Niraj Dawar is a Professor in marketing at the Ivey Business School, Canada of. He earned his PhD from Pennsylvania State University. His research currently focuses on marketing strategy, brand equity and brand management issues. His published papers on brand extensions, consumers use of brand and other signals as well as international consumer behavior in a variety of leading academic and managerial outlets, including have appeared in the Journal of Marketing, Journal of Marketing Research, Harvard Business Review, M.I.T. Sloan Management Reviews, Journal of Consumer Psychology, Marketing Letters, Journal of Business Research, the Journal of International Business Studies, and others outlets.
Dawar teaches PhD, MBA, and undergraduate courses in marketing management and brand management, as well as in executive development programs in North America, Europe and Asia. Prior to joining the Ivey Business School, he was Associate Professor of Marketing at INSEAD, France. He was also visiting scholar at the Hong Kong University of Science and Technology during the fall of 1994 and 1995. During the Spring of 2000, he was the William Davidson Visiting Research Professor at the University of Michigan Business School. During the 2005-2006 academic year, he was Visiting Professor at INSEAD’s Asia campus in Singapore.
His most recent book, TILT: Shifting Your Strategy from Products to Customers
, was published by Harvard Business Review Press (November 2013).
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Morris: Of all the films that you have seen, which – in your opinion – best dramatizes important business principles? Please explain.
Dawar: I particularly like The Hudsucker Proxy for its portrayal of business morality, the struggle between good and evil in a business context, and the strategy of an underdog. In the movie there is a seven-minute sequence about a product launch (a hula-hoop) that is sheer visual poetry that sums up a variety of marketing decisions.
Morris: From which non-business book have you learned the most valuable business lessons? Please explain.
Dawar: I particularly like Atul Gawande’s books including Complications and Better for their portrayal of medical case histories. In many of his stories, the lessons show how the practice of medicine and the treatment of patients are about so much more than the administration of pills.
Morris: What’s your response to an observation by Peter Drucker: “There is surely nothing quite so useless as doing with great efficiency what should not be done at all.”
Dawar: I’d go further – it’s not just useless, it can be seriously counterproductive – consider, for example, advertising a bad product really well.
Morris: In Tom Davenport’s latest book, Judgment Calls, he and co-author Brooke Manville offer “an antidote for the Great Man theory of decision making and organizational performance”: organizational judgment. That is, “the collective capacity to make good calls and wise moves when the need for them exceeds the scope of any single leader’s direct control.” What do you think?
Dawar: I wholeheartedly agree with the idea that the competences required to win today’s competitive battles reside in organizations rather than individuals. But I would like to qualify that: a good leader can bring out the best in an organization, and a bad leader can wreck an organization.
Morris: Here’s a brief excerpt from Paul Schoemaker’s latest book, Brilliant Mistakes: “The key question companies need to address is not ‘Should we make mistakes?’ but rather ‘Which mistakes should we make in order to test our deeply held assumptions?'” Your response?
Dawar: It would already be great if companies could learn from the mistakes that they do make – designing tests of their assumptions presumes companies understand they are learning organizations, and that they know how to learn from mistakes.
Morris: The greatest leaders throughout history (with rare exception) were great storytellers. What do you make of that?
Dawar: We learn through stories. Stories are the receptacles in which our brains store lessons. Stories are the way we communicate and remember lessons.
Morris: Most change initiatives either fail or fall far short of original (perhaps unrealistic) expectations. More often than not, resistance is cultural in nature, the result of what James O’Toole so aptly characterizes as “the ideology of comfort and the tyranny of custom.”
Here’s my question: How best to avoid or overcome such resistance?
Dawar: Change happens when the misery of the status quo is greater than the pain of change.
Morris: In recent years, there has been criticism, sometimes severe criticism of M.B.A. programs, even those offered by the most prestigious business schools. In your opinion, in which area is there the greatest need for immediate improvement? Any suggestions?
Dawar: This is a very big question. I have taken a stab at it here, but this may be too long an answer for this interview.
Morris: Looking ahead (let’s say) 3-5 years, what do you think will be the greatest challenge that CEOs will face? Any Advice?
Dawar: All businesses are fast becoming information businesses. CEOs will need to grasp how to build and manage organizations that transform information into value. Advice? Read TILT before it’s too late.
Morris: Now please shift your attention to TILT. When and why did you decide to write it?
Dawar: I have thinking of writing this book for over a decade now. The initial impetus to write it came from my observation that the marketing function was losing clout within companies. The fragmentation of media and the move to consumer information pull as opposed to marketer information push meant that marketers now had far less influence over consumers than they did in the heyday of brands. As a result, they were becoming more tactical – gaining share one quarter, only to lose it the next. Surely there had to be a way for marketers to continue to contribute to building long-term advantage. A couple of years ago, with the emergence of Big Data and the realization that many of the giant companies that had ballooned over the first decade of this century (Google, Amazon, Facebook, and Apple) were all marketing companies, the way forward for marketing began to crystallize: marketers had to continue to drive consumer preferences but the way they did was entirely new. That is what led me to write this book.
Morris: Were there any head-snapping revelations while writing it? Please explain.
Dawar: There were lots of revelations during the writing. The biggest was the gap between where managers spend their time, on their products and production, and what they know is valuable to their customers: trust, reliability, ease of doing business. But there were many small revelations too, including that companies can handle the measurement and management of costs, but they are much less adept at managing customer risk; that companies can reduce customer risk by providing the right information at the right time; and that they’re not alone – they can marshal networks, including customer networks to reduce customer costs and risks.
Morris: To what extent (if any) does the book in final form differ significantly from what you originally envisioned?
Dawar: Like many projects, this book is a lot simpler than it was when I started writing it, the message a lot clearer, and the flow a lot more streamlined, thanks to feedback I received from people who read early drafts. A lot of the complexity was ironed out in the writing. I like this end product better than the ideas that I began with.
Morris: Please explain the most significant differences between upstream marketing (i.e. creating or increasing demand) and downstream marketing.
Dawar: Upstream activities, those related to the product and production, tend to occupy a lot of management time and resources. In fact, businesses are structured around their products and production: they have product divisions and product managers, profitability is generally measured by product (not by customer), planning meetings and budgets are product-based, incentives and bonuses are tied to product volume moved, and the managers’ hopes and aspirations are pinned on product innovation and the new product pipeline. Building better products, conventional wisdom in these companies holds, is their pathway to a better, less price-competitive future. Downstream activities are those related to customer acquisition, satisfaction and retention. Businesses are structured and managed around their upstream activities, when in fact downstream activities increasingly account for a greater share of costs, what customers will pay for, and sources of competitive advantage.
Morris: Even if possible, is it desirable to market both upstream and down stream? Please explain.
Dawar: TILT makes an argument for the importance of downstream activities. But this is not to say that upstream activities no longer matter, or that they should be neglected, or that outsourcing them is good or bad for the company. In fact, if anything, the conclusion from TILT should be that ensuring that a company’s upstream activities remain competitive is important. But they are important in the sense that they represent table stakes – you can’t play without achieving competitive parity on features, products, production, production costs, and supply chains, and you can’t stay in the game without maintaining a certain new product development pace. But to win, you have to achieve superiority in the downstream.
Morris: What exactly is an organization’s “center of gravity”?
Dawar: The center of gravity of business is defined along the upstream-downstream spectrum. Ask yourself first where management attention is concentrated – where do managers spend most of their time, is it in upstream activities or downstream activities? Next, ask yourself where do the bulk of the costs reside. And finally, ask which activities along the spectrum create the most value for customers – which of the activities are they willing to pay a premium for? Answers to these questions will give you an indication of where along the upstream-downstream spectrum your business center of gravity is located.
Morris: You discuss several prominent companies that gained dominant market share by seizing upstream competitive advantage in the past. They include De Beers, Ford, Infosys, Toyota, and Walmart. For leaders of other companies (whatever their size and nature may be), in your opinion, what are the most valuable lessons to be learned from these companies, lessons that are relevant to today’s global marketplace?
Dawar: There are many valuable lessons to be learned from these companies because they have been excellent in their field. However, the valuable lesson to be learned today is that many of these companies see the competitive playing field shifting under their feet. What allowed them to become leaders in their industry in the past is not what will allow them to maintain leadership in the future. TILT spells out how the ground is shifting, and what companies like these need to do to maintain their competitive advantage.
Morris: What are the major implications of a downstream tilt “that goes to the heart of strategy”? So what?
Dawar: There are six major implications for strategy. First, strategy should identify the company’s competitive advantage by asking: why do our customers buy from us rather than from our competitors? Next, instead of asking how much more can we sell, strategy should be about asking what else can we do for our customers? Instead of asking what else can we make, we should be asking what else do our customers need? Instead of asking can we sell better products, we should be asking can we sell products better? Instead of looking for competitive advantage inside our four walls, we should be looking to create in the marketplace. And finally, our innovation strategy should not just be about better products, it should be about creating new criteria of purchase.
Morris: Channeling Kim and Mauborgne, are downstream “oceans” red, blue, or green? Please explain.
Dawar: Downstream oceans in most industries are blue. Most companies today have well-honed capabilities in developing new forms of value in the upstream: think of all the well-established, step-by-step processes defined by stage-gates and milestones that guide pharmaceutical firms in developing a new drug molecule, or that automobile companies use in designing a new car model. Those oceans are red. But when it comes to systematic processes for creating new forms of value in the downstream, there is often no R&D lab, no R&D manager, no R&D budget, and most importantly, no R&D process. Blue oceans.
Morris: Let’s say that a CEO has read and then (hopefully) re-read TILT and now wants to initiate, manage, and complete an orderly transition from upstream to downstream. How best to determine whether or not to do so? And if the decision is to proceed, where to begin?
Dawar: The place to start is to examine your center of gravity. Compare it to the industry center of gravity, to your competitors’ center of gravity, and ask yourself if you are happy with where your CoG is, or would you prefer it to shift? A good place to start is by asking the question: why do our customers buy from us rather than from our competitors?
Morris: For more than 25 years, it has been my great pleasure as well as privilege to work closely with the owner/CEOs of hundreds of small companies, those with $20-million or less in annual sales. In your opinion, of all the material you provide in TILT, which do you think will be of greatest value to leaders in small companies? Please explain.
Dawar: I think all companies, regardless of their size, are information businesses. If you are a company that has more than one customer, you have a perspective on your customers’ business that they do not, and that can be very valuable to them if you can find a way to turn that perspective into added value. I discuss this in Part 2 of the book.
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Niraj cordially invites you to check out the resources at these websites:
TILT website link
Amazon.com link to TILT
Just Marketing blog link