Businesses, customers and small fry

IE Focus | By Enrique Dans, Professor at IE Business School

It’s time to put an end to deliberations. If there is anything that really is changing as a direct result of the popularisation of the net and the so-called social web, it is undoubtedly relations between businesses and their customers.

Open your account on Twitter (Sorry? You’re an executive and you still don´t have Twitter or you don´t know what it is?) And write something about well-known large business organizations with millions of customers, such as Telefonica or Iberia, often criticised for their customer service. In a matter of minutes, if what you have said about the company merits a reply, you will quite possibly find it on Twitter. Have a look at the Twitter accounts of Movistar or Iberia… What can you see? Businesses talking directly with their customers and offering to solve their problems. Businesses that listen to the small fry.

It might be a question about items on a bill, explanations about an incident or about an offer: the question is that, after many years of inflexible single-direction trading and contacting customers only to harass them by throwing new products and services in their faces, many businesses are finally starting to use bidirectional communication channels to maintain real relations with their customers. Such relations are much more genuine and make it worthwhile to manage exceptions or speak with a human voice if a problem can be solved and a customer can be satisfied. Trivial? At the moment, more or less testimonial. But undoubtedly a sign of the times. Times in which technology, far from isolating individuals, makes it possible to humanize relations and bring together those who are on both sides of the screen. How can invest millions in expensive CRM systems if our customers then speak about us in public and we pay them no attention?

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Change of Screen

IE Focus | By Enrique Dans, Professor at IE Business School

Television is dead. And not only television, but all the other classic media based on unidirectional communication, because the young are changing the rules. A recent study on teenagers´ habits carried out in the United States reveals of how the way information is consumed in our society has changed over the years: the classic one-way media, such as television, have died a death. The medium that was considered for many years as a bastion of North American culture and which still brings together multimillion audiences for events such as the Super Bowl final is being abandoned by young people in their droves. Time spent in front of the TV has fallen drastically and those who still watch it do so on a different screen: their computer.

The final nail in TV’s coffin has been hammered home, as expected, by the social network. The use of the social network confirms that the absurd fears of some adults for the alleged “isolation” of young people in front of the screen (“they don´t go out any more”, “I prefer my computer to seeing my friends”, “they are so pale because they get no sunshine and only get radiation from the screen”) were unfounded fears: the young people who are the most active on the net are also the most active off the net… they have more friends, go out more and go to more parties.

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Welcome, Spain, to the Euro

IE Focus | By Gayle Allard, Professor at IE Business School

After just 8 years of circulation the Euro has the dark side that Spain didn’t want to see when it took over from the weakened peseta. What we need now is real improvement in levels of competitiveness.We thought we knew what the Euro was about when we launched it in 2002. We started to spend those new coins and notes with an almost patriotic meaning for pro-Europeans. We went through the “rounding-up” stage, but anyway we were enthusiastic about the new currency and what it meant for Spain and Europe.

And the initial years of the euro brought the benefits we anticipated. Interest rates fell to the lowest ever levels. Trade increased, foreign investment reached new highs and Spain went through a golden era of growth and rapid increases in income. We should almost be forgiven for thinking that belonging to the Euro held only advantages. But we were wrong.

From the beginning, the euro was not ´pretty´ notes, but rather the final abandonment of two fundamental tools that had helped the member states balance out their economies: interest rates and exchange rates.

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IE Brown Executive MBA – getting into details!

The IE Brown Executive MBA breakes with the traditional Executive MBA model purely focussed on management. Starting in March 2011, this program integrates leading management thinking with wider perspectives from the humanities, social sciences, engineering, and life sciences. Follow this video in which Angus Kingon from Brown and David Bach from IE provide insights into the…

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Can Nokia compete with the iPad?

IE Focus | By Ricardo Perez, Professor at IE Business School

Nokia is still a leader in terms of sales, but the crown of innovation has now passed to Apple. In order to get it back, Nokia needs to reinvent itself as a mobile services company that offers multiple benefits to its partners. At the last world mobiles congress in Barcelona, Nokia and Intel revealed their plans for the joint development of software for all kinds of devices to compete with Apple and Google. Nokia takes another step forward in its strategy of creating a technological platform that returns it to a position that will enable it to take the initiative in the most interesting market at the present time, i.e. smart phones like the iPhone, and in new markets, such as the one created recently by the iPad. Don´t worry, I won’t go on about the iPad; what I want to speak about is Nokia and its position in today´s market. It is a story of what can happen to a leading company if it comes up with the wrong definition of the business game it is playing. The loss of leadership this causes has happened to others: it has happened to Sony with its music players and its video consoles over the last two years. Nokia had worked hard to create the different technological platforms it believed would enable it to win in the mobile market. Symbian, its key product, has also seen defeat. Allow me to explain.

Nokia established the rules for the top-of-the-range telephone market before iPhone. It created an alliance to produce the base software (operating system) with which telephones worked (Symbian, theoretically neutral and owned by many companies on the market). It also made sure that what users saw on the telephone when they used the menus (user interface) was the development and property of each of Symbian´s partners, which meant it could not enter the market as a competitor. The rules were clear and benefited Nokia in a market that competed in terms of the electronics and “additional utilities” of the telephone (best camera, GPS, etc.).

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Marketing and social networks

IE Focus | By David Gracia, Professor at IE Business School

The social networking phenomenon is unstoppable, but there is still no business model capable of successfully exploiting the services these companies provide.Social networks are attracting more and more consumers´ attention. As a result, they are becoming an unbeatable opportunity for advertisers to showcase their products and services to potential consumers. However, advertisers´ and users´ interests are not always the same and social networks need to find a balance so that they can attract new users and, at the same time, capitalize on their services in an Internet culture ruled by freebies. It is a three-edged challenge: advertisers, users and the social networks themselves.

Social networks are a particularly attractive platform for advertisers. Facebook, which has just completed its sixth year, was visited by 460 million people in February, 13.3 million of them from Spain (according to figures released by Nielsen). If Facebook were a country, it would have the third-highest national population on the planet, with more than 400 million inhabitants.

The comparison between Google and Facebook is particularly interesting. On the one hand, the percentage of Internet users that use the search engine in Spain is 91%, whereas only 53% use the social network. On the other, the key factor lies in the time spent by users on the site: whereas with Google people enter, search and leave, whereas Facebook users are getting more and more involved in a growing number of activities. On average, users spend 1.45 hours a month on Google, which is very little in comparison with the 6.5 hours they spend on Facebook.

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A … botnet?

IE Focus | By Enrique Dans, Professor at IE Business School 

You may not know this, but your computer could have a secret life of its own. It may form part of a network that takes advantage of chinks in your computer’s security system to commit fraud. Such a network is called a botnet.The news of the recent arrest of three Spanish citizens responsible for the “Butterfly Network”, described as one of the largest botnets in the world, was received with great interest by Spain’s technology sector. But exactly what is a botnet and what is it used for? What is a zombie computer? What are we talking about?

A botnet, or “robot network”, is a group of computers which, after being infected by a specific person or group, remain under his or its control and can be used for fraudulent purposes. The owners of the computers are usually unaware of the infection and do not know that their machine is being used, together with many more, for some type of generally criminal purpose. The person who manages to control a botnet has many options on the table: collecting sensitive user data, launching distributed denial-of-service attacks and even ordering the computers to click on websites with advertising contracted by a third party. The possibilities are manifold: the botmaster has an army of computers ready to execute a certain command at his/her will, with the profit resulting from any fraudulent behaviour being very difficult to identify as a result of the distribution.

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Out of sync at 40

IE Focus | By Celia de Anca, Director Centre of Global Diversity Management at IE

The midlife crisis affects both men and women, but while men tend to seek an emotional answer, women often need a more rational approach. It would be to business corporations’ advantage to provide women with just that.According to Jewish mysticism, a man can only start his learning of the cabbala after his 40th birthday, when life starts to fall apart and needs to be rebuilt, not so much from the outside, but rather from within, from a connection with his true nature. In our more prosaic civilisation, we speak of the midlife crisis, which, as Tony Judt pointed out not long ago, is that crucial moment when many men either get a new wife or buy a motorbike. 

A woman could not study the cabbala so there was apparently no reason for speaking about when her life starts to fall apart in mystic terms, and women have not traditionally changed their husband for one who was 20 years younger when reaching the age of 40. Her crisis, at least in our society, used to be the empty nest syndrome, which left a woman waiting to refill it with grandchildren.
Our society has changed, even if the midlife crisis is still with us. A woman no longer cries when her chicks fly the nest. Indeed, many of them are happy to see them go and become hungry for a professional career with some kind of meaning. A male friend once told me that after 20 years in the same profession, the time had come to change his life. At the same time, his wife, after 5 years at home looking after the children, had reached a point where she really needed to go back to work. Hence pure logic led them to change their roles, whereby he stayed at home for a few years enjoying his time with his children, who were still small, while she went back to work to enjoy the pleasures (yes, there are some) of a full professional life.

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Alternative Financing

IE Focus | By Ignacio de la Torre, Academic Director of Master in Finance, Master in Advanced Finance

The credit crunch could go on for years. That’s why alternative funding is on the rise, and it looks like it is here to stay.In 2009 more European companies financed their businesses using bonds rather than banks. This has never happened before, so what’s going on? The current situation means that banks are having to clean up their balance sheets, build up equity and write off toxic assets, which makes it difficult for them to offer companies competitive interest rates. Plus, Basel III will penalize bank loans to companies, which further exacerbates the current liquidity crunch. This scenario has forced companies to do their homework and to seek alternative sources of funding for expansion.

What is alternative financing? It’s the kind that does not depend on the banks. Traditionally, risk capital has played a major role in financing companies undergoing growth. It is normally broken down into two types: venture capital, which finances startups (often technology-related businesses) and private equity, which is generally used by more mature companies with a lower growth rate and a higher debt volume.

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The World Cup in South Africa: Dream or Nightmare?

IE Focus | By Gildo Seisdedos, Professor at IE Business School

South Africa’s much-desired World Cup could turn into a nightmare if global coverage exposes the country’s weakest points.This year the World Cup will be held in Africa. For the first time in history, the world’s most coveted sporting event after the Olympics has gone to the African continent. Beyond the strong symbolism of the pictures of Nelson Mandela holding the trophy and the impressive athletic progress made by African soccer, an unanswered question remains: was it a good idea to take soccer so far away from its origins?

Events as drivers for territorial transformation
We live in times when everyone wants a piece of the action where sporting events are concerned. Why? We might have to look for the root of this growing demand in what some have called the “Barcelona effect”. An industrial city in decline, positioned rather poorly within the regional hierarchy, manages to turn itself into a world-class city for tourism and services thanks to the impact on its brand made by an ambitious urban redevelopment project that used the Olympics as a driver and a global showcase. What mechanisms lay behind this magic transformation? Big events are without a doubt an excellent opportunity to tackle a region’s lack of certain facilities or infrastructure, both of which can benefit from the impact of the magic and far-reaching legacy of a major sporting event.

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Are we really so ignorant?

IE Focus | By Jose Mari O’Kean, Professor at IE Business School

The economic crisis has taught us an important lesson, namely that increases in wealth have to be based on real business, not on rises in the price of financial assets.We now have different books and reports on the financial crisis and they all have one common denominator: our ignorance of what happened and the difficulty involved in predicting it.

But if we stop and think for a minute, we can perhaps see that we aren’t really so ignorant:

a)We know that the market is what works best, but it has its faults. Several of them led to this crisis, namely the lack of information and the low-level transparency of financial markets, the principal-agent problem in bank management, behaviour among brokers that gave rise to moral risk, and inappropriate choices made by savers regarding financial assets and by banks regarding mortgage borrowers.

b)For better or for worse, states have intervened to correct these faults in economies, but we have no regulators to correct the faults of the global economy.

c)We operate in a global environment and this has made it possible to channel savings from where they were made to where they were needed with relative ease. The appearance of an emerging country such as China, with a savings rate of more than 40% of its revenue and a current-account surplus of 6% of its GDP, has brought an influx of funds available for loans on global financial markets.

d)And the newest facet of this crisis is perhaps that a generalized mega-expansionary monetary policy has been put in place coupled with the controlled inflation of the prices of goods and services, but nobody thought to control the significant increases in price it brought to financial and real assets.

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The iPad or cult of the apple

IE Focus | By Enrique Dans, Professor at IE Business School

Apple did it again. It focused everyone’s attention on the iPad launch, and it will be a success because it takes the best that tablets had to offer and adds the Apple touch.The world of technology has experienced another of those characteristic “cult of the apple” events, also known as the “field of distortion of reality”. Once again we saw how that high priest called Steve Jobs, thin and fragile after his liver transplant, hypnotised the world of technology from a stage, completely redefining, almost reinventing, an entire market segment. For several hours, searches on Twitter for the word “iPad” returned more than five thousand new results per minute, while devotees and critics eagerly followed the news via the several thousands of bloggers and journalists who were at the Yerba Buena Centre of San Francisco. Once again the mystical information system designed by the company worked its magic: a combination of obsessive secrecy seasoned with a few information leaks that were not confirmed until the moment of truth and a staging capable of creating a truly surprising level of expectation. 

Before the iPad, the world of mobile devices began with mobile telephones, continued with the so-called netbooks and ended with laptops, the category in which Apple´s sales reached their high. However, Apple had often snubbed the intermediate category of netbooks, which it referred to as small, limited computers that led to poor user experiences. As a result, Apple had a clear gap in its product range, a gap it has filled with a move that is strategically perfect. It offers a product that is familiar: after redefining mobile telephones with the iPhone and becoming the reference design, it has designed something that is simply a very big iPhone, something everyone who has ever had an iPhone in their hands knows how to use or, in the light of the company´s concept of usability, even if they have never held one. It is everything from a book or a magazine to a simple computer when used with a keyboard base. 

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