Thursday 30 October 2008

Ethical choices in a crisis

Imagine this: you are the local country head of a global, billion-dollar investment bank. Through weekly conference calls and updates, you know that your company is facing a cash crunch due to a worldwide seizure in the credit markets, and you are nervous about the company’s future. Business, however, must go on. One day, your regional boss instructs you to market a new series of financial products, to be distributed through local banks to retail investors. The financial products are themselves quite complicated and, in your opinion, rather risky, as they are essentially bets that companies will or will not go bankrupt. However, taking a look at the prospectuses and the marketing material, you see that they are couched in investor friendly phrases designed to give the impression they are safe and secure, as they are backed by the full faith and guarantee of your own bank. Your regional boss tells you to launch the products ASAP and is breathing down your neck every day for sales. Meanwhile, your own questions about the health of your own company are swatted away. What do you do?

In my last column, I explained how both the smart and ethical thing for a company to do in a crisis was to act swiftly and communicate clearly to affected customers. However, not everyone who reads this column is a company boss! What if you, a regional head or the marketing director, are given instructions contrary to ethical standards, such as an order to sell tainted milk powder where health standards are lax, or to market risky bets as safe financial investments? What are your options?

Just do your job. You may try to assure yourself and say, I’m only doing my job. Whether that is a good defense in a trial (yes, you have to start thinking in such terms) depends on your seniority in the company or your level of knowledge of the company’s policies, products and potential wrongdoings. I would say the moment you know what is going on, you can forget about this option. Also, you have your posterity and your afterlife to consider!

Compromise. This is especially attractive when any harm caused is debatable or quasi-legal. (“The fine print clearly says customers may lose all their money.”) So, in the banking scenario, while your unethical colleagues are selling Lehman Minibonds to pensioners, you target richer ones who can afford to lose a couple of hundred thousand. I don’t really think much about this option: it’s very difficult and it’s not worth it. By definition, you are compromising your ability to hit your targets, and for what upside?

Quit. Walk away. Life is not worth getting into moral scrapes which can imperil your career and, well, your soul. Throw in your resignation letter, try to get a waiver on your notice period, pay the company back if necessary, because the longer you work in a ethically imperiled company, the greater the risk of that peril extending to you. However, as Jeff Skilling, the former CEO of Enron discovered, even resigning did not save him from prosecution.

Blow the whistle. Time to burn your bridges and go to the authorities. Nowadays, even this option has various ways of doing it – from writing an anonymous memo to the boss (as Sherryn Watkins did in Enron) to going directly to the press (Citizen Nades would be your man) or, if you really want to protect yourself, going directly to the prosecutor’s office and striking a deal, in exchange for immunity. Just make sure your deal is airtight and agreed in the presence of your lawyer, and that, this being Malaysia, the company you are informing on doesn’t have, well, certain political connections, in which case your only option would be the opposition party.

If the above four choices all do not sound very appealing, its because they are not. Each has their difficulties and one’s choices would depend on one’s actual circumstances and ethical limits. The important thing to balance is doing the right thing, but also preserving your career and your personal reputation. Its easy falling into a hole. Climbing out is hard. Climbing out and staying clean is even harder.

As seen in theSun, 30th October 2008.

Monday 20 October 2008

Marketing and Crisis Management

Imagine this scenario: you are the boss of a company manufacturing infant milk powder. One day, your head of marketing and head of product quality come to you with some grave news: a hospital has contacted the company informing them that 10 babies in their ward have contracted kidney stones, and that the one common factor in all of them is that they had been consuming your brand of infant milk powder. Your head of product quality cannot explain why and he needs time to investigate the situation. Your head of marketing, after having faced a mounting number of angry calls from customers, wants to know what to do next, as, every day, your company is shipping out 90,000 tins of milk powder to retailers and exporters. What do you do?

Crisis management 101

We should be fortunate if we, through the course of our lifetimes, never have to be put in such quandaries. ‘Tough’ armchair marketers who like to talk about strategy and grabbing market share can freeze and wilt during times like these. Chances are, however, that a problem of this nature is bound to hit sooner or later, especially in mass consumer market food companies. How a company’s management and its marketing and communications department reacts to it can effectively determine its fate.

The important elements of crisis management are:

1) recognising a crisis early and dealing with it swiftly;
2) establishing regular and daily communications with customers and the public, through media sources;
3) updating the public on the company’s response and the steps being taken to arrest the crisis;
4) not focusing on blame, or culpability, and just doing all that can be done to protect its customers and, therefore, its brand, its reputation, its very future.

In the case histories of crisis management, these are the best practices that have pulled companies through those difficult times – examples include the Tylenol poisoning crisis of 1982 and, recently, the Mattel lead paint crisis of 2007.

Nothing is more important than item 1 – acting early. Just as in the case of an earthquake or a tsunami, it is worthwhile imagining a countdown clock starting the moment it happens… every second that ticks away without anything being done means more lives are lost. In the case of Sanlu, it seems it had plenty of chances to start managing the crisis – as early as December 2007, some report. But by ignoring or burying its bad news, it actually sealed its fate. Doing this tells the public that your management would choose its own image and reputation over that of the lives of its customers. Its probably fair to say that from being the No. 1 market leader in China, Sanlu is now quite finished.

As for steps 2 to 4, the various Chinese companies affected should borrow a leaf from their own political leaders. From the winter storm crisis to the Sichuan earthquake of 2008, Chinese leaders at the highest levels had been perceived to be actively involved in doing their best to solve the problem, with even Premier Wen Jiabao making appearances at crisis hit areas and addressing victims directly.

Crisis management 201

Let’s try another scenario: you are the local country head of a global, billion-dollar investment bank. Through weekly conference calls and updates, you know that your company is facing a cash crunch due to a worldwide seizure in the credit markets, and you are nervous about the company’s future. Business, however, must go on. One day, your regional boss instructs you to market a new series of financial products, to be distributed through local banks to retail investors. The financial products are themselves quite complicated and, in your opinion, rather risky, as they are linked to financial derivatives such as Credit Default Swaps (CDS’s). However, taking a look at the prospectuses and the marketing material, you see that they are couched in investor friendly phrases designed to give the impression they are safe and secure, as they are backed by the full faith and guarantee of your own bank. Your regional boss tells you to launch the products ASAP and is breathing down your neck every day for sales. Meanwhile, your own questions about the health of your own company are swatted away. What do you do?

Unlike the first dilemma, where doing the ethical thing – responding quickly – helps save the company, this second dilemma is a lot harder, as doing the ethical thing actually harms the company. Resolving this is beyond the limits of this column. Which is why it’ll be continued, 3 weeks from now. See you then!


As seen in theSun, 8th October 2008.

Wednesday 17 September 2008

In Defence of Touts

Picture this: you arrive at a busy, rather decrepit looking airport. You haven’t got your flight yet, so you are trying to buy a ticket back home. Looking up, you expect to see a board showing the departure times, flights and check-in counters of all the planes leaving today. Instead, all you see are flickering lights and paint peeling off the walls. In front of you are 40 different sales counters, each staffed by one person waving to you enthusiastically to book your flight ticket with his or her company. You have never heard of 90% of the companies. They are waving at you even though they don’t even know where you’re going.

Substitute the words ‘airport’ for ‘terminal’ and ‘flight’ or ‘plane’ for ‘bus’, and you get a picture of what happens daily at our bus terminals across the land, from Puduraya to Larkin to Sungai Nibong.

Is it any wonder that touts flourish in such conditions? A Malay daily reported recently that bus ticket touts can earn up to RM5,000-6,000 a month, despite the job being illegal. Typically, they earn RM200 a day, from commissions of RM2 to RM5 paid for by the bus companies. That tells you something, doesn’t it? The powers that be may hem and haw and tell passengers not to buy from touts, but the fact that they can have such decent earnings means that there is a real need and demand for them, from both the passengers and the bus companies themselves!

It’s always the same story. You arrive at the bus station, a little stressed because you want to catch as early a bus as possible. You’re possibly tired, and the prospect of combing through the different stalls looking for the right bus at the right time to the right destination puts you off. The young man who approaches you asking you “ke mana? Singapore? Penang?” could be either a lifesaver or a scammer – your inclination to buy a ticket from him depends on how knowledgeable, tired or desperate you are. Whatever the case, he promises to lead you to the right company, using the best bus, leaving at the best time. So you take your chance with him. What happens next depends on your luck and the honesty of your tout.

Nature, politics and markets all share a same trait – they all abhor a vacuum. If a need is not met, or is met badly, by the government and its regulatory agencies, you can expect private sector agents to provide an immediate alternative. A tout earns his living on the basic inefficiencies of the agencies and terminals regulating and facilitating bus transport – their inability to provide good infrastructure (clean, well-lit, comfortable terminals which are pleasant to wait in) and basic information (departure and arrival times) to match willing customers and eager bus companies. Since they can’t, or won’t do it, the tout assumes their place, a one-man matcher of supply and demand.

Before companies can engage in marketing, the markets themselves have to function effectively. It says something about the market for bus travel in Malaysia where one of the chief strategies of some bus companies is to engage armies of young men to sell their tickets illegally. Sure, most of these companies are using the touts to bypass the terminals (and their surcharges) altogether and pick up their customers on the roadside, but think about it: what is Puduraya providing anyway? A clean, organised, well-lit, airconditioned environment, with plenty of seating? If it was, these touts wouldn’t have any business.

To prove the point, look at those bus companies plying the direct KL-Singapore route - they generally avoid stopping at Puduraya and have online or phone ticketing services available; that is, they built their own infrastructure in the absence of it being available for them.

So touts are here to stay, as long as Puduraya remains Puduraya (dark, dingy, hot) and transport regulators have other agendas other than the efficient matching of buyers and sellers in mind. Perhaps we should just legalise touting and regulate them – after all, we only want them to be honest so that customers don’t get duped or led around in circles or get made to wait longer than is necessary.

Sounds wacky? Apparently, its about as wacky as the idea of a big screen showing consolidated bus departure and arrival times…


Printed in theSun, September 17th, 2008. PDF version here.

Wednesday 27 August 2008

Big Radio Killed The Radio Star

A cryptic banner ad appeared recently on a popular online local news web site, asking viewers whether they were “sick of Malaysian radio”. A click on the ad led to an online survey which posted various options of why one might be sick of Malaysian radio, including “too much phone-in contests”, “playing the same music over and over” or “an unduly high interest in Hollywood gossip”.

Whoever the ‘perpetrators’ of this ad and survey are and whatever good they may get out of it, I wish them all the best. For me, being three years into my thirties, I am no longer sure whether my musical tastes have changed over time due to the state of Malaysian radio or my own internal, autonomous ‘evolution’. Because, in truth, I can’t listen to any English radio station here in Malaysia for more than 10 minutes before switching to the soothing confines of my in-car MP3 player (unless, of course, I need traffic information delivered to me via the sexy husk of Priscilla Patrick).

To some extent, I’m not blaming anyone for this. Musically speaking, its tough being in one’s thirties. You can’t let go of the character-defining music of your teens and early twenties, yet you want to stay connected to the popular music of the day (even though most of it makes you cringe or gag) because of the need to be relevant and feel “young”. But seriously, there is something about Malaysian radio which makes this dislocation harder to bear.

For the youth-oriented stations, the Malaysian predilection to R&B, hip hop and rap, so evident on all our competing stations, leaves me a bit cold, not because I don’t like the genres, but because their best forms would have, well, zero chance of ever getting any airplay (how many times have YOU heard Dr. Dre on Malaysian radio?). Usually what gets played is the crowd-friendly bleah variety. The same goes for pop and rock. For the older-oriented stations, their idea of musical variety does not mean varied, different musical styles and sub-genres, but rather 20 years of bubblegum pop. I mean, seriously, how many times do I need to hear the Backstreet Boys, Jon Secada and Rick Astley in a year?

Funnily enough, my flight from this bubblegum land has found me in strange waters. Lately, its been classical music for me, especially since the birth of our baby girl. Unfortunately, Astro’s Opus only works at home (you need a decoder), which is fine for baby, but there’ll be no in-car classical music for me unless I happen to be in Johor and get it beamed from Singapore. In fact, whenever I am back there, I switch between three Singaporean stations: the aforementioned Symphony 92.4, the BBC’s World Service and the irreverent non-state owned 91.3FM. On the drive back home to KL, when the signals of these three stations start to fade into static (somewhere around Pagoh), I actually feel rather like I am leaving civilisation.

The point I am trying to make is not that radio stations should cater to my whims and fancies (although that would be nice) but to make the point that I am only a small instance of a larger trend, that this is a new era of fragmented demographic, cultural and social groups manifesting themselves in even more fragmented musical and programming tastes; an era where most people’s iPod playlists are longer than a radio station’s; an era where more new music can be found on the Internet than on the radio; an era where I believe niches are getting smaller and smaller, and therefore, Big Radio should be getting smaller and smaller.

So, let me provide not just one business model for a new radio station, but three, all centred on the Klang Valley, given its distinct demographic difference from the rest of the country.

a) A free-to-air classical music station
Target demographic: arts lovers, highbrow types, retirees, M2H residents, LiteFM listerners, babies
Programming: opera, classical, contemporary vocals
Advertiser shortlist: Contemporary arts events, baby products.

b) Expat Radio
Demographic: the Klang Valley expat community and the more liberal English-speaking local population
Programming: call-in programs (expats need to vent sometimes and complain about their host country), and whatever musical tastes they have (say, Keith Urban for the Aussies and David Hasselhoff for the Germans… I’m kidding, ok?)
Advertiser shortlist: just pick up a copy of Expat magazine. Or The Peak. Or Tatler.

c) Campus Radio
Demographic: local, international and foreign students in the Klang Valley
Programming: college or local bands, student interest radio-zines, allowing space for free-form expressions by students themselves
Advertiser shortlist: any youth-oriented products and services would apply.

Advertisers and marketers all over the world know that successful marketing is all about focus, focus, focus. It would be great if our media owners or - better yet - the regulators of our media owners appreciated this fact.

Appeared in theSun, August 27th 2008. epaper link here.

Saturday 9 August 2008

What's in a Number?

The PIKOM PC Fair just blew through KL over the weekend. For those of you who missed it, or who have never gone for one, it’s a veritable bazaar of the latest and greatest in technology consumer products.

Faced with a bewildering array of computers, laptops, camcorders, digital cameras, printers, PDAs and their attendant accessories, the average consumer can be forgiven some confusion in choosing what’s right for him. Relying on the salesman for edification – while he is spouting rapid-fire Cantonese and brandishing his product in your face – sounds more like a recipe for uninhibited expenditure than careful product comparison..

The problem is worsened by the industries’ usage of numerical specifications. To paraphrase a well known saying, there are lies, there are damned lies, and then there are specifications.

Numbers never lie…

A curious thing often happens in the marketing of products: someone somewhere latches on to a product specification, something which has a number attached to it, and starts to emphasise it beyond all proportion in the promotional literature. That leads to an “arms race” of sorts, as rival manufacturers are sucked into this competition and need to retaliate with their own numbers.

The megapixel (MP) controversy is an excellent example. Consumers go around proudly brandishing their new 10MP cameras saying its so sharp and so clear. Actually, as photographers can tell you, megapixels have little to do with sharpness, clarity, or even the size of the image you want to blow up. As Ken Rockwell notes in his blog kenrockwell.com, if you want to shoot sharper pictures, have better technique, and if you want to print a larger print, stand further back when you take the shot. Stand 100 feet back and you can print a billboard with an ordinary 5MP camera.

I think its because marketers, especially consumer marketers, are pressured to accomplish two things: to sell and to simplify. The problem occurs when complex products are over-simplified by the marketing department in order to make the job of selling easier. The quantitative aspects of the product specifications, being easier to understand, start to replace the qualitative aspects of the product.

…but they only tell half the story

Certainly a 200 gig hard drive is better than a 100 gig hard drive, of course, but the key thing is that its better, ceteris paribus, “all things remaining the same.” In the tech business, all things rarely remain the same.

The tendency for consumers at exhibitions like PC Fair is to go spec-comparing. I think this is a big mistake. I’d rather go test-comparing. Nothing beats getting your hands and fingers on the product, working the interface, and bashing it about to simulate the real world.

To give an example, these are the “soft”, qualitative attributes I look for when it comes to laptops/notebooks:

• Keyboard layout and comfort. I can’t emphasise this enough. Nothing frustrates me on a notebook more than a non-intuitive placement of the ‘Home’, ‘End’, ‘Del’ and ‘Ins’ and arrow keys, since I use these a lot.

• Heat management. It is understandable for laptops to heat up and start to burn your laps (should you still be one of the few people in the world to take the term “laptop” literally), but when they start to burn your wrists too, it’s time to get another one.

• Screen brightness and lifetime. Bad laptops start to lose their shine, literally, after a few months or years, when the LCD backlight starts to fade. Its tough on the eyes and the bad thing is, you don’t even notice until its too late and your eyes have suffered for too long.

Now, do you see any of the above traits marketed by the notebook companies? Of course not, they’re just not as sexy as “2 gig RAM” and “1.6Ghz processor”.

Thread Counts

If you think it’s only the tech industry that creates these sorts of non-informative specification arms races, think again. For instance, would you say a 800-thread count cotton bed sheet is better than a 300-thread count cotton bed sheet?

You should know the answer to that one. If you don’t, you can Google “thread count” and find out for yourself.


Appeared in theSun, 8th August 2008. e-Paper link here.