Business owners have formally sounded off on consumer review sites like Yelp — and it appears the vast majority are listening, but don’t take reviews as seriously as consumers do.

That’s just one finding of a recent Woodbury University study that explores the power of the consumer, and consumers en masse, to affect business behavior. Sponsored by ReviewInc and led by Kristen Schiele, Ph.D., MBA, assistant professor in the Department of Marketing, School of Business, Woodbury University, the study found that nearly 75 percent of 261 businesses surveyed monitor customer satisfaction in some form. 

“When we began our research, I didn’t know what to expect because no study had been done from the business owner’s perspective, only from the consumer’s,” Schiele says. “I half expected to find that businesspeople were thinking along the same lines. It was surprising to see that review sites were way down the list — just 20 percent of businesses surveyed were monitoring customer satisfaction via these sites.”

Smart Business spoke with Schiele on how savvy businesses can engage with consumers and use crowdsourcing as a growth strategy. Studies at Harvard and Berkeley examined how reviews affected restaurant revenue.

How is your research broader?

Our study is the first to consider business as a whole, looking at review sites like Yelp, Angie’s List, Google, Yahoo and others. Aside from childcare and pet care, we addressed virtually every industry. We found that marketing services, health care, manufacturing, financial services and real estate are best at dealing with review sites.

Yelp-like sites represent a new platform for consumers to share their experiences with brands and products. Not long ago, the Better Business Bureau and Consumer Reports were all consumers had. Now, companies are trying to figure out this new platform — some of them, anyway. 

Why don’t more businesses take reviews seriously?

The biggest barrier is time. Dealing with day-to-day issues, they don’t have the energy or resources to monitor sites. And some owners prefer not to read negative things. Still, a business can grow, improve and solve problems by looking at criticism, taking it to heart and making changes.

More 
companies are mitigating fallout by using services like ReviewInc, which analyzes qualitative data and presents it in dashboard form. The business can see at a glance what people are saying. 

Suppose a company is on top of the consumer review data. What then? 

Companies that engage with people fare best. If a consumer posts, ‘We stayed at that hotel. The plumbing was bad,’ and the hotel explains how it corrected the problem and adds, ‘Next time you stay at our hotel, we’ll give you a free breakfast,’ that’s a win. But it’s not only about that future promise.

What’s most important is that consumers were heard and responded to — their complaints were validated, and the company showed it cares. Consumers have access to so much information, and so many choices. If industry products and services are similar, why buy from a company that doesn’t care? 

Where do reviews fit in, in a macro sense?

The old model was strictly one-way. Companies told the consumer what they had and that was it. Eventually, it became a two-way conversation where consumers could talk directly to the company. Now we’re seeing three-way communication, with consumers talking to other consumers. Businesses that participate can help foster customer loyalty.

And while it’s beneficial to 
get positive reviews, it’s even more important to get lots of reviews, period. 

So, what’s the biggest takeaway?

Sites like Yelp have turned the tables. The power is in the hands of consumers. It’s important that you aren’t passive. Since you can’t change the platform, how do you change your business to take advantage of a new opportunity to communicate? Understand it and then use it. Use it as a market research tool, which is cheaper than surveys and focus groups.

It’s also more 
authentic since these reflect actual behaviors, not just intentions. Use it as a customer relationship management tool. Then, armed with this information, make strategic decisions to help grow your business.
 
Kristen Schiele, Ph.D., MBA, is an Assistant Professor, Department of Marketing, in the School of Business at Woodbury University. Reach her at (818) 252-5249 or kristen.schiele@woodbury.edu
 
Insights Executive Education is brought to you by Woodbury University
Published in Los Angeles
We’re in the midst of a crisis of leadership — a situation that has weighed down economic development in the public and private sectors, says H. Eric Schockman, Ph.D., chair and associate professor at the Center for Leadership at Woodbury University, where he focuses on nurturing the next cadre of leaders coming up through the ranks.
 
“We know that leaders aren’t born,” he says. “There’s an evolutionary process of skills, training and maturation that defines leadership development. There’s now a burgeoning demand for better skilled, analytically-trained people to move into positions of leadership.”

Smart Business spoke with Schockman about the state of leadership development and how the current crisis might subside.

How has this crisis of leadership manifested?

The crisis of leadership begins with questions around ethical decision-making. When people enter leadership positions in the public or business realm, they carry a toolkit of their own values and structures, and sometimes those values conflict with each other.

At the end of the 
day, leaders have to make decisions —  hey can’t just sit on conflicting values. So, at some point along the way, it becomes a lose-win situation. The crisis lies in the simple fact that too many leaders don’t understand how to achieve ethical decision-making.
 
As you move from there, leaders become distracted by the myriad minutia that they encounter. The visionary piece gets lost. A lot of good visionaries become functionaries, which signals another death knell for leadership. 

In broad terms, how is leadership taught?

You need to look at both the theory and the reality of how leaders become leaders. There are a great many ‘happenstance’ leaders out there. These happenstance leaders are situational — they’re leaders who come to a particular organization and find themselves empowered, yet remain inept. The more enlightened leaders recognize this and embrace leadership training as a tool they can use to develop a more sophisticated skill set.

How do you get a leader to acknowledge, mid-career, that leadership training is appropriate?

Leaders need to recognize that this is about lifelong learning, about the undulating mind wanting to absorb more at any stage in one’s lifespan. Leadership doesn’t reside in a single silo. It carries over into your personal life, your community/volunteer life, your religious organizations and so on. You become a person who is a übermensch — someone who has big understanding of how leadership moves in a holistic manner.

In the private sector, you’re typically looking at a command structure, where followers become geared to the bottom line and management enlists a particular skill set to get people there. Ultimately, the question is, how can you get ahead of any changes? 

That segues to a discussion of the hallmarks of effective leadership. What might those be, generally speaking?

The 12th century philosopher Maimonides wrote that the highest form of giving is doing so anonymously. In that way, the person who’s receiving your money doesn’t owe you a favor. And that’s what today’s leadership often lacks. It’s always this climbing on top of each other, of trying to out-do each other, without a sense of the bigger mission, the bigger picture.

What other models epitomize that big picture approach?

Abraham Lincoln. Lincoln was a walkaround leader. He was at the battlefield. He was directing General Grant. He was talking to troops. He knew what was happening in the war. And yet, he had the bigger vision piece of, ‘I’m not only going to hold the Union together, but I’m going to end slavery.’ It comes down to communications skills. 

Leaders need to be storytellers. Leaders need to develop a contextual basis for their narrative. Lincoln was also very clear about not doing this alone. He cherry-picked his cabinet carefully, as a CEO would, and made sure his team executed and implemented.
 
H. Eric Schockman, Ph.D., is Chair and associate professor for the Center for Leadership at Woodbury University. Reach him at eric.schockman@woodbury.edu
 
Insights Executive Education is brought to you by Woodbury University
 
Published in Los Angeles
Executive compensation is something stockholders really don’t care about when a company is profitable and stock values are going up and paying dividends. And right now, the Dow Jones Industrial Average is seesawing around a record high 16,000 mark. But there are times when people do wonder what’s going on. Last year, Bloomberg Businessweek compared executive compensation to the average workers’ pay. 

The highest ratio was at the 
J.C. Penney Co., where the CEO’s annual compensation was $53 million. His workers’ pay, on average, was $29,700 — a ratio of 1,795-to-1. He was fired shortly thereafter because he had spent too much money on marketing and made too many changes. The company was improving and doing well; his compensation wasn’t what cost him his job.
 
“Of course, when things are going downhill, boards of directors start looking at trustworthiness, ethics, accountability and performance,” says Robert Bjorklund,
Ph.D., a professor in the Management Department of the School of Business at Woodbury University.
 
Smart Business spoke with Bjorklund, who is studying CEO compensation issues in top American corporations, about executive pay.
 
What message does sky-high executive compensation send to employees?
 
Do most workers care how much money Oracle Corp. CEO Larry Ellison makes? Not really.

What workers care about is internal 
equity; how their pay compares to other workers. If the person who’s sitting in the next office, doing the same thing, is making 20 percent more, that’s upsetting. But as far as the CEO, who is levels above rank-and-file workers, as long as he or she is making the company work, employees don’t really care. Employees have a stake, if not a say, in executive compensation, but they really have a stake in executive performance.
 
Should pegging compensation directly to performance be a given?
 
Many question whether CEOs should get a bonus when company performance is subpar. And that’s when you have to come to grips with the definition of performance. What makes a company successful? Must it involve something that has long-term impact? If you’re keeping a scorecard on where the company is going after the CEO departs, has the company been ramping up for the future? If so, that’s a good thing. But if the executive is getting paid for driving the stock price up, that can be disastrous. Assuming a CEO is paid in part by stock options, that means he or she is doing whatever he or she can to drive up that
price. That might put the company in more debt to increase an equity ratio of some sort. But if the stock rises and the CEO cashes out, that may not be good for the company, long term.

It would be better if we could find a way to normalize the value of a company — not in terms of what its cap rate is right now, but where its cap rate is going and the contributions the company is making.

What has been the effect of corporate governance mandates like Sarbanes-Oxley and Dodd-Frank?
 
Dodd-Frank hasn’t been all that effective. It certainly hasn’t changed executive compensation policies. There is an issue of scarcity, of course. There are only so many people qualified to run a Fortune 1,000 company, which drives up their value. For CEOs whose companies are doing well, the board’s personnel or executive committee is apt to think, ‘Our CEO is making only $30 million. Let’s give that person anything he or she wants to stay, because we like the job he or she is doing.’ That also applies when the CEO has no intention of leaving but wants a sweeter deal.

Is CEO compensation out of control? Certainly, if the issue is that there’s no overarching system to govern executive pay. But in the long run, the law of supply
and demand applies. If somebody’s doing a poor job, that person won’t last. It’s also likely that the next person will receive more money than his or her predecessor. Non-board members don’t feel they’re empowered to change the situation. They tend to look the other way — as long as the company is delivering a good product or service at a reasonable price, which is what everyone wants. 
 
Robert Bjorklund, Ph.D., is a Professor in the Management Department for the School of Business at Woodbury University. Reach him at (818) 252-5262 or robert.bjorklund@woodbury.edu
 
 
Insights Executive Education is brought to you by Woodbury University.
Published in Orange County
Executive compensation is something stockholders really don’t care about when a company is profitable and stock values are going up and paying dividends. And right now, the Dow Jones Industrial Average is seesawing around a record high 16,000 mark. But there are times when people do wonder what’s going on. Last year, Bloomberg Businessweek compared executive compensation to the average workers’ pay.

The highest ratio was at the 
J.C. Penney Co., where the CEO’s annual compensation was $53 million. His workers’ pay, on average, was $29,700 — a ratio of 1,795-to-1. He was fired shortly thereafter because he had spent too much money on marketing and made too many changes. The company was improving and doing well; his compensation wasn’t what cost him his job.
 
“Of course, when things are going downhill, boards of directors start looking at trustworthiness, ethics, accountability and performance,” says Robert Bjorklund,
Ph.D., a professor in the Management Department of the School of Business at Woodbury University.
 
Smart Business spoke with Bjorklund, who is studying CEO compensation issues in top American corporations, about executive pay.
 
What message does sky-high executive compensation send to employees?
 
Do most workers care how much money Oracle Corp. CEO Larry Ellison makes? Not really.

What workers care about is internal 
equity; how their pay compares to other workers. If the person who’s sitting in the next office, doing the same thing, is making 20 percent more, that’s upsetting. But as far as the CEO, who is levels above rank-and-file workers, as long as he or she is making the company work, employees don’t really care. Employees have a stake, if not a say, in executive compensation, but they really have a stake in executive performance.
 
Should pegging compensation directly to performance be a given?
 
Many question whether CEOs should get a bonus when company performance is subpar. And that’s when you have to come to grips with the definition of performance. What makes a company successful? Must it involve something that has long-term impact? If you’re keeping a scorecard on where the company is going after the CEO departs, has the company been ramping up for the future? If so, that’s a good thing. But if the executive is getting paid for driving the stock price up, that can be disastrous. Assuming a CEO is paid in part by stock options, that means he or she is doing whatever he or she can to drive up that
price. That might put the company in more debt to increase an equity ratio of some sort. But if the stock rises and the CEO cashes out, that may not be good for the company, long term.

It would be better if we could find a way to normalize the value of a company — not in terms of what its cap rate is right now, but where its cap rate is going and the contributions the company is making.

What has been the effect of corporate governance mandates like Sarbanes-Oxley and Dodd-Frank?
 
Dodd-Frank hasn’t been all that effective. It certainly hasn’t changed executive compensation policies. There is an issue of scarcity, of course. There are only so many people qualified to run a Fortune 1,000 company, which drives up their value. For CEOs whose companies are doing well, the board’s personnel or executive committee is apt to think, ‘Our CEO is making only $30 million. Let’s give that person anything he or she wants to stay, because we like the job he or she is doing.’ That also applies when the CEO has no intention of leaving but wants a sweeter deal.

Is CEO compensation out of control? Certainly, if the issue is that there’s no overarching system to govern executive pay. But in the long run, the law of supply
and demand applies. If somebody’s doing a poor job, that person won’t last. It’s also likely that the next person will receive more money than his or her predecessor. Non-board members don’t feel they’re empowered to change the situation. They tend to look the other way — as long as the company is delivering a good product or service at a reasonable price, which is what everyone wants.
 
Robert Bjorklund, Ph.D., is a Professor with the Management Department in the School of Business at Woodbury University. Reach him at (818) 252-5262 or robert.bjorklund@woodbury.edu  
 
Insights Executive Education is brought to you by Woodbury University.
Published in Los Angeles

Halal is the rules that influence consumption in the Muslim world, directed by the values and beliefs defined in the Quran. It refers to anything considered permissible and lawful.

The global halal market — food and non-food — is estimated to be in excess of $2.3 trillion, with the food sector alone reaching $700 billion annually, says Angelo A. Camillo, Ph.D., associate professor of strategic management in the School of Business at Woodbury University.

In Muslim countries, the halal industry is vital to societal development and economic growth. Global marketers also are strategically promoting the halal industry by targeting geographic clusters with large Muslim populations like France and Italy.

“The primary factor for the rapid expansion of halal is health related,” Camillo says. “Halal industries are emphasizing the sustainability, cleanliness and healthiness of their products.”

Smart Business spoke with Camillo about where this globalization is heading, and how business owners might get involved.

What kinds of products must be halal?

Halal impacts many products and services, although those that impact daily life most are food and beverage. In the Islamic religion, these products must be clean, pure and contaminant-free. For example, Muslims don’t consume pork byproducts, animals contaminated by intoxicants or killed prior to slaughter, or carnivorous animals or birds of prey. Many Muslims cannot take pain relievers manufactured with gelatin made from pigs’ feet and ears.

Some industries directly affected by halal guidelines are agricultural products (plants, animals and derivatives), chemical, health care, cosmetics, personal care, pharmaceutical and medical devices, and financial activities and business transactions.

How are halal products being globalized?

Halal food products produced and consumed locally may have a higher nutritional value, so halal businesses are emphasizing this over culture or religion. However, Islam is the main expansion driver — by 2030, the global Muslim population is expected to grow by 2.19 billion.

Halal producers often make their products on location, leaving insignificant carbon footprints without pesticides, fertilizers or genetically modified organisms. Despite this appeal, non-Muslim consumers may be reluctant to buy halal food products due to the religious implications — a halal-certified Muslim blesses slaughtered animals in the name of Allah.

Who are the industry players?

It’s difficult to obtain true data, as this industry is extremely fragmented. Malaysia appears to be developing as the major halal player, followed by Indonesia and Pakistan. Competition between businesses in these areas, as well as Singapore, New Zealand and Australia, is fierce.

In 2010, the size of the industry in the U.S. was approximately $13.1 billion, compared with Europe at $67 billion, and Asia at $416 billion, according to the Islamic Food and Nutrition Council of America. Many Muslims may be willing to buy strictly kosher meat products, processed according to kosher dietary laws, because that’s the closest thing they can find.

Halal is likely to grow as marketing raises awareness and links halal to sustainability and healthy choices. In the past two years Italy has exploded with halal food products. With a large Muslim population already supplying most of Europe’s organic food, it was a natural fit for companies in every sector to become halal-certified. But the road ahead is bumpy in the U.S. business landscape for halal industries. In addition to non-Muslims’ discomfort with religious implications, there is a lack of trust by Muslims regarding the safe production and distribution of U.S.-made halal products.

What’s the best market entry for U.S. companies?

There are opportunities for profit — as a case in point, Brazil has started producing halal food. Aside from product production, businesses along the supply chain can tap into this market in areas such as research and development, finance, marketing, support service, hospitality, life sciences, agro-based industries or food additives/enhancers manufacturing. However, the best entry for a U.S. company is overseas halal markets that produce products and services locally.

Angelo A. Camillo, Ph.D., is an associate professor of strategic management in the School of Business at Woodbury University. Reach him at (818) 394-3314 or angelo.camillo@woodbury.edu.

Insights Executive Education is brought to you by Woodbury University

 

 

 

Published in Los Angeles

The world of business today goes beyond the U.S. borders, so executive education programs like MBAs have a global component. For example, Woodbury University is part of a customized MBA program through the newly formed Carl Benz Academy for employees of Mercedes Benz and its affiliate companies.

Andre van Niekerk, Ph.D., dean of the School of Business at Woodbury University, says the program specifically serves employees in the luxury brand segment in emerging markets.

“There’s always a market for high-end brands, and that fully applies to the developing world,” he says.

Smart Business spoke with van Niekerk about the challenges and opportunities in marketing luxury brands in the world’s emerging economies.

Given the uneven recovery from the global recession, how open to luxury brands are today’s developing economies?

Virtually all luxury brands are jumping, or have jumped, into the developing world. That market — that collection of economies — is reaching a near-saturation point for some. To a large degree, it’s a matter of numbers; the size of the individual markets is key. If millionaires represent 3 percent of the population of China, for example, companies will pay attention.

Of course, if you step back and ask, ‘what is luxury?’ Your immediate response might be that people who have very little define luxury. In some parts of the world, two meals a day would be considered a luxury. There’s clearly a different context in the developing world, when contrasted with the developed world.

Having said that, however, luxury brands appeal to similar demographics worldwide. The people who buy and consume what are generally recognized as luxury goods, from clothes to jewelry to cars, are simply not as affected by economic downturns as the rest of the population. There’s just less price sensitivity.

Combined with quality and aesthetics, exclusivity is central to marketing a luxury brand. But the richer the world gets, the tougher it is to keep that exclusivity. Brands can artificially impose exclusivity by raising prices. Price, therefore, confers status — the status the brand affords the consumer. It’s an implied status, creating a desire to move up. The challenge for manufacturers is to keep customers brand loyal, wherever in the world they may be.

How do cultural differences come into play, as manufacturers introduce products and develop strategies to market them?

While many recognized luxury brands have a genuine global reach and can be considered universal, local tastes and accepted local norms matter. A specific handbag may become a roaring success in the U.S. but may not be as desirable in China. Or a specific color popular in Western Europe may not resonate somewhere else. Cultural nuances are often reflected in advertising, and it’s common for brands to reword and reposition ads for each market. Some nuances simply can’t be transplanted.

Status exists in every culture, and everyone has an ego, but the drivers for status differ across cultures. The U.S. is largely externally driven, as places like Newport Beach, Rodeo Drive or the Chicago Loop suggest. Other cultures are very circumspect — you don’t wear status on your sleeve.

What impact has the proliferation of luxury brands in the developing world had on those same brands in the developed world?

That trend has given rise to knockoffs. Counterfeit goods pose a huge problem for luxury brands, especially when the population at large may not be knowledgeable about what’s real and what’s fake. Knockoffs can ruin the brand by association. That’s why manufacturers confiscate and prosecute — they actively pay for that vigilance.

Things may be changing on this front, however. In a deal with China, Ralph Lauren agreed to overproduce by approximately 4 percent. Local merchants are allowed to sell the overproduction in controlled outlets at a slightly lower price. It’s a total win — a way to spread the brand successfully and locally, while helping to undercut the market for counterfeit merchandise.

Andre van Niekerk, Ph.D., is dean of the School of Business at Woodbury University. Reach him at (818) 394-3311 or andre.vanniekerk@woodbury.edu.

Insights Executive Education is brought to you by Woodbury University

Published in Los Angeles

Recently, President Barack Obama outlined a plan to combat rising college costs by holding colleges and universities more accountable for results. The foundation of this plan is a ratings system that would provide students and families with information to help them select a school that offers the best value. Ultimately, Congress may tie the provision of federal student aid to a college’s rankings.

What might the proposal mean for colleges and universities and the businesses that hire their graduates?

Smart Business spoke with Luis Ma. R. Calingo, Ph.D., president of Woodbury University, about the challenges of making college more affordable.

Will this proposal help colleges do a better job of turning out graduates who are prepared, for example, for a career in business?

The ultimate impact of the president’s proposal is difficult to gauge. However, the debate must begin with understanding the role of higher education.

Colleges and universities exist for one reason: to produce graduates with highly valued degrees who have the knowledge and the character to serve and lead. President Obama’s proposal enjoins colleges and universities to return to basics.

Doesn’t it make sense to focus curriculum on courses that are most essential to a student’s future career?

While that makes sense at the graduate level, there are benefits to a broader undergraduate liberal arts education, which is when students ought to be exploring their interests.

Businesspeople often say they can’t understand why any undergraduate student would pursue a history major or take a philosophy course. But the students who study history or philosophy are those who end up in law school, just as those who pursue biology may end up in medical school. These are the courses that enrich the mind so that students become better business executives by being more critical in their thinking and more socially responsible. All of those things come from a liberal arts education, which is why many professional degree programs have a strong foundation in liberal education.

On a personal note, my daughter is majoring in theology and minoring in Arabic in preparation for a career in law and foreign service. She’s a prime example of why it’s important to debunk the myth that a liberal arts education does not contribute to preparation for a business or other professional career. The dichotomy between liberal education and professional preparation is an artificial one.

What can be done to reduce the spiraling costs of a college education?  

How people respond to the cost question depends on their perspective.

If you are a parent or student who relies on federal Pell and/or state grants, any move that reduces public funding for higher education is of great concern. It also depends on where you live. A state university education in Ohio costs two or three times what it costs in California.

At Woodbury, what we do and what we spend is related to producing quality graduates. As with most universities, we spend 70 to 80 percent of our budget on personnel. We consistently apply a student-to-faculty ratio to determine new faculty hires. Any inflationary increases are generally tied to the Consumer Price Index. That’s how we establish the bulk of our budget.

In fact, Woodbury is doing a business process improvement study of our student services and business processes to improve our operational efficiency. Other colleges, large or small, should do the same.

Of course, universities like Woodbury could reduce the numbers and kinds of courses offered to focus on those required for majors. That, however, would be counter to the argument that business and other professionals benefit from a grounding in liberal education.

Luis Ma. R. Calingo, Ph.D. is president of Woodbury University. Reach him at (818) 252-5101 or luis.calingo@woodbury.edu.

For more of Calingo’s perspective on the challenges facing colleges and universities today, visit his blog, Pursuing Excellence in Higher Education, which debuts in October.

Insights Executive Education is brought to you by Woodbury University

 

Additional blogs and articles with Luis Ma. R. Calingo:

Better Than ISO? How Baldrige Benefits Manufacturers

5 Quick Questions: More Powerful Than ISO 14000 For Plant Floor Management

Building a World Class University: Beyond The Numbers

Published in Los Angeles