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Why Tesco failed in USA

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Major British stores may think twice before trying to break into the US market after Tesco, the UK's largest retailer, last week admitted its American dream was over. The supermarket has appointed advisers to "review" the future of its Fresh & Easy stores in California, Arizona and Nevada after running up more than £1.5bn of investment bills and accumulated losses in five years.

Such a review usually means finding a partner to share the costs, an outright sale or a shutdown; chief executive Philip Clarke has conceded that the probable outcome is that Tesco will exit the US.

Neil Saunders, managing director of retail analysts Conlumino, says: "If a player with the resources, scale and expertise of Tesco can't make it, what hope is there for everyone else?"

Indeed, Tesco is only the latest British retailer to have attempted to leap over the pond - and drowned. The past couple of decades have seen rival supermarket Sainsbury's, as well as Marks & Spencer, WH Smith, Dixons and HMV all forced to beat a retreat.

Some have underestimated the costs of breaking into such a large and highly competitive market; others took on stores that were far too expensive or, like Tesco, hit the US just as it headed for economic downturn.

Many past transatlantic ventures have been the victim of arrogance and poor preparation, failing to understand the surprising differences between US and British shoppers. We may, broadly, speak the same language, listen to the same music and watch the same films, but other tastes and habits can differ quite dramatically.

Tesco spent 20 years considering a move into the US market, and put in two years of intensive on-the-ground research, even sending senior executives to live with Californian families to observe the way they shopped and ate. They built secret test stores and investigated the contents of Americans' fridges.

But experts say Tesco then ignored much of that research, deciding to set up the stores it wanted, rather than listening to its potential customers. For example, although US shoppers prefer to buy in bulk to save money, Fresh & Easy offered small pack sizes. The stores also stocked British-style ready meals unfamiliar to US shoppers and initially relied heavily on self-service tills. This was a big turn-off to American customers, who value good service.

Like many British retailers before it, Tesco also struggled to get the right kind of stores in the right places. It had planned to open several hundred small stores very quickly; it needed 500 outlets to justify its investment in a US food factory and a vast warehouse. But as sales stumbled at the first Fresh & Easy branches, Tesco had to invest money in improving existing stores rather than opening new ones.

Even finding properties was tricky. As an incomer, any British retailer is fighting for locations with established competitors. According to experts, Tesco got some of its locations wrong, opening aspirational grocery stores in low-income areas.

Saunders says: "Tesco wasn't able to find enough stores close to its distribution centre. It's difficult in a very crowded and competitive market, with a lot of players doing a good job."

What's more, as news of Tesco's arrival broke the local competition responded. US grocery giant Walmart hired David Wild, a former Tesco executive, and Aldi USA, an arm of the German discount grocer, also revealed that it was planning a string of stores in California, Fresh & Easy's heartland.

But one source who knows the retailer well says Tesco's US adventure was most severely hit by the timing of the sub-prime crisis and the subsequent global economic downturn. Las Vegas, one of Fresh & Easy's target cities, had been the fastest-growing metropolis in the US but soon turned into its repossession capital. In 2009, 12% of the city's residents received a foreclosure notice. Phoenix, Arizona, another focus for Fresh & Easy, was also particularly hard hit by the housing crash. Fresh & Easy's upscale heat-and-eat dinners were never going to be top of the weekly shopping list for US families struggling to pay their mortgages and keep their jobs.

But some British companies have been here before: WH Smith had to sell its stores in American hotels and airports amid the travel and retail downturn that followed the 9/11 terrorist attacks in 2001.

US retailers, however, see the current downturn as an opportunity to pile into the UK. Chains including fashion stores Forever 21 and Hollister and lingerie retailer Victoria's Secret have snapped up outlets abandoned by British retailers suffering from poor sales and a switch to the internet. And Michelle Obama's favourite label, J Crew, is also looking for a store in London.

They are following in the footsteps of Gap, the now-ubiquitous clothing retailer, and Walmart, which owns Britain's second-largest supermarket, Asda. Companies from Apple to Banana Republic and Urban Outfitters also seem to have settled into the UK quite comfortably. Many of these successful interlopers are fashion stores, who are able to offer the British public something truly different. This same advantage has helped some British retailers do well over the Atlantic, including Topshop, Ted Baker and Burberry.

Generally US retailers have been able to exploit their bigger resources to adapt to the British market, tweaking their ranges, store size and pricing to suit. But it is hard for British retailers to match their financial power. Taking on the huge US market can drain not only financial resources but management time too.

Dave McCarthy, a retail analyst at Investec, says: "Tesco sent the A team to run the US operation and, by definition, that left behind the B team running the UK side."

Tim Mason, Tesco's deputy chief executive, moved to California to run Fresh & Easy. He was also the grocer's marketing supremo, the man who dreamed up the Clubcard and built the brand's classless image in the UK.

He kept that top marketing role even when he was in Los Angeles - 5,000 miles away from Tesco's core domestic market - and the brand's image at home took a substantial battering. Many of the UK stores need revamping, the chain's prices are no longer viewed as the sharpest, and service levels have been allowed to slide. This is all a result of investment in British stores being put on the back burner as profits from home were poured into the US business.

McCarthy says it is no coincidence that many British retailers have failed across the Atlantic at a time when they are struggling at home. Both Sainsbury's and Marks & Spencer, for example, were forced to sell off their US businesses as they dealt with problems in the UK.

"It's a chicken-and-egg situation. Is it the distraction of going overseas that means management is no longer focused on the home market, or failure at home that drags down the business overseas?" asks McCarthy.

Still, a business the size of Tesco has to take calculated risks from time to time or risk stagnating. After five years of trying, Tesco did manage to turn Fresh & Easy into a store that enjoyed higher sales per square metre than a typical US supermarket, which shows it wasn't rejected outright by US shoppers.

McCarthy says: "I still honestly believe that if they had used the right strategy they could have got it right, and blown the market apart."
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Fresh, but not so easy: Tesco joins a long list of British failure in America

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Major British stores may think twice before trying to break into the US market after Tesco, the UK's largest retailer, last week admitted its American dream was over. The supermarket has appointed advisers to "review" the future of its Fresh & Easy stores in California, Arizona and Nevada after running up more than £1.5bn of investment bills and accumulated losses in five years.

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How McDonalds conquered India

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A staunch vegetarian, Amit Jatia was 14 when he walked into a McDonald's for the first time.

It was in Japan and all he could have was a milkshake.

He loved it.

He is now the man behind McDonald's in India, responsible for the phenomenal growth the company has had in the country.

Vegetarian family values

When the American fast-food giant first contacted him in 1994 Amit's first challenge was close to home, convincing his vegetarian family to invest in the business.

"From my family's point of view we thought through this carefully," he tells the BBC.

"What convinced us was that McDonald's was willing to localise. They promised that there would be no beef or pork on the menu.

"Nearly half of Indians are vegetarian so choosing a vegetarian to run their outlets here makes sense."

Across the world the Big Mac beefburger is the company's signature product. Amit and his partners had to come up with their own signature product for India, so the Chicken Maharajah Mac was born.

Originally Amit was the local partner in the south and west of India, running the chain as a joint venture with the global McDonald's company.

Later he bought out the McDonald's stake and now solely runs the chain in the south and west of the country.

Culture change

It hasn't been an easy journey.

"From a consumer point of view I had to start with the message that a burger is a meal," he says.

His research shows that in 2003, of 100 meals that people ate in a month, only three were eaten out.

They introduced a 20 rupees (20p) burger called Aloo Tikki Burger, a burger with a cutlet made of mashed potatoes, peas and flavoured with Indian spices.

"It's something you would find on Indian streets, it was essentially the McDonald's version of street food. The price and the taste together, the value we introduced, was a hit. It revolutionised the industry in India," he says.

Now eating out has gone up to 9-10 times per 100 meals and McDonald's in India has more than 320 million customers a year.

"Whether you love or hate McDonald's, they deliver a formula very well," says Edward Dixon, chief operating officer of Sannam S4, which provides market entry advice and support for multinationals in India, Brazil and China.

"Localised menu, delivered with precision quality at a price that works. One other trick they have used very effectively [is] an entry level ice cream which fuels the ability for consumers who might not ordinarily be able to afford to become a customer."

New markets, new customers

The kind of customers McDonald's attracts in India is very different from other countries.

There are still families with young children who frequent it. But diners also include many young people, aged between 19 and 30, with no kids.

During the week, Amit says, this crowd dominates the restaurants.

I wanted to see how true this was so I decided to have lunch in the McDonald's in Delhi's crowded Lajpat Nagar market area.

Sitting to my right, a young IT worker munches on a McSpicy Paneer while conducting a Skype meeting on his laptop.

Breaking into a new market is never easy but many have achieved massive success far from home.

The BBC's global business team meet those who have managed to break into the fast growing global markets and find out what secrets they have learnt about how to succeed in them.
How to succeed in...
On my left, a group of college students share a meal.

But what's most interesting are the two tables behind me.

One table has two elderly couples in serious discussion; the other has a coy-looking woman and man trying to have a conversation amidst the din.

With a bit of eavesdropping I find out that this is traditional matchmaking but in the modern Indian way.

The parents have introduced the potential bride and groom who are having their first official date under the watchful eyes of their mothers and fathers. The parents meanwhile are sorting out the details of the proposed marriage, all over a Maharaja Mac Meal.

So Amit's research seems to be right: unlike McDonald's around the world, there are hardly any parents with young children here.

Fast competition

McDonald's doesn't have the Indian fast-food market to itself:

Domino's Pizza has more than 500 restaurants across India

KFC has more than 300 restaurants

Dunkin Donuts has more than 30 outlets in India

Burger King has just opened its first restaurant in Delhi and other outlets are reported to be opening shortly - it too has dropped pork and beef from its menu

McLocalising

Adapting McDonald's for the uniquely Indian market was a big expense when he started but Amit believes it has paid off in the long term.

When they started there was no lettuce supply chain in India. Most people used cabbage on burgers.

So they had to set it up from scratch.

The infrastructure is also now becoming a local venture.

"In 2001 we began to localise all the equipment that goes into the kitchen to build a burger," he says.

"For example, we took a burger and took it apart; now piece by piece every component is made locally.

"All the kitchen fabrication is done locally. All the refrigeration, chillers and freezers and furniture are made locally."

In most cases their global suppliers have worked with local businesses to make that happen.

He wants to take it further. His current challenge is to make fryers locally.

While recent weakening of consumer spending has seen a slowdown in sales, overall Amit has managed to grow same-store sales by 200% and he says he's not done yet.

The plans are to open another 1,000 restaurants in the next decade.

"Think about it," he says, "India has 1.2 billion people and we have just 350 McDonald's [restaurants] to service them."

But India is not an easy market to work in, especially for multinational companies.

McDonald's in India has another partner in the north with whom they are still in the process of addressing the issue of ownership amid an ongoing legal battle.

So how did Amit Jhatia get around it?

"There are a lot of regulatory approvals needed to get something done," he says.

"But that is known. Once you know it, you factor it into your business plan."

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A staunch vegetarian, Amit Jatia was 14 when he walked into a McDonald's for the first time. It was in Japan and all he could have was a milkshake. He loved it. He is now the man behind McDonald's in India, responsible for the phenomenal growth the company has had in the country.

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Great examples of Glocalisation

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We have heard a lot about globalism versus localism over the years. In order to succeed globally, even the biggest multinationals must think locally. A few examples:

McDonald's

In the UK, McDonald's strategy is to listen more to local consumers and then act on it. The company strives to do this around the world. Some if its local favorites around the world include the McItaly burger in Italy, Maharaja Mac in India, the McLobster in Canada, the Ebi Filit-O in Japan.

McDonald's has novelty items on its menu in Japan like the Teriyaki McBurger with Seaweed Shaker fries, Ebi Filet-O, Croquette Burger and Bacon Potato Pie. McDonald's signed model Yuri Ebihara (known as Ebi-chan in Japan) to market Ebi Filet-O. Ebi means shrimp in Japanese.

Starbucks

Starbucks is trying out locally designed franchises in stores. The stores are non-Starbucks branded in order to recapture the feel of a local coffee shop, which would otherwise be threatened by the existence of Starbucks in its vicinity.

KFC

To increase visits from local residents, KFC has initiated a five-year plan to upgrade its UK restaurants with new contemporary designs. Designs will be based on 'look and feel' of the area and in collaboration with local property developers.

KFC has a vegetarian thali (a mixed meal with rice and cooked vegetables) and Chana Snacker (burger with chickpeas) to cater to vegetarians in India.

Tesco

When Tesco expanded globally in countries such as Thailand, Hungary and the Czech Republic it kept it's usual name and branding. However, when it entered the United States, it named it's stores "Fresh & Easy Neighborhood Market".

Nokia

Nokia responded to local customer needs with the introduction of dust-resistant keypad, antislip grip and an inbuilt flash light for Indian rural consumers (specifically targeting truck drivers).

Hindustan Lever Limited (HLL)

HLL identified the importance of rural customers and invented the shampoo sachets priced at almost a rupee which were an instant hit.

Ford

In 1904, Ford was one of the first automotive corporations to go International with the opening of Ford Motor Co. of Canada. Even Henry Ford II had opined that in order to further the growth of its worldwide operations, any purchasing activity should be done after considering the selection of sources of supply not only in its own company but also sources located in other countries. When Ford had set up its first plant outside U.S., in Canada, it gained considerably from the geographic and cultural proximity.

Viacom's MTV localized strategy with localized programming

MTV has catered to local taste in East Asia in South Korea, China, India and Japan. E.g. MTV broadcasts on two channels with Chinese music in China and Hindi pop in India. Using joint ventures with local partners, channels are branded accordingly as MTV India, MTV Korea, MTV China and MTV Japan and use more local employees with use of local language.

Whirlpool Corporation

Whirlpool Example 1: Domestic appliance maker, Whirlpool incorporated specially designed agitators into its washing machines when it sold them in India. This helped Indian women wash saris without the five-foot long sari getting tangled. Whirlpool formed a joined venture with a local partner to produce the redesigned washing machine to suit local taste and culture. Whirlpool also makes its refrigerators in bright colors like red and blue as many Asian consumers placed their refrigerator in living rooms as a sign of status. Whirlpool believes in standardizing worldwide what it can and adapting what it cannot.

Whirlpool Example 2: As part of Whirlpool's global strategy, the company wanted to develop products based on consumers tastes and needs. Whirlpool had done extensive research and found that European customers wanted a microwave oven that could brown and crisp food. Whirlpool then designed and introduced the VIP Crispwave which could fry crispy bacon and cook a pizza with a crisp crust. The product was successful in Europe and later launched in U.S. as well.

KFC - Yum! Restaurants

Global chain, KFC has introduced 'Krushers' in the cold beverages segment in India. The range of flavors of Krushers has been altered to suit the Indian taste buds.

Subway

The Subway chain does not have beef in its stores in India.

Taco Bell

The Taco Bell menu in India has crunchy potato tacos and extra-spicy burritos filled with paneer (cottage cheese). Taco Bell has hired employees who explain what burritos and quesadillas are to customers in India.

Coca Cola

In 1955, a Coca -Cola advertisement or documentary (almost 20 mins long) referred to as the "Pearl of the Orient" shows Coca-Cola's popularity in Philippines and how Coke has merged itself into the Philippines economy and culture.

Heinz

In 2010, Heinz plans to launch packaged food products in India which will suit the Indian taste. Heinz, which entered India in 1994, plans to Indianise the flavors offering condiments, juices and snacks to the Indian consumers.

DisneyLand Glocalization in Hong Kong

In 2005, Disneyland was not that successful in Hong Kong with park attendance and growth revenues. Disneyland then made an effort to cater to the local Chinese taste by reducing prices, adapting to local Chinese customs and labor practices and also changed the decors and settings. Glocalization was successfully applied to the theme park in Hong Kong.

Dell's Advertising in Japan and Asia Pacific regions

Dell did not use its American Steven Jackson (referred to as the Dell Dude) commercials in Japan and other East Asian countries after its Global Brand Management team used localized focus groups to gauge the TV character's cultural acceptance. The attitude of the American character did not gel well with Japanese social etiquette e.g Know-all display and speaking to strangers without introduction.

Unilever - Marginal Local Adaptation instead of Total Local Adaptation

Unilever took glocalization (local adaptation) to a new level in the 1990s. Instead of adapting products unnecessarily, it adapted products to the local market marginally i.e. the basic product would be fine-tuned instead of expensive total adaptation. E.g. Unilever identified the need for a regional ice cream and was very successful with its Wall's ice cream adapting it specifically to the Asian taste (different from the rest of the world). In 2000, it had a market share of 41% to Nestle's 15%.

Another Unilever ice cream brand Asian Delight was very successful in Asia. Unilever's Bangkok innovation center redesigned the product and adapted it to local taste (coconut ice cream mixed with fruits and vegetables used traditionally in sweets in the region) and packaging (Thai and English on packaging in Thailand).

Italian Luxury Fashion Retail Brands

Luxury retail brands like Bottega Veneta, a unit of PPR, and Canali, an Italian men's fashion brand launched limited-edition of clutch (Knot India) and closed neck jacket (bandhgala worn by Indian men) specifically for the Indian market.

Nokia's multi-SIM devices in the Indian market

Nokia launched multi-SIM devices (C1 & C2 series) in India, after it realized its potential. Nokia's dual-sim phones were introduced late in the market after competitors LG and Samsung also introduced similar mobile phones. Nokia lost out on early market share (to competitors who introduced multi-sim devices early in the market) but planned to introduce it in other emerging markets as well.

Lenovo's LES Lite stores in the Indian market

Lenovo India has customized LES Lite stores to expand into India's key tier 3-5 cities/towns. These Lite stores are smaller versions (around 150-250 square feet in size) of Lenovo's exclusive stores and with lower costs & break-even points.

Gillette's low cost razor for the Indian market

Gillette introduced the low cost razor 'Gillette Guard' priced at about 15 rupees (~$0.33) in the Indian market. Features included easy rinsing (as water is scarce in Indian rural areas) and unique grip design (the way the consumer held the razor).

Piaggio's Scooter 'Vespa' adapted for the Indian market

In 2012, Piaggio & C. S.p.A., the iconic Italian two-wheeler re-entered the Indian market. It adapted its scooter the Vespa to suit the Indian riders and road conditions. E.g. the rear wheel structure was redesigned to facilitate easier tyre changes, the scooter is more efficient than it is in Europe (62km per litre compared to 35 in Europe), increased ground clearance, slimmer design and a lower footboard to give more legroom to Indian women who ride sitting side-saddle in the back seat.

Starbucks India

Starbucks' first shop in India (opening in October 2012) will have no beef or pork considered taboo by many Indians. The Indian menu has local favorite Chai Tea Latte and the coffee is sourced and roasted locally. Other food items (many meat free options) include baked goods like Konkani Twist or Chatpata Paratha Wrap to adapt its offerings to local vegetarian tastes. There are even separate ovens and counters for vegetarian and non-vegetarian offerings.

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Glocalization Examples - Think Globally and Act Locally

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We have heard a lot about globalism versus localism over the years. In order to succeed globally, even the biggest multinationals must think locally. A few examples: In the UK, McDonald's strategy is to listen more to local consumers and then act on it. The company strives to do this around the world.

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5 steps to building a Corporate Culture

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At Zingerman's, we are often asked, "How did you build this great group of people? How do you get people to care and have such a good time at work?

Basically, they are asking what the secret of our culture is. And, of course, there is no secret; there are a thousand things to make the culture what it is.

Still, most people are looking for simple answers. "It's all in the hiring, isn't it? Or "Do you think it's because you're in a college town? Sometimes, I jokingly tell them that it's all in the Magic Brownies we make at the Bakehouse.

What Is a Culture?
Here's what Webster's says. Culture is: a) the integrated pattern of human knowledge, belief, and behavior that depends upon the capacity for learning and transmitting knowledge to succeeding generations.

b) the customary beliefs, social forms, and material traits of a racial, religious or social group; also: the characteristic features of everyday existence (as diversions or a way of life) shared by people in a place or time.

c) the set of shared attitudes, values, goals and practices that characterizes an institution or organization.

d) the set of values, conventions or social practices associated with a particular field, activity or societal characteristic.

As we view it at Zingerman's, the culture is the everyday reality of organizational life. Within that, all the Webster definitions apply. The culture is not the mission statement, the vision, your bank balance or the staff handbook, though all those contribute to creating it. The culture is what we do and say, the way we behave, the way we treat each other, our products, our customers, our community and ourselves. In essence, it's the "personality of the company.

While speeches, grand plans, fancy training manuals, etc., have some influence on the culture, they are just as likely to have a negative as a positive influence. Ultimately, it's what leaders do much more than what we say that makes the culture what it is.

Creating a Culture
There are only two main ways to build an organizational culture: either with consideration and conscious intent; or, by contrast, to let the culture come together as it does, giving it little thought in the process.

What follows is our recipe for consciously creating an organizational culture. Like all recipes, it's not perfect. But, if you use it, you will radically increase the odds of creating the culture you want.

The formula for successfully building a culture of great service here at Zingerman's is applicable to the building of an organization's overall culture as well.

1. Teach It
The more-and more effectively-we teach people what we are looking for in our culture, the more likely it will become the reality. Whatever orientation and training work you're doing, you should talk about the kind of culture you're going after. Describe the way you'd like things to be working. Talk about the informal ways in which you envision the group working together, the way you want the customer experience to feel, etc.

It's okay to teach about parts of the current culture that you're working on changing. There's nothing wrong with saying something like, "You may notice that there are people who arrive a bit late fortheir scheduled shifts. We're working on building a culture that's a lot timelier. My expectation is that you be on time as per the schedule regardless of what others may still do. I'm looking for you to help lead the way to making this cultural improvement.

One of the best ways to teach the culture is to tell stories. There's something solid that resonates when people hear nice tales of how things were handled in a difficult situation, or how the organization has successfully progressed to where it is. There's a substantive wisdom that comes from these stories, an experiential element of teaching that goes beyond the intellectual theories. And because culture is what's happening, not just what we say should be going on, the stories resonate in ways that pure theory cannot.

2. Define It
If you have a number of leaders running your organization, you may not immediately have full agreement on what your desired culture is. In that case, there must be hard discussion amongst the key decision makers so that you can reach a consensus.

Putting the vision in writing is an essential element of making it successful. When the dialogue stays verbal only, it's inevitable that everyone will leave the room with a different version of what was agreed upon. Documenting it is far more likely to help you get where you want to go.

3. Live It
Culture is very little about what we say, and very much about what we do. If we don't live it, it's never going to play out as we want. Organizational culture is built slowly over time, not with a quick decision or the writing of a big check.

This is especially critical for the leaders in our organizations; the staff sees everything we do. I remind myself that every action I take and every word I speak will have an impact on how our organizational culture develops. Pretending that my words, actions and attitudes don't impact it significantly would be to live in denial.

(The influence of the leader is particularly strong in a start-up situation. Things are moving quickly, people are operating in close quarters usually under high stress and behaviors can have long and lasting effects.)

Some of the meaningful ways that leaders impact the culture include: * how well our words match our deeds * how we handle things when they don't match up * which of our values we live and which we only pay lip service to * who we hire and who we fire * who we reward and who we don't * the systems/recipes/processes we put in place * how we handle failure

How we manage difficult situations is one of the biggest contributors to the creation of organizational culture. It's easier to build a culture when everything is going well. But strong cultures are partially built by what we do during hard times. When money is tight, how do we act? When a staff member is ill, how do we respond? When a good customer can't pay their bills, what do we say?

What's different about Zingerman's culture is how we handle it when we don't live up to what we said. By openly accepting that we've erred, acknowledging what's happened, apologizing for it and then moving forward together toward the future, everything works more effectively. By handling problems in a constructive way, we are building the culture we want.

Ultimately, everybody needs to take responsibility to personally live the culture that we want to create. None of us will get there perfectly as individuals. But that's where diversity is so great; if we can a) build a group/team that together embodies all the characteristics that we're seeking and then b) actually handle that diversity with respect and inclusiveness not divisiveness, we're moving toward the organizational culture we seek.

It is incumbent on everyone in the organization-not just owners and managers-to take responsibility for the culture we have and to make it the culture they want. The most effective organizations and the most solid cultures are where everybody comes reasonably close to living the culture, and can acknowledge constructively where they're falling short and then actively move toward either getting better and/or actively supporting the others that are already doing it better.

4. Measure It
Once we've identified the key elements of our desired culture and written them down, we must measure our success in making them a (cultural) reality. Many will argue that you cannot measure things like fun or supportiveness or camaraderie; I think you can. If you want to have a results-oriented organization, you are more likely to succeed if you measure your success at putting the culture into place. If you're setting out to measure cultural characteristics like "fun, remember that the judgment will be made by the participants in the organization. Once you have that mindset, along with some definition of what "fun means, you can measure it. Just have people rate how much "fun they had at the end of every shift and tally the answers. When you track those scores week to week, you can talk about what to do to improve your "fun quotient and then implement an action plan.

5. Reward It
A common problem in every organization is the mismatch between what it says it wants and what's rewarded. In some cases, the issue is just an absence of rewards. Companies say that want people to treat each other well but those who do receive no recognition; they say that they want to have fun but the only reward you get is . . . you're having fun; they say that they want people to learn but the only reward is that they know more than before a seminar. The situation can be more extreme-organizations that actually reward the opposite of the cultural behavior they say they're seeking. They say they want to be generous, but they take for themselves first. They say that they want teamwork, but pay bonuses based on individual performance. No organization will ever perfectly align every reward with the behaviors we seek. But at least being cognizant of the key elements of the cultural vision we're going after and then making sure that we recognize and reward those is important.

Please note that I'm not talking about money per se, though that could certainly be one way to reward people. But money alone will never do the trick. We need to use multiple methods in various settings; positive cultures are built over time and take a wide range of rewards and recognition.

Changing an Existing Culture
There's no quick fix that begets cultural change in a matter of days, weeks or even months; it's infinitely easier to rewrite a system than it is to change the culture of an organization. It requires tons of communication, years of stubborn persistence, relentless follow up, and probably a little luck. Fact is, you can never "get rid of the parts of the culture you don't like. More realistically what works is to gradually build up the strengths around the less desirable elements so that the "problems become smaller impediments to getting to where you want to go.

The analogy I've come to work with is of the person with the English accent living in the States for a long time. We have one here at Zingerman's: Jude Walton, one of the managing partners in our Mail Order business, has been living in the U.S. for 15 years. By American standards, she still has an English accent and some mannerisms that clearly would identify her over here as British, but over the years those have become less noticeable. When Jude returns to Great Britain, her friends and family lovingly accuse her of having lost her accent altogether. That same sort of slow but steady change is how it works in organizational cultures. So, how long does it take to change a culture?

What I've always been taught is that cultural change takes about a "generation. In the food world, one of the organizational challenges we have always faced is that there's a lot more turnover than we might like. The good news is that because we have higher turnover we can make cultural change happen more quickly than it might in, for instance, the auto industry.

My rule of thumb for meaningful cultural change at Zingerman's is that it takes two to three years to get something woven into what we do. I'm often impatient about how long it takes, but the reality is that's just the way it is. By accepting that reality rather than fighting it, I can do a much better job of managing myself and of leading and supporting the change process. Three or four weeks into most any change, there still will be lots of problems and challenges; in three or four months the glamour of the idea of the change will have long since worn off. At that point, leaders need to refocus people on the long-term vision, to give encouragement and energy to get through the seemingly inevitable "zone of doubt and blame".

Handling Cultural Gaps
In my fantasy we deliver perfectly on our cultural vision all the time. We follow every system and recipe every day. We behave in ways that are in synch with our guiding principles.

The reality is that even the most effective organizations will have gaps between the ways they want things to be and the way people behave culturally. The obvious social example of this is the speed limit on the highway. Speed limit signs say "70 miles per hour, but everyone knows that the "real speed limit is that you drive as fast as you want unless there's a cop. Cruise down the road at 85 mph (in Michigan, at least) until you see that dome light on the side of the road, and then you quickly sloooooow down! Take note, of course, that these aren't outlaws I'm talking about. They're well-respected and upstanding citizens.

Different Cultures in Different Parts of the Organization
If you have a business where people don't all work together in the same space nearly all the time-either because you have different locations, a big building, extended hours or some combination of all three-you're going to end up with different cultures in different parts of the organization. That's not a bad thing in my mind. It's normal.

At Zingerman's, we certainly have one coherent culture across the organization even though we work in six or seven geographic locations. But you'll find a slightly different version of that culture at the Bakehouse than at the Roadhouse or the Deli. And within each of those businesses you'll find cultural variation between the various departments and shifts.

The key for leaders is not to fight against this diversity, but rather to focus on the positive. What's our vision of the culture, and what do we need to do to get there? Given that we do not have a Stepford Wives sort of uniformity, which elements of the culture are most important? What's the vision of organizational culture that we're going after? What actions do we need to take to build the culture we have visioned?

Losing What You Have While Building for the Future
This comes up regularly with organizations that have created the kind of culture that they sought early in their business development. Leaders and/or key long-time staff worry about protecting their culture when growing. Although the concern is valid, I revert back to my image of organizations as people. You can worry (and appropriately so) about what's going to happen to your kid if you let him out of the house. But at some point they will start going out. And you can't-nor should you-stop them.

Of far greater value would be to back up to the beginning and start by teaching, visioning, etc. We cannot stop our organization's culture from evolving. It's going to change, and next year it will be different than today. The key is to avoid the negative vision-it's not about what you don't want to happen to the culture as the organization develops. Growth is a positive thing. The question instead is, "Given the growth that we're going after and the way the world may change around us, what would the organizational culture of my dreams look like in five years? By writing down the vision of the culture you will create when successful, you are likely to get there.

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Five Elements of Building an Organizational Culture

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By Ari Weinzweig, Zingerman's Co-Founding Partner At Zingerman's, we are often asked, "How did you build this great group of people? How do you get people to care and have such a good time at work? Basically, they are asking what the secret of our culture is.

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How a leader can influence a business's 'Corporate Culture'

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As a child when Sir Richard Branson said anything nasty about anyone else, his parents sent him to his room to look at himself in the mirror.

He would have to stand there staring at his reflection thinking about what he'd said.

His parents' intention was to try to make him realise that being nasty or negative about other people was unkind and reflected badly on him.

It was an effective lesson. "Looking at myself in the mirror for five minutes wasn't much fun so I stopped ever criticising people," he says.

Even once he grew up to become the founder of Virgin Group - which has gone from a mail order record company to having businesses in telecoms, travel and financial services - it's a practice he's stuck to.

Sir Richard is adamant that to this day it's some of the most important advice he's ever received.

"If I ever hear people gossiping about people I'll walk away. As a leader you've just got to get out there and look for the best in people and that's really really important.

"Let them get on with it, not criticise them when they make mistakes and praise them when they do good things," he says.

Outdated image

It seems surprising that someone could become one of the UK's best-known and wealthiest entrepreneurs, creating a multi-million pound business, without criticising their staff.

Yet while the stereotypical image of an all powerful, dominant, alpha-male type character running a company persists, in many cases it's an outdated image.

The financial crisis in particular has forced a widespread rethinking of how to run a business and the days of the all powerful, domineering chief executive may be coming to an end.

Not criticising is just one element of a less hierarchical approach to being the boss.

CEO coach Steve Tappin says the pressure of having the top job means that it's easy for chief executives to "fall into the trap" of trying to be a superhero, pretending to know it all and unwilling to admit any failings.

"The best chief executives are not like that. They know that great leaders are great learners," he says.

Andrew Penn, chief executive of Australian telecommunications giant Telstra, has been the boss of the firm for less than a year, and despite having previously been at the helm of another large firm he says that it's impossible to have all the answers.

"The days of the rock star CEO are long gone. The CEO is just a member of a team and it's about bringing together a capable team," he says.

Nonetheless, he says, as the person officially in charge, it's important to have enough self confidence to lead the firm according to your own convictions.

Of course, it won't always go to plan. In fact, Mr Penn says he's made so many mistakes that it's impossible to list them all, but says it's all part of building up valuable experience and that crucially he learned a lot from them.

In the end what people remember is less what the boss did and more how he behaved, he says:

"When you're going through tough situations it's as important how you conduct yourself through the process as it is in terms of the actual decisions that you make in the process.

"Ultimately what people will remember more than anything, is how you behaved and how you conducted yourself and how you acted as a leader as much as whether or not you actually made the right or the wrong decision."

As far as Dominic Barton, global head of management consultancy firm McKinsey, is concerned, a boss new to the role should avoid making any major decisions at all initially and recognise that it will take time to learn how to do the job effectively.

Despite having been at the firm for over two decades before he took the helm, Mr Barton says heading up an organisation is very different. In his case, he says it took him two years just to get to grips with the different dynamics of being in charge.

Working out what the main issues to tackle are, and who can be relied upon to help drive the changes takes time and means it's important not to rush into anything, he says.

"It takes a while to establish legitimacy.

"Even if you've been appointed or elected, people, are saying how is this person going to work," he says.

Filipa Neto, co-founder of Chic by Choice, an online marketplace start-up which rents out designer dresses, enabling people to hire rather than buy them, has experienced exactly this problem, but with people outside the business.

As a 25-year-old boss of the start-up she says it has been hard to persuade more well-known designers and established brands to join her database of suppliers.

But she's not been discouraged. To prepare herself for the company's growth and being in charge of a larger firm she spends her spare time reading up on business books to find out how other chief executives succeeded.

"I learn a lot from all these people and I never forget. If somebody else has already done it in a clever way, why should I try to reinvent the wheel?

"I don't want to make the mistakes they've already made," she says.
This feature is based on interviews by CEO coach and author Steve Tappin for the BBC's CEO Guru series, produced by Neil Koenig.

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Will not criticising make you a better boss?

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As a child when Sir Richard Branson said anything nasty about anyone else, his parents sent him to his room to look at himself in the mirror. He would have to stand there staring at his reflection thinking about what he'd said.

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How Zappos build a strong culture part 2

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Core Values of Culture - Tony Hsieh (Zappos)

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How Zappos build a Strong culture

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Uploaded by Nicholas Gallucci on 2011-09-01.

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What is 'Corporate Culture'?

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Hofestede's cultural dimensions

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Hofstede's Cultural Dimensions Video: Explained With Examples of Each Dimension

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Learn more about this model at: http://www.mindtools.com/pages/article/newLDR_66.htm We know that we are living in a global age. Technology has brought everyone much closer together. This means that people of different cultures find themselves working together and communicating more and more. This is exciting, but it can also be frustrating and fraught with uncertainty.

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Which Country do you belong in - interactive quiz

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Which Country do you Actually Belong In? (Quiz) | MoveHub

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Skip To Close 504,745 moves and counting! Get Free Quotes from up to 6 Shipping Companies Last updated on Using the latest controversial scientific research on hangovers, the messiness of your bedroom and ability to ride mules, you can now determine the country that you actually belong in.

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Japanese Culture & Business Women

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'I couldn't tell my parents I had started a business'

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Shoko Takahashi set up bio-tech firm Gene Quest, but didn't feel able to tell her parents for six months that she had launched her own business.

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Dangers of Auto-Translation

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Imagine a far flung land where you can catch a ride from the Jackie Chan bus stop to a restaurant called Translate Server Error, and enjoy a hearty feast of children sandwiches and wife cake all washed down with some evil water.

If such a rich lunch gets stuck in your gnashers, you'll be pleased to know there are plenty of Methodists on hand to remove your teeth.

And if by this point you've had enough of the bus, fly home in style on a wide-boiled aircraft. But whatever you do, please remember that when you land at the airport, eating the carpet is strictly prohibited.

No, I haven't gone mad. These are all real-world examples of howlers by auto-translation software.

Joking aside, poor translations can have big implications for firms who run the risk of offending customers and losing business, or at least looking very amateurish.

Yet we keep being promised that machine learning and natural language processing will soon make flawless, near-instantaneous translation a reality.

So how long will businesses have to wait?

Obscenities

In January, Skype rolled out its real-time translation software, which allows voice-to-voice translation in seven languages.

But even this hi-tech development was not without its teething problems, randomly turning Mandarin words into obscenities on one occasion.

The glitch was spotted by photographer Tom Carter who was in China shooting a Skype commercial and had been using it to speak to people in Mandarin.

When he said: "It's nice to talk to you" to a local scout in Yangshuo, Skype translated it into a very offensive stream of swear words.

The issue was blamed on how the Great Firewall - China's way of censoring the web - had interrupted the Skype conversation.

Neural networks

Translation programs, such as Google Translate, have traditionally been built around phrase-based statistical machine translation.

This works by analysing a back catalogue of texts that have already been translated - such as academic papers and glossaries. It analyses them in parallel in both their original and target languages, then uses statistical probabilities to select the most appropriate translation.

Its effectiveness depends greatly on the quality of the original language samples and it's prone to mistakes, often sounding clunky and mechanical.

For this reason, Alan Packer, director of engineering language technology at Facebook, said recently that statistical machine translation was reaching "the end of its natural life".

Instead, translation tech is now moving towards artificial neural networks. These are structured similarly to the human brain and use complex algorithms to select and use the appropriate translation.

But rather than just translate the words, a neural network can learn metaphors and the meaning behind the language, allowing it to select a translation that means the same thing to a different culture, rather than a direct literal translation which may in some cases cause offence.

Facebook, which carries out up to two billion translations a day in 40 languages, plans to roll out such a system later this year.

Search giant Google, too - which now offers 103 languages covering 99% of the online population - is also reported to be working on switching its translation service over to neural networks.

But it has not said publicly how soon it plans to make that transition.

'Hard problems'

But before you think auto-translation is on the verge of perfection, think again.

Professor Philipp Koehn, a computer scientist and expert in translation technology at the University of Edinburgh, tells the BBC there is still some way to go.

"There are very hard problems with semantics and knowledge representation that have to be solved first, and that we are not close to solving," he says.

"The main challenges are when there is less explicit information in the source language than what is needed for generating proper target language."

For example, Chinese doesn't have the equivalent use of plurals, verb tenses, or pronouns as in English, which makes exact translation very difficult, he says.

And English doesn't use gendered nouns, which makes things tricky when translating into languages that do, such as French, Italian and German.

Human touch

Until these challenges are overcome, mistranslations are likely to continue, whether that's Chinese bus routes changing Sichuan Normal University Campus Station to The University Jackie Chan Campus Station, or restaurant owners calling their establishments "Translate Server Error".

Although translation technology may be improving rapidly, the cost of failure is potentially huge, so many businesses are unwilling to put their faith in it entirely.

Clem Chambers is chief executive of ADVFN, a global stocks and shares information website that covers over 70 stock exchanges around the globe.

He says: "For us, when it comes to creating geographic and language-targeted websites, nothing beats having native speakers who actually have a thorough understanding of the financial markets.

"Translation tech has come a long way and can provide good literal translations, but what we need is something that really speaks the language of the local end user, with all the subtleties and colloquialisms specific to their country."

In other words, translation tech has its uses, but rely on it entirely at your peril.

Follow Technology of Business editor @matthew_wall on Twitter

Click here for more Technology of Business features 

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Wife cake and evil water: The perils of auto-translation

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Imagine a far flung land where you can catch a ride from the Jackie Chan bus stop to a restaurant called Translate Server Error, and enjoy a hearty feast of children sandwiches and wife cake all washed down with some evil water.

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World Business Cultures

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Global cultural differences present a challenge to anybody who is doing business in an overseas country or working with a colleague in another office. How are you going to work effectively across the barriers of culture, language and geography if you don't factor in the cultural nuances and communication-based difficulties you are likely to encounter?

The World Business Culture website is the brainchild of Keith Warburton, CEO of Global Business Culture and generally regarded as one of the world's leading experts on the impact of international cultural differences when working in a global environment. He has brought decades of experience together in a series of country-specific profiles which are designed to offer a practical guide to doing business in 39 of the world's leading economies.

Each country profile is broken down in bite-size sections on such vital issues as meeting styles, decision-making and effective communication - there is even a top tips section at the end of each country profile.

We hope you find the global business culture information contained in the country profiles of great help as you navigate your way around an increasingly complex global commercial environment.

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Business Culture Around the World | World Business Culture

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Global cultural differences present a challenge to anybody who is doing business in an overseas country or working with a colleague in another office. How are you going to work effectively across the barriers of culture, language and geography if you don't factor in the cultural nuances and communication-based difficulties you are likely to encounter?

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4.2.2 Assessment of a country as a market.pptx

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C2 International business support systems.pptx