Attended a most interesting INSEAD breakfast presentation last week by François Momboisse, President since 2002 of the FEVAD (the association covering eCommerce and distance selling in France).  François is also head of international digital operations for the FNAC (a leading retailer of high tech and cultural goods).  Herewith a little state of the e-business in France.

90 euros average basket in France

eCommerce in France which has lagged most of the “developed” countries in Europe has been in catchup mode for the last several years.  Despite a moribund economy, eCommerce (as measured by the FEVAD) reached 25€ billion in 2009, up 25%.  In the 2Q of 2010, eCommerce grew 28% in France and is projected to grow overall a further 24% in 2010.  Still, eCommerce in France remains half the size of that in the UK.  That said, eCommerce constitutes 13% of total sales for businesses in France (excluding finance sector) compared with the European Union average of 12%*; and it represents 4.5% of retailers’ business in France.  If France is still lagging somewhat in terms of internet penetration at 63% of households, 71% of these purchased on line in 2009, well above the EU average of 57%.

Among François’ comments on eCommerce in France, here are the key thoughts:

• French internet users have a high degree of confidence in eCommerce (62%) and a very high level of satisfaction (97.7%) — presumably led by the extremely rigorous Amazon (which lies #4 in France in total e-sales).
• The number of eCommerce sites has mushroomed, now numbering a total of 70,200, +29% in the last 12 months.  In other words, it is not just the major players who have opened up to eCommerce, but smaller companies who are getting into the fray.  Also, this means that the growth in eComm is not just organic.


Local players dominate eComm

• Other than eBay and Amazon, the 15 top players in France are local.  And the same is generally true throughout the developed countries (other than smaller countries such as Ireland, Austria, Belgium that are surrounded by bigger countries with a shared language).
• Together, England, Germany and France represent 50% of the total eCommerce business in Europe.
• Just as in the brick & mortar world, to succeed, eCommerce sites ought “to stand for something” — define one’s position clearly.
• Fraud represents 0.26% of the transactions in France (versus 0.4% in England).
• Rate of returns is not publicly shared, but François mentioned that in Germany there is a historical reason why returns are much higher, relating to the post-WWII environment where the government encouraged distance selling and a lax returns policy to overcome the lack of physical stores that had been destroyed in the war.
• Google has beta launched Google Products, its own price comparison site, which has just this week been launched in France and is likely to cause a major risk for existing local price comparison sites.

With my eye on sustainable development, I was quite surprised to see, according to a 2007 study by Estia/Fevad, the figure of 800,000 tons of CO2 equivalent saved over the course of a year by consumers making their purchases on line (as opposed to driving to the store themselves, etc.).   It would require 54,500 hectares (134K acres) of forest to absorb that CO2 which represents about half the size of the moors of Dartmoor (for those of you living in England) and, ironically, happens to be exactly the amount of land owned by Prince Charles around 23 countries in the world.

If eCommerce is growing rapidly, it is not necessarily a profitable venture.  To begin with, to succeed, logistics are absolutely vital.  With Amazon blazing forward and setting the industry bar very high in terms of customer support and service, I can see many companies falling into the trap of eCommerce, believing it represents the eldorado to compensate for the business ills.  However, it is a very exacting business to implement and requires a strong mobilisation of the entire company to get right.  Companies that know how to manage well customer service in the brick & mortar retail environment will have a better chance to creating a successful eCommerce.  The other way round is much more risky.   With the outsourced models (via Amazon or eBay), there are easy ways to get started.  But, a successful and profitable eCommerce site is easier said than done.

*Eurostat community study on new technologies, 2009

To grow organically or via acquisition?  This is a perennial question by many company in many industries.  In the world of the internet, as we remain in the “early days” — to the extent that most internet players are still not making money — it is as yet premature for most sectors to think of acquisition as a main strategy.  This does not apply to the Googles of the world, nor those backed by big money or who are owned by an ongoing concern.  That said, I thought I might take a look at two interesting opposing models in two different segments where the question is absolutely central to their strategies.

Craigslist and OLX – The classifieds online.

Peace & Love & Ads

Craigslist (CL), which was founded by Craig Newmark in 1995 and incorporated in 1999, took the local San Francisco market, literally, with a group hug;  and it has gradually created a virtual ‘peace & love’ community spread out over more than 50 countries in 5 languages.  With an Alexa ranking of 32 (#10 in USA), the site is well ingrained in North America and in North American ex-pat communities around the world.  Ownership is private and total revenues remain quite vague.  It is believed Craigslist was bringing in $10-20 million in 2005 and 2006, but that they may have earned $150 million in 2007 (according to WSJ via Wikipedia source) and are projected (by AIM Group via Kelsey Group)  to pull in $122 million in 2010.   Nonetheless, Craigslist seems content to grow slowly, organically — essentially by word of mouth; and the time spent on CL by users remains quite steady and loyal at 14 minutes. The company has an anti-capitalistic feel to it, driven by its founder, which may very well be why people like and trust Craigslist.  [The same could be said of why people followed the Grateful Dead.]  The feeling is transported across boundaries — even with a rather unwieldy English sounding name.  Fitting the profile to a tee, we have personally transacted on Craigslist in three countries and each time we have had nothing but positive experiences.   [One sticky point for Craiglist's future is the 20-25% stake owned by eBay which has been suing Craigslist to try to maintain the value of its holding.]

 

Oh Love Exchanging

OLX.com (online exchange), founded by Fabrice Grinda* and Alec Oxenford in 2006, has set out as a competitor to Craigslist — although not necessarily head on.  OLX’s strategy has been to target markets outside North America and to grow via acquisition, purchasing 8 different local players (especially BRIC-M countries), thereby acquiring local talent and market share.  Like Craigslist, OLX is privately held and numbers are not publicly available (official press release here).  A read on Alexa (which, granted, does not provide a totally accurate picture), shows that OLX.com is not strong in the US (2596th) and that the key countries are URL-specific.  Yet, with over 130 million unique visitors every month aggregated on all its different sites, OLX is no small fry**.  I note, however, that user time spent is just 3 minutes on average on olx.com, while it is 10 minutes on olx.pt, for example.  With 98.5% of its traffic coming from outside the US (versus 6% for Craigslist, OLX has the advantage of being truly worldwide in scope, and is available in 90+ countries and in 41 languages.  Per Fabrice Grinda, “I believe there is only really room for one player per market… creating a natural monopoly.”  One market, one player and OLX plans to be that player outside of North America.  Nonetheless, for OLX, the key will be developing backoffice synergies (c. 160 employees) and leveraging its expertise and marketing clout to grow the local players into dominant forces.  Presumably, there are also the benefits of learning from the acquirees and bringing those learnings back into the fold.

Baseline:  First, Craigslist is clearly winning the battle in North America, because of its early mover status.  Secondly, Craigslist is more niche in its orientation, in that it has a devoted user base with a strong notion of a community of shared values, which you can find wherever you conduct business on CL.  OLX is strong in a certain set of countries (i.e. Portugal, Spain, Brazil, Argentina, Pakistan…), but is spread out thinly and, to my mind, will need to be very controlled in its economic model to support the acquisition strategy.  If someone is up to that task, it would certainly be Fabrice.  Even if there may only be room for one player per market, nonetheless, there is definitely room for at least two players to cover the world!

Linkedin and Viadeo —  Freemium Professional Social Networking.

Top executives are IN the house

Linkedin (LI), founded by Reid Hoffman and launched in May 2003, is the recognized dominant professional social network, boasting a 24 Alexa ranking worldwide (14 in US and 65 in France).  With more than 75 million members across 200 countries, Linkedin has a strong community that, you get the feeling, shares a common set of values.  I like to think of it as the Business Class lounge mentality — wherever you go, the manners are more or less the same, reflecting the higher level of cadre that constitutes its user base.  In terms of languages, Linkedin is available in 6 languages, with English being the dominant “business” language.  Time spent is a strong 7 1/2 minutes on average.  Based on the Sequoia Capital investment in 2008, LI has a valuation of $1 billion, although the NYPPEX increased that valuation by 25%.  Revenues which were rather anemic through 2008 ($17 million) are now estimated (via NYPPEX, as reported in WSJ) to be $205 million.  With a puny 0.5% conversion of its members to the paying subscription, meanwhile, LI still has plenty of room for growth.

A multilocal network

Viadeo, which was launched by French entrepreneur Dan Serfaty in 2004, now has 32 million members.  A quick read on Alexa shows that Viadeo is well behind LI: #1045 worldwide, #8458 in US, but #56 in France (4 million members).  Time spent by users is a solid 5.5 minutes on average.  If Viadeo is basically unknown in the US, it purchased a strong player, UNYK, in Canada and has been targetting Europe and the developing countries (particularly India and China), acquiring several local players along the way.  Like Linkedin, Viadeo is offered in a relatively limited number of languages (6) — but has the upper hand in terms of penetration in certain countries via its key acquisitions.  It is said to be gaining 1 million new users throughout the world every month.  Different from Linkedin which typically attracts a higher level of management, Viadeo strives to garner a lower/middle management profile — the “feet on the street” as Dan Serfaty, CEO, likes to say.  One of the keys for Viadeo is that it has managed to get an 8% conversion rate of its members into a paying subscription.  According to Ferris, revenues hit $40 million in 2009 — although I have reason to believe that might yet be a little exaggerated.  Xing, the German counterpart (and third recognized competitor) that has built up a global membership of nearly 10 million, announced in August (2010) revenues of just under 26 million euros, up 20%; thus, one can imagine that the management at LI and Viadeo are also honing in on the key sales drivers.

Baseline : Linkedin and Viadeo are both exclusively professional and, as such, are playing with a very important crowd.  With very different positioning and growth strategies, it is quite possible that there is room for both.  According to Dan Serfaty, whom I met at an INSEAD conference this past week, the future may involve some kind of meta-model, akin to the roaming revenue sharing by the mobile operators, whereby all profiles (i.e. from both networks) will be regrouped together for purposes of search.

OVERALL,

I see with Linkedin and Craigslist an organic growth model allowing for a more homogeneous type of community build.  Both LI and CL have the first mover advantage and have chosen to pursue a strategy of organic growth.  The challengers (and ‘late comers’), Viadeo and OLX, have opted for growth via acquisition and both are focusing on a local and differentiated product.  In a head-on-head clash, one of the key success factors will surely ride on the quality of the product — does the challenger provide a superior experience?  In all cases, the parties will need to keep apace with the changing ‘social’ environments and technological advancements.  Both challengers are well positioned to capture the local market based on their core business model.  However, both are going to need a razor-edge approach to their finances in that they will need to amortize/optimize their investments in the local players.  Acquisition as a vehicle for growth can only go so far, in that organic growth remains the true signal of success.

While the fight between OLX and Craigslist is more head-to-head in that they are looking at exactly the same markets in the countries in which they do business, to-date, the battle is not head on in any country as yet.  Viadeo and Linkedin benefit, at least for now, from having very different membership bases.  As Fabrice said to me in a conversation on this topic, Viadeo and Linkedin are very much social networks and will need to harness the social power which is not the case for CL nor OLX, which are dealing with eminently local markets, trading and advertising among geographically tight communities.  Personally, I could see the “social” component still play a role in the Classifieds area.  All the same, it certainly seems easier to understand the economic model of the classifieds versus the social networks.  A tale of two different models.  It will be most interesting to see how both these battles play out.

Ironically, I note that both the “organic” companies are American born and bred, while the “acquisitive” companies are owned and run by Frenchmen.  Does that mean it is a trend?  Far from it, particularly since Fabrice has been living in the US since the early 1990s and Dan is now based in San Francisco (since this summer).

What do you think?  I welcome your comments and thoughts.  Can you suggest other segments where the same battle plan is playing out?

—————–

*In full disclosure, Fabrice is a cousin via marriage.

** OLX’s major sites:  Portugal: www.olx.pt; Spain: www.mundoanuncio.com; Mexico: www.olx.com.mx; Brazil: www.olx.com.br; Russia: www.olx.ru; China: www.edeng.cn

At your Service

French Service.  For some, this is an oxymoron.  Some like to say the same thing of American Intelligence.  But as far as French Intelligence is concerned and American Service, we tend to be on the right track!

Regarding French service, there has been much written about the issue of bad, snooty-nosed, unfriendly service in French’s stores, hotels and restaurants.  It is typically a Parisian problem, but Paris doesn’t have the monopoly on grumpy faced servers in France.  Where does this culturally imbued talent come from?

I believe there are three main culprits.

1. Poor incentives.  There is no incentive to do a good job in restaurants.  The French have an ironic concept called “service compris” whereby tipping is automatically included on the restaurant bill no matter the level of service provided,  Service compris means two things in French: the tip (‘service’) is included and the service is understood.  Clearly, it is more a case of service mal-compris.  One might say that this is just one industry, but it is an industry that has a far ranging reach — and is particularly visible to the tourist.  At the other end of the scale, tipping is not customary when the tips are not automatically included.  French tourists don’t naturally whip out a dollar bill (five?) for a kind service rendered.  About the only time I see tips being handed out in France is in a hairdressing salon where the opportunity to slip a few euros into the dashing stylist’s pocket seems a good trade-off for the bo-bo (bored bourgeoise) lady.  Adding 15% to a taxi fare seems out of the question for the common Frenchman. Speaking of taxis, of course, the Parisian taxi driver is another great example of poor service.  The situation is tipically resolved in that you hardly ever WANT to give a pourboire to a French taxi driver.  (I have written many articles, en français, about the taxi situation in Paris).  Notwithstanding the obnoxious attitude, the extra change “to drink” for a driver seems a little out of place, no?

The notion of smiling as a welcoming greeting is a foreign concept.  And great service — as generally recognized internationally — is just not on the radar for French management.  The frown is de rigueur.  Being at someone else’s beck and call is beneath most French people.  You would think it is akin to being a slave.  Regardless of the financial incentive, it is culturally, an undesired trait.  On the plus side, where the French sometimes have an edge is the area of discretion.  Service in a distinguished luxury hotel should be invisibly impeccable and refined.  In this, there may be grounds to develop a specific and successful French notion of service.  As my suave friend Kevin says, sometimes you need to deserve the concierge’s good guidance.  So, why is this the case?

2. Education.  The French educational system privileges knowledge accumulation; and, the more rational the subject matter, the more noble the endeavour.   Competence and know-how are the focus of the national education system.  [Ask a concierge the history of the building and he/she could very well expound lyrically.]  The FNAC is a classic example of knowledge as a service gone wrong.  The FNAC employees are supposedly picked for their passion and knowledge in a category.  Then again, they need to want to share that knowledge to the ignorant customer.  Teamwork and positive attitude are, at best, an after thought in the French education system.  Great service, on the other hand, involves empathy, humour and, above all, attitude.

Grumpy - a nationa passtime

3. The French consumer.  In a re-interpretation of the egg or the chicken debate, I think it takes two to tango.  If I were a salesperson at a retail store in Paris and were confronted day in and day out by the grumpy, frowning French customer, constantly looking down on me as if I were a sub-citizen, it is possible that I might also give up the mantle (read pretense) of good service.  It is highly possible that the customer (who went through the same high school system) has trained the salesperson in his/her image.

Culturally, the French are brought up with a critical mindset.  Critical thought is a highly valuable skill.  However, when critical thought moves from intellectual debate to strict judgment, there is a tendency to want to complain and to put others down; furthermore, the result can be that one is never content with anything. The art of critical thought begat the French pastime of complaining.  No one is ever happy with anything, which means we should just try not to be happy, period.  Take the weather.  Most of France has a true four seasons — essentially mild compared to the summer in Las Vegas or the winter in Montreal.  However, in the summer in France, you will hear the very same people who complained that the winter was too cold that the summer is too hot.  This is where perspective is good (and presumably travelling to other countries is a recommendable activity).   Yet, the French typically prefer to stay in France for their holidays — in part a question of budget, part a question of francophonie (and the usual notions of visiting family, etc.), and in part a question of enjoying an amazing choice within the boundaries of the Hexagon.  Frankly, though, you might be excused for thinking that the French prefer to stay amongst themselves to rant and rave within the confines of France, to evaluate each other’s ‘esprit‘ (quickness of mind, sharpness of tongue) and to complain about la condition humaine.

If you watch French roundtables on national television here, you will find plenty of well educated people that like to debate endlessly (and to cut each other off in mid sentence).  With more or less eloquence, the debates in isolation could be considered interesting.  However, the reality behind the debates is that they are more about having one’s opinion aired and heard than actually bringing about change.  The notion of responsibility for one’s ideas is limited to the articulation.  And, heaven forbid the idea should make true sense.  Once the individual’s ideas are out in the public, the collective spirit of France unfurls the flag and puts up red, white and blue tape to squash it, for a return to the unchanged, unchangeable way it was.  The French give great importance to ideas and there are many extraordinary French philosophers and writers.  Ideas are definitely more noble than action.  However, service is all about action and execution.

Taking a slight tangent, it occurs to me that the French are so enamoured with aesthetics and critical thought that it is the quest for the ideal, the perfect solution, that impedes progress.  Critical thought suggests that you can always find another, superior way.  The French are masters of la remise en cause, to put into question the actual premise for doing a particular act in the first place (before even wanting to improve it).  Perfection is indeed a wonderful ambition.  However, it cannot become an excuse for inaction.  The ship will by pass by if you wait for Valhalla.   And in the meantime, service-related businesses trying to develop in France — such as hairdressig salons, retail outlets, or a visiting company such as Starbucks –  are suffering from a lack of a trained talent pool.

The truth is that good service comes from people who enjoy people.  They must love being social.  They must have a positive attitude.  They must be able to focus on person coming in without judgment.  Want to walk in their shoes, per se.  Great service also comes from people who have, deep down, a strong self confidence.  If that is a tall order in any country, it also explains why good service should be paid for!

If Paris is the city of lights, an illuminated denizen of brilliant thinkers, one wonders when light bulbs will turn on about the need for quality service if the millions of tourists are going to keep wanting to return.

My three suggestions:

1. get rid of the “service compris” in the restaurants

2. introduce more sports and thespian activities into the school curriculum (to develop more teamwork and public speaking)

3. develop some government sponsored initiative (because if the government is not involved, it just will not go far) to incite innovative training programmes about true service.

What do you think? What ideas do you have?

For some good reading on the topic of French service, I suggest “Service Compris” (2000) by Philippe Bloch/Ralph Hababou/Dominique Zardel.

Still Unlikely Balancing Act

In Paris, yesterday, I attended a conference hosted by the MEDEF (the union of employers in France), where the ORSE (Observatory of Societal Responsibility in Enterprises) was promoting among other things the arrival of a new book, « Patrons Papas: paroles de dirigeants  sur l’équilibre travail et vie privée » (Editions du Cherche Midi) or “Papa Bosses: Statements from leaders about the work/life balance.”  This book (out on Friday) features the accounts of 10 CEOs, all male, as to how they have managed the work-life balance question in their own lives.  The panel at the MEDEF conference included three of the CEOs in the book as well as three female CEOs/leaders of opinion.

Here are a few of the interesting conclusions/statements:

1/ From Mme. Brigitte Grésy (author of ‘Petit traité contre le sexisme ordinaire’): parenthood has still not been accepted as a noble activity in French companies.

2/ From Mme Grésy again: the concept that a career should follow a continuum is strictly masculine.  Moreover, it is my personal belief that having more organic and less linear careers will be more in line with the desires of the younger generations — and in so doing will provoke different ways of working together and creating value.  Mme Grésy also spoke of needing to adjust/adapt other criteria that are distinctly masculine: absolute presenteeism and the concept of “top performers” aged between 25-35 years old (prime birthgiving years).

3/ From Stéphane Richard (France Telecom): as much as a CEO intends to be exemplary in many of his/her functions, the benefits, such as a chauffeured car, accompanying the role of a CEO make comparisons inappropriate for the remainder of the employees.

4/ When Pierre Fonlupt, chairman of [SMB] PLUS SA, highlighted the challenge of international mobility, Christian Nibourel (CEO Accenture France) said that Accenture had established a policy of supporting the spouse that has to sacrifice her/his career in the move.  In the end, the CEO’s personal grit and determination is absolutely vital in pushing through the agenda.

5/ Christian Nibourel talked about the great opportunities provided by new technologies to allow “home-working.”  My belief is that any such new technologies need to be accompanied by a company culture that accepts a “distributed” workforce.  The pink elephant in the room that was not mentioned at any point in the conference: the vital role of Human Resources and the need for deeper change management, which I believe must go all the way down to changes in the French educational system.

Balance in Motion

6/ “A fish rots first at the head” is a proverb that appears in more than 30 languages.  This proverb was apparently first expressed in written English in 1674 (per this Merriam-Webster article); however, there is no conclusive evidence that a fish does actually start rotting at the head. At least, I found no fishmonger expressing their expertise or a counter opinion.

7/ If no one likes the term “quota”, there is no proof that any other system works to advance the imbalance between men and women (from Agnès Touraine, President of Act3 Consultants).

Meanwhile, taking a sampling of different publications I came across yesterday, I picked up some statistics about the situation for women in France 2010.

1. 83.7% of women between 25-45 work vs 95.1% men**

2. 84.6% of women graduate from high school (pass the rugged baccalaureate) vs 82.1% men**

3. 56.9% of university students are women**

4. Female managers: 35%**

5. Female entrepreneurs: 30%**

6. Female CEOs of French companies: 17.2%**

7. 38,400E/year is the average salary of a female manager in France, -17% below their male counterparts*

8. For all working women between 25-45 years old, their salary is -27% below their male counterparts**

9. The percentage of women sitting on the board of French companies: 7.6%*

10. The percentage of women sitting on the board of CAC40 companies: 5%*

*Metroplus, March 8, 2010

**20 Minutes, March 8, 2010

Not sure if it is really relevant to ‘compare’ these statistics with other countries, if only to rub one’s nose in it.  However, to the oft-stated dictum, “what you don’t measure, you can’t improve,” it doesn’t seem, for now, that measuring the women’s situation has actually brought about material progress. More concrete and bold steps need to be taken by a wider swathe of the ruling elite.

As far as gaining work-life balance and “material success” is concerned, the most telling line that was said on numerous occasions: don’t do as I do or did, do as I say.  If the CEO is not the appropriate model due to his/her substantial benefits, the challenge is finding the right champions within the upper cadre of management to reform the culture, allow men to enjoy paternity and convince themselves to accept that diversity is a true competitive advantage.  Until such time as equality is generalised, it will be a battle led by courageous individuals.

Android smartphone

Connected phones going global

A wave of publications on 2009 results show that the smartphone invasion continued at a great and global pace, outstripping the wildest predictions of only a few years ago.  Clearly, the people are voting with their pocket books and a certain number of companies (Apple, Google, Nokia, network operators, in the first instance) are taking full benefit.  Most businesses, however, are lagging in a dramatic fashion and failing to understand the seachange under way — both from a consumption and an employee-employer standpoint.

Worldwide cellphone market nearing 5 billion

Here’s look at the numbers*:

The worldwide market for cellular phones is nearing in on 5 billion (est 4.6B).  (If the studies say “users” or “subscribers” for each phone, I think they may overstate the case to the extent that there are many people that have multiple cell phones).   At 5 billion subscriptions, that would be roughly 3/4 of the world’s population is using a mobile phone — if there were an even 1:1 distribution.  Mobile phones are, by far, the most widely distributed high tech item ahead of, even, the radio (3.9 billion units).  Computers (1.4B) and televisions (1.5B) are just for a veritable elite it would seem.

Mobile phones have accelerated their rate of growth since 2004, in large part thanks to the smart phone (offering easier and smoother access to internet) and, specifically, the o-so sexy i-phone (and now the Android, etc.).

Smartphones at 500 million

Smartphone users now total nearly 500 million worldwide (already 1/3 of the total number of computers).  Landline phones are going to die an ugly if slow death (1.1 billion units and slipping).  In 2009, 15% of all the phones purchased in the world were smartphones.  In France, where I live, there were 3.6 million smartphones bought in 2009 (versus 1.8 million in 2008).  It is anticipated that the number of smartphones in the world will hit 1 billion within 3 years (i.e. double).   I would believe that is, again, a pessimistic forecast.

With the generalised arrival of the smartphone, the question is to what extent companies and their marketing teams are ready, adapting their websites and communications to this platform?

The fact that the mobile phone is intrinsically a personal object and yet has become an unavoidable business tool, is one more reason the professional needs to integrate the personal elements of his/her life. Companies set on filtering, controlling and otherwise manipulating access to the net (on smartphones) will limit their team’s ability, nay desire, to understand and interface with the mobile ‘net environment.

Your thoughts?  Who is doing a good job in adopting and adapting to the smartphone/mobile phone paradigm?

*Source: International Telecommunications Union, Challenges #200, 18 February 2010

Momentum Effect by JC Larréché

I attended a presentation last week by Jean-Claude Larréché, famed marketing professor from INSEAD (still teaching there and also was there when I attended in 1993).  Jean-Claude gave a short and punchy overview of the key points of his latest book, “The Momentum Effect” which was published by Wharton School Publishing last year and is now out in French, “L’Effet Momentum“.  What made the evening particularly powerful was that, after his exposé, a host of different actors, from different industries, recounted a series of real life examples.  And, the style “requested” of each presenter was in the form of a story, which made the content all the more memorable.  Here are the salient points that I captured:

The Momentum Effect is about creating effective and durable growth with the reality of limited resources.  Too many of the measurement systems generally accepted today are static, taking an instantaneous snapshot as opposed to understanding the underlying dynamic strength or weakness, aka the momentum.  The bottom line for companies that experience the [positive] Momentum Effect are those which create a strong internal culture (tending toward the concept that “the employee is the brand”) all the while creating traction with the client.  As Larréché says, there is a need to “pilot the external market” all the while mobilizing the internal forces.  The two big typical errors in terms of mobilizing the internal team: not devoting enough attention to talent finding and building; having ‘pre-established’ [i.e. erroneous] concepts of talent (I would interpret this as, for example, hiring too many clichés and clones).

Among the stories that followed Larréché’s exposé, Christian Blanckaert (ex-MD Intl of Hermes, current CEO Petit Bateau) talked about the difficulty (need) to manage disorder and disequilibrium.  It’s not about how you manage the good times or the planned events.  It’s about leading through the spontaneous, unexpected moments.  As I was discussing with another expert in management yesterday at lunch, one can sort out the difference between the wheat from the chaff in terms of the leadership during periods of crisis.

Claude Brunet (Axa DirComm, Marketing & HR, ex-CEO of Ford France) presented the challenge at AXA to bridge the gap between the internal feeling of pride among the Axa employees and the external negative image of insurance (in general).  This is not your every day challenge — but, perhaps, there are lessons to be had for companies in the opposite situation.  Axa began a programme in 2006 to measure the level of “employee engagement” as opposed to satisfaction (a more static or 2-dimensional measurement).  They ‘invested’ in an internal blog addressed to top management in May 2008.  Interesting details on Axa’s internal blog: with 110,000 employees worldwide, they had 55,000 visitors (he did not specific unique), 20,000 comments and, using a ‘semantic’ analysis, that 85% of the words were positive.  All the same, I am quizzical about drawing conclusions about the positiveness of comments published on an internal blog… I would have to guess that the 20,000 comments came from less than 10% of the employee.

In June 2008, AXA launched a campaign that spoke inside and outside the company, “Redefining Standards” (translated into French in a binome statement as “Reinventer votre assurance.  Reinventer votre métier.”

Reinventing our job

Brunet then said how their “engagement” level had been rising 1-2 points per year since 2006, but that since the latest campaign that the level had jumped 4 points.  Certainly, the idea of measuring engagement within the company is as relevant and powerful as measuring, what is more frequently discussed these days, client engagement.

Larréché’s point is that the positive momentum comes when both the internal ‘energy’ resident in the employees and the traction with the client are aligned.  I could not agree more.

I attended a GEF (Grandes Ecoles au Feminin [1]) conference yesterday, here in Paris, at which I listened to the results of an Ipsos study entitled, “How to improve the mix of women in management [in France].” You can read the French results here. This was the fourth time that a study had been commissioned in and around this topic, and apparently the results remained largely similar: all manner of managers in business recognize that having women in management is a good thing, but that little progress has been made and the road ahead is still long.

The study was made with individual interviews of top management from 16 major French companies (Dec 2009) as well as the answers of 5,431 respondents (questionnaire was self-administered on Internet) in May 2009.

Some highlights that I picked out:

o 82% of men and 87% of women are in favour of more women to change the style of management. This point strikes me as supremely important and recognizes implicitly the failings of current management practice (hierarchical, control & fear based…)

o 80% of men and 96% of women recognize it is rare to see women in top posts. The point here is that 20% of men actually believe it is not rare.

o 47% of men and 76% of women see an important or rather important difference in salaries between men and women. That’s a stunning 29% difference.

In a review of actions taken by companies to promote women in management, the study identified 25 measures that had been concretely taken by one or more of the 16 companies interviewed. The irony of the study was that 16 of the 25 measures were considered en masse to be easy to implement and effective in their results. And, yet, the net results remain basically imperceptible. The GEF team concluded that the reason for the lack of impact is that companies are satisfied to implement only a couple of the measures which, in practice, did not bear any fruit. Fully 1/4 of the respondents (21% for men and 29% for women) believed that it will take 50 years before seeing parity in France.

The net result of this GEF survey is a sort of manifesto of 10 specific measures that need to be taken, ensemble, in an effort to make real headway on this issue. I cite those 10 actions below, adding a few comments where I see fit.

GEF Plan: A Plan of Action in three areas, that needs to sponsored by top management

Actively promoting women
o For each open position in management, ensure the presence of female candidates and justify if there is no female candidate. The key is having someone who calls out and verifies when no female candidate is presented.
o Identify the high potential women to create a target group that is representative of the company’s mixity [2].
o Develop specific training for women. Only 7% of women have ever received any special training.
o Promote networking. I believe that women might benefit from some specific training relative to how men might network a little differently — at least to decode the ‘masculine’ ways of networking.

Changing the rules
o Change the criteria for performance evaluation. I believe that performance evaluations need to be adapted to the new world order, especially to promote collaborative behaviour.
o Break the linear career model and changing the criteria of geographical mobility. This applies not just to women, but to basically all Gen Yers. On average a woman has just under two kids in France and, therefore, spends 8 months out of a 40-year career on maternity leave.
o Educate management on the behavioral differences between men and women and on the interest in taking on a greater mix. The key here, for me, is bringing out/accepting feminine values of management in men as well.
o Develop a practice for a better work-life balance. Personally, I struggle with the notion of balance on a daily basis, in that we are constantly out of balance. The key is to find a way to create a longer-term balance.

Operating and monitoring of measures implemented
o Establish quantitative targets at any level. You can’t improve what you don’t measure.

As for quotas (as in Norway for Executive Boards), the GEF position is: there is no proof that we can do without quotas. They asked their pool of respondents the question to what extent they were opposed to a quota system. The “good” news was that they were less opposed than expected. However, that still left 45% — 56% of men and 32% of women — opposed (somewhat or totally) to a quota.

And, finally, I leave you with an article on a study which I have found extremely enlightening regarding how men and women can operate differently. The Harvard Business Working Knowledge article by Martha Legace interview of Professor Boris Groysberg (Harvard Business School) is entitled, “How female stars succeed in new jobs.” The article (and study of 1,000 analysts) presents how female analysts (Wall Street) do a better job of creating a successful transition to a new company. As Groysberg said in an HBR article in Feb 2009, “[f]emale star analysts, it would seem, take their work environment more seriously yet rely on it less than male stars do. They look for a firm that will allow them to keep building their successful franchises their own way.”

North America if far from perfect in terms of parity, but there are surely some good examples to be had from over the pond.

——————–

(1) GEF is an assocation regrouping alumni from 9 major graduate schools in France: Centrale Paris, ENA, ENPC, ESCP-EAP, ESSEC, HEC, INSEAD, Les MINES et POLYTECHNIQUE

(2) Using the term “mixity” is perhaps a bit of a frenchism, but the important point is relating the percentage of women in top management positions compared to the overall employee population of that company. For example, it is highly irregular and suspect to see a company with 10% women on a board of directors in a company where over 60% of the employees (or, potentially more just, compared to its management ranks) are women.

As part of my Franco-American profile, I am naturally drawn to reading about comparisons and competition between France and the US. I came across this May 2009 article, France Beats America, which describes France’s epicurean passion for “living it up” in terms of eating, sleeping and holidaying. On the eating front, as much as obesity and over-eating might be America’s bête noire, the French make more time for eating. According to this article, “[t]he French spend more than 2 hours a day eating, twice the rate in the United States, according to the Organization for Economic Cooperation and Development (OECD)…” The French spend 135 minutes per day eating versus 74 minutes for the Americans and 66 mins for Mexicans (69 mins for the Canadians). The Turks (#1) actually out-eat the French (#2) by an half hour each day! According to the OECD report, the French top the list for average number of hours slept at 8h50/day… marginally ahead of the equally surprising 8h38/day for Americans. Koreans and Japanese sleep the least among OECD countries, and an hour less per day (7h50) than the French (the OECD average is indicated as 503 minutes or 8h20/day). And, if you are thinking that not sleeping enough is bad for your health, the Japanese lifespan expectancy (86F.79M) outlasts France (85F.77M) and far outstrips the US (80F.75M) which is below the OECD average (82F.76M).

Finally, when you add that the French take on average 7.0 weeks of holidays per year versus 3.8 weeks for the Americans, it does add up to a lot more “living it up.” I would tend to argue that the pendulum should swing back for the French, to work just a bit harder … not just any how, but by adding more pleasure, humour and emotion in the work space. And in the US, I would argue that the focus should be on eating better (not necessarily longer).

Meanwhile, among the countries included in the survey, it was reported that men have more leisure time than women. “This gender gap is largest in Italy, where men top women by 80 minutes per day. The gap is just under 40 minutes in the United States, and smallest (less than 5 minutes) in Norway.” France’s gender gap on the criteria of leisure time is 34 minutes (in line with the OECD average of 35 minutes). Is there any real correlation between a reduced gender gap on leisure time with equality of the sexes? That is far from certain. However, to the extent that women are generally at work and have the lion’s share of the responsibility for taking care of the family, clearly women will continue to suffer in terms of having their own leisure time if the burden at home is not appropriately shared. Below is the OECD report (data from 2006, published in April 2009) regarding the leisure time gender gap.

While life is about good food, good company (including on holidays) and a good night’s sleep (& good health), the issue is about creating a sustainable model, i.e. (a) making the 45-49 weeks at work more agreeable and liberating; and (b) finding ways to allow women to have as much leisure as men. Quality of life should, considering how many hours are put into work, include the quality of life at work and we all need each other to be in “top” shape!

Your thoughts please!

MEDEF UNIVERSITE D’ETE PLENARY SESSION – 3 September, 2009

“Will capitalism become ethical or not?”
Plenary Session animated by Jean-Pierre Elkabach

Below I will highlight a few points that I took away from the two hour plenary session, brilliantly managed by JP Elkabach, on Ethical Capitalism at the MEDEF Summer University 2009.

As with the other subjects discussed in all the sessions at the Medef UE 2009, the US clearly remains a nevralgic centre for business leaders in France. To be sure, I was not the only American in the audience to be fingered. The newly assigned US Ambassador to France, Charles Rivkin, was on hand to hear a number of rather broad criticisms of the US in the current crisis. Not too surprisingly, a large part of the ‘debate’ was focused on America, the originator of today’s world crisis.

With a few broad strokes, Pierre Bellon, President of Sodexho, ranted (since he feels he has earned the right), “the fault [of the current crisis] lies with bankers…credit agencies…and politicians…” As if that were not enough, he also felt the need to state that “the citizen and the small companies cannot be held responsible.” Mr Bellon called for, among other things, greater transparency, the cleaning up of conflicting interests, and the end of the eternal optimisation of corporate profits… What irked me about his tirade was the feeling that there was little accountability in his words There were no corresponding concessions understood in the propositions and there was no ripost from the stage or floor…

Laurent Fabius, former PM of France, explained that the US will have to rebalance its budget. ‘It is an enormous “black cloud” that looms over the world’ said Fabius about the US budget deficit. Regarding France and the system of ‘privileges‘ (defined as that which is “read in private“), Fabius suggested that the MEDEF should review that which should be allowed to be transparent as he believes that the trend toward total transparency is dangerous. Fabius grandly called for a Social and Ecological Economy, whatever that means.

Christine Lagarde, France’s Minister of Economic Affairs, also did not like too much transparency either. However, in a play on words, if not shadows, she prefers to shed “light”… shone on the shadier, darker areas, including the Swiss banking traditions (2/3 of the world’s transactions occur in the ignorance of, or outside the realm of the world’s governing agencies). However, unfortunately, she did not have the opportunity to elaborate on which transparency she did not want to have…

What struck me about the intervention of the three people I cite above was the recurring issue of transparency. To be transparent or not to be… and about what? This was certainly a topic that came up again and again in the various sessions. In certain regards, on an emotional level, total transparency is an unlikely objective, even dangerous. In any event, is there such a thing as total truth? Unlikely. The issue of total transparency is that one may risk removing all the mystery of life (as one might appreciate in surprises, love and luxury … ). Secondly, there are certainly some things better left unsaid in terms of avoiding unnecessary heartache…e.g. white lies. Whether personal or political, some secrets are better kept that way. But, how and when to know to stop the transparency tap? Aside from state secrets, there is the case of some ‘sensitive’ subjects being put into the wrong hands (notably the media), and these do indeed need to be treated with great care. But, shrouding facts behind the veil of secrecy is a tricky business. And, for the cynical, if everything is transparent, there is no more wiggle room for propaganda?

Nonetheless, notwithstanding the philosophical nature of total disclosure (cf Rousseau’s Confessions), I truly believe that, in the field of business, there is a need for much greater transparency and I would be worried to believe that Mme Lagarde would not agree. Transparency is, in this case, an issue of strategic communication. This does not mean that one need be saying everything about every subject; too much information is one of today’s major curses. Yet, there is much to gain in terms of employee ‘buy-in’ by being transparent about a corporation’s its financials, challenges and ambitions. Such transparency helps galvanize what is sometimes termed as ‘psychic ownership‘ whereby, without needing recourse to stock options, an employee comes to ‘own’ the vision and the problems and, along the way, becomes part of the solutions, too. Even in the case of brands and their relationship with the customer, transparency is more desirable. The myth of “mystique = value added” has worn thin. The brands need to regain the [lost] trust of the customer which is why there is so much being attention paid to authenticity and transparency. Surely, it is not too strong a leap to suggest ethical capitalism should include transparent values and justifiable value? Would be glad to have your feedback on this topic!

I finish with what, for me, was one of the more poignant phrases of the conference. Philippe Lemoine, President of LaSer said, “[t]he French need to have confidence in themselves…” He encouraged the MEDEF business leaders: “You need to listen better…” and you will find your way better.

#MEDEFUE09

If the plight of children and the role of women is the key issue for the  MEDEF Summer University [Universite d'Ete] 2009, Ms. Cherie Blair was a wonderful choice to open the conference. If her speech felt a little long, there were many interesting points raised in her 30 minute speech.  I captured below a few sound bytes that resonated for me:

The men among the 3000 people in attendance in the room (and in positions of power in general) will need to be, not only interested in, but, to play a critical role in solving the challenges of the 21st century facing our children.  As Ms. Blair suggested, most of the women in the room are probably already attuned to the issues… However, it is only when men and women work together as equals that “we can make a difference.”

The Convention on the Rights of the Child, a universally agreed set of non-negotiable standards and obligations, is signed by all countries of the United Nations but two: Somalia and the United States.  Maybe President Obama will sign up the US?

There are 1 billion children in the world lacking proper sanitation.

All the research and studies show that an investment in educating a girl [in third world countries] is a better investment than investing in a boy.  Educated women have healthier, fewer and more educated children.  And, educated women are likely to have a stronger voice in their family and their economy….

“Educate a man, you educate an individual.
Educate a woman and you educate a family and a nation.”

Tony Blair was told by a patriarch of the backbench, back when he was serving as an opposition MP, that if he kept leaving the House of Commons promptly after the 7pm o’clock session (to take care of his children) without spending some time fraternising with “the boys” that he would never get anywhere in politics….

Ms. Blair described being a working mother as being an experiment in organized chaos… There is so much to do in managing and finding work-life balance.  In order for the concept of “flexible work” to get to the next level it will take concrete actions — not words — led by the top [and visible] executives.  On this point, I fully subscribe to the need to have role models, role models who can succeed to find that equilibrium all the while replying adequately to the pressures and needs of the company’s stakeholders.

France has a system that suits a society where fewer women work… i.e. Ms. Blair suggested that serious change needs to come to France.  She did not elaborate on this point, but one must assume she is referring, among other things, to the midweek break at schools in particular.  On the other side, France has an amazing crèche system that starts at the age of 3 years old…

As opposed to believing that the youth of today are aimless, shallow and uncultivated, Ms Blair insisted that today’s young people have incredible compassion, energy and depth.  Plus, they have a connectivity across the world…  It would seem that we, the parents, should be learning from our kids.

To a question from the floor about a good model to follow (outside of France) in terms of treating women and children, per Cherie Blair, there is no one best solution, but there is a range of models.  If she did not specify which countries were in that range, Ms Blair referred to the World Economic Forum which scales the countries of the world in terms of the gender gap across a number of criteria.  It’s true that the Nordic countries dominate the top 5, she said and that Europe has the best record among the regions.   However, “the Scandinavian model is too prescriptive in terms of childcare,” meaning that women may not even have the choice to stay at home with their children.  [I have written about the WEF Study previously on my blog .]

A woman who has taken a gap out of her career to have a child and take care of that child should be able to return to work under truly normal conditions.  Ms Blair said, “[T]here is too much subtle culture in business that says ‘we know we have to [give a woman maternity leave, etc]‘… but, if you are going to do that, we know you are not really serious about your career…”  This is a problem for women, and an even bigger problem for men who are interested in parental leave and a share on the home front because of the persistent prejudice on the career.

Overall, a well presented case… Hopefully, it did not fall on deaf — largely male — ears.