tbf 2011 kalyan - "caring: a new business paradigm to connect with the 21st century...

Copyright © 2011 Kalyan Raman, Raman Associates, Inc.www.ramanassoc.com

Caring: A New Business Caring: A New Business Paradigm to Connect with Paradigm to Connect with the 21the 21stst Century Customer Century Customer

Kalyan Raman, Northwestern Kalyan Raman, Northwestern UniversityUniversity

TOURISM BRANDING FORUM , MAY 4-6, 2011Innovation, Branding & Technology for Tourism Brands


Caring Ties Innovation, Branding & Caring Ties Innovation, Branding & Technology TogetherTechnology Together

Innovation—Look at the World DifferentlyInnovation—Look at the World Differently Branding—Relationship BuildingBranding—Relationship Building Technology—Applying Science to Solve Technology—Applying Science to Solve

ProblemsProblems

Why Caring is Relevant to Tourism…


U.S. Tourism IndustryU.S. Tourism Industry In the U.S. alone, Travel and Tourism is a $1.3 trillion In the U.S. alone, Travel and Tourism is a $1.3 trillion

industry. If $1 were equated to a second of time, industry. If $1 were equated to a second of time, then $1.3 trillion would equal over 41,000 years! then $1.3 trillion would equal over 41,000 years!

The Travel and Tourism industry is one of the The Travel and Tourism industry is one of the country's largest employers with 7.3 million direct country's largest employers with 7.3 million direct travel-generated jobs. You could fill the Orange Bowl travel-generated jobs. You could fill the Orange Bowl stadium a hundred times over with people directly stadium a hundred times over with people directly employed in the industry. employed in the industry.


U.S. Tourism Industry cont.U.S. Tourism Industry cont.

There is $163 billion direct travel-generated payroll There is $163 billion direct travel-generated payroll and one out of every eight U.S. non-farm jobs is and one out of every eight U.S. non-farm jobs is directly and indirectly created by travel and directly and indirectly created by travel and tourism. tourism.

Approximately 2.6 million hotels rooms are sold Approximately 2.6 million hotels rooms are sold everyday in the U.S. That is enough rooms to lodge everyday in the U.S. That is enough rooms to lodge every person living in San Francisco, Atlanta, every person living in San Francisco, Atlanta, Washington, D.C., Miami, and Denver combined! Washington, D.C., Miami, and Denver combined!


Tourism & Global InfluenceTourism & Global Influence

There is a strong correlation There is a strong correlation between Tourism expenditure per between Tourism expenditure per capita and the degree to which a capita and the degree to which a country is a global player. country is a global player.

Projections of growth in tourism Projections of growth in tourism indicate the relative influence indicate the relative influence that a country will exercise in the that a country will exercise in the future. future.


Tourism & ShoppingTourism & Shopping

• Spending by resident and international travelers in the U.S. averaged $1.6 billion a day, $68 million an hour, $1.1 million a minute, and $19,000 a second!

• Shopping is the most popular domestic trip activity—30% of all domestic trips. That's 342 million trips with shopping sprees!


Big Spenders & Hard-Core Big Spenders & Hard-Core Vacationers Vacationers

Most liberal money-spenders are tourists from Most liberal money-spenders are tourists from Germany ($72.7 billion), USA ($69.2 billion) & UK Germany ($72.7 billion), USA ($69.2 billion) & UK ($59.6 billion), ($59.6 billion),

Longest vacations—Italy (42 days on the average), Longest vacations—Italy (42 days on the average), France (37), Germany (35), Brazil (34), UK (28), France (37), Germany (35), Brazil (34), UK (28), and Canada (26). and Canada (26).

Shortest Vacations—USA (13 days). Shortest Vacations—USA (13 days).


THE MESSAGETHE MESSAGE

There was never a better time for There was never a better time for tourismtourism

But….But….High Growth Industries Attract Fierce Competition.

How will you differentiate yourself?

•Economists talk about Markets•We talk about People

Because

Markets are made up of PeopleOur customers are peopleAnd people respond to Caring

Innovation + Branding + Technology=

Caring

Innovation + Branding + Technology=

Caring

MEMORIZE THIS EQUATION!MEMORIZE THIS EQUATION!

Three Narratives about Caring

•Prefer human or robot as your care giver?•Caring in England—British perception of American friendliness•Person in wheelchair—Ignore or Inquire?

Companies say stuff like this…

But customers see…

And customers hear…

Customers are not commodities to beacquired and fired on whim…

Academics write papers like these…

And papers on how best to fire customers…

Once upon a time in Michigan…

The court exchange in the Dodges’ lawsuit against Henry Ford

“ What is the Ford Motor Company organized for except profits, will you tell me, Mr. Ford?”

“Organized to do as much good as we can, everywhere, for everybody concerned.”

“What is the purpose of the Ford company?”

“To do as much as possible for everybody concerned,” responded Ford, “give employment,…, and incidentally to make money,...., Business is a service not a bonanza.”

Ford was derided by the stockholders and the court—but that was back in 1917

The court exchange in Michigan

82 Years Later in 1999…

William Clay Ford, great-grandson,promoting the idea that business is a service

“We want to find ingenious new ways to delightconsumers,…, and make the world a better place for us all.”

Ford was enthusiastically supported by the shareholders and other stakeholders

How times have changed!

Times have changed.How do the world’s leading

Marketing thinkers view these Changes?

From “A Career in Marketing/Advertising,”Gregory Beyer, [email protected]

The New Business Climate

Two of the Four Key Elements of All Professions

• A Commitment to the Public Good•An Enforceable Code of Ethics

Harvard Business School Professor Rakesh Khurana (2005)

Critical Challenge FacingBusiness Today

Restore the image of business as a force for good rather than evil in the world

Wharton Business School Professor Paul Schoemaker (2008)

Fundamental Problem

Roughly 80% of our operating business models arebased on industrial-era logic

Don Schultz (2010), Northwestern UniversityPioneer of Integrated Marketing Communications

And this is a problem because…

Industrial Revolution Logic

MechanicalManufacturing OrientedSales OrientedAdam Smith’s Economics (1776)

The Spinning Mule, 1769

A Logic Ill-Suited to our Times…

GPS is enabled by Einstein’s Time-Dilation formula

Our TimesDictateA NewLogic

A New Logic

CustomizedCustomer OrientedCommunitiesA New Economics

A Qubit—0 or 1? Its Potentially Both!

How will yourespond to these

complex developmentsin business and society?

Caring

Caring provides a powerful unifying framework to integrate the interests of employees, customers, shareholders, suppliers and all the stakeholdersthat affect the company in an environmentwhere customers are increasingly suspicious of and resistant to marketing practices developed in times gone by


The Best and Worst of The Best and Worst of Customer ServiceCustomer Service


Poor ratings in recent Consumer Reports Poor ratings in recent Consumer Reports researchresearch

The New York Times reported that in The New York Times reported that in June 2010, Dell sold millions of defective June 2010, Dell sold millions of defective PCs even though employees were aware PCs even though employees were aware of their problemsof their problems


CitigroupCitigroup

Fell on the low end of a number of Fell on the low end of a number of customer satisfaction surveyscustomer satisfaction surveys

Employee discrimination suits, Employee discrimination suits, especially one which contends that especially one which contends that the bank used the recession as an the bank used the recession as an excuse to fire women. excuse to fire women.


AppleApple

Apple has been # 1 in the University of Apple has been # 1 in the University of Michigan's American Customer Satisfaction Index Michigan's American Customer Satisfaction Index for the seventh straight yearfor the seventh straight year

Offer free tech support for 90 days and free Offer free tech support for 90 days and free computer software courses for buyerscomputer software courses for buyers


Rated number one in the The 2011 Temkin Rated number one in the The 2011 Temkin Experience Ratings.Experience Ratings.

Based partially on high customer interaction Based partially on high customer interaction through Twitter, Facebook, phone support, and through Twitter, Facebook, phone support, and website.website.

Offers perks like free shipping on orders over $25Offers perks like free shipping on orders over $25

http://www.fastcompany.com/articles/2007/03/companies-that-care.html

Some Characteristics of a Caring Company

But can a caring company make money?

Success Stories about Caring Corporations

The SAS Institute in Carey, NC

Rigorous studies of the impact of caring on performance now exist…

Caring & Job Security

ROI and Other Measures of the Impact of Caring on Performance

•Chase Manhattan—115% ROI •Pepsi—300% ROI•KPMG—125% ROI within 6 months, 521% ROI by year 4•Aetna—30% increase in claims processed•American Express—$40 million increase in sales•UPS—reduced turnover from 50% to 6%

As a result of implementing caring practices

How does Caring achieve its magic?

Caring—A Chain of Beneficial Effects

Lower Employee Turnover

Lower Hiring Costs

Higher Morale

Higher ServiceQuality

Higher CustomerSatisfaction

Higher Loyalty

Lower Training Costs

Higher Profitability

New Opportunities in TourismRelating to Caring

New Opportunities in TourismRelating to Caring

• Smartphone—Technological Opportunity

• Disaster Tourism—Humanitarian Opportunity & Ethical Issues

• Medical Tourism—Humanitarian Opportunity & Potentially Society-Changing Opportunity


The Role of the SmartphoneThe Role of the Smartphone

If 2010 was the year of the Smartphone, 2011 will be the year of travel through that Smartphone.

• For comparing fares, predicting price drops, getting pinged for one-day (or even one-hour) specials, finding hotels, gas, bathrooms, Starbucks, and attractions.

TsunamiTsunami Hurricane Hurricane

KatrinaKatrina Holocaust Holocaust

Concentration Concentration CampsCamps

West Bank & West Bank & Gaza StripGaza Strip

Ethical Issues


Medical TourismMedical TourismMedical TourismMedical Tourism

American patients seeking healthcare American patients seeking healthcare abroad between 500,000 to 750,000 in 2007abroad between 500,000 to 750,000 in 2007

In 2008, 1.3 million Americans traveled In 2008, 1.3 million Americans traveled abroad to seek healthcare — expected to abroad to seek healthcare — expected to double by 2010.double by 2010.

Medical Tourism industry, currently a $20 billion market, could reach $100 billion by 2012.


Off Shore Medical CareOff Shore Medical Care

Deloitte and Touche predicts that medical Deloitte and Touche predicts that medical tourists from the U.S. will grow to nearly 1.3 tourists from the U.S. will grow to nearly 1.3 million in 2011, and more than 1.6 million in million in 2011, and more than 1.6 million in 2012. 2012.

Among the top ten medi-vacation Among the top ten medi-vacation destinations are Mexico, and Latin America destinations are Mexico, and Latin America — Costa Rica, El Salvador— Costa Rica, El Salvador


Latin America and MexicoLatin America and MexicoLatin America and MexicoLatin America and Mexico

Latin America, particularly Costa Rica and Panama, Latin America, particularly Costa Rica and Panama, are fast becoming tourist spots for medical are fast becoming tourist spots for medical travelers—150,000 foreign patients in Costa Rica in travelers—150,000 foreign patients in Costa Rica in 20062006

Mexico has become a Mexico has become a top medical tourism top medical tourism destination destination with 40,000 to 80,000 American seniors with 40,000 to 80,000 American seniors spending their retirement there, receiving nursing spending their retirement there, receiving nursing home and health care.home and health care.


Comparing the CostsComparing the CostsComparing the CostsComparing the Costs

Medical care in Panama would cost Medical care in Panama would cost 40% to 70% less in comparison to 40% to 70% less in comparison to the U.S.the U.S.

Mexico offers 25% to 35% savings Mexico offers 25% to 35% savings for dental and cosmetic surgeryfor dental and cosmetic surgery

Costa Rica offers 30% to 40% Costa Rica offers 30% to 40% savings for dental and cosmetic savings for dental and cosmetic surgerysurgery

Brazil offers cosmetic surgery for Brazil offers cosmetic surgery for 40% to 50% less40% to 50% less

Companies could save up to 70% on Companies could save up to 70% on medical costs for their employees. medical costs for their employees.


CARINGCARING Not just a feel-good conceptNot just a feel-good concept

To apply the principles of caring to businessTo apply the principles of caring to business—identify the key influencers of caring—identify the key influencers of caring

And this is tricky becausecaring is not what you might think…

Caring Transcends its Everyday Caring Transcends its Everyday MeaningMeaning

The basic element in my view of the goodsociety is the centrality of others

Statistics is the most important science inthe whole world

Kenneth Arrow, Nobel Laureate in Economics, Stanford UniversityKenneth Arrow, Nobel Laureate in Economics, Stanford UniversityFlorence Nightingale, Pioneer in Nursing—The Science of CaringFlorence Nightingale, Pioneer in Nursing—The Science of Caring

A famous scientist said,

Another famous scientist said,


Adam Smith—Father of Adam Smith—Father of Capitalism?Capitalism?

The Wealth of Nations—The Wealth of Nations—

well-known, highly citedwell-known, highly cited

Theory of Moral Sentiments—Theory of Moral Sentiments—

unknown, uncitedunknown, uncited


The Wealth of Nations—the “Invisible Hand” The Wealth of Nations—the “Invisible Hand” guiding the marketguiding the market

Theory of Moral Sentiments—the “Invisible Theory of Moral Sentiments—the “Invisible Hand” guiding the individual’s conscienceHand” guiding the individual’s conscience

Smith’s Smith’s sixthsixth revision of the revision of the Theory of Moral Theory of Moral SentimentsSentiments was on his deathbed (Heilbroner was on his deathbed (Heilbroner 1986)1986)

Adam Smith—Champion of Caring?Adam Smith—Champion of Caring?

MORAL: Caring is subtle and full of surprises—here are more…

The Misquote of the The Misquote of the Century!Century!

What is good for General Motors is What is good for General Motors is good for the United Statesgood for the United States

Charles E. Wilson, former CEO of GM,& Secretary of Defense in Eisenhower admin

What Wilson Actually SaidWhat is good for the United StatesWhat is good for the United States is goodfor General MotorsGeneral Motors Reported in Peter F. Drucker: Managing

In a Time of Great Change (1995)

Jeffrey Sachs, the“Shock Therapist” in

Jeffrey Sachs, Promoter of a“Caring” Approach

What do these Surprises Portend?

Peter F. Drucker: ManagingIn a Time of Great Change (1995)

Caring is the emerging logic of our new world

The Good News

Caring will improve the performance of your organization—successful implementation is achievable once you understand the principlesof caring

Caring is not just good—its good for the bottom-line

Caring is not a fad—it increases customer loyalty

tbf 2011 kalyan - "caring: a new business paradigm to connect with the 21st century...

Travel

tourism industry

caring caring

tourism expenditure

tourism brands

tourism shopping spending

tourism global influence

ford company

new business paradigm