Tag Archives: citizen-driven innovation

Leadership Missteps at Whole Foods and Hyatt Hotels: Listening Could Have Helped

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Hyatt Hotel‘s has been in the news lately – for all the wrong reasons.  As was the CEO of Whole Foods a few weeks ago!  In fact, I could begin this blog the way I began my May 21 blog (What do General Mills and Finland have in common?) and ask – what do the Hyatt Hotel and the CEO of Whole Foods, John Mackey, have in common?  

On August 11, John Mackey penned a op-ed on health care reform in the WSJ strongly aligned with right wing, conservative thinking.  His opening quote makes transparent his personal leanings.

“The problem with socialism is that eventually you run out of other people’s money.” – Margaret Thatcher

On Sep. 17, Hyatt fired approximately 100 housekeeping staff in Boston.  According to the Globe, Hyatt fired housekeepers at the Hyatt Regency Boston, Hyatt Harborside, and Hyatt Regency Cambridge, replacing them with workers from an Atlanta staffing company.

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One can argue what’s wrong with that.  The constitution of the United States guarantees a person the right to free speech, and capitalism the right to a company to structure its labor force and its costs (most of the fired housekeepers were minority women, making $15 an hour; it is expected the replacement workers will make $8 an hour).

However, in today’s networked, interconnected world, company’s and CEOs are not just individuals or employers.  They are symbols of what their companies stand for, and for what their customers stand for.

Customers who shop at Whole Foods are liberal, pro-environment, anti GMO, pro-organic food people.  It is not that they want to deny John Mackey the right to his opinions; it is that they felt let down and violated.  John’s op-ed diminished the value customers derive from their association with the store and their shopping experience there. Take a look at the poll at wholeboycott.com:

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Clearly, those who run Whole Foods have not spent enough time to understand the dynamics of today’s interconnected networked world.  The concept of customer value has changed.  Customers don’t just derive value from the products and services a store has to offer, they also derive value from what the company and its executives stand for.

Hyatt’s case is no different.  The outrage is not about whether it’s a good business decision – its not about Hyatt’s understanding of cost cutting and optimizing a housekeeping budget – its whether Hyatt has a good heart or not?  The issue is also about whether I will get value by staying at a hotel chain that acts in such a heartless fashion.

A company or a CEO can’t be so naïve as to ignore the context they operate in.  There is still blood on the streets.  A large number of people are struggling to get by and the evening news is full of heartbreak stories.  We live in an era where Politicians are actually regarded as more trustworthy than Business Leaders!  Don’t believe me?  Ask CNN!

Today’s customers are talking to each other – in both the real and digital worlds.  Though what they say in the digital world can often be more potent, due to the speed and ease with which digital opinion can whip up bystanders into a frenzy about issues they deeply care about.  The environment is one such issue, health care is another, having a job and avoiding economic pain probably tops the list.

Are John Mackey and Hyatt not listening?  Intelligent companies in touch with the realities of the digital market place don’t just listen when customers talk to them.  They listen even when customers are not talking to them or about them.  Why?  Because smart companies realize they don’t control the conversation agenda, they are merely a part of it. 

Collaboration and Co-Creation of Social Value: Government, Citizens, and Sustainable Cities

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The next few years are likely to witness numerous environmental initiatives around the globe.  For starters, the 2009 UN Climate Change Conference is expected to update the Kyoto Protocol.  Additionally, several countries are looking to green policy stimulus packages to pull them out of the current recession.

At recent G20 conferences, Japan and South Korea trumpeted their stimulus plans as Green New Deals, while China has earmarked $30 billion of its package for environmental programs.  In the United States, the Obama administration continues to emphasize its commitment to the environment, dedicating $80 billion of its $800 billion package to support green projects.

To maximize the benefits from these investments, local governments must successfully engage their citizens to influence their thinking and behaviors.  Indeed, it is no coincidence that the most significant innovations occur within distinct cities or communities, as local governments can more easily interact with citizens, soliciting their feedback on key initiatives and working with them to execute policy. 

The greenest communities share some common characteristics – energy-efficient buildings, renewable energy sources, widespread recycling, efficient and comprehensive mass transit, and substantive nature trails/green space.  But that’s just the cost of being green!

At the end of the day what they excel at is actively involving their residents in implementing green initiatives–the same way as corporations like Whole Foods do (discussed in the previous post).  Two shining examples of innovative community initiatives are Curitiba and Malmö.
Curitiba, in Brazil, developed a holistic urban plan in the 1970s and 80s to preserve green space, establish a recycling program, and reinvent its public transportation system.  However, given Curitiba’s limited resources, it relies heavily on its residents to execute its initiatives.

Watch Brazilian urban planning guru, Jaime Lerner explain his philosophy of how to make life better for people by making cities more livable.

  • Curitiba’s Cambio Verde program enables low-income citizens to exchange their metal and glass waste for fresh produce and bus tickets.  Due to this program and widespread recycling of all residents, the city has emerged as Brazil’s number one recycler, reusing 70% of its waste.
  • Curitiba used existing roadways to develop a rapid transit bus system that links all areas of the city.  Investments in a high-speed, high-capacity bus network increased ridership by 400% in over 20 years; now 60% of urban travel occurs by bus.  While citizens are more likely to own cars than other Brazilians, they use 25% less fuel per capita. Furthermore, 41 cities, ranging from Los Angeles to Bogotá to Seoul, are in the process of replicating Curitiba’s transit system.
  • The city’s Technology Street showcases 24 different homes, each built to spotlight sustainable construction materials, such as bamboo, or homes operating with renewable energy.  The city encourages prospective homeowners to meet with the architects of these residents prior to starting any new construction.
  • Mandates for dedicated green space have encouraged residents to independently plant more than 1.5 million trees on city streets.  A city-appointed shepherd and his flock of 30 sheep trim the grass in many of the nation’s parks! 

Malmö, Sweden, an industrial city in which the economy crashed
and burned in the 1990s, has reinvented itself as a pioneer in
sustainable development as an Ekostaden, or eco-city.  Currently,
Scandinavia receives more recognition than any other region for its
sustainable living practices, with Sweden alone supporting more than 60
“eco-cities.”   How have they done it?  A combination of bold politics,
experimentation, and community empowerment.

Several key initiatives have enabled the city to achieve the following: 

  • Widespread
    solicitation and implementation of citizens’ unique ideas    .  One
    resident developed a plan for a new storm water system that captures
    70% of rain water in one area of the city.
  • A
    community (Western Harbour) in which the government encouraged
    innovation from architects and planners to enable 100% renewable energy
    from the sun, wind, hydropower, and biofuels generated from organic
    waste
  • A mandate for increased green space, resulting in one of
    the largest developments of botanical roof gardens in the world with
    which citizens can insulate their homes, plant their own herbs and
    vegetables,     and reduce the city’s carbon dioxide emissions   
  • A
    transportation system dominated by cyclers and mass transit.  The city
    worked to make the cycling paths and bus network aesthetically pleasing
    to encourage shifts in citizen behavior.

Collaboration and Engagement are potent platforms for the co-creation of value, whether commercial or social.  In both the commercial and social arenas, companies and institutions are only just beginning to truly understand the power of WE.  Appropriately harnessing it and leveraging its power is still a few horizons away.

The old way of doing business is dead for business and marketing executives.  It is dying fast for those who run countries and communities as well.

What Do General Mills and Finland Have In Common?

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The answer: A desire to grow through innovation, to provide greater and better value to their customers/citizens, and to co-create this value with selected collaborators and customers.

Let’s visit General Mills first.

Most companies have big egos!  Not surprisingly they are quick to disproportionately aggrandize their own skills and knowledge; especially when it comes to innovation and new product/service development.  A symptom of this kind of thinking is the not invented here (NIH) syndrome - companies suddenly turning deaf and blind to suggestions coming from outside their four walls.

At one time or the other, the NIH syndrome has struck several big and not-so-big name companies.  Apple, Hallmark, and even P&G are all guilty.  Remember the well-publicized case of Shea O’Gorman.  Apple drove the 9-year-old third-grader to tears, when in response to her hand written letter to Steve Jobs offering ideas on how to improve the iPod Nano, she got a response not from Steve but from the company’s law department.  They curtly informed young Shea that Apple doesn’t accept unsolicited ideas, so she should not send them her suggestions and if she wanted to know why she could read their legal policy posted on the Internet.  

Till very recently General Mills had their own version of NIH – Policy 16 – which stated that no outside product suggestions would be accepted.  But all that changed a few years ago when the company had Wheaties for breakfast and became a champion and an industry role model for open innovation.

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General Mills’ G-WIN, an open innovation initiative, is entering its terrible twos.  Happy birthday G-WIN!  The initiative seeks outside partnerships with entrepreneurs, inventors, universities and other food companies.  During its young life the program has generated hundreds of concepts for patented technologies or potential products that are complementary to its existing brands and businesses.

Two notable successes:

  • Fiber One® Chewy Bars: General Mills teamed with an exclusive partner on a fiber ingredient to develop a delicious snack bar with 9 grams of fiber per bar. Within months of the product launch, Fiber One bars were among the top 10 best-selling grain bars on the market.

  • Progresso® Reduced Sodium soups: Through a new proprietary partnership with an external company with considerable expertise in healthy foods, General Mills was able to source a great-tasting new lower-sodium ingredient for its Progresso Reduced Sodium soups.  In the first year of launch, fifty percent of sales for lower-sodium Progresso soups came from consumers who weren’t previously buying Progresso.

Collaboration and customer driven innovation bring resources, passion, and an energy that companies bogged down by their rules, standard operating procedures, and reverence for hierarchy just can’t match.  

It’s just not companies but also countries that are fast signing on.  Not surprising to see Finland, one of the top 3 knowledge economies of the world, leading the pack.  Last Fall, Finland, home of Nokia, the world’s largest manufacturer of mobile phones, unveiled a new innovation plan to keep the tiny Nordic country competitive in an increasingly competitive global market. 

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Two aspects of the new strategy are especially noteworthy:

  • A desire to be more connected with innovative companies and researchers from abroad – Finland has just over 5 million people.  In order to make this connectedness a reality, Finland has begun establishing a network of international innovation centers under its FinNode program.  These centers help Finnish scientists and companies establish contacts with centers of excellence globally and can be found in Japan, Russia, China, and USA

  • A second noteworthy objective of the new strategy is to move beyond a knowledge push environment, where scientists and engineers come up with the ideas and push them to the market, to a demand pull system, with private companies and users playing an active role in market oriented innovation.

Two different economic entities, a company and a country, similar platforms for growth – collaboration and customer driven innovation.   Good Luck G-WIN; Onnea Finland!