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Archive for March, 2011

What a term: Evil, Sadistic Obstructionists.

Thanks you Dilbert, you have brightened my day, even if it is only in form of dark humor.

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Gluing myself to the TV news seems like all I’ve been doing in every waking moment at home this week.  The daily developments are painful to watch, and it just appears as if the worst is always yet to come.  At work, we all are beginning to reflect upon how this epic disaster will have its effect toward our companies and commodities.  Business continuity plans need to be in-effect.  What about our staff, suppliers, partners, stakeholders, and customers in the zone of terror?  How will the utility crisis brought by the Fukushima Daiichi nuclear power plant turn out for the rest of the world?  Regardless of which line of work you are in, believe me, you will be affected. 

Jason Busch from Spend Matters has the following to say in how procurement and supply chain practitioners should be prepared for in this latest crisis.

“Spend Matters suggests an earthquake/tsunami procurement, commodity management and supply chain action plan based on the following steps for companies anywhere in the world in the following industries: automotive, diversified manufacturing (including transportation equipment and electrical machinery), aerospace and defense, high technology, consumer products, chemical/process. A plan should include at least the following steps:

  • Fully understand your extended supply chain and supplier locations and facilities — two, three or even four levels down
  • Stay in constant communication with your suppliers and send resources, if possible, to monitor production ramp-up at key facilities. Lessons from supply chain history suggest that what suppliers might be telling you on the phone in situations like this might be very different from reality. Those buying organizations who are on-the-ground first working closely with their suppliers are likely to receive more favorable treatment in capacity-constrained situations
  • Understand the geographic concentration of suppliers in potential regions in the area (and potential geographic concentration from a port standpoint as well). Even in a multi-source arrangement, natural disasters can help cancel out most of the insurance a split-of-business sourcing strategy provides when geographic concentration exists
  • Offer to help purchase raw materials and lower tier parts/components if necessary on a demand aggregation basis (your purchasing power as a larger organization may help secure supply given the constraints created by the disaster); provide resources to support the sourcing of materials necessary to get supplier facilities back up to production levels and understand, on a bill of material level, the raw material specifications that comprise a finished part, component, SKU or product (i.e., what your suppliers must buy)
  • Monitor the situation (and your supply chains) in neighboring countries as well as those throughout the Pacific that may be impacted by the disaster
  • Prepare to rely heavily on airfreight in the coming weeks and offer to step in and help suppliers from a logistics standpoint — despite the high costs, those who can rapidly secure sufficient capacity and favorable terms with airfreight working closely with carriers directly or indirectly through their 3PL partners are likely to face less; move quickly in general and consider charter situations based on industry, volume and the degree of impact
  • Put friendships and relationships with supplier personnel first — factories can be rebuilt, facilities can be overhauled, ports can be brought back online. Human lives and the spirit of connection are temporal. We must all remember that relationships need to come first — not the bottom line.”

I cannot agree more to the last advice, ever. 

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Do I believe in bonuses for procurement professionals?  Why wouldn’t I?   And it’s not just because we don’t want to be singled out as the only profession not getting any, it’s more toward the pay-by-performance concept that I believe in.  Otherwise, it’s human nature to be complacent.

Yet there are still many opinions within my profession who opt against the idea because of integrity, measurement and benchmarking concerns.  I acknowledge those concerns, but I think they are addressable through rigorous control mechanisms rather than taking away the incentives for precision, innovation, effectiveness and efficiency.

The issue is well addressed in the following article by Rima Evans, projects editor for CPO Agenda.   The pros and cons of bonus schemes are covered, together with an implementation checklist.  For those organizations who are not convinced of rewarding their champions of change, I hereby recommend this article to them.

“Because You’re Worth It

By Rima Evans

Procurement has been widely credited for showing its mettle during the downturn and delivering value to businesses, but has this been supported by adequate financial reward?

Amid the current period of fragile and uncertain recovery, now is not a great moment for pay rises – in fact, the latest CPO Agenda economic survey showed a considerable drop in the number of companies approving pay increases (from 25 per cent in May 2010 to 9 per cent in November 2010.) But bonuses may be an option for CPOs currently wanting to redefine or improve the way their teams are rewarded while having to adhere to strict mandates to keep salary bills under control.

Although bonuses are not uncommon in procurement (sector and level of seniority are obviously big influencing factors), there is still some way to go in terms of catching up with other professions.

Andrew Coulcher, director of business solutions at CIPS, says its annual salary survey with Croner Reward in 2010 showed about a third of procurement and supply professionals received a bonus.

Most FTSE organisations offer bonuses ranging between 10 and 30 per cent as the average value, although these figures don’t just apply to procurement staff.

Mark Childs, director at Total Reward Group, points out that the higher the salary, the higher the bonus procurement can command. “If you are earning £60,000 you might expect a 15 per cent bonus, but on £100,000 you might be offered a 50 per cent bonus,” he says.

This type of financial incentive has its obvious advantages – it promotes improved performance and results by being tied to personal objectives.

Jonathan Bean, managing consultant at Purcon, an executive recruitment company specialising in procurement and supply chain management, says: “Do bonus schemes work? Ordinarily they do.

Procurement professionals are tasked with delivering results – not always savings, but often performance that is quantifiable – and a bonus is a great way to acknowledge performance.”

He adds: “The size of the achievement does not always correlate to the size of the bonus and as long as the mechanisms for bonus entitlement encourage sustainable solutions rather than short-term actions, there is no reason why bonuses should not motivate over-achievement.”
Childs agrees. “Bonuses work – partly because people believe they work. In procurement if the lifecycle of the thing or service that is being procured can be measured over time then bonuses are worth looking at.”

A recruitment tool

There are added benefits, Childs explains. Not only can they increase the retention value of reward packages – which is an advantage for CPOs trying to keep talent from walking out the door – they can also be used as a recruitment tool to differentiate your organisation from the competition. 

For employers, bonuses are an effective way of keeping a proportion of employment costs variable, which offers flexibility when employment costs need to be reduced quickly, for example, during a downturn.

At an individual level, “providing a line of sight between their activity and earnings promotes a healthy psychological contract”, Childs also explains. “Often the consequences of not providing a bonus are more detrimental than the positive effects.”

Not all procurement leaders, however, are convinced by their worth and they remain a contentious issue for some practitioners.

CIPS also warns that while bonuses do have their merits, it is a particularly sensitive issue given the austere economic cutbacks being implemented in many countries, and employers should tread carefully.

Performance incentives

Coulcher says: “In times of recession and economic turbulence, retaining good staff and keeping them motivated can sometimes be a challenge. Of course procurement and supply management professionals should be offered incentives in the way other professions are and it’s just one way of keeping the high performers. Yet, with all the controversy around bank bonuses, naturally there is a degree of uncertainty on how this should be approached, and with public sector cuts even more sensitivity is needed.”

Martin Blake, head of corporate procurement at London Probation Trust, a UK public sector organisation, admits to much deeper concerns about the principle of bonuses, describing them as incompatible with the aims, integrity and effectiveness of procurement.

“They can create a negative effect for an organisation, especially when buying services. Reducing cost and making savings is easy – but at what cost to quality? Procurement professionals must act with integrity and in the interests of the greater good of the organisation rather than merely looking after their own interests. A salary should be sufficient.”

However, Blake concedes that the effectiveness of a bonus depends on the nature of what is being purchased. “If you are buying commodities or products that are very discrete, bonuses may not be so detrimental. But in services it’s a different kettle of fish. How do you put a bonus on such intangible aspects as creating robust contract terms to protect the business, or important factors such as flexibility? Procurement adds a lot more value to the organisation, for example risk management, but how do you measure that for a bonus?”

Motive to influence

By contrast, Dirk Zemke, director of strategic procurement, ESAAP, at Sensus, thinks if other departments such as sales are offered bonuses, procurement should be included in the deal too. “Purchasing has to convince other departments to change so why not motivate them with a bonus to change the thinking of others? As service levels are defined and agreed with other departments I do not think a bonus creates negative effects for an organisation.”

Zemke says there is a bonus scheme in place at his company, offering 10 per cent. “It does work. It helps to define the priorities clearly and helps people focus on these priorities. I think it’s important with a scheme such as ours offering 10 per cent to keep people focused on two or three projects a year. With a team of five that is at least 10 major projects or activities you can achieve per year.”

So what elements make bonus schemes work, how can they be structured and what criteria should CPOs set down for the individuals’ and organisation’s benefit?

First of all arrangements will differ according to role and job. Childs explains there is a key distinction between a bonus, and commission or incentive plan. A procurement manager is likely be on a more general bonus plan, driven by the profitability and results of the company, as well as having to meet personal objectives. Whereas more junior staff carrying out transactional work might more commonly be on a commission-based arrangement, directly linked to individual results.
“For junior staff, where there is a more direct relationship between what they do and results achieved in the short term, they tend to want to see the reward more quickly. So they might earn £20,000 basic but be able to increase that to £500-£1,000 more per quarter in commission,” says Childs.

Broadly speaking, there are a number of criteria or KPIs that may be common to procurement bonus plans:

1. Savings
On the face of it, this is a logical way for procurement’s performance to be measured, but there are challenges. According to Bean: “As savings can be captured in a variety of ways, such as negotiations, cost avoidances or specification changes to reduce costs, it is not always a clear-cut issue. One problem often experienced within procurement is of course the validity of savings and how they are measured or recognised within the business. If you change the specification of a material used in production, is that a saving that can be banked against procurement for identifying an alternate grade, or against finance as the cost of manufacturing the product is reduced?”
Bean also warns that the contribution by procurement can also be muddied if savings are reinvested but overall budgets stay the same.

Childs says procurement enjoying a share of the savings they make is not as common as one might expect. “It’s more likely to happen among outsourcing procurement providers, where their revenue is tied in with savings achieved. Where procurement is not the core activity of the business they are more likely to be on a conventional management scheme.”

2. Contract compliance
Candidates are often measured on this, says Bean, as well as spend coverage managed or influenced by procurement. “It can be quantifiably measured while at the same time showing how much leakage there is in contracts set up with suppliers.” It’s not completely watertight however. Procurement can often bank a saving based on anticipated budget. But the savings might not be fully realised as compliance or buy-in to a deal is poor.

3. Customer or internal stakeholder feedback 
This can often be used to validate activities and satisfaction levels and can be used as a KPI, especially if the business is encouraging experts in their field and wanting customers to have full confidence in procurement, says Bean.

4. Compliance to follow the sourcing process
A measurement that can be adopted especially within organisations keen to make sure their interaction with suppliers is fair, auditable and transparent.

5. Quality and outcomes

Offering bonuses that hold individuals to account for outcomes is an area of opportunity for innovation, explains Childs, particularly in long-term, major contracts or purchases of large capital items.

“An element of the bonus could be deferred and remain at risk subject to long-term outcomes. So if a person cuts a deal and claims a certain amount of success, but 18 months later there were outcomes or quality issues that were not so great, that person can be held to account. So a person can’t just walk away after a deal has been cut.”

Childs adds: “This is much like what is going on in the financial services. I haven’t come across a scheme like this in procurement yet.”

The value of bonuses is hugely variable – some meritocratic organisations offer up to 98 per cent bonuses, according to Bean, but he adds that it is not usual for companies to directly relate the bonus value to value of savings delivered. “Ordinarily it is a combination of company, function and individual performance,” says Bean.

Coulcher thinks the split should be about 75 per cent/25 per cent with reward linked to overall company performance and supply chain performance.

However, Bean also advises: “A typical CPO will have a pot of money that will need to be sliced and diced for team members and the exact value an employee receives is affected by whether they have hit or exceeded expectations. There is no guarantee that a higher performer will always get a generous bonus, especially if peers are also performing well and the pots needs to be divided equally.”

Ensuring an effective bonus scheme requires there to be clarity about its purpose and reason. Being clear to staff on what the bonus represents – reward for contribution over and above a job or role and how it differs from salary, which is an employers’ contribution for doing a job, is paramount to avoid confusion. Its benefits should also be clearly spelled out.

They also have to be part of a long-term strategic approach rather than about encouraging short-term wins, says Coulcher. “Otherwise it may not encourage the right behaviour in staff. There may be consequences with supplier relationships if any incentives are based on cost savings.”
Childs warns that many managers place too much faith in bonus plans and are over-reliant on them as a tool for management control. “It’s the combination of the bonus plan and management support that makes a difference to performance. You can have the most generous bonus in the world but if you don’t enjoy working at an organisation it won’t make any difference,” he says.

He also advises that plans be designed so targets can be easily modified when necessary, which will also avoid allowing schemes to get stale.

Can bonuses be taken away? Usually they are discretionary, but not always. However employment contracts rarely refer to bonuses being guaranteed, says Bean.

They are usually cut when people are more concerned about job security than they are about earnings. “It’s very difficult to take bonuses away in boom times,” Childs warns. 

Checklist

Five tips for implementing a bonus scheme

Align performance measures to your procurement function needs for both now and the medium term.

Keep bonus schemes fresh. Periodically change performance measures and be prepared to revise targets to reflect changing circumstances.

Align payment frequency to the procurement cycle. If you are letting long-term contracts then consider deferring some element of the bonus to be able to measure on outcomes and quality.  If you are trying to incentivise short-term, tactical, small-scale results, consider monthly or quarterly payments.

Think about the total reward package on offer to staff. It’s not just about earnings from a bonus. Personal development is also important, so too are opportunities to climb the career ladder, and the culture of the business plays an important part in motivating teams.

Be situational. Don’t look for best practice or compare with another organisation’s bonus plan. Have the confidence to do what’s best for your own business.”

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Getting people to stop whining is one of my most favorite catch phrases.  You will often find my Facebook updates filled with reminders to look at how fortunate we all are despite our beliefs.  If none of that was convincing before, what happened in Japan last Friday sure brings us back to perspectives in the most unfortunate fashion.

Every disaster is a test of our faith and endurance, and I believe that even though I am an atheist.  When one of the world’s most prepared nations for earthquakes and tsunamis was hit, there is just no way of telling how we can make sense of all this.  In the middle of all those hard-to-watch videos and news clips of the disaster, I have been in awe of the unity and perseverance of the Japanese people.

While they are still looking for the whereabouts of their loved ones, scrambling for food and shelter, and assessing immense damages of their properties, many Japanese offer to lend help to vulnerable foreigners and visitors who have had no experience or expectation of such disaster.  They offer precious water and food, look for transportation information for those who are hurrying to leave the affected cities, as well as to provide recommendations and options even with the slightest understanding of the English language.    If that’s not being considerate and compassionate, I don’t know what is.

So what does that tell us when we see this happening in our city every day?

  • when asked by local reporters whether he may risk airport chaos in Japan, a Hong Kong gentleman about to leave for his vacation answered: “Of course not, I know the Hong Kong government will charter flights to take us home”;
  • people jumping queues at bus terminals, subway stations, and even while waiting for elevators;
  • bitching at the government that they don’t have enough money to buy the HK$6 million show flats after graduation;
  • renowned for our checkbook charities instead of making a physical effort to help the needy

While trying my best not to turn into a grumpy old man bitching at the senseless cruelty of everything happening about us these days, I restore my faith when I see there is still goodness in people. 

And my dear Japanese friends, your spirits and strengths will pull you out of this disaster in no time.  I will make sure I learn from you.

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The “Today Show” had a segment this morning on the captioned which resonates with many people, I’m sure.  It seems that we are doing almost everything on our phones now but calls.  Aside from making the occasional calls for hotlines, reservations or for work, I don’t think I am really using my phone to talk to any of my friends now.  Instead, I test, I e-mail, I surf Facebook and I share news all on one simple handy device ironically named a mobile phone.

The segment profiles college students claiming that they are texting some 20,000 messages on a monthly basis, and some of them believe that they can express themselves better through texts than by speaking with their friends in person.  I don’t.  Though I find it extremely convenient to communicate via texts, it’s not really the reason why I seldom make calls.  I guess I just don’t enjoy chatting on the phone endlessly.  My phone conversations are always to the point and mission specific.  If I really want to catch the latest of a friend, I always prefer asking them out for a face to face chat rather than doing it on the phone. 

No doubt texts can never take the place of a live conversation.  There is a limit to how much you can convey through the 26 alphabets and emoticons available on the phone.   However, the slight delay in response time allows us to think for a bit before we reply, which is always nice.  It also gives me back my much-needed sanity from hearing people screaming and babbling on their phones in noisy subways and buses.  If you work in an office, you will definitely agree with me that texting is a lot more discreet for those small talks with your boyfriends or girlfriends than using the phones during office hours.  For the latter, half of the office would already have their ears pressed toward your cubicle the whole time.

Texting is also great to catch up with someone without overly disturbing them, especially for the people who you are not that close to, yet.  It helps to minimize awkwardness, rejection and anxiety.  The flip side of the coin of course is that you can be zapping 3,000 texts with someone and still haven’t had a good idea of who they are, or what you think of them.  Is it  time-saving or is it indeed a waste of time?  You be the judge.

Experts believe that phone calls will soon head toward extinction.  With so little practice in their personal lives, now I understand why so many people are horrible in phone etiquette at work.  I wrote about this in an earlier post, and would like to take this opportunity to also include some etiquette tips provided by the Today Show.

  • Speak in an “even” tone, and clearly: As speakers, we often “mumble, shout, whisper, or speak with food in our mouths,” Sue Fox, author of “Etiquette For Dummies” and “Business Etiquette For Dummies.” says.
  • Don’t talk while being distracted by all the technology around you. Go to a room or area where there is no other technology that can tempt you with interruptions. Find a comfortable chair (or area to stand), where you can just focus on the phone call, and not be lured by beeps, message flashes, screens and other white-noise interruptions of technology.
  • As a listener, your job is to “really listen,” says Fox. Sounds simple, but, she says, “as listeners, we do other things when we’re supposed to be listening, listen without hearing anything the other person says, or respond to another person’s question from left field — with an entirely different topic.”
  • “Find the correct distance from your mouth to hold the receiver so that your voice doesn’t sound like part of the ambient background, or like a hectoring protester speaking into a bullhorn,” she says.
  • “Exercise patience on the phone, and let other people finish their sentences.”
  • “Confirm you’re listening with periodic (verbal) sounds, such as ‘ah-hah’ ‘yes’ and the like.”
  • Believe it or not, your “posture when you speak on the phone strongly affects how you sound to the person on the other end” as well as “the energy that comes across on the telephone,” Fox says. “Don’t slump in your chair; sit up straight. Also, smiling while you speak can actually make the tone of your voice more pleasant.”
  • “Never use phone calls as an opportunity to get caught up with paper-shuffling,” she says.
  • “Remind yourself that feeling ‘out of control’ in a phone call is just a state of mind,” says Sherry Turkle, MIT professor. “You can warmly and firmly set boundaries in a phone call. Say: ‘I wanted so much to hear your voice … It always lifts me up. But I only had five minutes. So, if it’s okay with you, let’s chat for those five minutes. It would be precious to me.’ ”  Meaning, says Turkle: “Reaffirm what is precious about the phone call, that you will hear the voice — and take out of the phone call the thing that may mar it for you — the tension that it might interfere with other responsibilities, other pressing matters.”
  • You may not like to talk on the phone, but “keep up telephone contact with close friends,” Turkle says. “They have things to say that they don’t want to say in e-mail or text. Count on it. You will hear things in the cadence of their voice, their inflection. Learn to limit these conversations; it is a crucial life skill. Learning it with friends who care about you will put you in good stead for the rest of your life.”

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Happiness Explained

What makes someone the happiest person in America? 

For three years the Gallup-Healthways Wellbeing Index asked a series of questions to learn the answer.   Apparently you will be if you are…

  • older
  • married
  • Asian American Jew

Based on job satisfaction, health and comfort, as well as the Gallup results, The New York Times also has the following instruction manual to be happy:

  • Be a man.  Men report being happier than women.
  • Move to Hawaii.  No surprise it’s the happiest place in the country.
  • Find God.  Faith gives people purpose.
  • Jews and Asian Americans age over 65. Hmm…

Looking at it from another angle, can a positive outlook keep your heart healthy?

Yes according to Dr. Redford Williams of Duke University Medical Center. “Positive people have less distress in their lives.  Their optimistic attitude cause them not to be so stressed by things that are going wrong, and that can lead to less stress hormones, less adrenaline, less cortisol, and these could all contribute to lowering their cholesterol level, lowering their blood pressure, and even contribute to making their platelets less sticky in stressful situations unlikely to clog their coronary artery.

Although I do not fit into any of the happy criteria of the Gallup poll, I truly believe in the benefits of maintaining a positive outlook.  Being happy can change things.  In case you still find it hard to believe, what Mr. Alvin Wong’s life philosophy is so true:  “If you can’t laugh at yourself, then life is going to be very hard on you”.

Who is Alvin Wong?  He is a 5-foot-10, 69-year-old, Chinese-American, Kosher-observing Jew, who’s married with children and lives in Honolulu.  

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Men’s Best Friend

What does it tell you when you find a dog, men’s best friend, more reliable and loyal than your partner? 

I know it’s a sick thought, but that is what I felt when I bumped into the world’s friendlist golden retriever tonight.  The love it generates is the most selfless and unconditional, ever.

Whenever I feel disllusioned towards relationships, I can’t help to turn towards dogs.  Is it pathetic?

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I was totally stressed out the other night – but in a good way.  I was relaxing at home after midnight when a good friend of mine informed me of some unbelievably good deals on Cathay Pacific Airways that are only valid for a week.  Seeing that this is a fantastic opportunity to see the world, I jumped on the chance and booked a trip to Paris this May. 

The story doesn’t end here.  There are still so many other attractive destinations that I would like to go or revisit, namely Seoul, Tokyo, Osaka, Nagoya, Moscow, Phuket, Bangkok, Kuala Lumpur, Johannesburg, Shanghai, London and New York.  I had been flipping through my calendar, browsing hotel deals, texting my friends, checking seat availability, for a good 3 hours.  I haven’t yet made any confirmed decisions yet, and that planning will continue tomorrow and the few days ahead, provided, of course, that there are still seats available for the dates I am picking.

So this afternoon I was visiting a friend on Kowloon side.  Walking on the busy Nathan Road I could actually hear two separate conversations of people passing by chatting about the exact same online promotion.  Talk about Hong Kong people’s obsessive compulsion to get out of the territory, with every chance we get.  Why is that the case?

  • the fact that we work 14 hour days and still finding it hard to sleep at nights due to immense stress from work
  • we are living in shoebox-sized apartments that we can hardly see the sky
  • we have forgotten about how clean air smells like
  • we find ourselves pressed like sardines in shopping mall elevators even on supposedly relaxing Sundays
  • we cannot get our foot into any electronics stores because every one of the 38 available sales reps were mobbed by our mainland Chinese neighbors
  • tons of rude, impolite, inconsiderate and selfish pedestrians on the streets and on practically all forms of transportation, and most of them are locals
  • news programs are flooded by retarded policies and tactics of the government, and increasingly violent protests spearheaded by our post-80s and 90s
  • another excuse to take 15,000 digital pictures of yourself with exactly the same pose and gesture, in front of landmarks of the world but with hardly any real appreciation of its history or importance
  • one more excuse to take 3,000 more pictures of all the foreign food you are going to eat beginning with the in-flight meals
  • way cooler to check-in at impressive foreign landmarks on FaceBook rather than Central MTR station in Hong Kong
  • experience how checking work e-mails, twittering, and FaceBooking abroad is like
  • witness how devalued the Hong Kong dollar is
  • feel the victory and accomplishment of successfully grabbing the few Hong Kong Chinese newspapers on return flights from abroad
  • another chance to wear NorthFace down jackets together with oddly colored crocs and huge alien-like sunglasses
  • read as many Hong Kong tabloid magazines as possible while laying by the hotel pools
  • a chance to continue being selfish and rude to unsuspecting service people overseas

Alright this may be way too much ranting in one post, but what’s the point of repeating the same old routine or even bad habits when you have a week of vacation time to unwind?  Let’s relax, let our guards down, take a few steps backwards, and be positive and appreciative in our travel adventures.  Take a deep breath, soak in the nature and culture, and teach your children a lesson or two about civility and consideration.  Amen.

 

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With the $6,000 Hong Kong government is giving to its people in the latest revision of the financial budget, aside from the inevitably disgruntled debates over eligibility and disbursement, the talk of the town these few days is focused on how we will dispose of this US$770 equivalent new-found cash.

Kid not, every other commercial establishment in town is hungrily eyeing this disposable income in the otherwise slower commercial season of March and April.  I am prepared, and it won’t make any difference even if I’m not, to be bombarded by hundreds of marketing programs and sales calls in the mailboxes, on the streets, in the malls, and on the internet.

I am interested to find out how Hong Kong people are planning to utilize this $6,000, in a city where consumption is the population’s number one pastime.  I posted a poll on my Facebook page, and I surveyed a few discussion forums in town on the internet to give you a summary of what our neighbors have come up with.  Of course, for those who are very much in need of this sum to manage their daily food and shelter expenses, they wouldn’t have the time and energy to take part in these surveys, and so their plans of consumption are always implied even if not stated below.

  • the brand new iPad 2 or the upcoming iPhone 5 (what are the chances of such convenient coincidence, with Apple launching iPad 2 the day after our handout announcement?  I have to take my hat off to Steve Jobs, once again, even if it was none of his intention whatsoever)
  • save it (no it’s not lame, since we practically spend so much on a daily basis without any need of excuses, anyway)
  • a vacation to Thailand, or Europe with savings (Hong Kong’s favorite pastime: getting the hell out of the city even for just a few days)
  • pay back credit card debts
  • take a break off my part-time job
  • grab my sister’s share of her $6,000 as well (siblings’ greed should never be underestimated)
  • pick up an English language course to stay competitive (admirable, if only it’s that easy)
  • put it all in the stock market
  • pay for a call girl
  • collect everyone’s share and buy back the Western Cross Harbour Tunnel (now that’s what I call innovative thinking!)
  • pay for condolence flowers for the government house
  • buy $6,000 worth of bananas and throw them at the two Mr. Tsangs and call it the “Long Hair Effect” (Donald Tsang as our Chief Executive and John Tsang our Financial Secretary)
  • a trip to Macau’s casinos
  • wait in line for Justin Bieber’s concert in May

Since the value of the dollar is different for everyone, I do not dare to draw any conclusions.  One thing I know, is that when I turned on the news yesterday and watched the unmistakably joyous face on the old lady who collects cardboard boxes for a living at $8 a day,  a portion of my share should go to the charity to help those who need much, much more than $6,000.

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I couldn’t put the book down and finished reading it within a day.  It’s the New York Times bestseller Buyology: How Everything We Believe About Why We Buy Is Wrong, by Martin Lindstrom.   Lindstrom is one of the world’s most respected marketing gurus, and he has been traveling around the world advising the biggest Fortune 500 companies, at least 300 days of a year.  Most of us believe that we are smart shoppers, and that we are careful with how we make our buying choices through conscious thinking.  In fact, we are far from there.  And as Lindstrom points out, we are actually getting worse and worse.

The better we think we are, the more we let our guards down, and the more vulnerable we are for everything happening around us.  One example, a supermarket with a whole stack of canned soups priced at $1.95 receives no customers.  The next day, the store puts up a giant sign saying “Maximum 6 cans per customer”, and the soups are flying off the shelf at the same $1.95 price tag.  Mind games working, huh?

On the book’s back cover, Lindstrom lists out a few intriguing questions:

  • Why did so many people who took the “Pepsi challenge” say they preferred Pepsi, only to carry on buying Coca-Cola?
  • Why do the majority of anti-smoking campaigns inadvertently encourage people to smoke?
  • Why does the scent of melons help sell electronic products?

Lindstrom addresses all these questions with his main theme of neuromarketing.  We used to rely on old school questionnaires and focus groups to study what customers want.  The fact that more and more of these traditional studies failed miserably has led to the widespread effectiveness and popularity of neuromarketing.  It is very well a science for subjects’ brains to be scanned when shown various advertisements and marketing programs.  The results are startling, and in many cases, contradicts completely with what we would admit, on paper.

I find the topic of product placement and the American Idol example fascinating.  With Idol’s 3 main sponsors, Coca-Cola, AT&T and Ford, who do you think gets the most of their advertising money’s worth?  Who fails miserably?  Why do some product placements fail?  Do you remember Elliott places pieces of Reese’ Pieces candy to lure E.T. out of his hiding 19 years ago?  Tom Cruise with his Ray-Ban sunglasses in 1983’s Risky Business, Top Gun and the later Will Smith in Men in Black II?

In the next chapter, Lindstrom describes how mirror neurons are responsible for why we often unwittingly imitate other people’s behavior.  Apple and its iPod sensation.  Abercrombie & Fitch with their all gorgeous American popular teens image that is ever so irresistible for 14 year-olds.

Do subliminal messages exist?  Yes, but its power has little to do with the product itself.  Instead, it lies in our own brains.  Tobacco companies spend huge percentage of their marketing budget into subliminal brand exposure.  “…Philip Morris, for example, offers bar owners financial incentives to fill their venues with color schemes, specifically designed furniture, ashtrays, suggestive tiles designed in captivating shapes similar to parts of the Marlboro logo, and other subtle symbols that, when combined, convey the very essence of Marlboro – without even the mention of the brand name or the sight of an actual logo.”  It’s an irony that because of government bans, tobacco companies have been forced to develop a whole new set of marketing skills, a set that is now vastly copied by many other industries.  Don’t let yourself fall prey to them.

Other topics of ritual, superstition, faith, religion, our somatic markers, senses, and sex are expressly covered.  Does sex really sell, or are consumers too distracted from the steamy images that they have forgotten entirely about the product?  Is it the sex that is selling or is it the controversy?  Well the latter is actually the more potent factor, though mirror neurons explain why sex and beauty continues to be popular in advertising everywhere around the world.

I highly recommend Lindstrom’s book and it’s one of the best investments I had made, considering the subliminal messages I was put through from his various appearances on CNBC prior to my purchase.   We will continue to shop for sure, but if we can all at least remember bits and pieces of this mind-provoking book and pause for a while before we take out our credit cards, we can at least delay the unavoidably path of becoming worse and worse shoppers, as Lindstrom predicted.

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