The Growth Solution: Strategic Relevance

In my last article, “The Growth Handicap: Cultural Competency and Strategic Readiness,” I suggest that many U.S. corporations are operating with significant handicaps because they aren’t aligned with today’s consumer landscape. Their vision, mission and values fail to deliver across the board.

In research to help diagnose companies’ hindrances to growth, and to reveal causes of share declines in markets across the country, I frequently review annual reports and 10-K reports. I also engage in explorative conversations with executives. These talks and documents describe specific details about companies’ strategic foundations and their competitive advantages. Often, these include engaging and building consumer relationships and loyalty, delivering excellent customer service, providing easy and convenient access to their products and services, and delivering value by positively impacting consumers’ lives and lifestyles. Long lists of strategic assets describe how these contribute to meeting these goals. By this I mean operations, technology, people, products and services and their delivery.

The reality, however, is that few companies are planning, developing and implementing strategic assets with acknowledgement, understanding and the competence to be relevant to the total U.S. consumer marketplace.

 

Strategizing for the Majority Minority

In general, it can be said that corporations’ strategic assets are mostly relevant to two-thirds of U.S. consumers. As a result, companies are finding it hard to achieve established growth goals because their strategies, operations, technology, innovation, people and marketing don’t consider, speak to or deliver on the specific needs of the remaining one-third of the U.S. population. I contend that investing on strategic assets that only take a company two-thirds of the distance is not a sound growth strategy or investment.

Yet companies continue to think and operate with a limited view of today’s marketplace even as the “core” market on which they focus continues to shrink and age. Is it really possible to win with companies’ current approach in markets like California, Texas, Arizona, Illinois, Florida, New York and others states where over 300 counties are already majority minority counties?

Stunted Innovation

I’ve spoken to companies losing market share or where growth is stunted in the above markets, which are just now realizing they may need to do things differently. All the while, their category managers, merchandisers and retail operations teams either have no idea how to be relevant and/or they outright refuse to adapt to the marketplace around them for fear of alienating their “core” customer when the core customer profile has changed dramatically in these markets.

I’ve talked to other companies that, in their quest for growth, are innovating and testing new products and services in the country’s largest markets where Hispanics, African American and Asians represent more than half of the population. Yet, when asked about how the market tests and research results turned out among Hispanics, Asians and African Americans, they respond emphatically that their R&D tests and market research wasn’t an “ethnic” project.

This is the kind of disconnect at work in corporate America today. In this age of globalization, is it really possible that companies are successfully taking steps to expand into foreign markets when they haven’t yet cracked the code on the largest multicultural market within its own borders? Fifty million Hispanics or 100 million multicultural consumers are big numbers no matter how you look at it.

Connecting Corporate America’s Disconnect

If you’re ready to improve your financial performance by expanding your organization’s ability to think and act globally within U.S. borders, here are the six steps I recommend to get help your organization start thinking more strategically about total market growth:

1. Establish the need in the CEO-Suite

Speak to performance goals which are dependent on the country’s total population of 308 million not 208 million people. The CEO must communicate and model a total market success vision and convey the change as an imperative critical to achieving financial performance.

2. Senior leadership must help re-define the U.S. consumer market

The organization must adopt a broader view of how the U.S. consumer market is defined, and how it will be addressed vis-à-vis the company’s business model and performance goals.

3. Build a cross-functional, working team of high level stakeholders

All areas of the organization should participate in the due diligence process and must be held accountable for delivering value to all customers to improve financial performance.

4. Charge stakeholders to aggressive knowledge-building

Stakeholders must acquire the necessary awareness, knowledge and skill sets to meet total market requirements so they can identify the relevance gaps, implications, and develop recommendations for current and on-going market relevance.

5. Develop action and change-plans across all areas of the organization

With senior management input, stakeholders must act and plan across all areas of the organization so that area leaders can implement their respective solutions, including educating and developing their teams.

6. Task stakeholders with implementing solutions

Stakeholders must implement approved solutions in a timely and methodical manner, with established metrics and milestones that are reviewed quarterly, semi-annually, and annually at appropriate levels.

It’s important to keep in mind, that transformative business readiness to achieve total market success is a process. It will happen in pace with top leadership’s ability to create and maintain appropriate momentum, as well as, its commitment to tie rewards to strong results across all consumer segments and ultimately to financial performance.

By Terry J. Soto, Author of “Marketing to Hispanics A Strategic Approach to Assessing and Planning Your Initiative” and President & CEO of About Marketing Solutions, Inc. a strategy consulting company providing transformative business readiness and strategy consulting for profitable and enduring total market success. Contact Terry at 818-842-9688 or by email at terrysoto@aboutmarketingsolutions.comwww.aboutmarketingsolutions.com

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The Growth Handicap: Cultural Competency and Strategic Readiness

Imagine a country where its corporate leaders ignore or simply don’t know how to capitalize on one third of the country’s consumer market. Worse yet, imagine a country where the average age of the other two-thirds of the market is 47 years of age, grew only 10% in the past ten years, and whose spending in key household categories and overall market basket size declines precipitously every year they age.

As the face of the country continues to undergo a major transformation, it’s hard to imagine a single U.S.  Corporation that doesn’t realize big demographic changes are afoot and have been for some time. Many also realize their companies’ survival depends on their ability to capitalize on this younger, ever-changing and ever-growing consumer group. Yet, few companies are really undergoing the required transformation to be and remain relevant and in demand today and into the future.

The problem as I see it is three-fold:

1)  Some leaders simply refuse to see and respond to the changes around them. The ostrich syndrome.

2)  Some leaders are enlightened enough, but are unsure and sometimes powerless about what to do about an organization where its leadership, managers and employees simply don’t relate to, identify with or whose sheer ignorance renders them indifferent about the need to understand the third of the population that is different from them.

3)  Some leaders are stuck on personal, political, and philosophical principles about the desirability of the demographic change happening around them. But the questions must be asked: Are they being compensated to stand on principle and opinion or to grow shareholder value?

To be fair, many corporations do see the need to evolve. Most, though, have very little sense of what to do and how to go about it. Some have grown very strong on the tactics and remain very weak on corporate wide strategic integration. They use advertising and tackle some operational adjustments on a piecemeal and ad hoc basis and that’s as far as they get or as far as they can get in the absence of a business ready organization and a total market strategic approach.

As recent past president of the National Association of Hispanic MBAs (NSHMBA), my counterpart with the National Black MBA Association (MBMBA) and I witnessed corporations’ growth attempts by focusing on diversity leadership. Many were failing miserably because they tended to fall into three camps:

1) They use the diversity “veil” to partner with diversity associations or contribute to non-profit “watch-dog” organizations as a way to “prove” there is an integrated total market strategy in place where there really is none. Behind the “veil,” these efforts are often about good PR and offsetting corporate affairs risks than they are about building a total market-driven growth strategy.

2)  Companies’ diversity directors partner with professional organizations like NSHMBA and NBMBA for exposure and to offer job opportunities. But, they’re looking for Hispanic and African American professionals with senior experience in industries which historically have had few Hispanics or African Americans in senior positions. As a result, they offer interested candidates starting positions and seldom end up hiring from this talent pool.

3)  Some corporations successfully attract and hire the diverse talent they seek, but without the existing cultural competency and integrated strategies in place to enable capitalizing on the new hires’ diversity, culture, approaches, the differences for which they were hired and resulting potential contributions, they go about training the employee to align their thinking to the existing corporate culture.  A true diversity HR strategy enhances its company’s cultural competency only by enabling differences, the resulting creativity and innovation, and the hired business acumen to impact the total business positively.

The big questions are how does a company overcome these hurdles?  How do they create an awakening to the reality of what’s in the way of total company growth, including personal and professional evolution as big picture leaders and visionaries?

Building company wide competencies and capabilities to capitalize on today’s total consumer market is a challenging undertaking to be sure. But, if business growth is what a company is after, it is an imperative that cannot be ignored. It’s simply impossible to win and continue growing profit and shareholder value when operating with a significant organizational and cultural handicap and misalignment with today’s consumer landscape.

The first step is introducing the questions. Considering what you have just read, is your company business ready and culturally competent to capitalize on the total marketplace? Or, is it still struggling and just going through the motions?

The next step is synthesizing the possibilities. Watch for next week’s post, in which I’ll answer these important opening questions with some steps to align your organization to 21st Century demands.

By Terry J. Soto, Author of “Marketing to Hispanics A Strategic Approach to Assessing and Planning Your Initiative” and President & CEO of About Marketing Solutions, Inc. a strategy consulting company providing transformative business readiness consulting for profitable and enduring total market success.

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