The bumpy ride during these last five years has brought both pleasant and unpleasant surprises for firms, leaving their Chief Marketing Officers (CMOs) to struggle with many demand shocks and unanticipated customer behavior.  
Shocks, especially in demand, are best managed when information is communicated accurately and in a timely fashion throughout an organization, and preferably an entire supply chain. Something easier said than done.  
Being responsible for strategic marketing, a role that goes beyond PR and communications, CMOs or CCOs (Chief Customer Officers) take the lead in understanding, co-creating, delivering and communicating value to customers.[1] Anticipating changes and shocks in customer needs and behaviors is obviously one of their top priorities.  
To find out how CMOs deal with uncertainty and how to create growth opportunities for a challenging 2013, IMD joined the CMO Circle Conference to talk with CMOs of prominent brands in a wide range of industries about their current challenges. Their current marketing issues seem to fall into three categories:
  • React
  • Influence
  • Anticipate

React
To quote Jack Welch, the former head of GE: "When the rate of change outside exceeds the rate of change inside, the end is in sight." For the CMO of a major international insurance company, a flexible structure and a culture of agility are the keys to success. This CMO focuses on going back to basics and putting the customer at the center of all business processes. This means enhancing emotional connections with customers by cultivating a genuinely caring attitude in all employees.  
Similarly, the CMO from a leading manufacturing company has worked on making this firm more customer-focused by drawing on customer insight along the entire value chain and touch-points. Using the net promoter score (NPS) methodology, a client loyalty metric, he set up a marketing information system to analyze the complex buying centers at customer sites and aggregate the data to guide strategic decision-making.  
The "react" strategy also requires identifying changing patterns early and leveraging the vast informational resources available within firms. For the executive of a leading IT and software provider: "Our role is also about knowing how to deal effectively with the data explosion and social media opportunities. This means a stronger say in all of the marketing Ps, and not only the P of Promotion." Another player in the same industry sees opportunities for top marketers in the speed at which data and information is generated and disseminated. For him, "Real-time insights now, with 80% accuracy, are more important than 100% accuracy in three months' time."

Influence
Influencing consumer demand and creating a following of fans and friends is another key strategy. It relates to the core of marketing strategies -- differentiating the value proposition and reinforcing the brand.  
A marketing executive in the fast-moving consumer goods industry warns that technological advances should not distract marketers from the basics: "We are in danger of losing perspective and focusing on the newest shiny but less important things in our quest for modern marketing… Next to going 'back to basics' it's about 'going social.' Not only by really embracing social media, but also by being more social and purposeful as a brand… Sociable marketing is the way to build strong brands and business in the future," he says.  
Anticipate
Even in a VUCA world anticipation can be strategically valid, providing that it is done at the right level. CMOs must pay attention to all major trends shaping the business world (demographics, communications technology, social and economic trends, etc). Since demographic change is one of the key drivers of every business, firms and CMOs alike should anticipate their position in respect to an ageing population, more single households, health and wellness growing, one billion consumers in emerging markets and polarization in consumer choices between the "best" and the "cheapest," especially in developed economies. CMOs also need to develop their answers to the predictable and bigger macroeconomic questions.    
Conclusion  
The three categories—"react," "influence" and "anticipate"—are not necessarily mutually exclusive. While short-term imperatives may require a strong focus on one, a long-term perspective may force marketers to play with another and manage a dual approach.  
Each strategy requires enlarging the mandate of CMOs beyond a constrained set of responsibilities (such as PR and communications). Fortunately, it looks like the potential of CMOs is being unlocked. Spencer Stuart's recent report shows that average CMO tenure has risen to 43 months (up from 23.2 in 2006), although it remains shorter than for others in the boardroom.  
Although the panelists' strategies vary depending on their industry and environment, their mindsets are interestingly similar. They all see change as a great opportunity, also for 2013 and beyond. Many agree that marketers and CMOs tend to look on the bright side and always see the glass as half-full.  It is the 'nature of the beast.' 

Originally posted on the IMD website:
http://www.imd.org/research/challenges/strategies-for-an-uncertain-2013-dominique-turpin-and-willem-smit.cfm​

Dominique Turpin is the Nestlé Professor and President of IMD. He co-directs IMD's Orchestrating Winning Performance program. Willem Smit is Adjunct Professor at Singapore Management University, and chair of the European CMO Circle Conference.www.cmo-conference.org
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    Willem Smit

    ASB Professor of Marketing. International Faculty Fellow at MIT Sloan. I feel privileged to be part of starting a premier BSchool in the midst of SouthEast Asia

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