Do you buy Fair Trade Products?

March 1st, 2015

What percentage of consumers are happy to pay a higher price for Fair Trade products? Watch a short video with Jens Haninmueller, Associate Professor of Political Economy at Stanford who has researched the subject: 

Are consumers actually seeking out Fair Trade products? The Stanford  researchers  found that sales in US grocery stores increased by 10% when a product had the Fair Trade certified label on it. Even when the price was raised on the product sales continued to grow. But it was only true for one type of fair trade certified coffee tested.

For the less expensive coffee sales actually decreased dramatically. The researchers hence believe there are two segments in the market. Consumers who are willing to pay more for products with Fair Trade certification and as many that are not willing to pay more. About an equal split.

Are you willing to pay more for Fair Trade products?

Are you willing to pay more for Fair Trade products?

Have on and off been buying Fair Trade products all over the world. When I lived in the Middle East I used to buy from Marks & Spencers’ Fair Trade products.

Fair Trade is a certified label that no product can use unless it’s certified in accordance with Fair Trade standards. Companies have to apply and once accepted can use the label on their product. So far it benefits 1,4 million farmers and workers in approximately 70 countries.

Different from organic products

Fair Trade certified products should not be confused with organic products. The difference is that Fair Trade products are checked and hence live up to the expected standards. But unfortunately there are organic products on the market that are not organic at all. Just more expensive.

Are you looking into ethically differentiating your product?

There is a business case for differentiating yourself from your competition by becoming a Fair Trade product or brand. There are consumers who are willing to reward you. That segment of consumers will also punish you if you don’t and you will be perceived as a company left behind.  If your competitors have upgraded ethically you take a huge risk if you don’t. So it may be necessary to start contemplating how your product could be produced in ways that are more friendly to the environment. It can be done through CSR and sustainability which is becoming more and more important to consumers all around the world.

Do you buy Fair Trade products? If so, why? If not, why? Is it important to you that products you buy are ethically produced? Do you support companies that are into CSR and sustainability by buying their products? Would you like to see more Fair Trade products on the market? Are we heading for a future where companies have to comply to Fair trade standards and CSR and sustainability or be punished by consumers?

VIdeo: Stanford Graduate School of Business – Photo: Lily lilivanili

Rising inequality – the main risk facing the world?

February 22nd, 2015

Sounds like some socialists voicing their discontent, doesn’t it. But it’s what world leaders are telling The World Economic Forum. The Economist‘s economics editor, Zanny Minton Beddoes, is of the same opinion. In this short video she explains why rising inequality around the world is rapidly becoming a major headache:

Considering that we last week looked at how to raise productivity and equality, it’s propitious to re-publish this post about inequality. The World Economic Forum’s Global Risks 2013 Report highlights wealth gaps (severe income disparity) as a bigger problem than unsustainable government debt in a survey with over 1,000 leaders. And considering that Oxfam in 2015 concluded that the richest 1 percent of people in the world will soon own as much as the remaining 99% the gap between the haves and havenots is still increasing.

Opinion of world leaders – not “the usual subjects” 

It would be different if it was  Occupy Wall Street or leftists that lamented inequality. That it’s top leaders of business, finance and government indicates how serious the problem is. As you know, The World Economic Forum network consists of high level leaders.  The fact that they are worried should make us worried. More than we are about sovereign debt apparently.

Top leaders believe it's essential to look for ways to improve equality

Top leaders believe it’s essential to look for ways to improve equality

Will democracy decline?

Inequality has widened for decades in two thirds of the rich countries and many emerging economies, including India and China. But the global crisis has made it even more of a problem, not least because of the austerity measures being implemented.

It’s in times like these that democracy declines and autocrats get the opportunity to grab power. When I lived in London, I used to frequently attend seminars at the think tank Chatham House. Their senior research fellow and author Charles Emmerson has written Eve of Disaster, an analysis looking at why 2013 eerily looks like the world of 1913, on the cusp of World War. I am sure you will find interesting and food for thought.

Do you agree with world leaders that rising inequality is the main risk facing our world? If so, what do you think should be done to stop income disparity getting completely out of hand? Should austerity be abolished and economies stimulated to make them grow and hence have a positive impact on inequality? What’s your suggestion? How can we make life better for more people so they spend money and hence improve the world economy? Or are you of the opinion that rising inequality is a good thing and that the leaders telling the WEF it’s the main problem facing the world are wrong?

Video: EconomistMagazine Picture: World Economic Forum

Can we increase global productivity and equality?

February 15th, 2015

“Sustainable growth is based on increased productivity and equality”, Ben Bernanke once said. He is right but it’s easier said than done. In this short video McKinsey Global Institute partners James Manyika, Jaana Remes and Richard Dobbs look at the patterns of global productivity:

Some of you readers questioned if it’s possible to predict productivity. According to James Manyika: “It’s always very difficult to predict if you can predict productivity or not. But when we look at sectors across the world we do know what the enabling environment looks like”. He proceeds to say that technology is a big part of it as well as  competitive markets and labour regimes. And not to forget, rules on how you use land and equity.

Focusing on the short term is, according to Jaana Remes, dangerous because we need to put emphasis on long term growth. Above all providing a policy environment that encourages productivity, investment and avoids protectionism.

High productivity but lower wages

Dobbs correctly points out that in the past years of high productivity corresponds with high job creation. But that overlooks the fact that in the past salaries also rose during such years. That hasn’t been the case the last few decades because productivity has risen much faster than wages. And the fact that technology is taking over both blue and white collar jobs in the West has further increased the downward spiral of wages.

productivity, equality, Ben  Bernanke, Thomas Picketty,

Should the world start focusing on long term growth again?

Income gap increasing

According to Oxfam the 1 percent richest people in the world will soon own as much as the remaining 99% do. The main reason is what Thomas Picketty stated that return on capital is so much higher than economic development. Researchers are of the opinion that technology is a main reason for that. In the past increased productivity and higher salaries have gone hand in hand.

Basic income? 

One solution to make sure all human beings have food on their table and a roof over their head is an unconditional basic income in which all citizens or residents of a country regularly receive an unconditional sum of money. The concept is actually being discussed in countries around the world. The the European Union, Asia, North America, Africa, Asia, Oceania and South America are looking into that possibility. Implementing a basic income would make it easier to allow technology to take over jobs without poverty increasing drastically.

Anger about inequality fatal

Throughout history anger about huge gaps between the haves and have nots has been one of the strongest political forces for change. An interesting aspect here is that equality between countries is increasing while inequality is on the rise inside all countries. Ben Bernanke was right when he said that sustainable growth is based on increased productivity combined with equality.  There are no easy answer to the problem of increased inequality. But it will definitely become an increasingly important issue all around the world unless it’s addressed.

Do you agree with Ben Bernanke that increased productivity and equality are necessary for sustainable growth? Should the world start focusing on long term growth again? How can we make high productivity create both growth and higher salaries again? Is an enabling environment, as outlined by Manyika essential for increasing productivity? Is it a good idea that the 1% wealthiest people own as much as the remaining 99%? Or, could that in the long run lead to instability? What’s your opinion on basic incomes to all citizens? Is that necessary in order to avoid poverty when technology takes over more and more jobs? Or do you have any other ideas that can make higher productivity and growth possible without increased unemployment and poverty?

Video: McKinsey & Co.

What will happen to global growth?

February 8th, 2015

There’s a lot of nervousness about the outlook for global economic growth. Will the pace and location of growth in the world change? What impact will our aging population have? Jaana Remes and Richard Dobbs, partners of McKinsey Global Institute, discuss what will happen in this short video:

In 1964 the world economy was approximately the size of China’s economy today in terms of purchasing power. Since then we have had a remarkable era of growth on a global scale. In the last 50 years the global economy has become 6 times larger. The reason is two-fold; the labour pool expanded and productivity for all those workers increased.

Demographic tailwind

The global economy has on average grown 3,6 percent per year the last half century. We have in other words had a phenomenal demographic tailwind.

But now that will come to an end because of our aging population. We are approaching flat demographics. Consequently global growth will slow down significantly unless we can increase productivity substantially. Wolfgang Fengler of Brookings Institution took an interesting look at demographics in our world in “How your birthday reveals global demographic shifts” 

Will India, as some predict, continue to grow well beyond 2050?

Will India, as some predict, reach its peak long after China?

Peak in 2050

The number of workers in the world will reach its highest level in 2050. In quite a few developed economies that has already happened. For instance in Germany, Italy and Japan. But between 2020 and 2025 it is estimated that even China and South Korea will peak. Needless to say this will have an enormous impact because they have both been growth engines during the last 50 years. India and Nigeria, however look likely to have their peaks later on.

If economic growth stays the same as the last 50 years global GDP will decline by 40 percent. In other words the global economy will only grow by 2 percent a year as opposed to 3,6 percent.

Did you know how our aging population is likely to impact global growth? Are Jaana Remes’ and Richard Dobbs’ predictions likely to take place? Do you believe we can increase productivity enough to compensate for the fall in the number of workers? What are your suggestions? In what areas of the world are you predicting we will have the highest growth? How can we in the West increase productivity? 

Video: McKinsey & Co. Photo: World Economic Forum

Negotiations Part II – Do you have a successful strategy?

February 1st, 2015

Not sure what works best? In this short video Stanford professor Margaret Neale answers questions about how to craft a winning negotiation strategy:

It’s common to wonder if it’s best to make the first offer or not. According to Margaret Neale that depends from negotiation to negotiation. Regardless of that many people believe that the person who starts is lost.

If you make the first offer, you get the benefit of anchoring your counterpart because they need to respond. But when you receive the first offer you get the benefit of the information it gives you. Consequently what’s important is what benefits you most in the negotiation you are facing at the moment.

Where is the benefit?

Should you aim for setting the anchor or getting the information? The answer to that mainly depends on how prepared you are. And how prepared your counterpart is. Being prepared and having, to the best of your ability, made an estimate on what your counterpart hopes to gain will make it easier for you to decide which of the strategies is likely to be best for you.

Do you negotiate the easy issues first?

Negotiating is trading proposals back and forth. Frequently your counterpart will want to go issue by issue i.e. solve the easy issues first. Professor Neale however is of the opinion that doing so leaves you with the difficult issues and nothing left to trade.  Another aspect is that your easy issues may not be your counterparts easy issues. If that’s the case, you have lost the opportunity of using those issues to give them concessions and it could hence work against you.

Do you usually have a strategy that works?

Do you usually have a strategy that works?

Negotiating the package

Professor Neale is of the opinion that it’s optimal to negotiate at a package level. Your counterpart will start by trying to break it apart and go issue by issue which you should resist. Instead it is better to, from the package point of view, negotiate in the sense of “if I get a concession here I will give you a concession there”. That way you can avoid the battle it becomes  when everybody is keeping score by negotiating issue by issue. It’s much easier to develop a win-win scenario if you negotiate on a package level.

When to walk away

At what stage should you walk away from a deal and when should you keep on negotiating? Again, this depends on how prepared you are. What are your alternatives? What will happen if you don’t get an agreement? What difference will it make if you make an agreement or walk away i.e. what’s your bottom line? What’s an optimistic assessment of what you could achieve by making a deal? If you know the answer to those questions you will know what to do.

What strategy do you normally use when negotiating? Do you negotiate issue by issue? Or do you agree with Margaret Neale that it’s best to negotiate on a package level? Do you prefer to make the first offer or not? How prepared are you when you negotiate?  Or do you mainly improvise? What would make you walk away from a negotiation? What are your experiences of negotiating? Do you normally get what you want? 

Video: Stanford Graduate School of Business – Photo: US State Department

Entrepreneurs – Do you master online storytelling?

January 25th, 2015

Today that’s become an essential aspect of being an entrepreneur. And so is authenticity. Fortune Magazine senior editor Pattie Sellers explains why in this short video:

Storytelling has become a must for entrepreneurs. All start-ups and businesses have to be able to tell their story on social media in ways that captivate their audience.  Consequently one more crucial skill has to be performed by entrepreneurs. But not to worry, those of you who are not writers can hire one.

Can you write like a journalist?

It’s a new phenomena because in the past there was no need for entrepreneurs to tell an interesting story about themselves and their company that made people want to know more and do business with them.

storytelling

Have you ever pondered upon that question?

But social media changed all that. Communication is fundamental and it’s essential to convey your brand in ways that works. Advertising in newspapers, magazines and TV commercials is no longer enough.

You have to be able to tell your story the way a journalist or writer  would. Alternatively get a journalist or writer to tell your story to build up your brand on social media. 

If you write fiction you will be caught

To be honest and authentic is more important than ever. Even if you use little white lies chances are high you will get caught. Today it’s so easy to find the truth. It’s hence essential to be consistent and tell the same story everywhere. Not only online but offline. Unless of course you want someone somewhere, maybe a competitor, to catch you and post their findings somewhere on the web. It happens all the time. So don’t pretend you are better than you are.

Do you agree that social media has made captivating storytelling essential for entrepreneurs and companies? Is excellent communication and writing skills more important than ever? Or are you of the opinion that advertising and TV commercials in the right places is still enough for an entrepreneur to succeed? Are you consistent with your brand and make sure the same information, and pictures, come across everywhere? Are you authentic and honest with your branding? 

Video:stanfordbusinss

Do you enjoy feeling scared?

January 18th, 2015

What makes an abundance of people all over the world thrive on watching horror movies or jumping out of planes? This short video from The Economist takes a look at the reasons why:

Many of us loved watching horror movies when we were kids without knowing what made us so keen on those films.

When our arousal  level sours we feel good because our brains release feel-good hormones such as dopamine, serotonin, adrenaline and endorphins. Not that we understood that when we were children.

When we face danger we either fight or flight. We may only think we are scared when what it’s all about is the sense of relief we feel when at the end of the movies the character we identify with triumphs or the nasty monster dies. When that happens we can feel a sense of achievement and the come down hence makes us feel good from a psychological point of view.

Personally for instance enjoy parasailing. What do you thrive on?

Personally for instance enjoy parasailing. What do you thrive on?

We are all different

Danger makes us all respond in different ways. Some thrill seekers love high levels of arousal. They hence carry out activities, like jumping out of planes and climbing mountains, that most people avoid.

Are entrepreneurs more keen on danger?

It’s not unusual that you find people with entrepreneurial minds thriving on high levels of arousal. It goes hand in hand with being willing to take risks and being adventurous, which is often essential in order to succeed. Watching horror movies is one thing but getting a kick out of, say, parasailing is another. Keeping calm when facing danger is essential for entrepreneurs. Being used to high levels of arousal and the good feeling that comes afterwards enables you to better  handle stress and uncertainty.

Did you enjoy watching horror movies as a child? Maybe you still do? Do you get a kick out of high levels of arousal? If so, what do you thrive on? Are people with entrepreneurial minds more likely to enjoy high levels of arousal than people who don’t have that mindset? Do you believe handling danger goes hand in hand with being willing to take risks? Or maybe you believe that entrepreneurs don’t need to be adventurous to live with constant stress?

Video: The Economist – Photo: purolipan

Are you a successful negotiator?

January 11th, 2015

Sometimes? Then you will benefit from listening to Margaret Neale, professor of management at Stanford, explaining the pros and cons of negotiations:

Looking upon negotiating as a fight to get what our counterparts don’t want to give us is unfortunately common. If we at the same time don’t want to give away anything to them we are in a fight even though the majority of negotiations are not battles. However that kind of mindset is not ideal when negotiating. It puts the people we negotiate with in a defensive mood and makes it less likely that we succeed.

Fluency is the name of the game

A much more beneficial approach is fluency i.e. ask yourself what you want to achieve. And what strategies and tactics will be beneficial to reach that outcome. By doing so you allow collaborative problem solving that benefits both parties i.e. make you both better off than your current status quo.

Don’t forget that there is no command and control in negotiations because your counterpart has to willingly agree. If not, you will not reach an agreement.

This is not the way to negotiate

This is not the way to negotiate

The importance of listening

Many times people are so caught up in what they want to achieve for themselves that they forget to listen to what the other party is saying. You can’t just tell them what to do but understand what motivates them and what their interest are. So we need to estimate the answers to those questions. Needless to say it’s best if we try to figure that out before we start negotiating.

Preparations often the key

The difference between successful and unsuccessful negotiators often comes down to how prepared you are, which is a factor that you can actually control. However, according to Margaret, most negotiators are not prepared because they are confident they can just flow with it and handle whatever comes up. Why? Again it comes down to the fatal approach of battling to not let their counterpart have whatever it is that they want and to get whatever it is they don’t want you to have. That’s a not the way of succeeding in negotiations. Instead start contemplating creative proposals to open up new solutions that neither one of you could have implemented.

Do you regard negotiations as a battle to get everything and give away nothing? Or are you of the opinion that an outcome that is of mutual benefit is the best approach? Are you prepared before you start negotiating? Do you actively try to put yourself in your counterparts shoes to understand what they aim for and what motivates them? Do you listen to what they have to say to facilitate a mutually beneficial agreement? Or maybe you are of the opinion that you can handle whatever comes up in a negotiation and just go with the flow? Are you good at coming up with creative proposals that open up new solutions that enable success?

Video: Stanford Graduate School of Business – Photo: Mark Nockleby

Do you turn customers into promoters?

January 4th, 2015

Apple does, maybe it would benefit you as well? In this short video Fred Reichheld, fellow and founder of the loyalty practice at Bain & Company, tells you how Apple builds loyalty:

Have you developed a system to help you focus all employees on making customers come back for more and bring their friends? If not, it is definitely worth while. Not only will your customers by happy, you and your employees will feel energized and proud of the way you treat customers.

Are you, like Apple, obsessed with enriching the lives of your customers?

And serious enough to want to measure how well you are doing in that respect? Sample customers on a daily basis and measure feedback consistency. What you need to know  is if your customers have had a good experience and would recommend you to a friend. It’s simple really. Just ask them if they are content with everything and if so why. And if they are not, find out what does not meet with their approval and why.

promoters

Apologize when necessary

With the feedback in hand you/the managers then call discontent customers and attempt to change their mind. Discuss the root of the problem and try to find a solution. If necessary apologize.

On a daily basis look at the feedback customers have given so that you can learn from the problems and celebrate successes.  Make staff that have been really appreciated by customers explain to their colleagues what they did to make their customers so content.

When you are listening and driving innovation based on customer feedback suddenly you are, like Apple, enriching peoples’ lives. Maybe the greatest gift you can give to yourself and your employees is to put them in a position where they can earn customers appreciation and be rewarded for it?

When Richard Branson a long time ago was selling records out of his car booth he had a firm belief that the customer is always right. So when someone complained and wanted to return something he gave them their money back. Sometimes it really hurt his pocket but in the long run it paid off.

Do you turn your customers into promoters? How do you find out if your customers are happy with all aspects of their experience with you and your company? When someone complains how do you handle it? Do you celebrate when customers tell you they are happy dealing with you? Are you good at apologizing? Do you have loyal customers? If not, what are you going to do about it? How have you managed to retain your customers and make them recommend you?

Video: HarvardBusiness

Holiday Reading: Learning – an access to having it all?

December 28th, 2014

The day I stop learning I’m dead. And even when that day comes I will not know everything there is to know.

The day I stop learning I’m dead.

Nobody does, even Einstein said he is not an expert on anything, merely curious. Did you for instance know that sweating leaves produce electricity? Neither did I until I came across that revelation.

Learning is fascinating. Some days what we learn have a fundamental impact on our lives, some days it’s just minor things and sometimes we are forced to learn lessons we really could do without. But regardless, the important thing is that we learn and develop. If not, how can improvement take place? How boring life would be without constant learning and development. Imagine how inflexible people would be..

Ever met a person who has never had a problem?

Everybody has problems, the richest man in the world as well as the poorest. It’s just a question of what problems. The important thing though is what we learn from them. The easiest is to blame everybody else but that approach will just assure that the same problem happens over and over again. The smart, and interesting, way is to take responsibility for what happened, learn and move on.

Almost every day something new happens

In Saudi Arabia you learn a lot. KSA is, in my opinion, the most interesting country in the world because almost every day something happens that you have never experienced before. Life in the kingdom hence enriches you enormously, provided of course, that you are not stuck in your ways or intolerant. We are all different, and that’s what makes life beautiful. How boring it would be if we were all alike.

If you have a curious mind and constantly learn you can succeed with anything. Don’t know how many times I have been asked to do something I have never done before in different parts of the world. So I just found out, learnt and did it.

Life has no guarantees

Sometimes I think people are afraid of learning and developing. It’s not only laziness but also easier to take the option of doing nothing since, they could, after all, fail. And society sometimes reward people for towing the line as opposed to learning and developing. It’s not unusual that even top positions are filled with executives who will just preserve the status quo. That’s all very well, but how will companies develop with that kind of mind-set? Sure control is important but surely not at the expense of the company learning, developing and improving results? And how can they do that unless they start looking at new and different options? Besides I don’t understand the contradiction since I have always followed company policy and at the same time learnt, developed and improved results.

For me acquiring new knowledge, behaviors, skills, values, preferences and understanding is vital. To be broad-minded and curious is probably one of the key, if not the key, aspect of life. And how would that be possible without constantly learning? I know more today than I did yesterday and will continue to do so for the rest of my life. I really enjoy living and am not afraid of dying but anything in between I’m simply not interested in. And isn’t that how we end up leading our lives if we stop learning with all that entails? Or maybe Oscar Wilde had a point when he said: “Everybody who is incapable of learning has taken to teaching”? Joke aside, at least that’s how we sometimes felt when we were at school.

(Photo: PhotoXpress giuseppe porzani)