How to do business in a world of difference.
By Dick Martin
"Never before, perhaps, has a culture been so fragmented into groups, each full of its own virtue, each annoyed and irritated at the others." Historian Daniel J. Boorstin wrote those words in 1960. What would he make of us today?
Today, many of us feel surrounded by groups so different in behavior and belief we can’t see what we have in common. To one another, we are totally Other.
To pundits on the left, we are polarized economically, with the rich getting richer and middle class stagnating. To those on the right, we are polarized culturally, with secular sybarites on the two coasts and God-fearing, respectable people in the heartland.
In the United States, the sexual revolution of the 1960s still reverberates in the changing structures of the nation’s families, workforce, and social mores. Historic levels of immigration are changing not only the country’s complexion but also its culture. And in reaction, many people increasingly seek comfort in an ancient, visceral instinct—tribalism. America seems to be shattering along deep fault lines into tribes that occasionally touch but seldom mix. The social distance between people of different incomes and educations has never been greater. They live in different worlds. They don’t shop in the same stores, go to the same movies, or play the same sports. They don’t call, email, Tweet, or friend each other on Facebook. If they sat next to each other at a wedding reception, they’d probably have trouble striking up a conversation. If one were forced on them, they’d probably need an interpreter.
Globally, the world’s wealth is moving from the northern hemisphere to the southern and from west to east, as the population of developed countries ages and the developing world gives birth to a new middle class. Growth is “over there,” in unfamiliar countries with idiosyncratic tastes and customs.
At first, these issues may seem to belong, at best, on the margins of a businessperson’s ambit—something worthy of an hour on the agenda of an executive retreat, or perhaps a paragraph or two in a speech to the local Rotary Club. But acquiring the wisdom of dealing with these new tribes is not touchy-feely stuff—it’s a hardcore operational capability. Understanding the ways and whys of people unlike yourself is key to winning and keeping customers, managing today’s workforce, and relating to all the third-party activists who have an increasingly influential voice in where and how a company does business.
New Voices, New Publics
Being “OtherWise” sounds like good, old-fashioned public relations. But it actually turns the practice, as commonly understood, on its head. To many businesspeople, “good PR” is measured in buzz—the room tone of the modern marketplace. Good buzz is the pleasant melody of excited murmurs and swelling applause. Bad buzz is discordant, distracting, and disturbing noise. Managing buzz is a matter of clever orchestration—piping an agreeable tune into the marketplace and burying static under it.
As good as that sounds, there’s less to buzz than meets the ear. Fragmented audiences don’t reverberate to a single tune. Digital media have transformed people from passive observers into conductors and composers in their own right. Good PR no longer goes to those who can toot their horn the loudest but, rather, to those who can listen the closest. These fractious times call for greater attention to the quiet side of public relations: the listening and analysis that enables companies to make the right decisions.
Companies have never been under greater third-party scrutiny. Businesses have no choice but to deal with these new publics, not only because they threaten a company’s operating flexibility but also because they represent a new opportunity. The companies that learn how to engage them productively will gain a competitive edge in developing new markets and in creating products tailored to these publics’ needs. Conversely, those executives that act on the comfortable assumption that everyone sees the world as they do are headed for disaster.
Most multinational companies have already discovered this in foreign markets. Successful companies have learned that globalization requires more than a passport, a Berlitz guide, and a local “fixer” to make introductions and set up appointments. They invest heavily in understanding the cultural values of the countries in which they do business.
P&G spent three years studying the consumer market in China before introducing its first product in 1988. Its initial plan was to manufacture Tide detergent at a state-run factory it had purchased. But when an expat sent to the country to test some ads talked to actual consumers, she discovered the Chinese had low expectations of laundry detergents—getting clothes whiter or brighter was a low priority. On the other hand, concern about dandruff gave them high expectations of shampoo. Based on those insights, the company shifted production to Head & Shoulders.
Eventually, P&G sent people to live with typical Chinese families to observe how they went about their daily tasks, brushing their teeth, changing the baby, doing the wash, etc. The first toothpaste it introduced to the Chinese market had the flavor of jasmine tea because many local consumers consider tea a natural cure for bad breath and jasmine is the most popular flavor. Today, P&G not only has the best-selling toothpaste and shampoo in China—it is the country’s leading consumer-products company, with revenue of more than $1 billion.
Your Friends and Neighbors?
Ethnic minority groups currently account for more than 90 percent of the country's population growth.
The challenge of adapting to market idiosyncrasies is no longer unique to foreign lands. The United States itself will soon be as foreign as China to most American executives. America is going through demographic change unlike any since the baby-boomer generation upended everything from nursery and schoolhouse to marketplace and Congress. In 2010, for the first time, more than half of all U.S. births were to Hispanic, black, or Asian mothers. In fact, ethnic minority groups currently account for more than 90 percent of the country’s population growth. Four states and dozens of the country’s largest metropolitan areas—including the twenty-three counties that constitute the New York metro area—already have majority-minority populations.
According to the Selig Center at the University of Georgia, the purchasing power of so-called “multicultural communities” will exceed $2.5 trillion by 2015, accounting for nearly one of every four dollars American consumers spend. Indeed, America is already the world’s second-largest Hispanic country, after Mexico. And as the boomer generation retires over the next two decades, American employers will increasingly depend on immigrants to staff new jobs.
Speaking of baby boomers, for the first time in recent history, the oldest segment of the U.S. population is the fastest-growing, adding three to four million people to its ranks every year. Boomers already account for half of U.S. consumer spending, and, with longer life expectancies, that share is almost sure to increase. In fact, younger boomers—people from 47 to 64 years old—are already a more attractive market than their kids, with higher rates of employment and income.
Also for the first time in history, the majority of American householders (what used to be called “heads of household”) are women. Part of the reason is that a record number of unmarried women are having children; in 2009, 41 percent of all births were to unmarried women. Married couples account for less than half of American households; married couples with children constitute just a fifth. Finally, the leading edge of Generation Y—the current crop of 15-to-34-year-olds—numbers just 85 million and is unlikely to feed as much growth as the boomers did. “Marketers can no longer count on sheer demography for growth,” demographer Peter Francese warns. “What growth they see will have to come from product innovation and differentiated value.”
But differentiated value depends on superior understanding of an increasingly complex market with no “standard” household type. The United States is fast becoming a minority-majority, multiracial, multicultural, multigenerational society. “More than anything,” Francese warns, “chief marketing officers need to understand that their customers will never be like their friends and neighbors. They will not be like the people they see every day. Nothing like it.” To many marketers, they will be Other.
Times like these call for more than an adjustment in advertising techniques—they require a whole new definition of marketing: a radical reorientation from upstream activities such as promotions to downstream functions such as product conceptualization and development. Marketing must be more than selling. It must become the engine of discovering and fulfilling customers’ deepest needs, values, and aspirations. And that, of course, must start by understanding who the customer is.
Embrace the Other
The sweet spot in marketing is the break point between individual and culture, where needs, values, and aspirations coalesce. Harvard Business School professor Ted Levitt used to tell his students that no customer wants a quarter-inch drill—they want a quarter-inch hole. People buy products to accomplish particular jobs. That job may be functional (a quarter-inch hole), social (fitting in on the job site), emotional (impressing your spouse), or aspirational (feeling like Norm Abram of This Old House). In most cases, it will be a combination. And in almost every case, a person’s cultural heritage will contribute to shaping that need.
For example, General Mills’ ethnographic research revealed that many first and second-generation Hispanic women consider the preparation of family meals a particularly big part of being a “good mom.” They invest a lot of time and energy in it because they believe that every mother should have her own individual recipes. This attitude is markedly different from the general American market, coming as it does from their country of origin where food was a magnet for gathering, managing, and nurturing multigenerational families.
As General Mills CMO Mark Addicks told me, “To the general American market, a brand like Hamburger Helper is about convenience and great taste in minutes [and] on a budget. In marketing Hamburger Helper to newly arrived Hispanic-American mothers, we still emphasize the convenience, taste and value, but position the brand as the first step to dinner where you add your own special ingredients and ideas.” To many Hispanic mothers, Hamburger Helper is a recipe element, a base on which they can build a meal.
America’s growing diversity is giving birth to an entirely new culture. McDonald’s, for example, discovered that its ethnic customers are trend-setters. A menu item developed specifically for Hispanics did well not only in the Latino neighborhoods of Los Angeles, but also in the chain’s restaurants in Laguna Beach, a predominantly white area. When the same thing happened with Asian menu items and African-American promotions, McDonald’s looked up from its cash-register receipts and realized it was on to something. As a result, the company’s mainstream menu and advertising have become more black, Hispanic, and Asian. McDonald’s calls it “leading with ethnic insights.” The restaurant chain is motivated by more than the opportunity of the ethnic market—it’s big enough that it could run ad campaigns tailored to every ethnic group if it wanted to. But for a company that is dedicated to staying “forever young,” keeping in touch with trend-setting multicultural customers is a no-brainer. Indeed, multicultural marketing is becoming the new mainstream.
In that sense, marketers are a canary in the mineshaft for all businesspeople, whatever the title on our business cards. Whether recruiting or managing our own employees, or interacting with customers, suppliers, and communities, we need to be sensitive to needs, aspirations, and values that may at first seem different, if not peculiar.
The Other is not only the immigrant at home and the stranger abroad. He or she is also the product of the strange, and somewhat paradoxical, times in which we live. While most Americans are pretty close to the center on specific social issues, the relatively small numbers at the vocal fringes often set the beat and melody of public discourse. The proportion of the U.S. population born elsewhere is smaller than in many other countries or even in previous periods of our own history, yet a recent Pew Research Center survey identified “immigration” as one of the top two sources of conflict in society, closely following tensions between rich and poor. And the largest political faction in the United States is the majority that doesn’t vote at all.
"For a company that is dedicated to staying 'forever young,' keeping in touch with trend-setting multicultural customers is a no-brainer."
Still, people seem to be stumbling over fissures right and left. Part of this perplexing fragmentation is the unintended consequence of new communications technologies. Digital technologies that promised to bring us together by making the world smaller have made us smaller by allowing us to create our own private worlds. The Internet is not only collapsing distance—it is folding geography in on itself, like a digital black hole from which nothing can escape. We can each program our own, unique information stream. With the right filters, we can avoid thoughts or beliefs we don’t like. The global village is fast becoming a series of tightly wound personal cocoons, tailored to their occupants’ personal tastes and opinions and connected only to others of like mind and passion.
Back in the olden days—the early 1990s—most Americans still got their news from three big broadcast networks. It was a fairly predictable, consistent news diet. For all its shortcomings, it fostered a collective intelligence and set the agenda for conversation around the dinner table and the water cooler. But with the advent of talk radio, cable TV, and especially the Internet, that has all changed. Digital technology has given people more choice in the news and information they consume. To differentiate themselves, the purveyors of news and information have tailored their content to specific audiences with clearly defined beliefs and values.
Like it or not, businesses operate within that environment of sharply polarized beliefs. The whole Tea Party movement was kicked off on the CNBC business network, when the guy who covers the Chicago Commodities Exchange ranted about the government’s plans to “bail out” “losers” who had defaulted on their mortgages. That led to a heated discussion about the lending practices of banks and other financial firms, followed by outrage at their outsized compensation, which ultimately spawned the Occupy Wall Street movement.
Indeed, pretty much every discussion these days can be characterized as heated. Every argument devolves into a battle between good and evil. In the middle of an endless and insoluble debate on the relative culpability of government and business, people on both sides of the aisle wish a pox on both, an attitude with a tangible impact on all kinds of institutions.
John Gilfeather has been doing market research for more than four decades and has worked with some of the world’s leading companies. In the summer of 2010, he helped design and test a research instrument that probed people’s feelings about companies in the context of the political and social issues roiling the country. Instead of asking for the presence or absence of the usual favorable attitudes—“well managed,” “trustworthy,” “caring,” and the like—the questionnaire intentionally confronted the negative attitudes that everyone knew were on people’s minds. For example, the survey asked, “Does this company have executives who are more concerned about how much money they make than the long term health of their company?” It went so far as to probe for negative attributes such as “greedy,” “arrogant,” and “secretive.” In a last-minute, “what the hell” moment of inspiration, Gilfeather added “idiots” to the list.
The survey examined fifty-four companies, a mix of some with sterling reputations in other surveys—e.g., Johnson & Johnson and Kraft—and some Gilfeather likes to call “the villains du jour,” such as Halliburton, Goldman Sachs, and BP. The results were unlike anything he had seen in more than four decades of plumbing the public’s psyche. When respondents’ opinions were averaged across all fifty-four companies, nearly a third agreed that executives were more interested in their personal compensation than their companies’ long-term health. Nearly a third said the companies were “greedy.” More than a quarter said they were “arrogant” and “secretive.” And one out of five found “idiots” to be an accurate description.
Naturally, the villains had more negatives; more than half of respondents said BP’s executives were looking out only for themselves. But even the heroes had tarnished crowns. Nearly one out of five felt the same way about Kraft and J&J, which were the companies people held in highest esteem. This wasn’t simply a few outliers bringing the average down for everyone. “I’ve never seen so much free-floating anger,” Gilfeather says. “And it appears that it will attach itself to any company, even those that have had great reputations in the past. It’s not just an erosion of positives—it’s a rise in distinct negatives. Companies aren’t dealing with neutral audiences anymore.”
Those “audiences” are no longer passive either. Richard Haass, president of the Council on Foreign Relations, believes that companies’ operating environment is fundamentally different than it was just a generation ago. “Increasingly, business leaders have to contend with people who can’t be told what to do, and, at best, they can only try to persuade,” he told me. “Whether it’s union officials, government officials, regulators, the media, or special interest groups, suddenly they’re dealing with people who have a degree of independence and an even greater say in what businesses can do.”
Indeed, there’s a Wild West quality to today’s business environment. Business leaders never know from which direction to expect the next volley of criticism. The Internet has given everyone a printing press with literally global reach that can even exceed the influence of people who buy ink by the barrel. The New York Times reported on “lean finely textured beef” in 2009, but it didn’t blossom into the “pink slime” controversy until people began tweeting about it in 2012.
Outside the Company Walls
All that free-floating anger is coalescing into deep alienation. A 2011 Gallup survey showed that a majority of Americans have confidence in only three institutions: the military, small businesses, and the police. (One might assume it’s a coincidence that two out of three carry guns.) Less than a quarter of people expressed confidence in newspapers, banks, TV news, organized labor, big business, health insurers, and Congress (which scored 12 percent). Even organized religion, the medical system, and the U.S. Supreme Court failed to inspire confidence in a majority of Americans.
Interestingly, white people express greater alienation than minorities, even though, by most measures, the economic downturn has been tougher on people of color. A recent poll found that African-Americans and Hispanics were twice as likely as whites to believe that “today’s children” will have more, rather than less, opportunity to get ahead than they do. Part of the reason for the difference is that African-Americans and Hispanics start so much further back than their white neighbors. Part of the reason is that many whites believe that overcoming racism is a zero-sum game they are losing. Whatever the reason, as evidenced by a November 2011 Time cover asking, “Can You Still Move Up in America?”, many people believe that the American dream has become a fantasy, a cheery story they don’t expect to come true. As National Journal’s Ron Brownstein put it, there is “a widely shared conviction that the country’s public and private leadership is protecting its own interest at the expense of average (and even comfortable) Americans.”
Such disillusionment is toxic to the market growth that business needs to move forward. And it’s not all rooted in misperception. For example, according to a 2008 study, the United States is the only developed country in which young adults are less well-educated than their parents, with all the negative implications for jobs and income. One million students drop out of high school each year, qualifying them for only the most menial tasks. They lack the skills to be productive employees, and they will probably never have the incomes to be good customers. But those dropouts almost certainly will contribute to the growing culture of failure and hopelessness that poisons the business environment.
Investing in tomorrow’s workforce and customer base by improving local schools is not only doing good—it ensures that companies will continue to do well. But it won’t happen without business leaders who are better attuned to the world outside the four walls of their company. In our increasingly diverse and divided society, becoming OtherWise—understanding of and responsive to different kinds of people—is the essence of leadership. A deep understanding of people unlike ourselves must inform every executive decision, from hiring to promoting, from investment and development to marketing and sales.
Why acquire the wisdom of relating to the Other? Not because it’s the nice—or even right—thing to do but, rather, to be more effective in our increasingly fragmented and global society, as businesspeople and as citizens. You, not to mention your company, can’t hope to flourish in this new environment without an attitudinal change entailing intellectual, as well as emotional, development.
Today, every large company is global. If most of its customers don’t live in other countries, they soon will. Odds are most suppliers already do. Business leaders know they need to expand their managers’ knowledge of other countries, including their histories, cultures, and religions. The days when such understanding could be delegated to a small cadre in the “international division” are over.
A deep understanding of people unlike ourselves must inform every executive decision, from hiring to promoting, from investment and development to marketing and sales.
The same can be said of the world’s biggest, most advanced market. America is no longer a massive, homogenous bazaar—fissures based on sexual orientation, education, and political beliefs crisscross the traditional fracture lines of religion, race, and ethnicity. Doing business across the gaps at home also requires greater literacy in the catalog of differences. But the real challenge both at home and abroad lies at a deeper level than memorizing a few cultural tips or hiring a native guide. It is the challenge of developing an attitude that doesn’t just tolerate difference but understands and welcomes it.
The opposite of intolerance is not tolerance—it’s hospitality. When our primordial ancestors dropped from the trees and started walking across the African savannah on two legs, survival favored those who had an innate ability to work in small groups, as well as a deep hostility toward anyone not of the group. Those characteristics were so critical that, over a number of generations, they became the norm. And they survive to this day. But in the second decade of the twenty-first century, instinctual suspicion is shortsighted and dangerous. There are more strangers in our lives than ever before, no it’s no surprise that, at a personal level, our sense of identity and security feels threatened. But the real threat lies in our inability—or unwillingness—to see beyond differences to what we have in common.
The secret to success in this new environment is to develop business leaders who can understand and relate to others unlike themselves. Such leaders have keen self-awareness, challenging their own assumptions and biases about people who are different than themselves. They are knowledgeable about differences—and even more eager to learn. They have a history of engaging with people outside their immediate circle of friends in meaningful ways. They not only understand other points of view but are highly attuned to others’ feelings.
Technical knowledge, creativity, and managerial excellence will always be in great demand. But tomorrow’s business leaders will have a unique skill—they will be OtherWise. They’ll literally think different.
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