Tesco's IT competitive advantage

If Tesco was a person it would have a couple of stories to tell it's grandchildren. One of them was about the launch of its Clubcard loyalty program and it would go something like this: "once upon time the highly competitive market of retailing in the UK was lead by Sainsbury; your granddaddy Tesco wanted to change this and decided to launch a loyalty card so that the customers would be so happy to come to Tesco and would come back again and again. This was a big success and after 6 months Tesco increased market share significantly eventually becoming number one in the country.".

This story seems to belong in the fairy tale world but it is, nevertheless, a true story. The unusual success with Tesco's loyalty Clubcard (by the way, loyalty cards already existed in several other industries) is related not to the card itself but to what Tesco did with it. Tesco used the card to collect a lot of relevant information about the customer shopping habits and preferences (ex.: "38% of customers cared about price) and acted on them (ex.: basket of goods on promotion was reduced from 750 to 350 matching customers preferences).

Tesco used the technology developed around the Clubcard as an enabler to improve their product and boost customer satisfaction. Tesco successfully created of unique, not easily replicable, set of processes that, through IT as enabler, was able to create consistent and sustainable value to their customers.

And in the business jargon this is called "competitive advantage".

Beach&Party weekend - orientation and FAQ

BEACH & PARTY WEEKEND IS JUST 2,5 WEEKS AWAY! YEAH!

Find below some info about Lisbon and where we will be hanging out on the 2nd, 3rd and 4th July.

Around Lisbon

FYI - Lisbon is a very small town (800K people) surrounded by some of the best beaches in Europe. We'll be hanging one of the four signed in the map above according to the weather and swell charts. Some brief info  on each:

• Costa da Caparica- this is the closest one to Lisbon, about 10km from the city centre: about 15 km stretch of sand, 1 large beach but several names. Probably where will be.
• Carcavelos - urban beach, really used for surfing only as it is not the prettiest around
• Guincho and Praia Grande - arguably the most beautiful ones in the area, but are colder and therefore require warmer weather. Guincho in particular is very exposed to wind and can be a nightmare for beach goers (and a paradise for kite surfers...) 
• In all of them: water is cold! This is the Atlantic Ocean, beach for real men and tough women, not that sissy Caribbean thing. But well worth it... check teaser pics

Sunset + "beach activities" in Costa da Caparica

  

October mist in Praia Grande

If you are brave enough to challenge "the elements", you can get a wetsuit and a board and have a go at surfing. Let me know if you feel like to know how you're loundry feels in the washing machine and I should be able to get some rental equipment.

a nice little beginners' wave at Costa and a heavy one at Carcavelos

  

the beginner surfer challenges "the element" and gets his reward. It was his 4th or 5th time

    

With regards to the city itself: 

The orientation in Lisbon is dead easy! There is one main artery that goes downhill to the river (Av.Liberdade and pedestrian R. Augusta) that splits the city in two. On the left you have the Alfama and the castle where the original 12th century Lisbon was; on the right the Bairro Alto where 19th and 21st century Lisbon thrive (all the bars are here!). On the east of Lisbon you have the Expo area (new development that removed old industries), nice and pleasant for a Sunday stroll; on the west the Belem area with monuments, cafes and great views to the golden gate bridge (pretty much like the one in San Francisco but without the fog!).

And this is really all you need to know for a weekend. Except for Belem and the Expo, everything is walking distance but be ware: 1) Lisbon is not flat; 2) wear comfortable shoes, specially the ladies as Lisbon sidewalks are a deadly trap for high heels (you'll understand it when you're there).

Left: view from the castle; right and bottom : around Bairro Alto

    

About safety and where to stay

Lisbon is totally safe and you would have to be REALLY unlucky or try very hard to get into trouble. Just a few things to bear in mind:

• beware of pick pockets around touristic areas like the castle, downtown, bairro alto and belem (usual stuff)
• avoid Martim Moniz, Intendente, Anjos. They are all on the "left side of town" on the metro green line. You will never go to Intendente and Anjos but Martim Moniz is really close Rossio (downtown between Av. Liberdade and R. Augusta). Martim Moniz is not dangerous during the day but it is where the illegal immigrants hang out so it is not pleasant.
• Bairro Alto after 3am can get heavy, I wouldn't hang around the tight winding streets at that time. Also, be aware that this is full of bars and there is always some drunk guy looking for trouble. And I don't need to tell you to decline any invitation to go inside some building or into a dark corner to buy drugs, right?

When you are choosing where to stay you have all the safe options (Novotel, NH,...) cheaper than in most other European cities. For a stay in style you can try to get a short term let deal like this (thanks Sebastian for the tip), and it even isn't more expensive. hint: always ask if there is public parking nearby because Bairro Alto and Alfama are a nightmare for cars. I have heard there are zillions of places like this but I actually don't know them cause....aaa, I normally stay at home when I'm in Lisbon...

Ok, this is the basics taken care of. Next post will be about eating & partying so keep checking.

And of course, if you have any questions or need any help you know where to find me!

the erp dilemma

 

A long looong time ago in the beginning of my career I was an ERP consultant. My first steps in the corporate world were crammed with praise for the power and flexibility of ERP systems (mostly SAP in my case). Clients were bombarded with fancy slides explaining how their business could be configured in the endless options available in SAP and, if the option was not there standard, you could develop it.

The key message was: you do not need to change your business, the system is fully adaptable to your reality.

A mere 5 years later the tune had changed substantially. Tales of implementations gone horribly wrong (now it's the right time to go back to the picture in the beginning of the post) coupled with outrageous maintenance bills of highly customized systems paved the way to the opposite philosophy.

The key message became: the ERP is based on best practice so you should adjust your business processes to the system.

What cherries to pick?

Confused? Naturally! But not to worry, there's a new rule brewing that can be used to sort out "The ERP Dilemma": should companies adjust their businesses to the system or the system to their businesses?

If it is a core competency, adjust the system; if it is not, adjust the company.

Beach&Party Weekend in Lisboa

Here's a thought: we've been doing a fair bit of work, exam period is coming up, some of us are getting a tiny weeny bit stressed out.

Work + Exams + Stress = we gotta chill out before the 2nd term begins!

With this in mind, Group A went through one of their trademark brainstorming sessions:

• one standing up and writing everything on the white board, 
• another one doing the same but in some fancy application on the ipad, 
• one making sure that the discussion is emotionally charged by making as many extreme statements as humanly possible complemented by extensive use of loadsa powerful adjectives
• another one snoring through most of it and occasionally intervening with some enthusiastic paraphrasing of someone else's idea, 
• one getting on everybody else's nerves with occasional pseudo witty lecture style "clever" comments and 
• last but not least, another one silent most of the time and only coming out of the shell when the group had walked through the self destructing path far enough that required prompt action to re-balance emotions and avoid irreversible implosion.

The result: BEACH&PARTY Weekend in Lisbon. Find some details below:

When?
2nd July (Friday) - 4th July (Sunday)
We can leave straight after the quants exam on the 2nd.

Where?
aaaa... well, in Lisbon where else?....

What?
Mostly all sort of beach activities (surfing, frescobol, good food, great partying!)

How?
Important disclaimer: this is not an all included perfectly organized trip. If you want to go, get together with 2 or 3 people, rent a car and hit the road!

The big advantage is that you have expert local knowledge available (that would be me, btw...) that you can use kinda like in the spirit of Alice's rent a local friend.

I'll be posting some more details and tips on things such as how to get there (recommend car), where to stay (hotel vs flat), where to go (some of the best beaches of Europe crammed up in a 15km radius around Lx...), where to eat (insider tips only), where to party (I might be able to make guest list arrangements where it's needed).

Stay tuned!...

can "dell hell" be avoided?

Jeff Jarvis was an ordinary guy. And as many other ordinary guys, he decided to get a Dell computer sometime in 2005. He was unlucky: his laptop turned out to be a lemon and he ended up enduring the usual after sales nightmare that you get when you happen to buy pretty much any defective high tech item.

Jeff Jarvis was an ordinary guy but he was also a blogger, one with reasonable exposure. He started blogging about his pains and getting massive response from his readers and the friends of readers (measured in hundreds of comments). Soon he captured the media attention and by the time he wrote an open letter to founder and CEO Michael Dell, "Dell Hell" was already a catchy slogan that eventually made its way to an independent web page. 

A picture is worth a 1,000 words, and the picture below can be revealing:

As you can see, after "all hell broke lose" in the blogosphere Dell shares went from over $40 to a minimum of $20 in 1 year. Mr. Dell finally agreed to meet Jeff Jarvis in October 2007 (over 2 years after the open letter) after various attempts to fix Dell's customer service but most of the damaged was made.

The million dollar questions (or should I say, the $20 per share questions) are: could this be avoided and how so?

The answer to the first one is certainly yes!

The answer to the "how" is more tricky.

1. Engage in the the dialog
It is clear enough that Dell has misread the importance of Jeff Jarvis' lemon laptop and understated the impact that this one incident could have in its public image through the virulent effect of the blog world. So an obvious prescription to Mr. Dell (and any other consumer goods producers for that matter...) is: get on your marketing or IT budget room for a bunch of people to run through the blogs, social networks, online news and, arguably, even relevant chat rooms and forums to check and respond to what is being said about your company and your products. Engaging in the dialog is sometimes your customers want and can make a such a difference and make a world of difference in preventing PR misery.

2. Go back to basics
Even if Dell had been top of the tops in ePR, if their products are bad or, as it appears to be more correct in this case, your after sales is appalling then you are in for trouble.

I suspect that Dell's woes between 2005 and 2007 were not chiefly related to post sales "Jeff Jarvis' Dell Hell" case but rather to continuously missing investors' expectations of which this June 2006 article is an example. And this was probably more related to the decline of Dell's original sales model (sales to end customers via 3rd party stores) in light of the rise of the more cost efficient direct online sales than to its post sales misery.

Having said that, laptops are, nowadays, pretty much a commodity. And the 2 key competitive advantages that you can have in commodity business are 1) lowest cost + large scale and/or 2) superior customer service (if you are lucky to have this option, because coffee makers and cement producers don't).

In 2005 Dell had neither of the two so its market value had only one way to go...

the magic 3: on facebook's top issues and its future

 
3 times this month I was called upon to draw my attention to (relatively) new players of the e-economy: foursquare, google and now facebook.

3 times I have followed the same research pattern: read wikipedia for the company's history, browse their websites and generic news sites for information on their products and sources of revenues, get inspiration from specialized blogs and other e-media sources for clever insights about their business and their future.

3 times I looked at what I got and ended up with the similar conclusions: the future of these companies, and in particular of Facebook, is directly linked with the way they handle and adapt to 3 key issues. Data privacy, anticipate and/or prevent the "online advertising bust" and stay in tune with recent trends affecting their businesses.

Data privacy


I do not have an accurate figure, but if I boldly stated that 80% of the news articles of the last six months on Facebook addressed the issue of data privacy I could probably get away with it (the remaining would be 15% about acquisitions and IPO and 5% demonising founder and CEO Mark Zuckerberg).

I feel most of the excitement is both biased and dated. Biased because for decades banks, insurance companies and governments have stored confidential and sensitive information prone to hacking and misuse. Dated because even if Facebook may concentrate more personal information than your bank (which is debatable) most users simply do not care: generation Y clearly has its own view on what privacy means and social network websites like facebook are designed for them and not for their critics.

Having said this, Facebook's strength depends on their user base and the traffic they generate. To step out of line and loose the confidence of their users is very risky because competition is just one click away.

Online advertising bust


This is controvertial: how do I dare putting the adjective "bust" close to "online advertising", the new Holy Grail of PR, the Mecca of product awareness, the Nirvana of relevance and meritocracy, a market that went from $4,6Bn in 1999 to $22,6Bn in 2009 in the US alone!

Well, because of one simple reason: online advertising is easy to avoid, block, opt out. Don't believe me? Just google it and, with an appropriate plug in you can avoid those annoying and intruding pop ups that come up pretty much every site you browse to.

As an MBA student of IE at had the privilege of attending a class with the country manager of Google Spain in which he stated that advertising blockers are not a major concern because Google sees advertising as a "service" to the users and those who opt out from it would not provide any revenues anyway.

This is a good (and brave!) point but I wonder how many users consciously consider online ads a "valuable service" vs those who would rather block them if they knew how to. As users become more tech savvy it is not unreasonable to think they will be activating advertising blocks most of the time they surf the web, consequently reducing the number of times they are exposed to ads and the number of times they click on them (both major sources of online advertising revenue).

If this hypothesis of the behaviour of web users is correct, online advertising will grow up as more users get connected, will start decreasing when they learn to block advertising until it reaches a stable (lower) equilibrium that corresponds to the users that click on ads only when they choose to be exposed to them.

In fact, I wonder if last years's small dip in online advertisement in the US is a consequence of the financial crisis or an indicator that the US market reached a mature point and has started "the search for the new equilibrium".

- Online advertising revenues: USA -

source: "IAB Internet AdvertisingRevenue Report 2009", published April 2010 and available online here This graph is on page 5.

Stay in tune with trends

Young innovation driven internet companies are used to operate in a very dynamic environment. Facebook is one of these that, like it many of its kind, started off as a cute, unpretentious idea to fulfill a niche (create a facebook of Harvard students), operated for years on venture capital money until it finally found its gold pot in online advertising.

In this process, the key factor of success was adaptability. Facebook's capacity to adapt resulted in the creation of a superior product (usability is considered one of the reasons that made Facebook explode whereas mySpace faded) and of eventually finding its business model that took FB from negative CF in 2009 to $1Bn in revenues in 2010.  

Going forward this characteristic will be very important to meet two serious challenges: the increase in quantity and variety of internet devices and platforms (ex.: tablet computers and TVs, Apple vs Android) and the global trend to "go mobile" (where Foursquare's concept of "social networking meets google latitudes" may be  an embryo of what lies ahead).

So what's next for FB?


I do not dare anticipating what Facebook will look like in two years time. It would be arrogant and possibly stupid to do predictions about a company that operates in a very dynamic environment, where competition is 1 click away (ok, maybe not 1 but not more than a few...) and that does not care about money.

But its future is likely to be shaped by the pulling and shoving of the 3 forces I described. And it will undoubtedly be interesting!