Archive pour December 2011

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Why am I writing this blog?

Friday 23 December 2011

I was in a meeting with a client a few weeks ago and one of his employees asked me where I was getting my inspiration from to write 3 posts per week. Well, it has certainly to do with curiosity but not only. The underlying purpose of this blog is to diffuse knowledge. This blog as no other purpose than to share my thoughts and help others with my ideas. I firmly believe that I can make this world better by bringing in new perspectives, analyzing thing under a different angle, challenging the current state-of-the-art and combining innovations from different areas.

Many people think that knowledge is power and that knowledge deserves to be protected. I can’t agree less with such a statement.

I do believe that knowledge does not exist if it is not shared. The purpose of knowledge is to enrich people’s lives and when I think about it, my take is that companies’ primary goal should also be to enrich people’s lives. This goal seems to be forgotten by many and I’m modestly trying to reverse the trend.

I’ve been posting on this blog for more than 3 years and have succeeded in keeping the posting frequency of 3 posts a week (on Monday, Wednesday and Friday). This is actually the hardest part. Bloggers are usually very productive in the first weeks and slowly the posting frequency decreases. Thanks God I never lost the faith and sometimes blogging is even a therapy when it comes to pointing out firms’ failures and their resulting frustrations.

In terms of figures, although the audience went up 50% in the last 6 months I believe I can reach more people; at the same time however I realize that the topics I deal with are highly specialized and can’t interest as many people as, say, news on cars or smartphone.

Currently 50% of the readers are located in France and 70% of the readers read the French version of the blog. There is still potential with the English version.

I’ve set up for myself a few goals for 2012 :

Keep publishing 3 posts a week

Reach the parity in terms of audience for the French and English versions of the blog

Increase the total audience by 50%

Invite guest writers once a month

I’m still hesitating about the very content of the posts. In the last weeks I’ve tried to alternate highly focused and “technical” posts with more easy-to-read articles. In terms of visits I don’t see much difference. I guess the easiest way to get an answer to that question is to ask you: what do you want? What did you like to read in 2011 and what didn’t you like? This blog is yours and can only be fully successful if I manage to make you move, think different, and exchange ideas. This is actually the biggest challenge of all.

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Sabine Laruelle, Belgian ministry of SMEs, on the importance of entrepreneurship

Wednesday 21 December 2011

I was listening on Dec. 13th to an interview of Sabine Laruelle, the Belgian Ministry in charge of SMEs, on a local Belgian radio (Twizz).

In a crisis context like the one we are currently going through, it is perfectly understandable that the attention of the States focuses on entrepreneurs. For instance Bruno Wattenbergh, the Managing Director of the Brussels Enterprise Agency, was dealing the other day on RTL with the powerty problems 15% of the entrepreneurs are faced with.

Going back to Sabine Laruelle, the journalist asked her how much was needed in terms of capital to start a company. Of course it depends on many factors, and it was also the answer of the Ministry. Mrs. Laruelle stressed in first instance the need to be accompanied to increase a venture’s chances of success and then went on to talk about the funding possibilities. And this is the part where I can’t agree with Mrs. Laruelle. She mentionned that funding institutions (like the Fonds de Participation Bruxellois which lends money to entrepreneurs) could also help in starting a venture if banks failed to.

Let’s be very clear. I don’t think it’s the State’s role to lend money to entrepreneurs. It’s the banks’ role. Now, don’t get me wrong. It’s definitely great that such institutions exist but their existence is only the mirror of deep malfunctions of our system. If banks don’t lend money to existing companies and start-ups there is something wrong happening. And this is unfortunately the case. Although the acceptance rate is relatively high in Belgium (80%), the years to come will be increasingly difficult for companies needing money to fund their growth.

Under this perspeective I found interesting to look back at banks’ past advertisements.

BNP Paribas tried to differentiate itself by communicating on its lending money to the agriculture sector (think a second about why it should actually be a differentiation point) probably at the worst possible moment, and the Societe Generale reminds you its aim is to help entrepreneurs by lending them money …

… well actually not to all of them as you can barely read at the bottom of the ad (the agriculture sector as well as start-ups are excluded of the offer).

My take:

The agriculture sector as well as start-ups are the two categories most in search of funding … isn’t there something paradoxal here?

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Pierre & Vacances makes the buzz

Monday 19 December 2011

Pierre & Vacances (in association with other partners like Red Bull) recently created the buzz in Brussels when they built a ski piste in the heart of the city.

The whole installation cost a mere €600,000 and 1/4 hour skiing was 13€ worth. As you can see the costs will most probably never be covered. But it doesn’t matter since this pop-up piste attracted the attention of the media and gave also the opportunity the many other sponsors to be visible.

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Pop-ups ads can weaken your message

Friday 16 December 2011

I was reading the Harvard Business Review online when an ad popped-up at the botton of the screen, trying to catch my attention for yet another article to read online. No big deal. Unless this ad contradicts the article you are just reading.

I was reading a pamphlet about “meaningless expressions”, the first one being “thinking outside the box”. And suddenly an ad appears to promote an article containing this very expression. Funny, isn’t it ?

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A few key points from RENT conference (#rentconference) introductory speech

Wednesday 14 December 2011

The RENT conference started in Bodo (Norway) with a panelist discussion on entrepreneurship and more precisely on the role of entrepreneurship in the current crisis situation that the world is going through.

I don’t want to sum up the whole discussion. Rather I’d like to stress a few striking facts or figures mentioned by the speakers.

  • Professor Sarah Carter mentioned that 6 sectors were identified in Scotland as promising for the future of the economy. Those 6 sectors are however under-represented and contribute only a tiny fraction (<1%) of GDP. Why is it that  so-called low-growth low-tech companies get so little attention?
  • Out of 100 start-ups created, 4 of them contribute more than 50% of the jobs created
  • Paul Westhead stressed the need to promote enterprise sustainability and survival, especially in low-tech sector. He suggested that policy makers offer customized support to the different types of entrepreneurs rather than providing one-size-fits-all support
  • Paul Westhead (again) rightfully said that it’s easier to avoid a looser than pick up a winner.

My take:

I came back fully energized from this discussion. It’s great to finally listen to people who go against the general practices and suggest new ways of doing things. One aspect seems very important to me. So-called “Gazelles” (high-growth companies) do exist but the world is still mainly made of “normal” low-tech companies which also require a dedicated approach and support. My impression is that governments should recognize the need to help those companies and offer them a new kind of support.  What I’ve believed for years, and as suggested by Paul Westhead, is that entrepreneurs should be challenged by external advisors. I’m maybe preaching for my own but I do think that the major part of failures could be avoided if entrepreneurs had their business idea challenged and removed from the main pitfalls. All too often I see entrepreneurs of those low-tech sectors required to prepare business plans and the like before even thinking about whether their venture has a tiny chance for success. I see entrepreneurs unprepared and yet ready to register their company, unable to explain me why I should be buying from them, without real differentiation and sometimes with no idea of what the business looks like.

Unfortunately, as a reaction of a candidate entrepreneur revealed a few weeks go, not all entrepreneurs are willing to have their business idea challenged. It’s much more comfortable to live with dreams until those very dreams are challenged by the market itself.

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A nice advertisement campaign by Makro

Friday 9 December 2011

I just found this stunning example of advertisement campaign in Brussels. It promotes bicycles sold in the Makro stores (sorry for the poor quality of the pics; I was not equipped to take any better pics on that day)

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A PESTLE analysis may have helped the eco-construction sector

Wednesday 7 December 2011

One of the decisions the Belgian government took to reduce the debt was to cancel the 40% tax deduction on works carried out to reduce energy consumption (isolation, double-glass windows, …).

The consequence of this decision will be to change dramatically the competition landscape for firms specialized in energy-reduction construction works. We can with certainty expect that the least robust of those firms (which have popped up in the last years) will die.

I discussed my prognosis with an expert in the field of eco construction and he expected less impact since energy costs will undoubtedly sharply increase. I doubt that his optimism will be confirmed. Consumers are not long-term oriented and I expect that their decision to invest or not will be short-term based, resulting in a sharp decrease of investments.

Opportunistic firms which have invested in this market segment may have wanted to perform a PESTLE analysis before. They would have realized, by analyzing the Legal (“L”) aspects that tax reductions had considerably reshaped the landscape. I expect that rivalry will profit consumers due to several factors :

-          Consumers will become more price-sensitive

-          Cancellation of tax deductions will put extra pressure on prices and remove above-average earnings

-          On the one hand small firms with a light cost structure will try to compete on prices and accept to reduce their margins to survive

-          On the other hand, larger firms which have operated on the market for longer time will face exit barriers and will likely be willing to reduce their cost structure to remain competitive and avoid facing exit costs

My take:

Tax deductions had artificially boosted the market and let small less efficient firms pop up. Those firms will eventually die but will in first instance try to survive by reducing their margins. Larger firms will have to be reshaped and will have to optimize their cost structure. In any case earnings will decrease and consumers will profit from pressure on prices and rivalry.

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How to announce a bad news: the example of ING

Monday 5 December 2011

Today’s post is far away from marketing but was triggered by a communication issue, which remains a central topic is modern marketing.

ING announced within 30 days that it would reduce interest rates on both its current account and its savings account. Interest rates for current accounts will be 0,05% (let’s say nothing) and on savings accounts it will be decreased from 1% basis rate + 0,5% loyalty bonus to 1%+0,25%. In today’s context those two decisions deserve to be analyzed more deeply and interpreted.

What did banks do in the past to reduce their costs? Well, usually they tried to become more efficient by reducing their payroll or decreasing their infrastructure costs. This however isn’t enough any longer to reach European targets as far as a bank’s own funds are concerned. ING discovered that it was much easier to reduce costs by paying its customers less for their money. However something like this is politically incorrect and it’s much easier to say it’s someone else’s fault. That’s what ING did actually. They sent the following message to their customers through their Home-Banking software :

The Short-term (European Central Bank) and long-term  interest rates (Interst Rate Swap) are decreasing. This situation leads us to modify the loyalty bonus applied to our green savings account.

From Dec. 9th 2011 following interest rates will be applied on the ING Green savings account: basis interest rate of 1% (unchanged) + loyalty bonus of 0,25% (instead of 0,50% previously).

I was wondering whether claiming that it was the ECB’s fault was totally justified. A lot of energy an time was required to find historical data on ING Green savings account’s interest rates, but I finally found them. When one compares them to the ECB’s rates you can come pretty quickly to a few conclusions:

  • The basis interest rate (1%) has been almost constant for years and changes in the ECB’s rates are reflected in the loyalty bonus
  • The ECB increased its rate in April 2011 and July 2011. However those two increases led to no effect in the ING savings accounts rates.
  • The ECB rate is the same as in April 2011 and nonetheless ING decreases its interest rates. There’s something wrong going on here, doesn’t it?

 

I also calculated the difference between the ECB rate and the ING interest rates (basis rate + loyalty bonus). What you can see on the graph below is that ING started in March 2011 narrowing down the difference between its rates and that of the ECB. As of today there is no difference and the price ING pays you for your money is the same it pays to the ECB.

Last but not least (and it’s no good news for consumers), I compared the ING interest rates to the belgian consumption index. The rates stay flat (and will even decrease as of Dec. 9th). Yet the consumption index keeps increasing (and the inflation too), meaning that you lose even more money than before by letting your money on a ING savings account.

My take :

The European Central Bank was the perfect scapegoat. A quick analysis reveals that ING’s explanation is far from reflecting all the truth. Yet the majority of ING clients will not even notice the change. Even worse, I think that ING’s move will be seen by its competitors as a permission to do the same and that we’ll have to cope with decreasing rates in the coming months, which in combination with increasing inflation, will expose us to become worse off.

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