THE IMPORTANCE OF SOCIAL RESPONSIBILITY AND LOCAL COMMUNITIES IN SOURCING
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GLOBAL SOURCING COUNCIL 3S AWARDS AND WINNERS
OUTSOURCING SOCIAL RESPONSIBILITY: LESSONS LEARNED BY APPLE AND NINTENDO
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GlobalizationToday October-November 2012
Bringing Markets Together
S C R Corporate Social Responsibility Our in-depth look at what it takes to be socially responsible Also in this issue: The New Sprint An In-depth analysis of Softbank purchase of Sprint
LinkedIn Profile Optimization How to make best of this Global Branding and Sales Tool by James Hill and Namami Ghosh
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by Steve Martin, Partner, Pace Harmon
Page 36
India Business Scenario A Look at India’s Today and Tomorrow
by Subramaniam Krishnan, A. Healthcare
Page 42
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INSIDE October-November 2012 Double Issue
5 PUBLISHER’S NOTE 6 NEWS FEED
What’s new and noteworthy in global commerce.
28 LINKEDIN PROFILE OPTIMIZATION How to make best of this Global Branding and Sales Tool.
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THE IMPORTANCE OF SOCIAL RESPONSIBILITY AND LOCAL COMMUNITIES IN GLOBAL SOURCING PRACTICES
by Luiza Oleszczuk
by James Hill and Namami Ghosh
36 THE NEW SPRINT
An In-depth analysis of Softbank purchase of Sprint
by Steve Martin, Partner, Pace Harmon
42 INDIA BUSINESS CASE
A Look at India’s Today and Tomorrow
by Subramaniam Krishnan, Ashwinee Healthcare
48 MARKET REPORT
Katowice, Poland. Where Second Tier is Not Second Rate
by Thom Mead
52 HUMAN RESOURCES
Thoughts from HR Tech 2012. Upgrading HR’s Role in Enterprise 2.0
by Kyle Lagunas, Software Advice
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2012 GSC 3S AWARDS COMPANY PROFILE: VOS - WINNER OF THE 3S EMPLOYEE ENGAGEMENT AWARD
by Luiza Oleszczuk
56 COACHING AND MENTORING
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OUTSOURCING SOCIAL RESPONSIBILITY: LESSONS LEARNED BY APPLE AND NINTENDO
- A PARTNERSHIP
The differences between coaching and mentoring and how both kinds of program can improve business productivity
by Jooli Atkins, Matrix FortyTwo
by Wanda Lopuch
www.globalizationtoday.com
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Got Something to Say? Then GlobalizationToday Wants to Publish You
FOUNDER & PUBLISHER Ali Comelek ali.comelek@globalizationtoday.com
EDITORIAL and PRODUCTION EDITORIAL DIRECTOR Ali Comelek ali.comelek@globalizationtoday.com AD PRODUCTION MANAGER Donna Eastman donna.eastman@globalizationtoday.com GRAPHIC DESIGN AND PRODUCTION Webstaze Design Studio www.webstaze.com
EDITORIAL ADVISORY BOARD Dr. Bruce Greenwald Prof. Asset Management and Finance Columbia Business School Dr. Matt Waller Prof. Marketing and Logistics University of Arkansas Dr. John Hindle Sr. Manager - Accenture, Adjunct Prof Vanderbilt University
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PUBLISHER’S NOTE
Ali Comelek
Founder and Publisher
Corporate Social Responsibility CSR is basically defined as a form of corporate self-regulation integrated into the business model. It’s a simple 10-word definition but implementation can be difficult for many organizations. And from what we’ve seen, what makes it hard is that it requires a certain paradigm – one which being socially responsible becomes an integral part of your business model. It’s part of who you are as an organization. If an organization doesn’t have it in its DNA, if it is an afterthought, then CSR becomes very challenging to implement.
At Globalization Today CSR has been a priority since day one and we’ve made it an integral part of who we are by working with various charities around the globe. We laid the foundation to work with 12 different charities so that a certain portion of our revenue goes to a given charity each month throughout the year. In addition, we are supporting nonprofit organizations year round, such as Global Sourcing Council, which promotes responsible practices in global sourcing, and supply chain management. In this month’s issue, you will find numerous articles that cover various aspects of the importance of corporate social responsibility. We have a feature story covering the winners of the Global Sourcing Council’s 2012 3S Awards including the company profile of the Employee Empowerment Award: VOS. As part of our expanded editorial coverage, in this issue, we are bringing you various topics ranging from LinkedIn Profile Optimization to an in depth analysis of the Softbank-Sprint merger. Additionally, we are looking at India’s “Today and Tomorrow”. The last article I want to highlight is Thom Mead’s Market Report of Katowice, Poland. Recently Thom spent over 10 days in Poland and he shares his findings.
Founder and Publisher Globalization Today Magazine www.GlobalizationToday.com 1-602-492-4194
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NEWS FEED
NEWS Feed
WHAT YOU NEED TO KNOW IN THE WORLD OF OUTSOURCING
CESC UNIT TO BUY STAKE IN FIRSTSOURCE SOLUTIONS www.blogs.wsj.com
BANGALORE — CESC Ltd. unit Spen Liq Pvt. Ltd. has agreed to acquire a 49.5% stake in Indian back-office-services provider Firstsource Solutions Ltd. for 4.00 billion rupees ($75 million). Under the deal, Firstsource will issue about 227 million shares — equal to a 34.5% stake in the company — on a preferential basis to Spen Liq. Spen Liq will buy another 15% stake from three of Firstsource’s shareholders, CESC said in a statement. In a separate statement, Firstsource said it will issue the preferential shares at 12.10 rupees each. CESC said its unit will also make an open offer for another second-largest lender by assets. 26% stake in Firstsource. The company has been Firstsource was co-founded struggling to compete with by ICICI Bank Ltd., India’s large rivals such as Tata 6
GlobalizationToday October-November 2012
Consultancy Services Ltd. and Infosys Technologies Ltd., which offer back-office services through their units.
NEWS FEED
INFOSYS, WIPRO WILLING TO PAY UPFRONT FOR BIG DEALS www.livemint.com
India’s top tech firms Infosys Ltd and Wipro Ltd are now offering upfront cash payments while bidding for large outsourcing contracts that promise assured revenues, a departure from their traditional strategy in the past of staying away from such transactions. The country’s second biggest software services firm Infosys, which has been facing a backlash from investors and analysts for being not aggressive enough, said it would use its cash pile of nearly $4 billion (around Rs.21,240 crore) to chase outsourcing contracts that require upfront payment. “When you are looking at $500 million and billion dollar deals, you see it as a unique opportunity. We are not averse to any opportunity which will give us growth,” S.D. Shibulal, chief executive officer of Infosys,
said in an interview last week. In the quarter ended 30 September, Infosys acquired motorcycle maker Harley Davidson Inc.’s assets, including a development centre and in-house information technology (IT) staff in exchange for an outsourcing contract of over $200 million. Unlike usual outsourcing contracts for managing computer systems and applications, deals asking for upfront cash are much bigger — at least $1 billion and more — and involve the sale of a customer’s assets that could include a computer data centre,
and the transfer of in-house staff or a patented software application. In some cases, customers even ask for a portion of future savings to be achieved from the contract -- upfront. Earlier this year, both Infosys and Wipro offered $100 million and $60 million, respectively, for a $1 billion contract from Mexico’s biggest cement firm Cemex SAB de CV, executives involved in bidding for the deal said, requesting anonymity because they are not authorized by their companies to speak to the media.
EU DIGITAL AGENDA COMMISSION PUSHES FOR MULTIMILLION NETWORK BACKING www.sourcingfocus.com
Digital Agenda Commissioner Neelie Kroes has called for EU and member state loan backing for CEF (Connecting Europe Facility) with around €7 billion going to fund nextgeneration networks. The new networks would provide high-
speed broadband throughout the European Union. Member states are due to reach a decision on CEF funding and budget allocation within the next few weeks, which will decide future projects up until 2020.
www.globalizationtoday.com
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NEWS FEED
SUTHERLAND GLOBAL SERVICES INVESTS IN JAMAICA’S BPO SECTOR www.go-jamaica.com
Sutherland Global Services, said to be one of the world’s largest independent business process outsourcing companies, is in the process of establishing a Global Delivery Centre (GDC) at The University of the West Indies (UWI), Mona Campus. Expected to generate up to 3,000 jobs, including critical leadership positions for Program Management, Training and Client Engagement, Sutherland will be opening the facility in the fourth quarter of 2012. Headquartered in Rochester, N.Y., Sutherland employs over 30,000 professionals globally and has been the number one job creator in Inc 5000 for the last 3 years. The company plans to make its UWI-based Business Process Outsourcing and Technology Management Center the premier provider of integrated business services in Jamaica. Initial plans for staffing the GDC include recruiting the majority of its Consultants from the UWI student population. Additional non-Consultant positions, including roles in Leadership, Information Technology, and Human Resources will be open to the public. Sutherland’s commitment to the community is grounded in its goal to be 8
GlobalizationToday October-November 2012
the Employer of Choice in the countries from which they operate. Sutherland’s partnership with The University of the West Indies provides qualified students with significant employment opportunities. “We are pleased to bring our global strengths and capabilities to Jamaica and creating significant job opportunities and helping drive economic growth,” said Mr. Dilip Vellodi, Chairman and CEO of Sutherland Global Services. JAMPRO, the national investment and trade promotion agency, has been working very closely with Sutherland from the outset to facilitate the company’s investment in the island.
JAMPRO strengthened its engagement with Sutherland after several meetings with executives at key global industry events and forums, culminating with the Jamaica Investment Forum held in Montego Bay in March 2012. In July, a high level delegation from Sutherland completed and exhausted a capabilities assessment and concluded the review in a meeting with the Minister of Industry, Investment and Commerce, Anthony Hylton, who commended the company for taking the innovative approach of recruiting the highly motivated and skilled students from the University’ population.
NEWS FEED
GENPACT SEALS DEAL WITH DIAGEO FOR SHARED SERVICES CENTER IN BOGOTA www.nearshoreamericas.com
Indian outsourcing giant Genpact has struck a deal with Diageo, agreeing to process the British beverage vendor’s finance and accounting information in Latin America. Financial details of the deal are yet to be revealed. As per the deal, Genpact has set up a shared services center in Colombia’s capital Bogota where its employees will work alongside Diageo’s. London-based Diageo, which sells popular alcoholic beverages including Johnnie Walker and Crown Royal, gave the contract to Genpact in an attempt to centralize its finance and accounting (F&A) processes in Latin American region. Diageo’s finance and accounting is currently processed at multiple locations across the continent. The center employs approximately 65 employees, and Genpact says it would hire hundred more staff in the days ahead. “This center will
serve Diageo’s large and growing Latin American businesses and is a sign of the confidence in the future and potential that Colombia represents for the company,” the companies said in a joint statement. “Genpact’s expansion of operations into Colombia further supports our strategy of bringing our global business process management expertise to rapidly-growing economies,” said Genpact’s Vice Chairman, Pramod Bhasin. The shared services center is
located in Bogotá Free Trade Zone in the Zona Franca business park. “Colombia offers a very favorable business climate for Genpact and our clients like Diageo because of its skilled workforce, a healthy and growing economy, a large number of universities with strong business programs, the presence of many different industries, and Colombia’s stated commitment to increasing open and free trade practices,” said Scott McConnell, senior vice president and business leader, Americas for Genpact.
EU DIGITAL AGENDA COMMISSION PUSHES FOR MULTIMILLION NETWORK BACKING www.sourcingfocus.com
In a deal valued at £65.5million, the global insurance market has renewed its contract with Xchanging to provide business process services. The new contract will cover a 5 year term and includes support of the market’s electronic
processing platform (IMR). Geoff Kennard, electronic services director at Xchanging, said: “We are delighted to have been awarded this deal and are privileged to have a key role to play in the market’s plans for the future.” www.globalizationtoday.com
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SOCIAL RESPONSIBILITY
The Importance of Social Responsibility and Local Communities in Global Sourcing Practices At a time when the sourcing sector is subject to political scrutiny in North America and Europe, it is more important than ever to make the case for bringing more spotlight to the good examples of sourcing practices and corporate social responsibility (CSR). by Luiza Oleszczuk
H
ow a company influences its immediate environment (including people) is crucial not only in the company’s home country, but- equally importantly so - at its foreign locations. Caring for employees and the environment in which a business operates is a responsibility of each ethically responsible company. There are plenty of negative examples of a lack of corporate social responsibility. But the positive ones are emerging too, and they deserve all the spotlight they can get. One of the most horrific accidents at a foreign plant of a U.S.-based company took place in 1984. I’m talking about the infamous and traumatizing 10
GlobalizationToday October-November 2012
incident in Bhopal, India, when a leak of methyl isocyanate gas and other chemicals from a chemical plant caused an estimated 8,000 deaths within two weeks since the incident, and another estimated 3,900 disabling injuries. The toxic
SOCIAL RESPONSIBILITY
substance reportedly made its way in and around the nearby shanty towns, killing people who simply lived near the plant. The plant - the Union Carbide India Limited (UCIL) pesticide plant in Bhopal, Madhya Pradesh– was a subsidiary
of Union Carbide Corporation (UCC), a U.S.headquartered chemical company. This example- however chillingly negativeshows how big an influence the presence of a foreign company can have on a local community; www.globalizationtoday.com
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how the distant communities can be influenced by a company’s lack of responsibility (one of the broadly published conspiracy theories surrounding the leak-- described in a book by Dan Kurzman, an American journalist and writer of military history books-- claims that the plant was practicing severe cost cutting, like cutting the employees’ promotions, instructing employees not to fix broken pipes, or making them use manuals in English, even though few knew the language). They influence lives of employees and communities. They influence the environment where a company has its plants in countries that might be distant and cheaper but that are populated by real people living in vibrant communities. Through its sourcing practices, a company influences the ethical (or not) nature of its product, its brand, its philosophy and its nature. Whether it is a large corporation, like in this example, or a jeweler using stones imported from the Democratic Republic of the Congo; or a technology company that assembles its phones and tablets in China-- socially responsible sourcing practices matter.
ETHICAL PRACTICES IN GLOBAL SOURCING SHOULD BE INCORPORATED INTO THE BUSINESS MODEL OF EVERY COMPANY. LUCKILY, MORE AND MORE COMPANIES RECOGNIZE THAT FACT. For example – did you know that Verizon Communications launched several sustainability programs since 2009? The company currently aims to facilitate sustainable practices for its nearly 190,000 employees, as well as the communities it operates in. An example of such a program is a series of Electronics Recycling Events – events geared to allow employees and communities near Verizon offices an opportunity to recycle used 12
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electronics free of charge under a zero landfill policy. Intel is operating a campaign focusing on an ethical sourcing of the so called “conflict minerals” - gold, tantalum, tin, and tungsten - mined in the Democratic Republic of the Congo (DRC). The company focuses on driving accountability and ownership within the supply chain through smelter reviews and validation audits, partnering with key industry associations, including the Electronic Industry Citizenship Coalition (EICC) and the Global e-Sustainability Initiative (GeSI); and working with both governments and NGOs to support in-region sourcing. Companies and BPO centers across Asia, Africa and South America are developing programs that are supposed to provide qualified services to companies around the world, while empowering the communities in which they operate. Showcasing, encouraging and rewarding these positive examples is the role of the Global Sourcing Council-- a non-profit organization established to monitor and research global sourcing practices. “Sustainability became a fashionable topic these days,” says Dr. Wanda Lopuch, Past Chair of the Global Sourcing Council and Chair of the GSC 3S Awards , a competition and awards program established to honor practitioners of sustainable and socially responsible sourcing. “Executives from the C-suite embraced that concept and that term very easily.However, when it comes to execution of the philosophy of sustainability, companies do not always practice what they preach,” adds Dr. Lopuch. Sometimes there is a disconnect between the sustainability philosophy outlined in “shiny, glossy sustainability reports and actual practices.” The 3S Awards (for Sustainable and Socially Responsible Sourcing) were conceived as a platform to put the face and meaning behind
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these high-level concepts. “We want to demonstrate these good practices to recognize those who are committed to them, to complement them and also to inspire other companies to follow suit,” says Dr. Lopuch. The 3S Awards program recognizes and provides visibility to exceptional achievements in the global sourcing marketplace by individuals and organizations such as Verizon or Intel, but also smaller companies and NGOs. One example is Efficiency Exchange-- a company focusing on supply chains in China, and especially on lowering the energy usage in Chinese factories. Another one is Forgotten Shirts, which produces fair trade t-shirts in Uganda, with the idea of empowering African farmers and textile workers. Or Indian VADS, a BPO center that empowers the local community by hiring local physically disabled professionals and constantly innovating their work space. The 3S Awards program is a step towards supporting, promoting and showcasing the best examples of sustainable outsourcing and tangible benefits of Impact Sourcing (IS). IS is
a new and innovative approach to outsourcing which requires a change in mindset and attitude. “In this interconnected global world what we want to emphasize is the need to look beyond simple, short-term profit,” says Dr. Lopuch. “In the business equation we want to demonstrate that ‘profit with purpose’ is not only possible but it’s more and more prevalent these days.” The 3S Awards program also prevents people from viewing “outsourcing as a peril or as a threat to a community,” says William Bierce, Director at the Global Sourcing Council. The NGO “was founded in response to the fact that in the 2004 (presidential) elections outsourcing was portrayed as something where you name and shame people, companies that are engaged in outsourcing,” explains Mr. Bierce. “But in fact, outsourcing is something that’s been promoted by the U.S. government through its consistent policies beginning with the adoption of the North American Free Trade Association and the World Trade Organization around agreements on investment protection measures, intellectual www.globalizationtoday.com
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property and trade and services, all of which are promoting outsourcing.” We live in a world which is governed by outsourcing and promotes it, argues Mr. Bierce. The purpose of the Global Sourcing Council is therefore to establish a rational dialogue on “what are the issues involved in making outsourcing an effective tool both for the companies who do it and for the employees who are affected by it.” As long as free trade exists, the sourcing sector will exist-- that seems to be the leading thought behind this organization and the 3S Awards program. Companies will always look to cut their costs. The only potential variable is making sure they do source services in a sustainable and socially responsible way.
Below is the list of winners of the 2012 GSC 3S Awards — outstanding examples of viable impact sourcing models who constitute a working template for assisting others globally in creating a scalable impact sourcing business model: Community Engagement Award:
Alter Eco www.alterecofoods.com Alter Eco Americas promotes a form of global commerce where priority is given to working with marginalized farmers to build trade relations based on solidarity and sustainability. “Alter Eco is honored to be selected for the Community Engagement Award from 3S. The recognition from this award underscores and bolsters our commitment to the Direct Trade model of commerce as a solution for alleviating global poverty and empowering farmers worldwide,” said Jeanne Cloutier, Director of Operations at Alter Eco. 14
GlobalizationToday October-November 2012
Employee Engagement Award:
VOS www.vosflips.com VOS is an eco-friendly shoemaker brand that gives back to the local communities in South America. “Winning the 3S Award will support our ongoing efforts to empower the employees in our global supply chain towards 3S actions and will substantiate our commitment to the United Nations Global Compact program,” said Jose Alejandro Flores, founder of VOS.
Empowered Woman Award:
HarVa www.harva.co.in HarVa means Green for the villages and stands for “Harnessing Value” of rural India. The company is a rural startup that focuses primarily on Skill Development, BPO, Community based farming and Microfinance. “We believe our principles echo with the 3S business practices which is unique in its approach and need to be embraced globally. Being recognized by GSC gives us a platform to learn and collaborate with objectively driven Impact Sourcing organizations and individuals that achieve sustainability in the real sense,” said Ajay Chaturvedi, Chairman at HarVa.
Out-of-the-Box Award:
prAna www.prana.com prAna is a fair trade apparel maker, one of the first ones in the United States. The company is always looking for new ways to fold the intention of sustainability into their materials and practices, working to reduce the
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impact on soils, water supplies and other natural resources. “Winning the 3S Award would be a great honor for all of the hard work that everyone at prAna, our customers, and the workers in the Fair Trade factories as well as the Fair Trade cotton farmers have done to create a new business model that benefits all involved,” said Nicole Bassett, prAna’s Sustainability Director.
People’s Choice Award:
Digital Divide Data www.digitaldividedata.org Digital Divide Data’s (DDD) creates better futures for disadvantaged youth in developing countries through employment in business process outsourcing (BPO). “For a young person born in poverty, a first job and the opportunity to go to college means the chance to break a heinous cycle and create a better future for themselves, their siblings and their own children,” said Michael Chertok, Co-founder and Chief Development Officer at Digital Divide Data. “Being recognized with the 3S Award will enable Digital Divide Data to create this opportunity for thousands more young men and women--and help us inspire others to use the Impact Sourcing model to build bridges to opportunity in the global economy for hundreds of thousands more.” The 2012 winners will participate in the 3S Awards Boot Camp, which will consist of participation in top-level industry gatherings such as the 4-day BSR Conference in New York City, where they can be coached by executives from global corporations. Two representatives of Digital Divide Data, winner of the 3S People’s Choice Award, will participate in the prestigious
Vested Outsourcing Course at the University of Tennessee in Knoxville’s Center for Executive Education. The 3S Boot Camp will end in June 2013 at the World BPO Forum in New York City. “It takes a village of like-minded individuals to grow and scale the socially responsible enterprise that produces profit with purpose,” comments dr. Lopuch, Chair of 3S Awards. “Our goal is to provide the winners of 3S Awards with skills and contacts that will empower them to take their winning programs to the next level.”
About the Author Luiza Oleszczuk Global Sourcing Council Luiza Oleszczuk is a freelance journalist and a sustainable development enthusiast, as well as a part-time business research consultant specializing in the Eastern European markets. She holds a Master’s degree in English from University of St. Andrews. Among Luiza’s interests are international business and CSR, the role of technology in social innovation, globalization and social issues related to it, policy and economics, and women in business and politics. Luiza also currently serves as Communications Director at the Global Sourcing Council, a non-profit. Her articles have appeared inThe Economist, The Christian Post, GSC Newsletter, Nowy Dziennik and other publications
www.globalizationtoday.com
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AD
AD
3S AWARDS
3S Employee Engagement Award 2012:
VOS
www.vosflips.com 18
GlobalizationToday October-November 2012
3S AWARDS
From left: Jeremy Hockenstein (Digital Divide Data), Jose Alejandro Flores (VOS), Anjeline Judex (GSC 3S Awards), Ajay Chaturvedi (Harva), Jeanne Cloutier (Alter Eco), Pam Theodosakis (prAna), Paris Theodosakis (prAna), Wanda Lopuch (Chair of GSC 3S Awards), Edward Son (Citi Commercial Bank) at Citi Executive Conference Center in New York on Oct. 22, 2012 - 3S Awards 2012 gala
W
hat’s the difference between a regular business and a business-with-purpose? The Global Sourcing Council, an international non-profit organization focusing on the sourcing sector, decided to explore that question by establishing the 3S Awards program – a global competition open to companies, NGOs and individuals practicing sustainable and socially responsible sourcing as part of their
business model. Five companies were chosen from among 24 to fill 5 categories: community engagement, employee engagement, women empowerment, out-of-the-box 3S practice and a 3S practice preferred by the public (the People’s Choice Award). The founder and president of VOS - Jose Alejandro Flores - winner of the 2012 Employee Engagement Award shares his thoughts on www.globalizationtoday.com
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the idea behind the program and on why he embarked on the path of social responsibility rather than pure profit. Established in 2008 in Guatemala, VOS is an eco-friendly shoemaker brand now mostly operating in Guatemala and the U.S., that “gives back” to the local communities in South America. “Winning the 3S Award will support our ongoing efforts to empower the employees in our global supply chain towards 3S actions and will substantiate our commitment to the United Nations Global Compact program,” said Flores, who collected the award in New York City on Oct. 22 from the hands of Dr. Zia Khan, Vice President for Strategy and Evaluation at the Rockefeller Foundation. Can you tell us about the element of inspiration and purpose that pushed your organization towards pursuing goals in sustainable and socially responsible practices, as opposed to a strictly profits-based model? The inspiration came from lifelong experiences of over 3 decades which exposed me to realistic humanitarian and environmental needs around the globe and then coupling the aforementioned with my passion for international business. VOS® was founded as an answer to a simple but profound question: Can you afford to care? As a result, the Give+Give+Recycle™ social initiative was created which promises to give a pair of footwear away to a person in need for every 20
GlobalizationToday October-November 2012
pair sold. The social initiative also supports natural rubber-producing communities with basic health care and education, initially in Guatemala. The social initiative is implemented in partnership with Soles4Souls, the international shoe charity. Basic health care and education is initially provided in partnership with Agro Salud Guatemala and the Guatemalan National Rubber Association. The idea of creating a 100% recyclable natural rubber collection of flip fops was born more than a decade ago while I was spending time in Brazil and other South American countries. This idea was coupled with my lifelong exposure to the global sport of soccer, where feet & shoes are an integral part of the game.
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that provide educational opportunities to communities and individuals that do not readily have access to them. What do you understand by corporate social responsibility? What do you understand by sustainable sourcing practices?
Jose Flores (VOS) accepts the 3S Award from Dr. Zia Khan (Rockefeller Foundation) in New York on Oct. 22, 2012
The idea of VOS® as a brand was born due to a “vos” expression used throughout Central & South America that is a colloquial version of the formal “vosotros” Castilian spoken in Spain. The providing of healthcare and education to the agricultural communities that cultivate the sustainable raw material used in the VOS® natural rubber flip flops was a direct inspiration through my exposure to the need of the same. I volunteered my time as a linguistic translator for many years with organizations that provide medical attention to rural indigenous communities in Latin America. Being fortunate enough to acquire an International MBA, I am a huge advocate of education therefore I was empowered to build and support programs
I understand Corporate Social Responsibility (CSR) as being a company’s deed of going beyond what may be required by regulators or environmental protection groups to effectively carry out commercial obligations to its stakeholders and end-consumers. It encompasses initiatives which assess and take responsibility for a company’s effects on the environment and impact on social welfare. I understand Sustainable Sourcing Practices (SSP) as the integration of ecological concerns with social and economic ones that in-turn minimizes uneconomic growth that would otherwise deplete ecosystem services. Sustainable sourcing extends to all aspects of a supply chain and infiltrates all procurement practices of an organization by carefully evaluating the economic, social and environmental aspects against a defined set of criteria. I’d summarize CSR and SSP as “corporate citizenship” which can involve incurring shortterm costs that do not provide an immediate financial benefit to the company, but instead promote positive social and environmental change. Our organization’s mantra is “it’s not about “us” … it’s about “we” … we can make a positive difference together! www.globalizationtoday.com
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Did you – at any point – come to regret that your company is following this path? What were some of the biggest rewards? Not for a second. It is paramount for the consumer marketplace to be aware of the global realities which are faced day-in and day-out by billions of people around the globe. Some of the biggest rewards come from the fact that the humanitarian intentions are sincere which is clearly sensed and embraced by the end-consumers which support the company and global social initiative. In addition, the smiles are genuine and heartfelt on the faces of the recipients of our humanitarian initiatives being provided healthcare, footwear and education without us expecting anything inreturn for the giving. What do you think sets you apart – as far as business model is concerned – from other companies from your sector? We take the Triple Bottom Line concept one step further than other companies. Instead of just considering People, Planet and Profit we also take into consideration the End-Consumer. In other words, we have found that most brands in the marketplace which are tied to a social initiative ask consumers to spend more on their products to either keep profits high or to sustain the charitable side of their business. This inevitably took VOS® to the original question: Can most people afford to care? More importantly, can VOS® create high quality products, which are good for the environment and while help others in need without asking people to spend more? Yes. By reducing the profit margin and strategically partnering with national and international organizations, VOS® created a sustainable business model. This enables most 22
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people to support the cause and the different social initiatives of all the organizations VOS® has partnered with by offering eco-friendly products tied to a social initiative at a price point that is competitive with products that do not give-back at all in any fashion. We believe that if a brand’s mission is to sincerely carry out philanthropy, there is not a need to inflate the final end-consumer price in order to carry out the same. A brand should be willing to realistically cut from their bottom line in order to carry out the philanthropic activities supported by the same. A final point that sets us apart is that we align with the United Nations Global Compact program which asks organization to embrace ten principles in the areas of human rights, labor, the environment and anticorruption.
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Jose Flores
What do you think can be done to make the business world aware of the need for corporate social responsibility? Continually ingrain the reality that every action in the business world has a positive or negative reaction somewhere else around the globe. Our world has become ever more interdependent and the business world must embrace the fact that implementing changes entail, among other things, international and national law, urban planning and transport, local and individual lifestyles and ethical consumerism. How is caring for local communities with which you do business influencing the business outcomes in the case of your company, or in general?
We’re strong believers that we may not be able to change the entire world, but we can definitely change the world around us. The basic necessities which are provided in the realms of healthcare, footwear and education all empower local communities to become productive links in the global supply chain. In addition, the sourcing of sustainable raw materials for the production of the final products provides for an environmentally sound offering that enables end-consumers to also take part in the full circle give back. In general, companies have a lot of power in the community and in the national economy. They control a lot of assets, and may have billions in cash at their disposal for socially conscious investments and programs. Thankfully many large corporations are devoting real time and money to environmental sustainability programs, alternative energy/cleantech, and various social welfare initiatives to positively benefit employees, customers, and the community at large. www.globalizationtoday.com
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Outsourcing Social Responsibility: Lessons Learned by Apple and Nintendo The Oxymoron of Global Outsourcing revisited by Wanda Lopuch
A
fter the Wall Street Journal published its story on suicides at a Foxconn manufacturing plant in May 2010, Steve Jobs learned that his loyal followers were deeply concerned about the working conditions of workers who assemble iPhones and many other branded electronic gadgets. When few weeks later, Steve Jobs wanted to promote new features of the incoming iPhone 3, Apple users demanded accountability for the Foxconn suicides. Consumers went further and demanded accountability for the working conditions at all Apple manufacturing plants, and they demanded it very loudly. Apple has been listening. For many years, electronic companies like HP, Intel, Motorola, Nokia, Microsoft, Dell and others argued for transparency and broader disclosure to consumers of processes and practices used in sourcing materials for production of their devices. 24
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Over 80% of the world production of minerals commonly used in smartphones, such as tantalum, tungsten, tin and gold, has been sourced from the Democratic Republic of Congo. Profits from mining these minerals are claimed by local warlords, fueling the bloody conflict in Congo and surrounding areas. According to the International Rescue Committee, since 1998 over 5.4 million people have died in this conflict, many of them children, forced to work underground in very dangerous mining operations. On July 21, 2011 President Obama signed the Dodd-Frank Wall Street Reform And Consumer Protection Act, which contained a controversial
SOCIAL RESPONSIBILITY
section 1502.(c), referred to as the Conflict Minerals provision. The State Department and the SEC were mandated to develop specifics of the policies within a year. Details on a months-long, highly charged debate on the Dodd-Frank Act are dramatic. At the 11th hour of debate, the Conflict Minerals provision was inserted, requiring public companies that are manufacturers of electronic products, to implement a two stage certification system for metals used in the production of their devices: (1) an independent third-party supply chain traceability audit, and (2) reporting the result of the audit to the SEC and to the public.
The Conflict Minerals provision was a significant victory for the companies united around the principle of sourcing transparency. However, there continue to be many critics of this provision, such as Paul Griffin, a professor in the Graduate School of Management at the University of California, Davis, who argue that the audit requirements will increase the cost of electronic products and reduce competitiveness of US electronic manufacturers. For years, watchdog organizations and some media outlets have followed electronic manufacturers and their sourcing transparency policies. One such organization, The Enough www.globalizationtoday.com
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SOCIAL RESPONSIBILITY
Electronics companies ranked by progress on conflict minerals Project, has rated 24 electronic companies on their progress towards responsible sourcing of minerals. On one end of the spectrum, companies such as HP, Intel, Motorola, Nokia, Microsoft and Dell lead the pack with implementing audit and disclosure requirements voluntarily. On the other end of the spectrum, Nintendo, Sharp, Canon and Panasonic have not made any progress towards transparency in their sourcing policies. On August 16th, CNN reported on the state of conflict minerals and pointed out that Nintendo received a score of 0 for its transparency practices of mineral mining. Nintendo told CNN that it “outsources the manufacture and assembly of all Nintendo products to our production partners and therefore is not directly involved in the sourcing of raw materials that are ultimately used in our products.” However, Nintendo added, “we nonetheless take our social responsibility as a global company very seriously and we expect our production partners to do the same.” Nintendo’s attitude is a recent example of the ways in which global companies extol the virtues of responsible sourcing but fail to act in accordance. Reading between the lines, Nintendo’s policy may sound more or less like this: We, Nintendo management, outsource manufacturing to lower cost destinations so we can increase our profits and deliver the highest returns on capital to our shareholders. This is, after all, the principle of capitalism. Profit, not values, is the goal of capitalism. For Nike in the 1980s and Apple in 2010, values translated into consumers’ support, which in turn translated directly into the price of stock. Therefore, values do in fact carry a tangible material value, which can greatly impact the 26
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return on capital to shareholders. That’s why companies aggressively protect their brands, as brands represent values. This is a lesson that Nintendo has failed to learn. Or perhaps they did, but still decided to gamble. This author cannot help but wonder if the Nintendo policy of outsourcing social responsibility was calculated based on the fact that, unfortunately, many Nintendo consumers do not even know where Democratic Republic of Congo is, or what drives the bloody conflict there. And for Nintendo users, unlike for Apple users, “blood phones are cool” – as expressed by
SOCIAL RESPONSIBILITY We have now entered a new phase of outsourcing social responsibility: the phase of bringing values and social accountability into a global financial accounting systems. Indirectly, but clearly, values are making their ways into P&L statements. And more is to come. Stay tuned for additional developments in the debate of outsourcing and social responsibility. In a follow-up article, I will discuss how Apple and Foxconn, unlikely partners in accepting social responsibility, passed the outsourcing social responsibility test with impressive marks.
About the Authors Wanda Lopuch Global Sourcing Council
Source: The Enough Project, 2012
numerous bloggers. On August 22nd, the SEC voted to uphold the requirement of third-party audits and disclosure of the source of conflict minerals. Therefore, the Nintendo-style (and Sharp-style, and Canonstyle) outsourcing social responsibility practice will not be sufficient, or even legal, under US law. Nintendo and other similar companies are obligated to implement the audit and report the source of conflict minerals. Thus values have been written into the capitalistic profit equation for the US public companies.
Wanda Lopuch is the Past Chair of the Board of the Global Sourcing Council. Additionally, Dr. Lopuch leads MDA Associates, Inc., a consulting organization focusing on “greening� global operations and their supply chains while improving economic outcomes of businesses in the life sciences, IT, FMCG and financial sectors. With 20 years of experience in the pharmaceutical and telecommunication sectors spanning across the United States, Europe, and the Far East, Wanda guides international teams in maximizing performance for multinational, multicultural and multi-functional projects. Ms. Lopuch holds a Ph.D. in Administration and Supervision from Marquette University, Milwaukee, WI, and an MS in Computer Sciences from the Wroclaw University of Technology, Wroclaw, Poland. She lectures on various aspects of international business. www.globalizationtoday.com
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LINKEDIN PROFILE OPTIMIZATION
LinkedIn Profile Optimization A Global Branding and Sales Tool by Namami Ghosh and James Hill
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inkedIn has become the de facto standard for businesses using social media as a branding tool, especially global businesses in the outsourcing and offshoring industry. The professional social media site now has well over 150,000 million users. Recent statistics from the well-known inbound marketing company HubSpot indicates that 74% of marketers use LinkedIn specifically for branding. In this article on using LinkedIn as a branding and sales tool, we highlight some of the conceptual underpinnings of social media, the pivotal idea of branded content in the profile—something that many fail to understand—and the key sections of the profile, with a focus on how to optimize it with tips, tricks, and traps. The emphasis is on developing an international brand statement particularly relevant for those in offshoring and outsourcing. A critical issue 28
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to remember is that the LinkedIn profile is not an instant success project; rather, it should be viewed as a long-term strategic, organic process, not just a one-time event. Also, make a note that many who were trained as sales professionals 20 years ago often struggle to embrace social media, since they often view it as frivolous and
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without business implications. Experienced sales professionals often struggle to connect the dots with social media, branding, and sales and see these as discrete events rather than as a synergistic process. The facts are that with LinkedIn, you are “six degrees of separation” from everyone in the world, which is a very
powerful way to reach out to those that you would never have been able to connect with otherwise due to geographical constraints. Take a quick look at the demographic– geographic statistics from the Ignite social media blog from 2012 for LinkedIn. The top rated countries and cities in terms of LinkedIn www.globalizationtoday.com
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LINKEDIN PROFILE OPTIMIZATION usage per capita are the following. The number by the city is the worldwide ranking by top cities. • The Netherlands – Amsterdam (4) • India – Bangalore (1), Mumbai (2), New Delhi (3) • United Kingdom – London (6) • United Sates New York (5) • Ireland • United Arab Emirates • Singapore • Canada • Belgium • Australia Key takeaway: This study clearly shows that if you need to approach a global, and not regional, or national market with your brand statement, either professional or corporate, LinkedIn needs to be your social media platform of choice.
Developing your Global Brand Statement: Title–Name–Summary: These are critical sections of the profile to be optimized since they are the most searchable with key words or metadata. One of the tricks here is to have a unique name that is slightly differentiated from a million others. Tip: People who have heard of you but do not know you personally might find it easy to trace you if the name is Jim S. Hill rather than Jim Hill or James Hill. Simple, but very powerful. Check to see how many hits come up in a search for your name, and differentiate it slightly so that much fewer results come up: a simple trick to being branded. The title should also probably not be the title on your business card as much as it should be a detailed description of the key tags or metadata that best summarize your brand statement. Tip: Rather than say Sales Manager, 30
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(a title that brings up almost 7 million profiles) the title would be more virally branded to say: Domestic and International Sales Manager: IT, Call Center, BPO Projects: Philippines. Also, the summary section is critical and hard to develop since it is limited to a certain number of characters as are all profile sections. Here, it is imperative that you focus on those descriptive tags that are the most detailed and clearly reflect your brand identity statement. Honing in on 4–8 critical skill sets that define your professional experience or expertise and supporting it with relevant recommendations is the best advice. Trick: Include your e-mail, cell phone, or Skype contact in the summary at the bottom, which will dramatically improve your ability to be found and contacted since this information comes up on the first page of a
LINKEDIN PROFILE OPTIMIZATION simply kills your LinkedIn brand differentiator. Trap: Too many profiles use a flat, paper-based resume approach with job descriptions and no quantification, which is often very ineffective.
Recommendations.
search. Skype is especially important for global connections since the call is often free or very inexpensive.
Experience: Job Listings. This is the largest section of the LinkedIn profile, and two key points are critical: focus on the quantification of accomplishments and insure each position directly resonates with the brand statement highlighted in the summary. For instance, rather than saying “responsible for domestic and international sales,” it is much more branded to say “responsible for a domestic sales group of 15 sales managers with $20 million in annual sales, and an international sales group of 10 sales managers with sales of $8 million, and grew sales 45% in five years.” Lack of quantification
These are very critical for an effective and convincing LinkedIn profile, and are probably the most time-consuming to develop. Many see this section as one of the most distinctive features and benefits. In short: instant credibility that one rarely gets from a traditional paper resume. Timeconsuming: no magic number. On my profile (Jim Hill), I have about 40 recommendations: sweet, but it took over 7 years to accomplish and considerable strategic thinking about how they should be positioned for maximum brand effectiveness. Trick: A powerful issue to realize is that we often have a pivotal impact on a company, and we do not know it until later since we change jobs, relocate, and lose connection. Personal experience: I published a very forwardthinking, cutting-edge book on digital audio many years ago and moved on. Surprisingly, this book became the de facto standard on digital audio, and the author, with whom I touched base later, was more than happy to give me a glowing recommendation given that he had made a considerable amount of royalty income from the book. Trick: when I contact someone influential whom I know and have worked with previously and ask for a recommendation, I usually write the recommendation myself. Why? I know my brand positioning better than them, and it is much more expedient to write it myself. Then, I send it to the recommender for approval, editing, and posting. This may sound narcissistic, but it is very effective as a brand differentiator. Tip: What you need to avoid with recommendations is the following: “I really liked working with Jim, and he was always www.globalizationtoday.com
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LINKEDIN PROFILE OPTIMIZATION very friendly and helpful with all of our projects.” Recommendations like this, and you see a boat load of them on LinkedIn, just do not have any brand excitement or differentiation since the content is so mundane and trivial--definitely not viral. For obvious reasons, recommendations are often more branded if they are from a Senior or Executive VP than from a project manager, depending on your professional branding goals.
Skills. LinkedIn has recently added a new section where you can select the skill sets that are most representative of your brand. These are preselected, and cannot be created individually. An easy section to select, but important in terms of search engine positioning, and should clearly reflect your summary.
LinkedIn Groups. This next section simply lists all of the LinkedIn groups that you are a member of. The maximum number is 50 and, although joining the relevant groups does take time, it is very important to be a member of groups that clearly define your brand statement. There are literally thousands of groups to join, and it may take you several months to become familiar with all. Also, you can always create your own group if you do not see one that is relevant to your goals. Start a group and invite others: that simple. Trick: Join those groups that tend to have the most activity and the most number of members since this is where you can make the most connections. When you do a search for particular groups, the number of members is noted below the group name. You simply ask to join the group, and within 24 hours you usually get a response. Then you start receiving posts and comments from those 32
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group members. Tip: Make a note that you can only “officially” connect directly with others in a group if you are a member of that group, or if you “know” them personally or professionally. When trying to connect with others, a dialogue box that asks you how you know this person appears with a number of choices such as member of the same group, know them professionally at another job, have their e-mail, and so on.
Making Connections: Brand Magic. T. S. Elliot is famous for saying “hell is a place where nothing connects.” The brand magic of LinkedIn is to make as many relevant connections as you can especially if you are in a sales role since this is where you will increase your visibility and traffic, and be able to establish “warm” leads for potential sales. The first magic number is 500, but
LINKEDIN PROFILE OPTIMIZATION
after that the power of LinkedIn is exponential, geometric, and hard for our linear human minds to grasp. In other words, 1,000 connections are a lot more than and twice as powerful as 500: a whole lot more. Over a period of time getting to 1,000, 2,000 or, even more, simply increases your brand visibility, especially globally. Scientist Stuart Kaufmann refers to this unexpected connection with innovation and change as “the adjacent possible.” Trick: Always acknowledge others’ connections with you with a short note: “Thanks and let’s stay in touch.”
Connecting: Sales Leads: Experienced sales professionals know that the more people they are connected with, the more possibility there is for referrals and sales, and often the connections are very unpredictable and
quixotic. Trap: Many get involved on LinkedIn, and they do not see the sales power of the platform since they have such few connections, are in a small number of groups, do not make many posts of content on the groups, and have a very unquantified profile. This is where you must take the initiative to connect with others on a regular basis. A very simple process of clicking on their name and asking for a connection preferably because you are a member of the same group, have similar professional interests, along with a simple, brief, personalized message. Trick: Many believe they should only connect with those “known” personally or professionally, which is the direction from the LinkedIn privacy statement. Seems to make perfect sense, but quite overdone with the security issue. Nevertheless, the magical power of LinkedIn is to implement a connecting strategy with others in groups where you are professionally aligned even if you do not know one another outside of LinkedIn. Tip: This is a critical differentiator at looking for the unexpected, the serendipitous connection, in a way that Nassim Taleb has called “the black swan,” in his bestselling book by the same name, on the impact of the highly improbable, the unexpected. The intuitive, emotional intelligence of this process evades many, unfortunately: why connect only with those you know? You do not need LinkedIn for that, right? Tip: I accept all connections from everyone assuming they are not in al-Qaeda, known drug dealers, or pedophiles. I never say “I do not know you,” although many do that, and is more of a personal and professional choice than anything, but can also be very limiting in terms of the brand and sales possibilities. Again, the hidden power of LinkedIn is to confront the unknown global market with a transparent emotion; Forest Gump nailed this when he said: “Life is a box of chocolates, and you never know what you are going to get.” Tip: I do www.globalizationtoday.com
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a lot of professional writing, like this article, and I found an exceptional coauthor and editor, and she lives in Pondicherry, India—7,000 miles away— not Houston, Texas, and the articles have had a significant impact on my professional branding and sales success. Trap: Like everything in life, all is not good news: just because you are in a group with someone does not mean they cannot come back with “I do not know you.” You are technically allowed five “I do not know you’s”; after that, you can connect only through an e-mail
About the Author Namami Ghosh Freelancer Namami Ghosh is an editorial freelancer with about 10+ years of experience in the publishing industry. She has handled both STM and non-STM work for major international publishers and earned rave reviews in the process. Some of the prestigious accounts that she has won include Elsevier, Springer, Taylor and Francis – Informa , IB Tauris, GmB Publishing, and Intellect Journals. She started her career with TnQ books and Journals in Chennai, India, and then moved on to SPi Publisher Services, and later at Integra Software Services Pvt Ltd and is currently a full-time freelance editor in Pondicherry, India.. A rare breed of copyeditor who is equally adept in both science and humanities, she is well known for her flair for the English language, an eye for detail, and an untiring zest for copyediting. Her contact information is ghoshnamami@gmail.com.
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address. This is LinkedIn’s way of trying to be the high school hall monitor with rowdy teenagers. Best approach if you get your hands slapped with five “I do not know you’s” is just to ask for forgiveness on the LinkedIn “help” section, and your connecting status will be reinstated without having the other’s e-mail.
Posting Content and Thought Leadership: More brand magic. Posting content is like Dorothy in The Wizard of Oz when she clicks her ruby red heels and says: “There is no place like home . . . there is no place like home.” Making posts to groups is as much of art as science, and connects you to unknown “homes” in global but unexpected locations with significant brand and sales benefits. Of equal importance, people in groups want to read comments, see discussions on controversial topics, edgy issues with debate, sharp differences of opinion as opposed to the mundane and obvious. This is where you can become a thought leader—a fundamental characteristic of vibrant, professional brands— and gain the respect and following of many others since they perceive you as influential, knowledgeable, and respected. Each group has its own personality, and takes some time to develop the emotional nuance with that group. However, a good benchmark strategy is to make posts at least five times a day either initiating a new topic or commenting on an existing topic. Sales Tip on Posting Content: Most of the groups have a policy against blatant selling and self-promotion, a good idea. The key to LinkedIn as a branding and sales tool is to be more indirect and subtle. If you make blatant attempts to sell, many will turn away for obvious reasons. But, if you are more indirect and subtle, and insure that you have a differentiated brand, most people will come to you in what HubSpot calls “inbound marketing.”
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Tip: Take your time with the posts, make them intelligent and insightful and, by all means, insure that spelling and grammar are correct. Another fundamental part of making posts that drive traffic to your profile is to develop a list of websites, news feeds, publications, and other content areas that are relevant to your brand differentiator. Then, link that content through LinkedIn. My own field is publishing outsourcing, so when I find an article of interest I connect it to LinkedIn so that they appear on my profile for others to see and also link to those connected to them. Since much of my work is about globalization and outsourcing, some of my favorite posts, for instance, come from Foreign Policy, Outsourcing Magazine, Horses for Sources, Outsourcing Institute, International Association of Outsourcing Professionals, as well as Business Week, The Economist, and others.
Personal and Professional Files. This is the last section, and can include any document that you believe supports your brand statement. Since I am in publishing outsourcing, I include not only my resume in Microsoft Word format for easy downloading, but also the scholarly articles from graduate school (part of my brand differentiator is that although I am a salesperson, I can write fairly well), as well as the professional articles that I have written about publishing outsourcing and presentations at conferences. Many of these files use an application called Box. net, but there are others to choose from as well.
LinkedIn and SEO: Getting Found: LinkedIn has a magical algorithm that is a combination of the number of connections, number of recommendations, number of posts that you make, the number of people who review
your profile, and a number of other black magic items that directly relate to where your profile comes up in searches with key words. Also, of equal importance is the direct connection with LinkedIn and Google searches for your LinkedIn name. At some magical moment, and not sure exactly when that is, you can do a Google search for your LinkedIn name, and it will appear, usually in the first 4–5 listings if you have developed a well-branded profile. LinkedIn is the ultimate social media platform for business. A highly branded profile with quantification drives thought leadership, traffic, and global connections with others throughout the world.
About the Author James Hill Firstsource James Hill is an experienced publishing and outsourcing professional in Dallas, Texas, and is currently the VP of Sales and Marketing at Firstsource, responsible for publishing and content services with traditional publishers and corporations. He is the co-author of Turning a New Page in the December 2010 issue of Globalization Today as well as Vendor Selection, Visibility, Credibility and Branding in the MarchApril 2011 issue of Outsourcing about publishing outsourcing. He also authored along with Ghosh Why LinkedIn Makes the World Flat in the AprilMay 2012 issue of LinkedIn for Business. Hill has also authored along with ValueNotes in Pune, India, a four part white paper series about the “taboos” of publishing outsourcing in 2012. www.globalizationtoday.com
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The New Sprint
The New Sprint Poised to Become Relevant Once Again? by Steve Martin, Partner, Pace Harmon
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n October 15, 2012, Softbank announced its intention to buy a 70% stake in Sprint for just over $20 billion, which in turn, immediately stated its plan to increase its stake in spectrum rich Clearwire from 48% to a majority share of just under 51%. While market reaction to the announcements ranged everywhere from a “Hail Mary” pass to strong praise, the overwhelming consensus seems to be clear – the acquisition appears to be a matter of long term survival for the Kansas City based telecommunications company. Although there will be ongoing 36
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debate regarding the long term financial viability of Softbank’s decision, there should be little question about the positive prognosis for two other key stakeholders – Sprint and its customers. For Sprint, whether it was Softbank or another strategic or financial buyer, a deal was virtually inevitable. The company needed to crack the code of how to add wireless subscribers without continuing to bleed earnings. Sprint has been suffering through its post-Nextel acquisition hangover since 2005, with consistent quarterly
The New Sprint
losses for the past five years. Although it finally turned the corner two and half years ago, adding overall net subscribers for the first time in years, it recently announced during its third quarter earnings release on October 25 that it had another hiccup, once again suffering a decrease in overall subscribers during the past three months (due in large part to its failure to recapture defecting legacy Nextel iDen customers who have fled due to the pending shutdown of that network). Moreover, Sprint has been adding subscribers at significant financial losses due to investments
in its Long Term Evolution (LTE) network roll-out and, more recently, because of its large commitment to Apple for the iPhone product line. The company continues to play catch-up in adding wireless subscribers, constantly grappling with thorny decisions about which 4G devices to roll out, where and how fast to build its LTE network, and which potential acquisition targets to pursue. The potential infusion of capital by Softbank will, in theory, remove the financial shackles, enabling the company to place bets that are in the short- and long-term interests of www.globalizationtoday.com
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The New Sprint growing its subscriber base more profitably – bets it has not been able to make since its Nextel acquisition because of the resulting heavy debt burden. Placing the Right Bets: Big Benefits for Consumer and Enterprise Telecom Markets The $8 billion of capital that Softbank will invest in Sprint will help accelerate its Network Vision program, including both the LTE build-out as well as enhancements to its current 3G network. These should improve quality and enable the deployment of more sophisticated devices – the combination of which has the potential to restore customer confidence. But the company must make the right bets, e.g., pick optimal cities, determine how fast to deploy its LTE network, develop its product/device portfolio, and select the right mix of pricing plans. The good news is that for the first time since its so-called “merger of equals” with Nextel, Sprint will have the financial wherewithal to invest on a more level playing field with its Tier 1 competitors – positioning the company to compete on quality, perhaps for the first time since we last heard the “pin drop.” So assuming Sprint makes the right bets, how does this bode for the most relevant stakeholder – the customer? First, the Softbank acquisition has the potential to yield meaningful benefits for individual wireless subscribers (consumer market). New Sprint (as it is currently being referred to by Softbank) and its 57 million subscribers combined with Softbank’s 30+ million subscribers in Japan will be vaulted into a virtual tie with AT&T as the world’s third largest mobile provider, behind China Mobile and Verizon. This will provide the company significantly more purchasing power with respect to equipment providers such as Apple and Samsung, which will enable a richer portfolio of 38
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available data-intensive smartphones and other devices, not to mention more aggressive price points that can be passed on to consumers. To the extent that Sprint continues to differentiate itself from AT&T and Verizon with its unlimited data plans, this capability will prove particularly compelling to the wireless data power user. However, the biggest winner stands to be the enterprise telecommunications market (business customers) with the magnitude of the upside to be determined by Softbank’s ultimate strategy for Sprint. First and foremost, the acquisition gives Sprint the potential to be a much stronger No. 3 provider across both the wireless and wireline business markets – perhaps returning to the wireline world of the late 1990s/early 2000s when Sprint competed strongly with AT&T and MCI (now Verizon). Enterprise customers were historically considerably better off with
The New Sprint 1) Maintain Focus on US Wireless Business and Continue Nursing US Wireline Business
Placing the right bets
three viable long distance wireline providers. As soon as Sprint became less relevant in the wireline business, enterprise customers felt the pain of the effective supply duopoly (i.e., AT&T and Verizon) with much less leverage than they previously enjoyed. More recently, Verizon and AT&T have clearly “out-branded” and “out-built” Sprint in the ongoing land-grab for enterprise market share for both wireline and wireless – creating their own Tier 1 segment, each with nearly two times the number of wireless subscribers as Sprint, and essentially relegating Sprint to “Tier 1.5” status in both the wireless and wireline markets. The extent of benefits for the enterprise market will ultimately depend on the strategy New Sprint pursues. Let’s look at a few potential strategies and the likely impacts for enterprise customers.
In this approach, New Sprint would focus on turbo charging its Network Vision program, enabling it to compete on a more level playing field with Verizon and AT&T in the US market. As previously indicated, the accelerated deployment of its LTE network, which will be enhanced by Sprint’s relationship with Clearwire and its significant LTE spectrum licenses, will enable a more robust roll-out of the company’s multimode 4G devices across the country. This will provide geographically dispersed US enterprises a third viable option to Verizon and AT&T, whose coverage has clearly outpaced Sprint’s. What makes this option particularly interesting is Sprint’s relatively stronger experience serving enterprise wireless customers – experience gained in large part by Nextel’s depth in this space. The downside of this strategy for the enterprise customer is that it does nothing to enrich Sprint’s fledgling wireline business, which again, has become considerably less relevant since Sprint’s acquisition of Nextel and its decision to deemphasize that part of its business. So as enterprises, particularly the Fortune 500, continue to move towards converged network services, Sprint would still be coming to the table with a wireless-centric model—thereby continuing to drive customers interested in buying bundled wireless/wireline services to Verizon and AT&T. 2) Maintain Focus on Wireless Business but Leverage Capabilities in Japan; Continue Nursing US Wireline Business In the near term, this strategy would only add a Japanese roaming dimension for US multinationals (or US roaming dimension for Japanese based businesses), providing www.globalizationtoday.com
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The New Sprint
Must Maintain Focus on US Wireless Business
a differentiator in the exorbitantly priced international roaming market for those enterprises with significant operations in both the US and Japan. However, this capability could serve as a platform should the acquisitive Softbank continue to make investments in, or develop broader relationships with, other foreign wireless providers. All said, from the enterprise perspective, this strategy would yield relatively insignificant incremental benefits visa-vis the first strategy for the majority of US based enterprise customers. 40
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3) Maintain Focus on US Wireless Business and Invest in Revitalizing Wireline Business While the chances of this occurring are arguably limited, given Softbank’s apparent focus on the wireless market, this approach could offer the greatest upside to the enterprise customer. Sprint’s decision to emphasize its wireless business coupled with Verizon’s acquisition of MCI and SBC’s acquisition of AT&T (all three events occurring between 2005 and 2006), have left the enterprise customer with only two true Tier 1 wireline
The New Sprint providers, which has been further cemented by virtue of Verizon and AT&T having a stronghold on the local access markets in virtually every major city in the US. Given the propensity for enterprises to attempt to purchase wireline and wireless services together, this also effectively leaves only two Tier 1 combined wireline/wireless providers. This market dynamic has led to a significant erosion of the enterprise market’s overall competitiveness. While companies such as CenturyLink, with its recent acquisitions of Embarq, Savvis, and Qwest, and a host of other Tier 2 providers have begun to take wireline market share from Verizon and AT&T, and Sprint has held its own (although not grown meaningfully) in the wireless enterprise market, there are really only two providers that can effectively compete for large bundled wireline/ wireless procurements required by the most significant enterprises in the US. Consequently, a revitalization of Sprint’s wireline market, even with the encumbrance of lacking a local access presence, would be perceived favorably by the enterprise customer base and in fact, could result in a shot in the arm for Sprint’s wireless business as it would immediately become a relevant player in the bundled procurement arena. What’s Ahead? As a next step, Softbank must first gain US regulators’ approval to complete its acquisition of Sprint. The good news is that the deal offers the potential to strengthen the US competitive landscape – not diminish it through the removal of another competitor (as has been the case with the effective reconstitution of the old Bell System through the RBOC mergers and subsequent acquisitions by Verizon and SBC, and as would have been the case with the proposed acquisition of T-Mobile by AT&T). On the other hand, regulators will closely examine the issues associated
with foreign ownership of a major US carrier, prompted in part by AT&T’s recent assertion that Softbank’s acquisition will give one of Japan’s largest wireless companies too much control over the US wireless spectrum. However, Softbank and Sprint will point to Vodafone’s ownership position in Verizon Wireless and Deutsche Telekom’s ownership of T-Mobile as precedents for foreign ownership of US carriers. Assuming the deal goes through, the market will remain poised to find out where and how Softbank intends to deploy its capital in Sprint – wireless only or both wireless and wireline. Enterprise customers would be welladvised to lobby their Sprint representatives for the latter!
About the Author Steve Martin Pace Harmon Steve Martin is a partner at Pace Harmon www.paceharmon.com, an outsourcing advisory services firm providing guidance on complex outsourcing and strategic sourcing transactions, process optimization and supplier program management. He has over 25 years of industry and consulting experience in the areas of technology, telecom and supply chain. As a recognized authority in the areas of contract negotiations and in structuring transactions for technology related products and services, Martin has served over one-third of the Fortune 100 and has led more than 100 strategic sourcing transactions totaling in excess of $8 billion in products and services. www.globalizationtoday.com
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INDIA BUSINESS SCENARIO
India Business Scenario
A Look at India’s Today and Tomorrow by Subramaniam Krishnan
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ndia today is one of the largest growing economies in the world, the stage for which was set during the last decade when India embarked on a remarkable growth phase. India emerged unscathed from the impact of the global financial crisis revealing to the world the inherent strong fundamentals that the Indian economy possesses. This has led to aspirations of achieving high and inclusive growth. The current decade is thus, expected to play a crucial role in determining India’s journey towards achieving this goal. Most global companies have made significant inroads however many have failed to realize their potential; only some have succeeded in niches and 42
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not achieved large-scale market leadership, while others haven’t maximized economies of scale or tapped into the country’s breadth of talent. The exhilarating economic growth of the noughties (decade of 2000-9) infused great confidence in Indian business. The experience of a leading multinational consumer goods company illustrates the challenge: its revenue in India has grown by 7% compounded annually in the past seven years; almost twice the rate of the parent company in the same period. Yet, the company’s growth rate in India is only about half that of the sector. For multinationals, the fundamental step to reach the next level is learning to do business the Indian
INDIA BUSINESS SCENARIO
few years, among the highest rates of any big emerging economy. In several product and market categories—mobile handsets, for example—India could account for more than 20% of global revenue growth in the next decade. In other words, the future of many multinationals depends on their ability to sustain and succeed in India. Several factors will contribute to this global growth. Core markets—for instance, large financial- services and telecommunications companies in developed economies—should continue to expand along with the global economy, once growth returns. The pace of growth could slow down, however, if processes are automated and standardized more quickly than seems likely now. Corporate budget cuts during the downturn and protectionist regulation could also dampen demand from core and other markets.
Challenges in India’s business environment
way, rather than simply imposing global business models and practices on the local market. To appreciate India’s promise, multinationals must show a strong and visible commitment to the country, empower their local operations, and invest in local talent. They should pay closer attention to the desires of Indian consumers by offering the customization the local market requires. This may lead to moving beyond the joint-venture approach that so many have adopted and learning to go it alone. It’s vital that multinationals raise their game in India. The country’s economy is expected to grow by upward of 6% annually in the next
India is hard pressed today to maintain its lead in some sectors and will find it increasingly difficult in this decade. • First, the industry faces domestic constraints. Talent is a severe problem - India produces only 3 million university graduates a year. This is an inadequate number to maintain its market share. • An inadequate physical infrastructure is hindering the industry’s expansion. Transportation systems and power and water supplies are already strained in the country’s leading cities, including offshoring hubs such as Hyderabad and Chennai. At the same time, infrastructure deficiencies and talent shortages have prevented the industry from moving aggressively into smaller cities. www.globalizationtoday.com
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• Another problem is that everyone wants to join the party. China, Egypt, many Eastern European countries, and dozens of others are fighting aggressively to build their domestic business and technology services industries, offering tax benefitsandimprovedinfrastructureasincentives. • Finally, government policies that have over the years supported the industry have become less favorable in recent times. For example, at present there is a lack of clarity surrounding the continuation of fiscal incentives the government has used to spur industry development. Meanwhile, the industry continues to be regulated by the Shops and Establishments Act and other laws not tailored to the service sector’s requirements. Adding to the burden, these laws are applied inconsistently from state to state Innovation will be the key to maintaining and even expanding their market share. Business models that continue to focus on low labor costs won’t suffice. To address the opportunities in new geographic and industry markets and to serve individuals and small and midsize enterprises, business and technology services companies must create innovative products that address the needs of these new customers. Areas that appear ripe include clinical research, mobile applications and platforms, and energy efficiency.
India’s macro-economic outlook 2020 • India is expected to be more than US$ 5 trillion (current market price) economy by FY20, equivalent to Japan (in terms of GDP in US$) as of 2010 44
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• India’s growth would be driven by rapidly expanding services sector • Strong growth in domestic savings will support domestic investment • Although consumption will continue to be the major contributor to GDP during the current decade, its share is expected to decline gradually due to significant increase in share of domestic investment • Substantial rise in private investment activity and surge in infrastructure investment to drive investment • Rising income levels coupled with increasing young working-age population will lead to significant growth in private final
INDIA BUSINESS SCENARIO
consumption expenditure • Under consumption, share of discretionary spending expected to rise significantly to 72% of private final consumption expenditure (PFCE) by FY20 as compared to 59.7% during FY10
Economic growth drivers • Substantial investments in physical, social and agricultural infrastructure will be the key growth drivers which will enable the economy to achieve ‘inclusive growth’ over the current decade • Infrastructure investment (as measured by Gross Fixed Capital Formation) driven by rising demand for infrastructure facilities,
bulging of the middle class and an increasing working age population is expected to surge to 12.1% of GDP by FY20 from an estimated 7.0% of GDP in FY11 • Increased focus is expected on infrastructure development in new townships/rural areas which will provide further impetus to economic growth • Improvement in expenditure on education is expected to support in moving towards inclusive growth • Huge expected investment in agriculture sector to around 3.8% of GDP by FY20 as against 2.6% of GDP in FY11 (estimated) will facilitate agriculture sector to grow by around 4.3% during FY11-FY20 www.globalizationtoday.com
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Moving ahead The central and state governments are expected to continue to create growth-enabling policies in the field of agriculture, industry, fiscal, financial and environment and increase their emphasis on development of social infrastructure. The time is just right for companies to pursue aggressively the agenda of inclusive growth. Once the province of corporate social responsibility, the effort to bring India’s geographically remote and low-income groups into the mainstream of economic life now has the potential to become the most valuable business opportunity of the next decade. The market is there. Low-income consumers are moving up the economic ladder in unprecedented numbers and will account for most of the growth in disposable income. Advances in technology are making these consumers increasingly accessible. And there is plenty of motivation. The aspiring large poor and geographically remote populations are showing growing interest in adopting technology and are willing to pay for products and services satisfying their wants in a sustained manner. Service companies are increasingly signing up and many large manufacturers are exploring inclusive business models that will be important for future success. 1. Right Focus The key first step to viable growth is identifying innovative domains to deliver significant benefits to poor and/ or geographically remote consumers. Some of the high growth industries 46
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are – Agriculture, Biotechnology, Pharmaceuticals, Healthcare, Education, Financial Services, Green Technologies and Information & Communication technologies. By finding the customer gain or pain points in each of these areas, companies can identify the right opportunities 2. Inclusive Impact Business Model Viability further depends on quickly scaling the innovation impact to large numbers of new end consumers. Four types of inclusive impacts that can work in India for scaling across the value chain through business model innovation are – changing the price/performance envelope, skills and capabilities nurturing, enhancing lifestyle and income and conserving natural resources. Companies will have to use more than one type of impact to succeed in reaching large number of new end consumers
INDIA BUSINESS SCENARIO
ultimately secure better margins. Successful firms leverage innovations for low-income markets – such as new products and improved supply-chain capabilities — to enhance operations in their traditional higher- income markets. In bolstering their other operations, these innovations help offset the significant investments that often define the early stages of inclusive businesses
About the Authors 3. Align the operating model with the business model and build relevant functional capabilities Injecting an “inclusive belief structure” into the organizational culture is essential for an inclusive business model to succeed. All the elements of the operating model (leadership, organizational architecture, talent and metrics) should be aligned to create a culture that respects and fosters inclusion. Capabilities central to the effort are - companies must develop strong empathy in understanding customer “wants”, partner with appropriate inclusive entrepreneurs, adopt low cost prototype models that permit fast failures and quick recoveries and leverage inclusive innovations in other parts of the business and other markets. Armed with these capabilities, companies are in a position to acquire appropriate and timely information about customer preferences, price risks effectively, scale operations efficiently and
Subramaniam Krishnan Ashwinee Healthcare Subramaniam Krishnan is currently heading Sales and Marketing at Ashwinee Healthcare. Previously he was Associate Vice President for Strategy and Marketing at Xenolith Technologies. Subbu has published 3 papers on the topics of Lead Generation, Lead Nurturing and Digital Marketing. These papers were published by NASSCOM, India’s trade association for Information Technology and Business Process Outsourcing. He holds Six Sigma Green Belts for Market Segmentation & Positioning and Inside Sales Process Management. Subbu also has completed a Lean project on using Innovative Tools for new client acquisition. Subbu has over 12 years of experience in Marketing, Branding, Strategic Planning, Acquisition Strategy and Business Development.
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MARKET REPORT
Katowice, Poland Where Second Tier is Not Second Rate by Thom Mead
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ften when second tier outsourcing countries promote their second tier outsourcing cities, one often begins to question the quality of the technical infrastructure, the availability of flights, hotels, restaurants, qualified employees, quality of life, and other factors that led to it being a second tier city in the first place. In many of the low cost destinations around the world, these and numerous factors are legitimate risks that need to be considered. After all, part of the reason to outsource in the first place is to mitigate risk. During my recent visit to Poland, I went to what many would consider to be one of their second tier outsourcing cities. While other, more historically prominent cities such as Warsaw, Krakow, Wroclaw would often be first in mind when considering Poland‌there is a sleeper in 48
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the mix: Katowice (and the greater Silesia region). This former mining region has dug deeper, and is now poised to play a prominent role in the future business landscape in Poland. The breadth and depth of renovation, innovation and modernization occurring across the region is by itself nothing short of impressive and underscores the region’s growing importance as a growing, prosperous economy with aspirations for more. Katowice is the center of science, culture, industry, business and transportation in southern Poland. It is the main city in the Upper Silesian Industrial Region and of the 2.7 million conurbation the Katowice urban area, within a Silesian metropolitan area populated by nearly 5 million people‌putting it at about the size of the Standard Metropolitan Statistical Area of Atlanta,
MARKET REPORT
Georgia, in the US; or the city of Chennai, India. However, unlike Atlanta, where seemingly commercial building has stopped for the last few years, the Katowice skyline has construction cranes busily building, and rebuilding, the city to evolve into a large, diversified, regional economic hub, eager to attract Foreign Direct Investment. In my conversations with the Mayor, Piotr Uszok, and his staff, it is clear he has set the bar very high and he is strongly committed to being the driving force for the region’s growth. While some politicians charismatically promise “change” and talk about the need for “change”, the Mayor of Katowice is busy being actually implementing change in his region. The dizzying pace of renovation can be seen everywhere, and if one were to visit 5 years from now, the city
will be virtually unrecognizable from its current state. As cities in Poland go, Katowice is actually a relatively new city, which may in part explain why most Westerners have never heard of it… lack of Marketing being the other reason. Yet like many reconstruction efforts in Poland that I saw, there is a vigilant effort to preserve the historic architecture whenever possible. The city is rich with history and its architecture and historic buildings are a living monument to the past greatness of the region that fell into a period of decline during the Cold War era. On the way from my hotel to one of the city’s most popular nightclubs I was fortunate to get an unofficial walking tour of the city with Marcin Stanczyk, a key member of the Mayor’s staff. Seemingly there was a bit of history that could be told at every street corner. I hope someone is doing a photo chronology of the changing cityscape in Katowice…it would make a nice exhibit in a few years. The region was once a dominant coal mining region, with large deposits of others ores and minerals such as copper and salt figuring into the mix also. Now the city of Katowice is seeking to leverage its roots as an energy hub to embrace, and set the pace for, Green Energy in Poland. Under Directive 2010/31/EU, and the associated BREEAM Certification, all commercial buildings must be green energy compliant per the Directive by Dec 31, 2019…and already as a country, Poland has the highest percentage of buildings conforming to the new standard. Herein lies an opportunity for a savvy venture capitalist, taking a look at energy management outsourcing (EMO) by expanding the capabilities of a Polish market leader and innovator such as GPP, or for foreign EMO companies such as Johnson Controls Workplace Solutions Group, or ESKO from Turkey…there is a great opportunity to turn the EU mandate into revenue. Tapping into www.globalizationtoday.com
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MARKET REPORT
the country’s leadership in Green Energy and Green Buildings, companies offering Energy Management Outsourcing services such as the aforementioned can harness a large talent pool of highly educated technical people who are already focused on this topic. Perhaps it could be the breeding ground for Poland’s first outsourcing company, competing on a higher plane of value add…and not just a lower cost destination for foreign multinational companies. While the EU is a natural market for such a service, given their current direction, countries such as China, India, Russia, and the United States become the obvious next step. Getting to Katowice is not a challenge at all. A short train ride from Warsaw or Krakow, or one can get direct flights from many EU countries to the Katowice International Airport, which surprisingly, has the third largest passenger volume of all airports in Poland. I had to laugh to myself when they talk about traffic in Katowice being heavy, especially at rush hour. They should visit Atlanta (I285), Dallas (I635), or Washington, DC (I395) and they will realize how blessed they are with the existing transportation infrastructure they have…and they are improving that also…to include more mass transit. Alpharetta, Georgia, USA and Plano, Texas, USA have far worse rush hour traffic than anything I experienced during my visit. The geography of Warsaw was more amenable to bicycles than was Katowice, but they were an integral part of the mix. Even the Mayor, leading by example, rides his bike for exercise… and to mingle with his city’s population. Again, leadership by example…not just words meant for others. Katowice is labeled “The City of Music”… prominently displayed on the side of the Spodek… or as it is commonly known in English: “The Saucer”. It literally looks like the stereotypical UFO the size of a city block, landed in the heart of the city. The city regularly is host to international 50
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music festivals and music competitions such as Metalmania, the Rawa Blues Festival and the International Competition of Conductors. But again, construction is busily underway to create an entire arts and music district of true world class stature…all accessible by public mass transit of course. While the city is currently in a state of widespread renovation, every effort is being made to maintain the city’s 45% forested area. Not an occasional park with plenty of concrete, strips of grass and flowers and a few trees, but forest. Yes, this city takes “green” to a whole new level. From my days earning my degree in Urban and Regional Planning…in most Western cities, 40% of the land area is typically devoted to roads and sidewalks. Again, Katowice is leading by example. There is no shortage of leading universities such as the internationally renowned University of Economics in Katowice. Katowice ranks as the 3rd largest scientific center in Poland, and boasts more than 20 schools of higher education. Having walked the city streets, taking in the warmth and richness that is Katowice, experiencing the nightlife…this is a young and vibrant city…both chronologically and demographically. However, when it comes to
MARKET REPORT this little gem waiting to be discovered. For companies such as Cap Gemini, PWC and a handful of other early adopters that have already discovered this Polish secret, their rapidly growing presence will make them employers of choice in the BPO, KPO, ITO and soon the EMO space. For Hi Tech and Finance companies seeking prime locations for lower volume, more cerebral type work done by a higher-educated, English literate workforce than most emerging outsourcing markets…best to get in on the ground floor. With a favorable location, good skills base, economic incentives and a mayor who is clearly pro-business, anyone considering something other than the standard, lowest cost labor, destination for transaction intensive, commodity style business, I would suggest you quality of life, I head for the links. Unfortunately, add Katowice to your list of places to consider. To in my entire trip to Poland, I did not even see a not do so is to not make a fully informed decision. golf course. But the mayor told me they did have one about 10km from the city. Yet another great About the Author opportunity! Since they will need more world class hotels as they grow, bring in a Hilton, Sheraton and Marriott… and require a course be built adjacent to each hotel just outside the city, or, entice Robert Thom Mead Trent Jones Jr. to collaborate with famous PolishThom has been a key American golfers Betsy King and Bob Toski to figure in structuring and create the Silesia National Golf Trail. Yet another closing more than $17B of great opportunity! outsourcing transactions Katowice is nothing short of a great secret in the in his career. Thom was VP world of outsourcing, high tech, “green” initiatives of Marketing, Alliances & and related industries. Maybe it is by design that Channels – North America they are waiting to tell the world…waiting for for Firstsource, CMO for all the civic improvements to be completed. But EXLservice, SVP - Sales for Spherion, VP of the competition for Foreign Direct Investment Sales and Marketing for Unisys Outsourcing and wallet share is fierce, both in country and VP of Global Marketing for ACS where he also abroad. People have choices and out of sight is served as president for an ACS BPO subsidiary. out of mind. Whilst my visit may portend the Thom can be reached at: beginnings of their Marketing outreach to attract 770-769-7795 business, much more still needs to be done on thom.mead@yahoo.com this front. For those who don’t like Marketing, www.linkedin.com/pub/thom-mead/0/224/a98 then this may be your one chance to be aware of www.globalizationtoday.com
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HUMAN RESOURCES 2.0
THOUGHTS FROM HR TECH 2012
By Kyle Lagunas Upgrading HR’s Role in Enterprise 2.0
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onsumer technologies are rapidly changing the way we work. In HR, social and mobile technologies have proven to be powerful tools for sourcing and recruiting talent. And newer tools that leverage social consumer technologies–like Yammer for collaboration, and Work.com (formerly Rypple) for performance management–have the potential for facilitating a more actively engaged workforce. At HR Technology Conference 2012 last week, these next generation tools were the focus of numerous sessions and conversations. But many attendees wondered, “Who takes ownership of these tools?” As I see it, these tools present HR with an interesting opportunity to upgrade its role in Enterprise 2.0–from traditionally tactical administration to tech-savvy strategic function. This article explores how–and what’s in the way. A NEW STRATEGIC ROLE FOR HR
HR’s strategic opportunity is to drive the adoption of consumerized social technologies to boost productivity, improve communication, and foster greater collaboration both within and 52
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between departments. And the play for HR is to team with IT in a role analogous to what IT Business Analysts do– assess needs, research solutions, and implement new technologies enterprise-wide. In short, HR needs to don a Business Analyst hat of its own. While IT can manage or assist on the technical side of things, HR should focus on driving adoption. This may require hiring someone with a blend of HR and IT skill, or perhaps partnering with another business leader to spearhead the effort. NEEDED FIRST: SHEDDING DATED PRACTICES
HR has earned a reputation for policing interoffice communications–not facilitating communication to make an enterprise more productive. As Chris Lennon, Product Manager at SilkRoad Technology observes, this is counterproductive.
HUMAN RESOURCES 2.0
“THE MERE ACT OF POLICING WILL SLOW DOWN THE COMMUNICATION. IF A PERSON IS TRYING TO SHARE INFORMATION REALTIME WITH THEIR CO-WORKERS AND IT DOESN’T SHOW UP RIGHT AWAY, THEY WILL STOP USING THE TOOL.” Cindy Lubitz, Founder of inTalent Consulting, points out that there’s also a double standard that is becoming a growing problem: “We hurt our corporate reputations when we attract candidates through contemporary use of social media, and then revert back to our old ways and block employees from using social tools to do their jobs.” While mitigating risk is important, HR can do more by taking a proactive approach to new tech. By moving away from the stereotype of communication cop and redefining itself as a communication catalyst, HR can play a more strategic role.
THREE STEPS FOR GETTING TECH-SAVVY IN HR
The details will vary by company, but here are some general steps in the process to get HR strategically involved in the selection, implementation and use of social technologies. Step 1: Establish a Baseline You need an accurate picture of where things stand before you can begin strategizing for improvement. Form focus groups to discover what needs employees have that they’re not solving today, or for which they would like a better solution. Ask how teams communicate and collaborate today. What works? What could be done better? “A survey of what technology is currently working, not working–as well as what employees would be interested in using–provides human resource leaders a quick look of where the needs www.globalizationtoday.com
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are they may not be aware of,” says Sarah White, While you short-list some tools, keep in mind Industry Analyst and Owner of Sarah White & that the best solution may not be a new tool but Associates. rather using a tool already in use in a different way.
“I’VE SEEN ORGANIZATIONS SAVE TENS OF THOUSANDS OF DOLLARS BY NOT GOING DOWN THE WRONG TECHNOLOGY ROUTE AFTER LEARNING IT WASN’T THE AREA THE TEAM ACTUALLY FELT THEY NEEDED ADDED SUPPORT IN,” SAYS WHITE. After determining what employees want and need, research technology solutions. While there are basic guides for software selection, you can also dig a little deeper. What are similar companies are doing? What successes or challenges are they having?
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Step 2: Tie Your HR Technology Strategy to Company Goals Next, discuss your findings with IT, department heads and line managers. Which communication and collaboration needs are shared across the company, and what needs are exclusive to specific departments? Begin formulating a strategy aimed at achieving company goals (for instance, improved employee engagement, communication, or collaboration). Then, break down how these goals relate to each department. As an example:
HUMAN RESOURCES 2.0
Step 3: Collaborate with IT on Implementation hiccups when opening channels for employees to One of the great benefits of the new wave of HR technology is that technical implementation doesn’t require much, if any, heavy lifting. The real challenge is driving employee adoption, and that’s one area in which HR can play a more active role. To that end, HR should focus on internal communications to promote adoption of the new tools and best practices around their usage.
“TO ENCOURAGE USER ADOPTION, BEING OPEN AND DIRECT ABOUT THE BENEFITS OF THE TECHNOLOGY IS KEY,” SAYS WHITE. “TALK WITH YOUR HR TECHNOLOGY VENDOR ABOUT YOUR ADOPTION STRATEGY. MANY VENDORS OFFER RESOURCES TO HELP YOU SPREAD THE WORD AND BUILD EXCITEMENT ABOUT THE SOLUTION. REMEMBER–TALK ABOUT WHAT IS IN IT FOR THEM, NOT YOU.” It’s also effective to get your employees involved. At Software Advice, for example, employees in the Marketing department recorded video tutorials of each of the tools they use day-to-day. Each video walks new employees through basic functions and best practices, and outlines how they’re used for essential workflows. They’re useful, but they also gave employees a chance to share some insider information–and play a part in driving adoption. IT’S TIME TO UPGRADE HR
HR departments fighting for a seat at the table aren’t doing themselves any favors by resisting innovation in workplace technology. There are bound to be
exchange ideas and information in real-time. But Lennon has a great point: “They’ll be surprised at how infrequently these [things] occur.” The greater risk with these types of tools is that heavy-handed moderation can have a direct impact on your company’s investment in these technologies. If HR can focus on strategies to maximize return on investment, rather than policing use, they could position themselves as a major contributor in the social enterprise.
About the Author Kyle Lagunas
Kyle Lagunas is the HR Analyst at Software Advice— an online resource for reviewing and comparing talent management software. He’s a tech enthusiast, and focuses on keeping his audience in touch with important trends and hot topics in the industry. Connecting with thought leaders and in-the-trenches professionals, and offering a fresh take on best practices in recruiting, human resources, and talent management, his work has been featured in Forbes, The New York Times, Business Insider, Information Weekly, and SHRM.
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Coaching and Mentoring - A partnership
COACHING AND MENTORING - A PARTNERSHIP
By Jooli Atkins Coaching and mentoring are widely used terms in the business world today. Organisations look to coaching and mentoring for a number of reasons but the bottom line is focused on the actual business value they can bring; can we see increased productivity and profitability if we invest the time and money in either programme? The answer to this is ‘yes’ if the right steps are taken to implementing either type of programme. Jooli Atkins, BCS Fellow and Managing Director of Matrix FortyTwo discusses the differences between coaching and mentoring and explains how both kinds of programme can improve business productivity.
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n understanding of the history of mentoring is something that I believe adds tremendously to the skills of a good mentor. Questions that always surface are ‘What are the differences between coaching and mentoring?’ and ‘When would you use either one?’ Therefore to better understand how coaching and mentoring can demonstrate the business value we need to understand at the differences between the two. 56
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For a coach, the task at hand is most important. The coach has to help the person learn the requisite attitude, behaviour and skills needed to perform the job successfully within the agreed success parameters. The task is therefore well defined and the conversation happens with a clear focus and specific timelines. Mentoring focuses on the individual and the conversation transcends more broadly into general work life. This means the interaction
Coaching and Mentoring - A partnership
can be more philosophical, more focused on attitudes and behaviours than on specific skills. Of course, these discussions could also have the same level of focus and timelines but the entire individual is the topic of discussion and exploration and not just a specific task. Coaching is about performance, mentoring is personal. So while it is appropriate and desirable for a person’s immediate supervisor to coach them, a mentor is best not to be in the direct
reporting line. Both mentoring and coaching have their use in the leadership interventions of organisations, but leaders need to be clear about what they are doing, what the other person needs, and what the situation needs. Here are four differentiators that you can take a look at and better understand the differences between the two:
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Coaching and Mentoring - A partnership
DIFFERENTIATOR #1: ORIENTATION
Coaching: Coaching is task oriented. The focus is on concrete issues, such as managing more effectively, speaking more articulately and learning how to think strategically. This requires a content expert (coach) who is capable of teaching the coaching candidate how to develop these skills. Mentoring: Mentoring is relationship oriented. It seeks to provide a safe environment where the person being mentored shares whatever issues affect his or her professional and personal success. Although specific learning goals or competencies may be used as a basis for creating the relationship, its focus goes beyond these areas to include things such as work/life balance, self-confidence, self-perception, and how the personal influences the professional. DIFFERENTIATOR #2: TIMESCALE
Coaching: Coaching can be short-term. A coach can successfully be involved with a coaching candidate for a short period of time, maybe even just a few sessions. The coaching lasts for as long as is needed, depending on the purpose of the coaching relationship. Mentoring: Mentoring is always long-term. Mentoring, to be successful, requires time in which both partners can learn about one another and build a climate of trust that creates an environment in which the mentoree can feel secure in sharing the real issues that impact his or her success. Successful mentoring relationships can last nine months to a year or longer. I have some relationships that are past the one year time frame. 58
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DIFFERENTIATOR #3: DRIVE
Coaching: Coaching is performance driven. The purpose of coaching is to improve the individual’s performance on the job. This involves either enhancing current skills or acquiring new skills. Once the coaching candidate successfully acquires the skills, the coach is no longer needed. Mentoring: Mentoring is development driven. Its purpose is to develop the individual not only for the current job, but also for the future. This distinction differentiates the role of the immediate manager and that of the mentor. It also reduces the possibility of creating conflict between the employee’s manager and the mentor. DIFFERENTIATOR # 4: RELATIONSHIP
Coaching: The coaching candidate’s immediate manager is a critical partner in coaching. They often provide the coach with feedback on areas in which their employee is in need of coaching.
Coaching and Mentoring - A partnership
About the Authors
This coach uses this information to guide the coaching process. Mentoring: In mentoring, the immediate manager is indirectly involved. Although they may offer suggestions to the employee on how to best use the mentoring experience or may provide a recommendation to the matching committee on what would constitute a good match, the manager has no link to the mentor and they do not communicate at all during the mentoring relationship. This helps maintain the mentoring relationship’s integrity. There are roles for each to play in your organisation. Make sure that you understand what the outcomes are that you are striving for. There is a role for each and there is a handoff that can take place, further validating the business value. Embrace the power of mentoring and realise the business value that it brings.
Jooli Atkins Matrix FortyTwo Ltd Jooli Atkins has been working as a learning and development professional for almost 30 years, mainly helping organisations to implement IT-enabled business change through her company, Matrix FortyTwo Ltd. A chartered IT professional and active Fellow of BCS, she is also a CITP Assessor and Chair of the BCS Learning and Development Specialist Group. Jooli is a regular contributor to a number of IT and L&D journals, and her personal passion is helping subject-matter experts, particularly those in IT, to become excellent learning facilitators.
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