Shame Curbs Bad Behavior

In China, no one is safe on March 15th, World Consumer Rights Day. An Evening Gala is hosted every year by CCTV, China Central Television since 1991. The purpose is to name and shame companies for their misconduct against consumer interest.  In decades past, firms like Starbucks, LG and Hewlett-Packard have been called out when offering poor products or irresponsible customer service. Many Chinese companies and state-owned enterprises like China Mobile have been inducted in this Hall of Shame as well.

This year, the Evening Gala aimed mainly at the misconduct in E-Commerce and Social Media. According to the State Ministry of Industry and Commerce, during this gala, Elema, a billion-dollar food delivery company, was shamed for making food under unsanitary conditions; Yipai (Easy Pass), China’s leading online automobile marketing platform, was accused of hurting consumers by providing personal   information to outsiders; Taobao, the biggest online shopping website founded by technology giant Alibaba, was  named for fraudulent consumer reviews which influenced product  rankings.  The Gala quickly became a battle cry for corporate PR teams, who had to come up overnight with explanations and damage control.

Will these allegations curb bad behaviors in companies and individuals? The answer seems to be “yes”. A new law prohibits indoor smoking in Beijing.  Individuals breaking these regulations can be fined $30, restaurants up to $155. In addition to the fines, repeat offenders see their names posted on a government website for one month, alongside a list of their offenses. Witnesses to infractions are urged to notify the government. Social shaming pressure is expected to make the new law more effective – and it works!

Shame can be used to focus attention on some “bad apples”, especially when it comes to major collective problems. It helps to be creative and focused when choosing targets. Companies, such as British Petroleum or SeaWorld, do not feel guilt. However, the people working in these corporations do. Their thoughts and behavior can be influenced by public disapproval and even mortify them. Public opinion can be essential for companies, especially if they are producing consumer brands, such as IPhones or agile Orcas. Reputational risks are a concern, and public shaming can be most effective if targeted at ”friendly” corporations and their employees.

One must ponder the question: can “shame” really work in implementing government policy? Jennifer Jacquet, author of Is Shame Necessary?, claims success for a website run by the state of California that lists the names of people who have not paid their taxes. The site targets only the top 500 delinquents, and the state has retrieved more than US$395 million in back taxes since it was launched in 2007.

Another possible and very helpful area for “shame policy” is immunization of a country’s population. Typically, 90 percent of people need vaccination for there to be true immunity. People can opt-out and get a “free-ride”, since everyone around them is taking the needle for them. However, with reduced compliance, immunization doesn’t work anymore. That’s where shaming can help encourage participation.

Another example is the Rainforest Action Network and its shaming campaign against banks which financed coal companies doing mountain-top removal in the Appalachia region. After a five-year campaign, two of the nine banks have changed their policy of lending to coal companies. Two out of nine may seem like limited success, but every march starts with the first step.   Shaming can act as a stop-gap for the period when people are concerned about something and when actual change comes about.

Working to avoid shame can lead to better weights and measurements. Who wants to be ridiculed by competitors or lose a long-developed fine reputation. Particularly in fields such as marketing, where the brand and personal perceptions are paramount, shaming can become a major influence if not the rationale for the curative marketing approach which aims to heal relationships between business, government and consumers. Avoiding shame by reducing, eliminating and making up for past mistakes, can strengthen a company’s unique selling proposition and let it emerge as a seasoned competitor.

Innovation in Developing Economies

by Michael Czinkota and Ilkka Ronkainen

Innovation in developing economies is evolving rapidly, but still can improve in terms of marketing. Businesses in emerging economies can make profits and can positively affect the livelihoods of people. In the next generation, multinational corporations can expand to vast un- and underserved consumer groups in developing countries. Executives need to redefine their roles and relationships across companies and radically depart from traditional business models through new partnerships and structures.


Businesses need to understand the needs, aspirations, and habits of target populations. For most emerging-market consumers, price is not the determining factor, but the total purchase cost (including transportation cost, time, the burden of carrying purchases, and storage availability). Large U.S. chocolate companies established only a marginal presence in Latin America with their standard American large chocolate bars. In contrast, Arcor and Nacional de Chocolates have grown their businesses by selling more affordable bite-sized chocolates that are available in remote rural stores.

Digital Technology

Due to the economic and physical isolation of poor communities, businesses that provide access to digital technology have the potential to thrive. Cisco partners with a range of global and local partners to sell, lease, or donate $300 million worth of computer products and services to markets worldwide. In Bangladesh, where the average annual income is $200, GrameenPhone Ltd. leases access to wireless phones to villagers. Every phone is used by an average of 100 people and generates $90 in revenue per month—two or three times the revenue generated by wealthier users who own a phone in urban areas. This program has been replicated in other countries, including Uganda and Rwanda.

Financial Services

Microfinance programs have allowed consumers to borrow sums averaging $100 to make purchases without using collateral. The mission of microfinance is to let the poor access financial services and improve their living standards. For example, Te Creemos developed a complete electronic payment solution in Mexico by partnering with MasterCard, which affords small and medium-sized enterprises a micro-business card and a low cost payment method.

Local Solutions

Many emerging consumers do not shop at supermarkets. Nestlé employs local residents with pushcarts who take small quantities of merchandise to kiosks. Unilever is rolling out similar strategies in Kenya, Indonesia, Vietnam and other countries offering five-peso “starter packs” in the Philippines. Others reach out to beachcombers via bicycles. Innovations can start in developing countries first, and disseminate via a trickle up approach.. Pepsi snacks like Kurkure and Aliva from India have attracted attention from the United Kingdom and the United States.


In the past, underdeveloped and monopolistic distributing networks of developing countries saw their primary jobs as distributing sales literature, cutting through red tape, and charging invariably high fees. Today, outside competition has forced distributors to add value to what they do. If local conditions do not measure up, companies are willing to use outside captive distribution systems or to appoint their own people in place. Eveready has an extensive network of associates and 15 distributors who support its business in East.

Multinational Commitments

Businesses, governments, and civil societies can join together in a common cause to help the aspiring poor to join the world economy. Lifting billions of people from poverty may help avert social decay, political chaos, terrorism, and environmental deterioration. For example, Procter & Gamble has a Safe Drinking Water program in Kenya through their water-purifying brand PUR that improves access to safe drinking water.  Coca-Cola funds “Slingshot”, a water purification system for communities in need.  Multinational companies can envision a world empowered by equal access to life’s basic needs.

Challenge to Existing Business

Marketers need to convert innovation opportunities in developing countries. Historically, what worked for a peasant in rural Kenya or Colombia had little interest for a sophisticated urban consumer in the West. Now, these opportunities may provide new platforms for growth even in post-industrialized markets. Africa’s prospects have proved alluring to Wal-Mart, which has agreed to pay roughly $2.4 billion to buy 51% of South Africa’s Massmart Holdings, with plans to use the discount retailer for continental expansion. Yum Brands recently said it wants to double its KFC outlets in emerging countries over the next few years to 1,200. Rising consumption will increase the demand for local products, and, given proper support, will trigger domestic growth and lift developing countries and their consumers up to greater economic opportunity and a better life.

Ilkka A. Ronkainen Georgetown School of Business faculty.

Innovation and Diversity: Earnings, Creativity, and the Global Economy

A Cultural Movement

In this recent interview between Forbes’ Ekaterina Walter and Progressive’s Neil Lenane, they discuss the concept of workplace diversity as a cultural shift, rather than just a strategic initiative.

“We view diversity not as a program but a cultural movement,” says Lenane. “While gains can be slow moving and measurement less clear than other business metrics, we find the key is keeping the momentum going every single day. Ultimately it ends up as not something we check off a list but a cultural attribute we use to help us achieve our operational goals.” Top-tier companies have shown tangible innovation benefits to developing an ‘all-inclusive’ approach to fleshing out their workforce, which allows them to deal with cultural challenges and language barriers more effectively than businesses that don’t actively drive diversity. Additionally, the myriad backgrounds and perspectives that shape how employees ideate and innovate is extremely valuable, providing expanded insight for global interactions and strategies, as well as internal challenges.

Lenane suggests the following advice for decision-makers: “Due to the constant pace of change, increase your desire and ability to be agile. This will help in not only weathering change but proactively adapting to it. And, obviously, look at diversity as a business success imperative.” According to HBR, employees at companies with greater diversity are “45% likelier to report that their firm’s market share grew over the previous year and 70% likelier to report that the firm captured a new market.” As companies compete on a global scale, it’s imperative to acknowledge that a variety of voices not only encourages collaboration, innovation, and change, but that diversification promotes competitive differentiation.

Listen Up, Leaders

Although initiating culture changes in your organization is key to driving innovation through greater diversity, it still must be treated like any business goal. From EY: “Leaders must first cultivate the insight to recognize and understand differences and their power to bring about profound cultural shifts in organizations. This mental transformation is critical to developing transformational leadership capabilities. It is the single most important step toward becoming a successful player in the global arena.”

Strengthening the employee pipeline and retaining top talent typically rests squarely on the shoulders of company leaders, as does catalyzing innovation for overall success. A lot of this probably sounds pretty obvious, but that doesn’t mean it’s easy. According to a recent white paper from Forbes Insights, ”Organizations still face external and internal challenges in implementing these policies and procedures. Internally, companies are still struggling with negative attitudes about diversity among their rank-and-file, while externally, a rocky economic recovery has impeded many companies’ hiring efforts.”

While that may be true, the evidence supporting a global need for diversity in the workplace — and its positive influence on innovation — is overwhelming. Studies show that diverse teams often out-perform teams with less diversity and higher-level skill sets. Research from Donald Fan shows that, when dealing with a problem, “we encode our perspectives and then apply our particular heuristics to explore new and better resolutions. Diverse teams often outperform teams composed of the very best individuals, because this diversity of perspective and problem-solving approach trumps individual ability.” And, EBIT margins at highly diverse companies are generally about 14 percent higher than those of the least diverse. Furthermore, HBR notes that without diverse leadership, “women are 20% less likely than straight white men to win endorsement for their ideas; people of color are 24% less likely; and LGBTs are 21% less likely.”

This data should be a powerful motivator for businesses; research has solidly established the incredible role that diversity plays in innovation and all-around market relevance, differentiation, and advantage. Check out this infographic for more information.

By , Published February 8, 2014
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Global Update: Samsung versus Apple – The Race Continues

Samsung unveiled its new watch-phone, the Galaxy Gear, today headlining the innovation of “wearable” devices. For the most part, Samsung used to be seen as lurking in the shadows of Apple, constantly following their innovation instead of creating its own. Today, the tables have turned as Samsung beats Apple in launching its smartwatch.

The Galaxy Gear is expected to be in stores as of September 25th at the price of $299. However, Samsung is not the first to launch such a product. Pebble began selling its smartwatch online back in January 2013 and from stores this past July. Apple is expected to release a similar product as well as Sony. These devices function in conjunction with specific smartphones or even an iPod touch in order to allow for more convenient uses.

What is your opinion on the new Galaxy Gear? Is Apple really falling behind? Post your views in the comment section below!