| Issue 06 |

Michael Illouz, CEO, Teva-Naot

• Number of employees in firm : 200, plus 300 under subcontractors
  
• Number of employees under my direct responsibility : 10
  
• We provide : Comfortable footwear.
  
• I'm on the job for : 6 years. Prior to that I worked for 16 years in Strauss industries, and managed Tufinei-Sa'ar in Tefen for two years. I have a M.A. degree in Human Resource Management in Leicester University. I've also taken courses in HR studies in the Technion and in Business Management in the University of Haifa.
  
• I like on the job : See how people grow, are empowered, get up happy and full of energy.
  
• Most difficult on the job : When people feel impotent. I find it most difficult when they tell me "it can't be done".
  
• Goals I set for myself: At Teva-Naot we want to be a leading international brand from based in Israel. 80% of our sales are for export, and we are proud to represent the challenge of exporting from the Galilee in the face of giant international footwear firms. My personal vision is to make people feel good. When people feels good, they inspire others. The people around them get better, and later so do the city, state and entire world.
  
• Our vision: We offer unique footwear solutions to our costumers, making them feel free and comfortable, every day and all day long. When a person walks comfortably and feels comfortable, it makes his day. We came to this vision with the help of a strategic consultant from Europe, who has been working with us for some years. We sat together - 10 people - corporate managers and designers and built our vision, values and strategy. Now we have our own internal bible, a book 350 pages long. In light of this strategy, Naot has taken the fashion towards comfort. We focus on three categories - comfort footwear, fashionable footwear and outdoors footwear. Teva-Naot now offers the Israeli consumer the wide range of collections that we offer each season abroad, through a chain of 12 branches we acquired two years back.
  
• Original product in our market: Flexy - our own product. It's a line of handmade, natural-materials shoes, with a replaceable inner sole made of cork. The sole is anatomic - taking the negative form of the person's foot, achieving extra comfort and better weight distribution. In the long run - it prevents pain and orthopedic problems. Seven years ago, when we presented it, we were unique in offering this solution in the world market. It allowed us to make our big international breakthrough.
  
• Sources of innovation : We have a team of 12 in-house designers, development and technology personel, as well as German and Italian consultants. New ideas come from fashion trends around the world (which are found in commercial databases), from exhibitions, conventions, looking at shop windows, consumer reaserch and requests by distributers and buyers.
  
• Book recommendation : The Fifth Discipline, by Peter M. Senge.
  
• To purchase the book: The Fifth Discipline
• Send comments to : illouz@teva-naot.co.il
• Would you like to be interviewed? : contact us
  

On Public Relations and Strategy

What is the relationship between public-relations and strategy? As discussed on the previous issue of LaZOOZ, public-relations are an important, and even crucial, part in the area of Marketing Communication, and therefore supports the strategy. Using the correct PR makes it possible to expose the products and services of the organization to the world, to develop investor contacts, to transmit the values and vision of the organization (externally and internally - to various levels within the organization), as well as to deal wisely with crisis. Still, one may consider a tighter, more sophisticated and direct integration of strategy and PR.

Here are several examples of a fruitful linkage of PR and strategy:

• The Israeli advertising agency Zarmon-Goldman believes that PR is stronger than advertising. Zarmon-Goldman climbed to be among the leading 10 advertising agencies in Israel, on the waves of the PR produced by their provocative advertisements. Censorship bans? Petition to supreme court is underway? Great - nothing better for promoting their clients and the agency in the collective awareness.
• The recent revolution in the Israeli Labour Party, promoting the young leadership to top positions, might prove to be more than a protest move by the party's younger faction. It may be a brilliant strategic move. In the USA, the lesson has been learned long ago - the nation likes a "Hollywood-style", good-looking president, and if he plays the sax - it's even better. It started out as a tactical move, but today a face that looks good on a TV screen is a strategic asset.
• The advertising campaign by Bank Hapoalim, starring Yair Lapid, is more than another celebrity-based campaign. Beyond the values that are related to Yair Lapid (credibility, warmth, friendship), the bank has gained the benefits of using a top media person. Not only does Yair look good, and that his opinion as a journalist matters - the mere fact of hiring him draws the attention and mentioning of other journalists. In the age of post-journalism, with a tendency to personal writing, it is not surprising to see the wave of responses to the advertising of the bank from his colleages.

How, then, should one produce a better integration of strategy and PR? One should examine the fit to the media when forming various parts of the strategic plan. Following are some suggestions:

• Choose a very "communicative" vision : this certainly serves the internal communication, but also goes a long way towards being in the headlines. Therefore, you should make sure in advance that the vision is understandable and exciting in the eyes of clients and media. Such an attractive vision lead Picanti Chain (that offered cheap food products with a "Robin Hood" type vision) and Ford (with the initial vision of "a Model T for each worker").
• Support "communicative" products or services : in choosing the product and service mix, one should examine their media and news value. Interesting features may be highlighted in almost every product, but more attention will be given, for instance, to those that have a direct (e.g. Viagra) or indirect (e.g. fashion) relation to sex. Another example - a non Cosher restaurant in Israel has a higher PR potential.
• Acquire media access: according to Jack Welch, even the giant General Electric gained momentum, media attention and free publicity when it bought NBC. Not every organization can and should buy media channels, but - as demonstrated above - it is possible to make "small" acquisitions, such as using a known media personality as spokesperson.
• Develop logistic flexibility: this point is extremely important for small businesses. According to Al Ries, even if you have an excellent story to tell the media (be it related to your vision, a product, a service or a spokesperson) - you cannot be certain of the timing of the media exposure. It may even take several years. Therefore, you should ensure that your organization is lean and mean before the media exposure, yet ready to grow quickly when exposure comes and demand grows exponentially. Among other things, operations, including manufacturing and supply, should be pre-planned to transform from small volumes and zero inventory to large volumes (for instance - with the help of subcontractors).
• Somtimes you're better off...avoiding the radar : if you are not logistically prepared for sudden growth, or if you'd like to avoid waking up giant or potential competitors, you steer clear of any public relations, and operate under "radio silence". In Israel, a newspaper item leads to a TV interview in the speed of lightening, and if you can't handle the media wave - you shouldn't start it.

• For articles on strategy and other subjects : click here
• For information on Proactive PR Management workshops :contact us

Double-Digit Growth: How Great Companies Achieve It - No Matter What / Michael Treacy / Portfolio

Let us consider for a minute a large public firm from the investors' point of view. In order to win their trust (and money), it is expexted to fulfill a very clear, yet difficult to accomplish, goal: consistently demonstrate double-digit profit growth rate. Consistently - meaning for many successive years. Unswaying. Without surprises. Double-digit growth - because for 5% annual return no one would take the risk of buying stock (there are more solid channels yielding such return).

The reward for firms that are able to do so is enormous: high market value, sweeping appraisal, market leadership and...fat bonuses, year after year. You would not oppose and of these, would you? But how to keep such a high standard, even in years of recession, even in saturated markets, eben when costumers are more choosy and prices are falling?

Double-Digit Growth , Michael Treacy's book, deals exactly with that issue. Treacy, a highly acclaimed strategic consultant, has analyzed consistently growing firms. His findings are encouraging, and indicate that it is possible to manage a successful "growth portfolio", for years, by using a planned and adapetd combination of five possible growrth sources:

(1) Preserving existing clients - a relatively easy direction, recommended for markets
     with low costumer loyalty.
(2) Gaining market share - a demanding and exhausting direction, achievable through
     organic growth (especially with low costumer loyalty), or through M&A (especially
     with high costumer loyalty).
(3)  Controling growing segments - the easiest direction, requiring the ability to
     predict the growth of a certain segment (due to deomgraphic changes, consumer
     tastes' shift, or a technological or other breakthorugh in value to costumer).
(4) Penetrating a related market - if it is dynamic and expected to grow, providing
     you will be able to lead it (with the help of core competencies), and maintain
     leadership through your technology, contacts and business model.
(5) Invading new markets - through the acquisition of firms, even smaller ones, in the
     new market (to bridge knowledge gaps), and providing you act like investors
     (carefully examining hundreds of investment opportunities).

The growth portfolio, according to Treacy, does not have to consist of all of these five sources, and it is vital to adapt it to your own market and business reality. For instance - most of the growing firms mentioned in his book have found enough growth sources in their own markets and related markets, and have therefore not invaded new markets.

The book dedicates one chapter to each of these growth directions, and includes examples, recommendations, rules of action, and surprising insights. The book's major flaw is it's limited length, and the lack of empirical basis for some of the recommendations (or at least no record of such a basis). Notwithstanding, the book does carry a very significant message: consistent double-digit growth is achievable : if you set it as a goal, if you are measured by it and if you handle it systematically. Run and buy the book - investors could not thank you enough.

• Buy the book at : Amazon | Barnes & Noble
• Visit Michael Treacy's website : www.michaeltreacy.com
• A list of other must-read books for managers 
• For information on ZOOZ Costumer Preservation workshop : see page 14 of our Strategy and Marketing workshops description (Hebrew Pdf file), or contact us

Adding a Dimension

Adding a Dimension is the sixth and final Systematic Invention Thinking tool presented in the column. While previous tools focus on the components of the product and its nearby environment, this tool focuses on the variables of the product and the environment, attempting to create new relationships between a set of two variables

The steps for using Adding a Dimension are as follows:

1. Choose an existing product or service

2. List the variables of the product or service and its immediate environment

3. Examine the relationships between two variables (at least one of which is the product/service)

4. Create a new relationship (dependency) between the two variables

5. Visualize the new product or service, and identify its benefits and uses

6. Repeat steps 3-5 with other sets of variables, to produce more innovations

Example 1 :

• Existing product: a watch
• Variables of the product: color and location of dials, brightness of light, type of alarm, color of strap, graphic design...
• Variables of the environment: time, date, country, day/night, age of wearer, color of shirt, personal taste...
• Improvements that have already been made:
  • Swatch (a collection of watches designed to suit an assortment of personal tastes) 
  • Changeable straps in a variety of colors (a relationship between strap color and color of outfit)
  • Dual Time (a relationship between country and location of dials - e.g.: watch shows "New York time" at the push of a button)
• Improvements that have not yet been made (as far as we know):
  • Automatic synchronization with local time (according to the country you arrive at, and the local winter/summer clock. Mobile phones already have such a feature)
  • A watch that sings "Happy birthday!" (a relationship between date and type of alarm)
  • A watch with an automatic light when it is dark outside (so that you can always see the time)
  • A two-sided watch with a two-sided strap (in two different designs - e.g. digital and analog; dual purpose - regular and cooking timer)

Example 2 :

• Existing service: a gym
• Variables of the service: type of equipment, instructions of use, cost of membership, presence of instructor…
• Variables of the environment: time of day, length of wait, current number of members, height of member...
• Improvements that have already been made:
  • Happy hours (cheaper prices at less crowded times)
  • Personal trainer (pay per hour)
  • Instruction of use on each piece of equipment (for working without a trainer)
• Improvements that have not yet been made (as far as we know):
  • Automatic adjustment of equipment (each member gets a personal card with information such as weight, height, muscle strength - and the card fits into the device and adjusts length of bench, number of weights, personalized training instructions, etc.). The device may also record previous training sessions and continue the training program.
  • Training incentives - a member discount or free cafeteria dishes for completing training goals (number of monthly visits, weight loss or other parameters).
  • Replacing instructions (for different exercises on the same equipment).
  • Free group trainer (to teach stretching exercises, for instance) when the wait to use the equipment is long.

• For description of the Adding a Dimension thinking tool, read  the article "Innovate!"

Shaving Knife with Battery

If innovation management is a form of art, The Gillette Company is a master artist. Not only do employees arrive unshaved to work - to try out new shaving knifes. Not only has Gillette developed a long line of breakthrough innovations (dual shaving knife, triple shaving knife, battery powered shaving knife...). Gillette also presents its innovation in a regulated and wise fashion, controlling the pace of innovation in the market. Approximately every five years it introduces a new and innovative generation of shaving knifes to the western countries, while rerouting the previous generation knifes to third world countries. In such a way, the "old" production lines gain several more years of operation. Between each generation Gillette offers smaller improvements every year. And the result? Gillette controls 70% of the world's shaving knifes market, an enormous, consumer products market, supposedly a highly competative one. And if you think that it is a matter of chance - better think again. The Gillette Company is also the owner of Oral-B, demonstrating a similar predatory presence in the tooth-brush market.

How about the battery powered shaving knife, then? We tried it out, and definitely recommend it. It is a regular size knife, with a battery inside the handle. When you click a green handle switch, the whole knife vibrates gently and rapidly. The sensation is similar to a regular shaving knife, but with the motion and vibration of an electric shaving machine. The shave is not necessarily smother, butm the movement on the skin is smother and faster, reminiscent of a hovercraft. It is very difficult to cut oneself with this knife, as it doesn't get stuck on rugged skin, but hovers over it.

As in the introduction of previous generations, this latest generation allows Gillette to raise the price of the knife. However, unlike in the past, Gillette was wise to integrate another product with the knife - a regular Duracell battery. And as you might have already guessed - Duracell is another brand of the Gillette family. The only business mistake that Gillette might have done is that (according to the ads, at least) the battery is good for 6 months. Why make such an effecient product instead of selling more batteries? Don't worry, count on Gillette to offer a knife with a lamp, to increase battery usage. Or, maybe integrate Gillette shaving foam into the knife? Or perhaps even...toothpaste???

• For Gillette website: click here
• For details on Systematic Innovation workshops: see our Innovation and Creativity workshops description (Hebrew Pdf file) or contact us

Innovation ideas for carpets

The following ideas were developed using various thinking tools, and do not exist at present (to the best of our knowledge):

1. A self-folding carpet (with appropriate springs)

2. A "writeable" carpet (combing the hairs in one direction creates lines of opposite colors)

3. A carpet with an air mattress attached below (turn over and use as a bed)

4. A double-sided carpet, with different designs on each side

5. An elastic carpet, to fit room size

6. A carpet with rubber stickers, to avoid movement (similar to bathroom carpet)

7. A warm carpet (like an electric sheet)

8. A carpet with a design that varies with time (new color layers that are exposed as carpet is wearing out)

9. A double-sided carpet for winter ( thicker warmer hairs) and summer (smooth and "cool") use
10. A "lego" carpet of several parts, divided for washing each part in a washing machine

• Articles on Systematic Innovation 
• We will be glad to read your comments and suggestions

Risk Control and Business Intelligence

Once in every few months we get information on business risks in Israel, including data such as the Risk Indicator in various markets, and the number of businesses expected to be in serious trouble or even get closed down. Naturally, every business holds a certain risk, but a sound evaluation and management of the risks a firm exposes itself to, dramatically improves its chances for avoiding or surviving risk situations.

ZOOZ now offers a new workshop, that provides CEOs, CFOs, CMOs, sales managers and even field personnel tools for setting a maximum risk exposure standard that the firm allows, as well as various techniques for containing the risks, warning signs in client or supplier behavior and ways of action in the various stages of the risk. In addition, the workshop covers principles and tools for gathering business intelligence for risk-conrol purposes. During the workshop or in the accompanying consulting, the tools are implemented in the firm's own business reality, and principles are adapted to market type, size of the firm, market conditions, etc.

• For further details please see page 21 of our Strategy and Marketing workshops description (Hebrew Pdf file), or  contact us

Hebrew Reversed

Hebrew is not an easy language. Especially if you just typed the name of a new client in Outlook, and get the English letters instead ("akuo fvi" instead of the Hebrew equivalent of " Shalom Cohen "). If you get Hebrew and English text mixed up several times daily, and you are tired of mentioning Bill Gates, it's time you install "Hebrew Reverse" program. It is a freeware, making life somewhat more bearable. Next time you type a Hebrew word in English mode by mistake, you do not have to delete and type over again! Mark the English text, click F10 and you get your soothing Hebrew word or phrase.

The software can also handle backward written Hebrew by using the F6 key. This feature is most useful when trying to copy Hebrew text from some Hebrew websites. By the way - you can always asign other keys to perform these tasks.

• Download the freeware from this website

Unification

About 10% of the ads that win creativity prizes around the world use the logic of Unification . The idea is to produce a surprising combination, or even fusion, between a symbol of the product's benefit and a symbol of the product itself.

At a first look at the Ad in front of you something looks strange. A second look makes it obvious that it is a strawberry taste toothpaste.

In such a manner, Unification generates a visual stimulation, making the viewer stop and try and figure out the "riddle". Thus, the ad gains a higher rating. Latter, when they've solved the riddle, you've created a powerful, non-verbal, unforgetable message in the mind of viewers.

One thing to pay attention to when using unification to create an ad, is that it should create a real fusion - producing a surprising hybrid, rather than just have a strawberry on the top of a toothpaste, or a lion on the carhood of a Peugeut.

• Source : Kodomo Bates, Kuala Lumpur Kevin Lee Tim Yang K.H.
• For information on creative advertising workshop see page 18 of our Strategy and Marketing workshop description  (Hebrew, PDF file)