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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
- Veröffentlichungsjahr: 2024
Explore the cutting-edge of marketing new products and services from leading businesses in Asia
In Reimagining Operational Excellence: Inspirations From Asia, world-renowned marketing guru and bestselling author Philip Kotler delivers a groundbreaking book unveiling the transformative marketing strategies that have propelled Asia to the forefront of the global business arena.
In this insightful text, Kotler explores the dynamic competition between Asia and the global West, revealing how it has catalyzed Asia's adoption of incisive and effective marketing practices. The book delves into various dimensions of marketing operations, including quality, cost, delivery, service, creativity, and innovation, highlighting the crucial role of entrepreneurship and leadership in achieving operational excellence. Kotler's analysis extends to significant developments within the global business ecosystem, showcasing how countries like Singapore, Japan, Korea, India, and China are redefining business efficiency and continuous improvement. You'll also find
- In-depth examinations of China's unique and competitive economic ecosystem
- Discussions of the increasingly foundational role played by Singapore as an international business hub
- An analysis of the latest economic developments in South Korea driving marketing excellence in that country
Reimagining Operational Excellence: Inspirations From Asia is an essential guide for anyone involved in marketing, advertising, business operations, or entrepreneurship. This book is not just an analysis of Asian marketing prowess; it's a blueprint for harnessing these strategies to drive business growth and success in today's rapidly changing global market.
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Table of Contents
Cover
Table of Contents
Title Page
Copyright
Dedication
Foreword
Preface: The Next-Level Operations in the Next Curve
Notes
Acknowledgments
CHAPTER 1: Operations as the Center of Gravity
Introducing a New Model of Entrepreneurial Marketing
Reviewing Operational Excellence
Moving Toward Flexible Operations
Stretching the Flexibility Frontier
Stretching the QCDS
Looking at the Impact of CI-EL and PI-PM on QCDS
Key Takeaways
Notes
CHAPTER 2: Competing with the West
Asia in the 1960s: A Good Student
Competing with the West: The Flying Geese Model
The Outstanding Middle Eastern Countries: The UAE and Qatar
Pathways to Competing with the West
Competing with the West with the New Rules
Key Takeaways
Notes
CHAPTER 3: The New Perspective of Quality
Customization Effects on Quality
Quality Versus Sustainability
Reliability Is a Must
Understanding and Managing Customer Expectations
Moving Toward Stakeholder Centricity
Measuring Impact
Shifting from Company-Centric to Stakeholder-Centric
Roles of Leadership and Management
Key Takeaways
Notes
CHAPTER 4: The New Perspective of Cost
Cost Management with Humanity
Entrepreneurial Cost-Cutting
Cost Reduction–Oriented Leadership
Adaptive Cost Management for Customer Value Optimization
Differentiated Social Values Contribution
Shifting from Divisional-Centric to Stakeholder-Centric
Key Takeaways
Notes
CHAPTER 5: The New Perspective of Delivery
Delivering Goods: Past and Present
Delivering Services: Past and Present
The Details of Today's Tech-Driven Delivery Processes
How Companies Have Responded Proactively to Tech Changes
Shifting from On-Estimate to On-Conscience Delivery
Consequences of the 1PL to 6PL Shift
Key Takeaways
Notes
CHAPTER 6: The New Perspective of Service
Customer-Driven Service Improvement
Standardization-Based Service Blueprint
Data-Driven Personalization
Agile in Mass Customization
Transformative Services
Shifting from Divisional-Centric to Stakeholder-Centric
Key Takeaways
Notes
CHAPTER 7: Creativity and Innovation in the New Operational Excellence
Samsung's Innovation Story
The Birth of South Korean Creative Capability
The Hallyu Effect
South Korean Company and the New Operational Excellence
Lessons from Other Asian Countries
Creativity, Innovation, and the New Operational Excellence
The Challenges Ahead
Key Takeaways
Notes
CHAPTER 8: Entrepreneurship and Leadership in the New Operational Excellence
Made-in-India Leaders
India: The Birthplace of Global Leaders
IIT: The Symbol of India's Talent Competition
Infosys Story
Entrepreneurship, Leadership, and the New Operational Excellence
Lessons from Other Asian Countries
Future Leadership Challenges
Key Takeaways
Notes
CHAPTER 9: Productivity and Improvement in the New Operational Excellence
Toyota: The Story of Improvement and Innovation
Toyota's Improvement Toward New Operational Excellence
Japan: The Story of Country Improvement
Japanese Economic Miracle
The Kaizen Philosophy
Stakeholder-Centric Productivity
Improvement Toward Sustainability
Cases from Other Asian Countries
What's Next?
Key Takeaways
Notes
CHAPTER 10: Professionalism and Management in the New Operational Excellence
From Third World to First: The Professionalism and Management Journey
Zooming into Singapore: The Evolution to Global Hub
Singapore Airlines: Service Excellence and Cost-Effectiveness
Changi Airport: Instill Professionalism and Management into People's DNA
Port of Singapore Authority: Global Maritime Powerhouse
Professionalism, Management, and New Operational Excellence
The Challenges Ahead
Key Takeaways
Notes
CHAPTER 11: The Yin-Yang Advantage
Mao Zedong and His Great Cultural Revolution
Deng Xiaoping's Pragmatic Leadership: The Door to Economic Revolution
“Xi Jinping Thought” to Made Chinese Society Stronger
The Yin-Yang Philosophy: Opposites But Balancing Each Other
The Omni Capabilities: Preparation and Execution
The Omni Capabilities of China After the Reforms
Zoom into the Greater China
CI-EL, PI-PM, and Operational Excellence
The Challenges Ahead
Key Takeaways
Notes
Epilogue: Countries, Capabilities, and Operational Excellence
Note
Appendix A: The Omnihouse Model
Note
Appendix B: Inner Development Goals
Notes
Appendix C: Humane Entrepreneurship
The Human Cycle: Nurturing Happiness in the Workplace
The Enterprise Cycle: Realizing the Vision
Integration for Sustainability: Fostering Profit, People, and Planet
Notes
Appendix D: Marketing ZEN
The Evolving Landscape of Consumer Data and Ethics
Introducing a New Framework: Marketing ZEN
The Characteristics of Marketing ZEN
The Steps of Implementing Marketing ZEN
Notes
About the Authors
Index
End User License Agreement
List of Tables
Chapter 9
TABLE 9.1 Toyota's Milestones adapted from
List of Illustrations
Chapter 1
FIGURE 1.1 The omnihouse model
FIGURE 1.2 Stretching the flexibility frontier
FIGURE 1.3 Stages of QCDS
FIGURE 1.4 The impact of CI-EL and PI-PM on QCDS
Chapter 2
FIGURE 2.1 Key moments of competing with the West
FIGURE 2.2 Industrial development matrix of countries in Asia
FIGURE 2.3 Four pillars and the SDGs
FIGURE 2.4 The 5Ps and SDGs
FIGURE 2.5 ESG scoring and rating agencies comparison
FIGURE 2.6 Comparison of SDG-oriented markets in the West and Asia
Chapter 3
FIGURE 3.1 Market share of display (overall)
FIGURE 3.2 Passenger car exports / with permission of Richard Katz
FIGURE 3.3 From input to output adapted from
FIGURE 3.4 Shifting from company-centric to stakeholder-centric (quality)
FIGURE 3.5 Convergence between leadership and management
Chapter 4
FIGURE 4.1 Largest companies in the world by market capitalization as of Sep...
FIGURE 4.2 Largest automotive companies in the world based on revenue as of ...
FIGURE 4.3 Target costing and Kaizen / with permission of Institute of M...
FIGURE 4.4 Two-way cost management / with permission of Taufik
FIGURE 4.5 Shifting from divisional-centric to stakeholder-centric (cost)
Chapter 5
FIGURE 5.1 Consequences of the shifts toward logistics
Chapter 6
FIGURE 6.1 Shifting from divisional-centric to stakeholder-centric (service)...
Chapter 7
FIGURE 7.1 Some key moments in South Korea's economic development
FIGURE 7.2 Creativity and innovation in the new operational excellence
Chapter 8
FIGURE 8.1 Global business leaders of Indian descent adapted from
FIGURE 8.2 Some key moments of India's economic and leadership development
FIGURE 8.3 Campuses of the Indian Institute of Technology
FIGURE 8.4 Entrepreneurship's role in brand management
FIGURE 8.5 Leadership's role in internalizing stakeholder-centric values in ...
Chapter 9
FIGURE 9.1 Japan's key moments
Chapter 10
FIGURE 10.1 Top five economies by GDP per capita ranking, 2023
FIGURE 10.2 Singapore's strategic location as an access point to Asia
FIGURE 10.3 Comparison of Singapore with other world cities
FIGURE 10.4 The five core elements of SIA's HR strategy
FIGURE 10.5 Changi Airport service DNA
FIGURE 10.6 Singapore on the US Legatum Prosperity Index
TM
FIGURE 10.7 Five pillars of the Singapore Green Plan 2030
FIGURE 10.8 Timeline of JSS tranches with payout months and basis periods
FIGURE 10.9 Gini coefficient based on household income from work per househo...
FIGURE 10.10 Citizen population size (in millions) according to population s...
Chapter 11
FIGURE 11.1 The yin and yang symbol
FIGURE 11.2 Framework of preparation and execution to achieve all omni capab...
FIGURE 11.3 Global Innovation Index ranking for China
FIGURE 11.4 The relationship between innovation and development / with p...
FIGURE 11.5 Bilateral influence adapted from
FIGURE 11.6 Labor moving out from agriculture, 2020 / The World Bank Gr...
FIGURE 11.7 Total factor productivity growth (1970–1989) / with permiss...
FIGURE 11.8 Changing composition of private sector employment. / with p...
FIGURE 11.9 HKSAR framework / with permission of AASIM M. HUSAIN
FIGURE 11.10 Foreign direct investment inflows: Gaming versus other sectors ...
FIGURE 11.11 Gross gaming revenue, total tourist arrivals, and Chinese touri...
FIGURE 11.12 Indexed real GDP growth of Asian tigers / Milken Institute...
FIGURE 11.13 The organizational structure of BYD / with permission of B...
FIGURE 11.14 Global carbon emission in gigatons / with permission of Gl...
FIGURE 11.15 Seven segments that drive growth in China
Epilogue
FIGURE E.1 Core capabilities of South Korea, India, Japan, and Singapore
FIGURE E.2 Perfect omni capabilities of China
Appendix B
FIGURE B.1 The Millennium Development Goals (MDGs)
FIGURE B.2 Sustainable Development Goals (SDGs) as proposed by the OWG
FIGURE B.3 Five fundamental aspects of the IDG framework
Appendix C
FIGURE C.1 Humane entrepreneurship model: human and enterprise cycles
Guide
Cover
Title Page
Copyright
Dedication
Foreword
Preface: The Next-Level Operations in the Next Curve
Acknowledgments
Table of Contents
Begin Reading
Epilogue: Countries, Capabilities, and Operational Excellence
Appendix A: The Omnihouse Model
Appendix B: Inner Development Goals
Appendix C: Humane Entrepreneurship
Appendix D: Marketing ZEN
About the Authors
Index
End User License Agreement
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PRAISE FOR REIMAGINING OPERATIONAL EXCELLENCE
“This breakthrough book introduces a new genre of entrepreneurship marketing that uses operational excellence to drive efficiencies and value propositions and allows businesses to adapt to emerging threats and opportunities—a guideline for businesses on dealing with market dynamics. Vivid role models from the best practices throughout Asia show how.”
—David Aaker, vice chair, Prophet; author, The Future of Purpose-Driven Branding; called by Phil Kotler “the father of modern branding”
“This book, by three exceptional authors, is an excellent treatise on the importance of operations and, more tellingly, how to approach that responsibility. There is a lot in here for seasoned executives who are open to being challenged with new viewpoints and just as much for those new to management. I urge everyone to set aside time to read this book. The case studies are excellent and highly instructive.”
—Gerald Zaltman, Joseph C. Wilson Professor Emeritus, Harvard Business School; cofounding partner, Olson Zaltman
“Drawing from a rich tapestry of case studies and experiences across Asia, this book reshapes our understanding of operational excellence. It provides fresh perspectives that are both inspiring and pragmatically instructive—an invaluable resource for leaders and professionals looking to harness the pioneering spirit of Asian business practices.”
—Professor Dr. Marc Oliver Opresnik, Distinguished Professor of Marketing, Lübeck University of Applied Sciences, Germany
“Reimagining Operational Excellence not only offers a playbook for exceptional performance, it does so by sharing brilliance from across Asia. Every executive aspiring to global excellence should prioritize this book.”
—Robert C. Wolcott, PhD, venture investor, advisor, and author of Proximity; adjunct professor of innovation, University of Chicago and Northwestern University
“Customer centricity, speed, flexibility, and execution are the keys to success in this fast-paced world. Reimagining Operational Excellence will show you how companies can better orchestrate strategic business functions and position themselves stronger in a fierce competition to win in the digital economy.”
—José Salibi Neto, founder, HSM; coauthor, Disruptive Leadership: Transformative Skills and Competencies to Lead in a Technology-Driven World
PHILIP KOTLER
HERMAWAN KARTAJAYA
JACKY MUSSRY
REIMAGINING OPERATIONAL EXCELLENCE
INSPIRATIONS FROM ASIA
Copyright © 2024 by John Wiley & Sons, Inc. All rights reserved, including rights for text and data mining and training of artificial technologies or similar technologies.
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Cover Image and Design: © M Corp
Here is the best guide to our future marketers for achieving operational excellence and job success.
―Philip Kotler
To the Asia Marketing Federation (AMF) with its 18 countries/economic regions that support the “Asia to the World!” spirit.
―Hermawan Kartajaya
To my late parents, Charles and Djoewati.
―Jacky Mussry
Foreword
In the ever-changing business world, where adaptability is the key to success and innovation is the lifeblood of progress, the book Reimagining Operational Excellence: Inspirations from Asia couldn't be more timely. The book is a sequel to Entrepreneurial Marketing: Beyond Professionalism to Creativity, Leadership, and Creativity and dives even deeper into the intricacies of modern marketing, illuminating the path to operational excellence in an era characterized by dynamic change and heightened expectations.
Building on the foundations laid in the previous book, the authors turn our attention to operations, the core of the holistic omnihouse model. Here, operations emerge as the lynchpin that connects the seemingly disparate realms of entrepreneurship and professionalism. Through careful analysis and insightful commentary, the book shows how the symbiotic relationship between these two areas of expertise forms the pillars of quality, cost, delivery, and service (QCDS), culminating in the achievement of operational excellence.
What makes this book special is that it draws on real-life examples from the vibrant Asian business landscape. Asia is rightly seen as the rising model. The case studies from South Korea, India, Japan, Singapore, and China illustrate that cultural and organizational contexts manifest themselves in outstanding capabilities. From the surprising Korean wave to the meticulous productivity of Japan, each case study is a testament to the profound impact of entrepreneurial and professional capabilities on QCDS metrics and, by extension, operational excellence.
The book's narrative goes beyond a purely academic discourse; it serves as a pragmatic guide for individuals and organizations alike. Whether you are a student seeking to understand the nuances of modern marketing paradigms, an entrepreneur navigating the turbulent waters of a startup, or a seasoned practitioner seeking sustainable growth, this book will provide invaluable insight to help you move forward.
As we stand on the cusp of the environmental, social, and governance era, where such considerations are paramount, the lessons set out in these pages are all the more relevant. They serve as a guide for companies of all sizes, challenging them to embrace innovation, cultivate leadership, and promote a culture of sustainability.
Philip Kotler, Hermawan Kartajaya, and Jacky Mussry invite us on a transformative journey that crosses boundaries, defies convention, and charts a path to a future where operational excellence is not just a goal but a reality.
—Professor Hermann Simon
Bonn/Germany, summer 2024
Preface: The Next-Level Operations in the Next Curve
The world is indeed very dynamic and unpredictable. The COVID-19 pandemic has subsided, and everything is back in full swing, but we are all still exposed to various classic problems such as climate issues, geopolitical tensions (which have led to conflicts and even wars in different parts of the world), various social and humanitarian issues, and the vulnerable economic conditions. The continuing acceleration of technological developments in multiple fields also keeps shaking up the world and bringing humankind into an increasingly complex landscape of never-imagined challenges.
Regardless of these dynamics, business must continue, with an even stronger focus on environment, social, and governance (ESG) factors. Our book Entrepreneurial Marketing: Beyond Professionalism to Creativity, Leadership, and Sustainability (Wiley, 2023) explains that conventional or procedural approaches are insufficient and will no longer be able to provide adequate results. To survive and develop in these challenging conditions, a business organization must apply an expanded marketing approach by integrating various dichotomous capabilities to increase its agility, flexibility, and resiliency.
The concept of this holistic approach is summarized in the omnihouse model, where the core component that can facilitate an organization's success is the operations aspect. Operations become an essential bridge between various dichotomous elements in the model. Operations can understand what the marketing department wants to achieve and, at the same time, help fulfill the finance department's primary goals. Operations can ensure that the use of advanced technology is genuinely humanity-oriented. Operations also become a bridge between two dichotomous clusters, namely, entrepreneurial and professionalism capabilities.
These two clusters of entrepreneurship and professionalism can influence operational excellence through quality, cost, delivery, and service (QCDS).1 Business organizations need a higher level of operational excellence to continue on the next curve toward 2025 and their journey to 2030 and beyond. In the next curve, operational excellence will be one of the critical determinants of whether our company will grow, stagnate, or even decline. Therefore, we must leverage all the momentum available with all our capabilities.
It is difficult for companies to have all the capabilities contained in the omnihouse model. However, limited capabilities do not mean the company cannot influence the QCDS aspect and ultimately achieve solid operational excellence.
This book attempts to present examples from various Asian countries that have gone through different processes on their respective journeys to nurture the formation of multiple capabilities, which became the foundation for many companies in each country to become competitive global players.
Why Asia? When the International Monetary Fund (IMF) predicted the performance of the world economy in 2023, with a total global gross domestic product (GDP) of US$105 trillion, Asia's GDP was expected to reach US$35.8 trillion, or the equivalent of 34% of the worldwide GDP. This portion exceeded North and Central America's total GDP of US$31.3 trillion (equivalent to 29.7% of global GDP), making Asia the world's largest economy.2 The dominance of Asia's economy, with China as the leading player, is expected to continue, which, according to Goldman Sachs projections, will reach a total GDP of US$90.6 trillion, or almost 40% of the total global GDP of US$227.9 trillion.3
Apart from that, we can be inspired by some Asian countries that have succeeded in overcoming various tough challenges so that they can compete and stand on an equal footing with Western countries that have advanced far, even when these Asian countries were still starting to build their capabilities from scratch or even did not have any capabilities at all. We can see it from the long and arduous journey of various Asian countries becoming countries with a solid industrial base and, in turn, able to stand on the global stage.
We can concisely understand this long journey from the various backgrounds of some countries and how they eventually became very competitive globally. However, it should be noted that there is no guarantee that the countries referenced in this book will remain competitive in the long run. Everything depends on so many factors, including how the government and society in each country take advantage of the existing momentum and how committed they are to developing relevant capabilities and competencies from time to time. Furthermore, individuals, companies, and even countries must collaborate with others to face a world that is often hostile. Collaboration can positively affect individuals, communities, companies, industries, and even a country.
This book will briefly review the concept of operational excellence and examine how the various elements of the entrepreneurship and professionalism clusters affect QCDS. Converging these two clusters is an essential foundation for forming a company's adaptive capabilities in the long term.
In line with the increasingly complex nature of defining quality, we will explore how the new quality perspective is closely related to sustainability or ESG aspects, encouraging companies to continue strengthening their stakeholder-centric orientation to affect society. Cost elements can no longer rely merely on a cost-cutting approach but must align with social values that refer to humanity. An environmental-related cost reduction, for example, will be able to provide a very relevant social contribution.
In line with the growing importance of ESG aspects, technology-based product delivery (reflected by the rapid growth of e-commerce) will cause a significant shift from on-estimate to on-conscience delivery methods to provide optimal customer experience. Likewise, the supporting services required will shift from standard to transformational service. Service will also take an essential role in line with various social changes through transformative service.
After understanding operational excellence and QCDS, we will see many stories from various Asian countries, each capable of influencing operational excellence. South Korea is powerful in creativity and innovation capabilities, ultimately creating a hallyu effect and bringing multiple companies and brands from that country to become world-class solid players. Samsung, for example, has succeeded in building extraordinary operational excellence based on robust creativity and innovation capabilities.
In addition, we will look at India, which has succeeded in building strong entrepreneurship and leadership capabilities shaped by its unique social, cultural, economic, and environmental backgrounds. It is no longer strange to hear that many large world-class companies worldwide are now led by made-in-India leaders.
Japan—an icon for its productivity and improvement capabilities—is where the post–World War II concept of Kaizen originated, making it synonymous with productivity and continuous improvement. Even though it has often been discussed in various literature, it would feel incomplete if we did not highlight the journey of how Toyota became one of the most outstanding automotive companies in the world despite the decline in Toyota's share price at the end of 2023 due to scandals in several Toyota's subsidiaries, among others: safety-test scandal at Daihatsu, emission scandal at Hino Motors, and data scandal in several diesel engines including for the Land Cruiser 300 and Hilux. However, until early 2024, Toyota could remain the world's number one player in the car market.4
We will also learn from a small country with extraordinary capabilities that have made it one of the leading countries in the world: Singapore. We will examine how professionalism and managerial capabilities are ingrained in Singaporean society and have led to extraordinary achievements in various institutions, both government and corporations. At least these two capabilities have made Singapore a global hub. It is an outstanding achievement for a small island country that covers an area of about 730 square kilometers, slightly bigger than the city of Jakarta. All of Singapore's accomplishments were initiated with hard work and discipline since the era of Singapore's founding father, Lee Kuan Yew. Who doesn't know Singapore Airlines? Did you know that one of the universities from Singapore is included in the top 10 ranking of the world's best universities?5
As a finale, we will explore China, one of the global economic powerhouses that has successfully built its omni capabilities, which has significantly affected its ability to create operational excellence through robust execution. China's path to achieve what it has achieved today is a long journey from various eras of leadership with different revolutionary focuses: the cultural revolution under Mao Zedong, the economic revolution under Deng Xiaoping, and the social revolution under Xi Jinping. China has successfully converged and balanced its entrepreneurial capabilities with those of its professional capabilities (a combination of creativity and productivity, innovation and improvement, entrepreneurship and professionalism, and leadership and management), making China a supreme global player.
By understanding the concepts of operational excellence, QCDS, and various entrepreneurial and professional capabilities, which are a subset of the new genre of entrepreneurial marketing, it is hoped that we can make business organizations more competitive and even have a more robust existence in the long term. We can learn valuable lessons from the various examples presented in this book. Suppose we can apply this next level of operational excellence in our company. In that case, we will have more significant opportunities to use all the potential of our company, which in turn can ensure our company participates, survives, and even becomes an important player on the world stage, now and in the next curve.
So, happy reading. Be inspired!
Notes
1
. The integrated concept of quality, cost, and delivery in management is an idea developed by Masaaki Imai.
2
.
https://www.visualcapitalist.com/visualizing-the-105-trillion-world-economy-in-one-chart/
3
.
https://twitter.com/ValaAfshar/status/1749155704617795673/photo/1
4
.
https://www.reuters.com/business/autos-transportation/toyota-shares-slide-unit-daihatsus-safety-scandal-widens-2023-12-21/
,
https://www.japantimes.co.jp/business/2024/01/30/companies/toyota-akio-toyoda-global-sales/
,
https://www.cnbc.com/2024/02/14/toyota-enforces-reshuffling-at-scandal-hit-daihatsu-unit.html
,
https://english.kyodonews.net/news/2024/01/ae5a9a8eaf58-urgent-toyota-group-firm-rigged-data-on-diesel-engine-power-output.html
, and
https://fortune.com/asia/2024/01/30/toyota-worlds-top-car-seller-safety-scandals-daihatsu-hino
5
. According to QS World University Rankings.
https://www.topuniversities.com/universities/national-university-singapore-nus
Acknowledgments
The authors are grateful for the invaluable support and encouragement from the entire management team of M Corp, especially the leadership team: Michael Hermawan, Taufik, Vivie Jericho, Iwan Setiawan, Ence, Estania Rimadini, and Yosanova Savitry.
A special thank-you and highest appreciation to Victoria Savanh, who managed and directed the writing process of this book from the beginning until its publication. The authors would like to thank the editorial team at Wiley for their fantastic attention and collaboration at every stage of the writing process for this book: Deborah Schindlar, Michael Joseph Das, Susan Geraghty, Thandapani Sudhagaran, and Kim Wimpsett.
We would also like to thank and give a thumbs up to the MarkPlus Institute team, who has worked tirelessly for almost one year to help conduct research, brainstorm with authors, and prepare many valuable materials. Special thanks to colleagues who have devoted their energy, time, and thoughts and involved deeply in the preparation and writing process of several chapters: Taufik (Chapters 2, 4, and 6), Yosanova Savitry (Chapters 10 and 11), Ardhi Ridwansyah (Chapters 7, 8, and 9), and Giovanni Panudju (Appendixes B, C, and D).
Special thanks and appreciation to Raditya Yusril, who has helped with excellent coordination and played a significant role in the research and writing process, as well as in organizing meetings and brainstorming. Appreciation also goes to Felix Rahardja and his team, who helped design the cover of this book, and also to Nabilah Ainurrahmah, who prepared various figures for each chapter in this book.
With deep appreciation, we also wish to acknowledge the support from the member organizations of the Asia Marketing Federation and the Asia Committee for Small Business.
CHAPTER 1Operations as the Center of Gravity: The Omnihouse Model
If you picked up this book, you are probably familiar with the term entrepreneurial marketing—not the mainstream one but the new genre that essentially attempts to converge various dichotomous elements (i.e., entrepreneurial and professional mindsets) in a business organization. This holistic approach enables companies to be agile, flexible, and resilient in facing the fast-paced, ever-changing, and uncertain business landscape. But when we review the model, namely, the omnihouse model, it is not the marketing element that is the center of the model; it is operations (see Figure 1.1).
Note
Appendix A provides the details of the omnihouse model for those not familiar with it. We also recommend our book Entrepreneurial Marketing: Beyond Professionalism to Creativity, Leadership, and Sustainability to learn more about the model.
In this book, we will explore this aspect of operations by looking at how the various elements of the entrepreneurship cluster and the professionalism cluster have an impact on quality, cost, and delivery (according to the concept developed by Masaaki Imai) plus service (QCDS). In Figure 1.1, you can note the following:
FIGURE 1.1 The omnihouse model
The entrepreneurship cluster is sandwiched between marketing and humanity and consists of creativity, innovation, entrepreneurship, and leadership (CI-EL).
The professionalism cluster sits between technology and finance and consists of productivity, improvement, professionalism, and management (PI-PM).
We will use examples from companies in various Asian countries and other parts of the world in line with Asia's increasingly significant role in the world economy in recent decades. At least five Asian countries (China, India, Indonesia, Japan, and South Korea) are now members of the G20.
Introducing a New Model of Entrepreneurial Marketing
The concept of a new genre of entrepreneurial marketing discussed in this book was developed because of our experience from the crisis triggered by the COVID-19 pandemic: a company cannot survive if it relies only on a professional management approach. The business is constantly changing; hence, management needs to change accordingly. Competitive companies constantly adapt, either incrementally or radically.
DuPont is one example of how gradually adapting can become a company's foundation and even make it more competitive. DuPont started as a producer of gunpowder and explosives needed during the Civil War. Over time, DuPont gradually adapted and eventually developed a wide range of products that are part of our daily lives, such as synthetic rubber, polyester, nylon, and Teflon—which also entered into a diverse set of fields: health care, electronics, and nutrition. That expansion was also made possible through the company's exceptional commitment to R&D.1
Something similar happened in the case of PPG Industries, Inc., which produced only plate glass when it was founded in 1883. Now, it has diversified with various products covering all types of glass, chemicals, paints, optical materials, and biomedical systems.2
Some companies' small but high-speed adaptive capabilities during the COVID-19 pandemic saved their future. CareSignal, a remote patient monitoring platform, created a new service line to provide COVID-19 education when they realized the pandemic would significantly affect their business. It took the CareSignal team only a few days to set up and launch the new service, which was called COVID Companion and was designed to monitor health care workers exposed to or infected with COVID-19 and low-risk patients who could manage their illness at home. It provided a dedicated platform for remote monitoring and helped health care system manage the surge in cases and ensure the safety of both patients and staff.3 Chemical producer BASF also made a gradual transformation to improve competitiveness and secure long-term growth several years ago. Various acquisition and divestment efforts are expected to generate significant cumulative transformation and impact.4
Some other companies have opted for radical transformations. Let's look at Apple's journey. It started out by making computers and software but then quickly expanded to offer various products, from music streaming and AI-powered personal assistants to wearables. Likewise, Netflix started as a DVD rental service but underwent an extraordinary revamp and eventually became a major player in streaming entertainment, including creating content.5 After Netflix made changes to its business model and in line with technological developments, in 2015 the Netflix streaming business (domestic and international) contributed nearly 90% to the company's revenue.
German steel maker ThyssenKrupp also demonstrated a radical approach. Faced with pressure from competitors from low-cost producers in Asia, ThyssenKrupp took a drastic step: leaving the business of making and selling steel. In 2012, the company began investing in industrial solutions, providing capital equipment, software, and services to manufacturers, including refineries and automakers, which then grew very fast and now contribute almost half of the company's total revenue.6
With examples like these, we can understand a new type of entrepreneurial marketing that helps business organizations become highly adaptive and avoid marketing blind spots, such as ignoring changes in the macroenvironment, misalignment of marketing and finance, disharmonious marketing and sales relationships, weak integration of online and offline marketing, overlooking human capital, and lacking humanity in marketing. Marketing blind spots are a condition in which a company has carried out various marketing management processes properly but does not realize there are still many unconnected elements that hinder the company and ultimately cause it to lose its ability to compete.
The essence of the new genre of entrepreneurial marketing is about converging the various dichotomies within the organization itself. Learning from the phenomenon of marketing blind spots, a business organization must be able to converge elements of marketing and finance, technology and humanity, as well as the two main clusters in the omnihouse model that have so far been considered opposites, namely, the “entrepreneurship” cluster (which consists of components of creativity, innovation, entrepreneurship, and leadership) and the “professionalism” cluster (which includes productivity, improvement, professionalism, and management). This convergence process—let alone combining two opposing mindsets—as a holistic approach to the new genre of entrepreneurial marketing is not easy, especially if an organization has significant rigidity and inertia.
Forming an interconnected, flexible, and results-driven organization will put immense pressure on the operational aspect, because it must balance rigidity and flexibility to remain relevant in a dynamic business environment, increase organizational survivability in various turmoils, and be sustainable in the long term.
Reviewing Operational Excellence
In the past, certain companies wielded operational excellence as a crucial element in their competitive advantage, providing new insights regarding operational excellence that we often refer to today.7 Examples include the following companies:
Ford introduced the conveyor belt assembly line, which is the cornerstone of modern mass production processes.
Toyota put forward the concept of continuous improvement and a production system “just in time.”
Amazon is a digital era icon that combines process orchestration with digital technology support that can integrate online virtual worlds with the real world.
When achieved, operational excellence can optimize business processes to increase efficiency and productivity, affecting the company's operating margin, net profit, employee turnover, and customer satisfaction. Additionally, the engagement of workers with their companies will increase and can positively affect companies' profitability and employee turnover. Finally, business organizations that achieve operational excellence will become agile and flexible and have a sustainable competitive advantage. In short, operational excellence is a long-term strategic role for the company.8
Operational excellence is strategic for companies because it has several essential characteristics:
Focus on value creation.
Operations are the fulcrum of various organizational departments that form an integrated value chain within a company. Operations is an intermediary between marketing, which usually focuses on the top line, and finance, which prioritizes the bottom line in the income statement.
Maximize efficiency.
Operational excellence significantly affects a business organization's efficiency (and, in turn, productivity) through various cost/expenditure savings, which significantly increase operating margins and net profitability.
Support innovation.
Operational excellence enables companies to have sensitivity, adaptive ability, and flexibility to deal with various changes in the business environment, see new problems and challenges, and immediately respond in the form of innovations.
Nurture improvement.
Operational excellence encourages everyone involved to have a good understanding of what is going on in the company, what is going well and what is not, so that everyone can make the necessary improvements in various value-creation processes on a day-to-day basis.
Improve competitiveness.
Having better operational excellence than competitors will improve a company's competitive position in an industry and business competition in general and provide an opportunity to be more sustainable than its competitors.
Focus on people.
Operational excellence can be achieved only with strong employee engagement. Therefore, it is a consequence for the company to provide the best for its employees so that they also offer the best for the company in all processes, from production, distribution, and sales to services.
Put customers first.
The best of operational excellence is offering customers the highest quality products and services that can be delivered according to customer expectations at the most optimal costs to provide reasonable prices.
Implement sustainability.
Through various improvements and innovations, companies can develop operational excellence oriented toward sustainability and, even more broadly, on the environmental, social, and governance (ESG) aspects through implementing cleaner/greener processes, reducing waste, implementing a circular economy, and so on.
These strategic aspects are why the operations element is central to the omnihouse model of entrepreneurial marketing.
Moving Toward Flexible Operations
The new entrepreneurial marketing concept of operations as the center of gravity emphasizes that companies must be able to converge professional and entrepreneurial capabilities to advance toward a successful future. Hence, companies must possess strategic flexibility because managing rigidity and flexibility is critical.9
Companies can no longer be fixated on improving business by pursuing only efficiency improvements, which will later be reflected in various financial ratios such as return on sales, asset turnover, return on assets, return on equity, and so on. So, high flexibility in the operational aspect required to deal with the ever-changing market becomes increasingly crucial in the current and future complex business environment.10
The business environment is becoming increasingly complex, aligning with the involvement of companies in the business ecosystem (both conventional and digital). This ecosystem provides a substantial entry barrier, solutions for more extensive problems, and versatile platforms. As companies become more integrated, operations must be able to execute various value creation and objectives from multiple functions, including marketing and finance. Additionally, operations must realize the idea of technology for humanity.11
Stretching the Flexibility Frontier
The active involvement of companies in a business ecosystem requires a more advanced form of operational excellence. Hence, operations must rely on more than just the company's internal resources and capabilities due to dynamic interactions with multiple parties in a business ecosystem increasingly influencing them. The company's flexibility will be significantly affected by several characteristics that form the company's new operational excellence (see Figure 1.2), namely, the following:12
Seamless interdependency.
The integration of a company depends on the number of parties that cooperate with it in the same business ecosystem, the extent of interdependence, and the seamlessness of the relationship. The more parties that collaborate, the higher the interdependence, and the more seamless the relationship, the higher the integration is formed.
Flawless compatibility.
Companies must examine the compatibility of technology used in their operational activities with other organizations in the same ecosystem. Additionally, organizations must employ a similar process, methodology, protocol, governance references, and culture. The more perfect the compatibility with other organizations in terms of process, methodology, protocol (including IT protocol), governance references, organizational structure/flow/bureaucracy, vision, mission, and culture in a business ecosystem, the more it shows the character of operational excellence.
FIGURE 1.2 Stretching the flexibility frontier
Immediate responsiveness.
Companies can use a business ecosystem to remain relevant in an ever-changing business environment, responding quickly to changes even if they show discontinuous trajectories. The faster the operational responsiveness of the company supported by its ecosystem, the stronger the indication that the company is performing operational excellence.
Suppose companies have increasingly seamless interdependencies, have flawless compatibility, and can respond to changes in the business environment, including various changes in the market or industry. In that case, companies can push the flexibility frontier further to gain capabilities beyond the operational excellence we have known.13 Every company needs a post-operational excellence capability that enables it to create a competitive advantage (through operational competitive advantage), which is essential for fast organizational learning processes and making changes accordingly.14
Stretching the QCDS
Operational excellence, as a systematic approach widely applied in various business organizations, aims to achieve the best performance in quality, productivity, and delivery, including service delivery.15 One reference component of productivity is cost. This component aligns with Masaaki Imai's quality, cost, and delivery (QCD) concept.16 We add to Imai's idea the service (S) aspect as an element that needs to be given greater attention, which we call QCDS. Therefore, the delivery aspect will be focused only on the product, which will then be complemented by several supporting services, which will be discussed separately in the service aspect.
If simplified, there are several stages (see Figure 1.3) that a company will usually go through for the four QCDS aspects.
