McKinsey explains how to win in massive, high-growth emerging markets

I found myself geeking out reading this McKinsey Quarterly article and wanted to share its insights and conclusions with y’all.

Full article here. Nothing ground-breaking, but great anecdotes, mini-case studies, and big-picture thinking. Particularly like Coca-Cola’s “picture of success”.

I’ve also clipped to my public Evernote notebook (where I share every online article that I read and highlight).

Here are the 10 main points with supporting excerpts. Enjoy!

#1. Target urban growth clusters

Walmart opened first store in Rogers, Kansas and actively avoided highly competitive metropolitan markets

#2. Anticipate moments of explosive growth

While refrigerators and washing machines are often lumped together as white goods, consumption data show that in Beijing, purchases of the former start to take off at annual incomes of $2,500 a year and slow above $6,000, while the take-up for the latter doesn’t begin until incomes approach $10,000 a year

#3. Devise segmentation strategies for local relevance and global scale

A careful segmentation strategy helped Frito-Lay capture more than 40 percent of the Indian branded-snacks market. The company tailored global products, such as Lays and Cheetos, to local tastes. Frito-Lay also created Kurkure, a cross between traditional Indian-style street food and Western-style potato chips that represented a new category in India and is now being sold in other countries. Critical to Kurkure’s success: attractive pricing and combining local feel with scalable international packaging.

#4. Radically redeploy resources for the long term

Emerging-market companies are built for speed. They are designed to serve the rapidly changing needs of middle-class consumers in their home markets and other emerging societies. They know that they must innovate or die. It helps too that these upstarts aren’t burdened by legacy issues

#5. Innovate to deliver value across the price spectrum

For rural customers, China’s Haier makes extra-durable washing machines that can wash vegetables as well as clothes, and refrigerators with protective metal plates and bite-proof wiring to ward off mice. The company is no less ingenious in developing products for urban users, such as smaller washing machines and refrigerators designed for tiny, cramped apartments

#6. Build brands that resonate and inspire trust

emerging consumers are novice shoppers for whom buying a car, a television, or even a box of diapers may be a first-time experience

Our research indicates that Chinese consumers, for example, consider an average of three brands and end up purchasing one of them about 60 percent of the time. In the United States and Europe, by contrast, consumers consider at least four brands and end up selecting one from their initial consideration sets only 30 to 40 percent of the time

#7. Control the route to market

Coca-Cola, long active throughout the developing world, goes to great lengths in those markets to analyze the range of retail outlets, identify the highest-priority stores, and understand differences in service requirements by outlet type. For each category of outlet, Coca-Cola generates a “picture of success”—a detailed description of what the outlet should look like and how Coke products should be placed, displayed, promoted, and priced

#8. Organize today for the markets of tomorrow

IBM, for instance, radically revamped its functions in Asia, moving human resources to Manila, accounts receivable to Shanghai, accounting to Kuala Lumpur, procurement to Shenzhen, and customer service to Brisbane

#9. Turbocharge the drive for emerging-market talent

In China, barely two million local managers have the managerial and English-language capabilities multinationals need. A recent McKinsey survey found that senior managers working for the China divisions of multinational firms switch companies at a rate of 30 to 40 percent a year—five times the global average. Increasingly, local stars prefer working for local employers that can offer them more senior roles. In 2006, the top-ten ideal employers in China included only two locals— China Mobile and Bank of China—among the well-known global names. By 2010, seven of the top ten were Chinese firms.

#10. Lock in the support of key stakeholders

Amway’s success in China illustrates the benefits of effective stakeholder management. In the early 2000s, the US-based direct-sales giant was almost declared an illegal business in China for violating a 1998 ban on direct selling. Amway’s senior executives made numerous visits to Beijing to get to know senior leaders and explain the company’s business model. The company also demonstrated its commitment to China by opening stores countrywide, while investing more than $200 million in China-based manufacturing and R&D centers. In 2006, the Chinese government reshaped the regulation of direct sales. Today Amway is China’s second-largest consumer product business

The Good Life: Lessons from Robert Greene’s Mastery

mastery-by-robert-greeneTl;dr: download the Good Life guide, a 4-page PDF drawing life lessons from Robert Greene’s Mastery.

This is my 4th Good Life guide. Here are the other 3:

  • Rick Warren’s Purpose-Driven Life [link]
  • Ben Franklin’s 13 Virtues [link]
  • Greg Epstein’s Good Without God [link]

I chose Greene’s Mastery because I feel like a “jack of all trades but master of none”. This book crystallizes why highly successful people are masters at a specific (and often narrow) discipline, and the steps they took to get there. In addition, it comes highly recommended by Tim Ferriss and I’m a fan of Greene’s 48 Laws of Power.

The Good Life guides are “CliffsNotes for personal growth”. Less comprehensive summary, more focus on how a book’s stories, themes, and facts can help us live a Good Life: one of personal fulfillment, long-term purpose, and value to society (usually all intimately-related anyway :).

It’s a 4-page PDF, free to download and share. You can also view it in Google Docs.

I’ve included below some of my favorite highlights from Mastery. This is my 4th Good Life guide – I’d love to hear how I can make them more useful for you!

If you’d like to buy the original, here’s my Amazon affiliate link.

EXCERPTS FROM THE GUIDE

  • Learn from existing Masters through apprenticeships

    Before it is too late you must learn the lessons and follow the path established by the greatest Masters, past and present

    The goal of an apprenticeship is not money, a good position, a title, or a diploma, but rather the transformation of your mind and character

  • There are 3 steps to the Apprenticeship:
    • Step 1: Deep Observation (observe and notice everything, especially the details)
    • Step 2: Skills Acquisition (learn to do what they do extremely well)
    • Step 3: Experimentation (learn to make those skills your own, and go beyond them!)
  • Feedback, feedback, feedback. Learn to love criticism
  • It helps also to gain as much feedback as possible from others, to have standards against which you can measure your progress so that you are aware of how far you have to

    Sometimes greater danger comes from success and praise than from criticism. If we learn to handle criticism well, it can strengthen us and help us become aware of flaws in our work. Praise generally does harm. Ever so slowly, the emphasis shifts from the joy of the creative process to the love of attention and to our ever-inflating ego.

HIGHLIGHTS FROM THE BOOK

At these times, other people seem less resistant to our influence; perhaps we are more attentive to them, or we appear to have a special power that inspires their respect.

Masters return to this childlike state, their works displaying degrees of spontaneity and access to the unconscious, but at a much higher level than the child.

As a classic example, compare the lives of Sir Francis Galton and his older cousin, Charles Darwin. By all accounts, Galton was a super-genius with an exceptionally high IQ, quite a bit higher than Darwin’s (these are estimates done by experts years after the invention of the measurement). Galton was a boy wonder who went on to have an illustrious scientific career, but he never quite mastered any of the fields he went into. He was notoriously restless, as is often the case with child prodigies. Darwin, by contrast, is rightly celebrated as the superior scientist, one of the few who has forever changed our view of life.

“Why bother working for years to attain mastery when we can have so much power with very little effort? Technology will solve everything.”

What we lack most in the modern world is a sense of a larger purpose to our lives. In the past, it was organized religion that often supplied this. But most of us now live in a secularized world. We human animals are unique—we must build our own world. We do not simply react to events out of biological scripting. But without a sense of direction provided to us, we tend to flounder. We don’t how to fill up and structure our time.

A false path in life is generally something we are attracted to for the wrong reasons—money, fame, attention, and so on.

The road to mastery requires patience. You will have to keep your focus on five or ten years down the road, when you will reap the rewards of your efforts.

You must adopt such a spirit and see your apprenticeship as a kind of journey in which you will transform yourself, rather than as a drab indoctrination into the work

The initial stages of learning a skill invariably involve tedium. Yet rather than avoiding this inevitable tedium, you must accept and embrace it

You will know when your apprenticeship is over by the feeling that you have nothing left to learn in this environment. It is time to declare your independence or move to another place to continue your apprenticeship and expand your skill

Your access to knowledge and people is limited by your status. If you are not careful, you will accept this status and become defined by it, particularly if you come from a disadvantaged background.

To attain mastery, you must adopt what we shall call Resistance Practice. The principle is simple—you go in the opposite direction of all of your natural tendencies when it comes to practice. First, you resist the temptation to be nice to yourself. You become your own worst critic; you see your work as if through the eyes of others. You recognize your weaknesses, precisely the elements you are not good at.

We live in the world of a sad separation that began some five hundred years ago when art and science split apart.

We must constantly ask the questions—how do things work, how do decisions get made, how does the group interact?

What makes the mentor-protégé dynamic so intense and so productive is the emotional quality of the relationship. By nature, mentors feel emotionally invested in your education. This can be for several reasons: perhaps they like you, or see in you a younger version of themselves, and can relive their own youth through you; perhaps they recognize in you a special talent that will give them pleasure to cultivate; perhaps you have something important to offer them, mostly your youthful energy and willingness to work hard.

You will want as much personal interaction with the mentor as possible. A virtual relationship is never enough.

People often err in this process when they choose someone who seems the most knowledgeable, has a charming personality, or has the most stature in the field—all superficial reasons.

What immediately struck him was the intensity with which Pacquiao focused on his instructions and how quickly he caught on. He was eminently teachable, and so the progress was more rapid than it had ever been with any other fighter. Pacquiao seemed to never tire of training or to worry about overdoing it. Roach kept waiting for the inevitable dynamic in which the fighter would begin to tune him out, but this never came. This was a boxer he could work harder and harder. Soon, Pacquiao had developed a devastating right hand, and his footwork could match the speed of his hands.

By moving past our usual self-absorption, we can learn to focus deeply on others, reading their behavior in the moment, seeing what motivates them, and discerning any possible manipulative tendencies. Navigating smoothly the social environment, we have more time and energy to focus on learning and acquiring skills.

To become indignant at [people’s] conduct is as foolish as to be angry with a stone because it rolls into your path. And with many people the wisest thing you can do, is to resolve to make use of those whom you cannot alter. —ARTHUR SCHOPENHAUER

Often it is the quiet ones, those who give out less at first glance, who hide greater depths, and who secretly wield greater power.

It is always wise to occasionally reveal your own insecurities, which will humanize you in other people’s eyes.

It is not generally acknowledged or discussed, but the personality we project to the world plays a substantial role in our success and in our ascension to mastery.

This ability to endure and even embrace mysteries and uncertainties is what Keats called negative capability.

Many of the most interesting and profound discoveries in science occur when the thinker is not concentrating directly on the problem but is about to drift off to sleep, or get on a bus, or hears a joke

In moments of great tension and searching, you allow yourself moments of release. You take walks, engage in activities outside your work (Einstein played the violin), or think about something else, no matter how trivial.

The hand-brain connection is something deeply wired within us; when we attempt to sketch something we must observe it closely, gaining a feel through our fingers of how to bring it to life. Such practice can help you think in visual terms and free your mind from its constant verbalizations. To Leonardo da Vinci, drawing and thinking were synonymous.

The more experienced, wiser types, such as Ramachandran, are opportunists. Instead of beginning with some broad goal, they go in search of the fact of great yield—a bit of empirical evidence that is strange and does not fit the paradigm, and yet is intriguing.

Your project or the problem you are solving should always be connected to something larger—a bigger question, an overarching idea, an inspiring goal. Whenever your work begins to feel stale, you must return to the larger purpose and goal that impelled you in the first place.

What is interesting to note is that many Masters who come to possess this high-level intuitive power seem to become younger in mind and spirit with the passing years—something that should be encouraging to us all.

Empathy plays an enormous role in learning and knowledge.

One time he learned a new word that a Pirahã explained to him meant “what is in your head when you sleep.” The word then means to dream. But the word was used with a special intonation that Pirahã use when they are referring to a new experience. Questioning further, he saw that to them dreaming is simply a different form of experience, not at all a fiction. A dream is as real and immediate to them as anything they encounter in waking life.

…for more, download the free PDF or view it in Google Docs!

March: Amazing books and articles that I recommend

Each month, I’ll post the best stuff I read in the prior month. So this is for February.

Books

February was a bit slower than January, primarily because I was focused on getting things done for Hyperink and prepping for the Shanghai move. Even though I finished 4 books, the bulk of the reading was done in January.

I finished:

mastery-by-robert-greeneMastery by Robert Greene [Amazon]. Came highly recommended by Tim Ferriss, and I’m a big fan of Greene’s 48 laws of power. While I don’t find Greene to be the most entertaining or efficient writer, he makes a strong case for the importance of becoming “the best” at something, and the steps necessary to get there (including picking the right field, tons of hard work over a long period of time, finding the right mentor(s) to guide your development). Examples range from Mozart to Darwin to Paul Graham.

talent-code-by-daniel-coyleThe Talent Code by Daniel Coyle [Amazon]. Of the 4 books that I finished this month, I read through this one the fastest and its lessons will probably stick with me the longest. Coyle examines places that have generated a disproportionate number of world-class performers, ranging from Brazilian favelas to Korean female golf players, and deconstructs the 3 elements that they all require (ignition, motivation, and mentorship). Some overlapping themes with Mastery. It’s a bit handwave-y at times, and not without its share of “hindsight is 20/20”, but Coyle is a great writer and his research is both thorough and accessible.

the-big-miss-by-hank-haneyThe Big Miss: My Years Coaching Tiger Woods by Hank Haney [Amazon]. While in some ways, I’m disappointed that someone whom Tiger trusted so closely was willing to write an expose of sorts, I’m fascinated by elite performers and this is the closest anyone has come to understanding and then sharing insights about one of the world’s most private athletes (minus that one bizarre scandal, of course). The book contains much more golf jargon and Hank-giving-a-written-golf-lesson than I expected, so I skipped over those parts, but the few insights that Hank does share about Tiger’s personality, his approach to the game, and his behavior quirks are more than worth the price and time. For example, did you know that Tiger loves having a popsicle after dinner, but does not proactively offer them to his guests?

name-of-the-wind-by-patrick-rothfussThe Name of the Wind by Patrick Rothfuss [Amazon]. I generally don’t read fiction, because I like to think that reading nonfiction kills two birds with one stone (ie, entertainment AND education), but that’s probably wrong. However, I still don’t read much fiction. I used to love sci-fi, and this came highly recommended, and I found myself having a hard time sleeping soundly when I ended the night reading deep-educational/political-shit. So this book accomplished its goal (of helping me sleep soundly), and was very entertaining, and I will *most likely* read book 2. Rothfuss is a strong writer, and while there’s nothing groundbreaking in the story and I find his usage of written accents tew bee vairy bahhhhd.

Articles

Here’s the best stuff this month. Note that not all of it is “fresh”: I emphasize quality, not what just hit the wire (because most of the time that’s crap).

  • DEEP INSIDE: The Story of 10,000 Porn Stars and Their Careers (Jon Millward, his own site). Data-driven approach to shit guys talk about all the time.

    We now have our average porn stars: Nikki and David. They’re of normal height, but both weigh less than the national average. Nikki has smaller breasts than you might expect and she’s a brunette. She got into the business aged 22 and is originally from California—or at least, that’s where she now lives. David got into the industry aged 24.

  • Five important lessons from the dustup over the NYT’s Tesla test drive (Katie Fehrenbacher, GigaOm). Not the most comprehensive write-up but a good one on a fascinating story.

    Don’t f*ck with Elon Musk: A friend who’s spent a decade in the legal industry told me once that you shouldn’t start a fight unless you’re ready to take it to the mat; i.e. take it all the way. Elon Musk will always take it to the mat.

  • Deng Xiaoping and the Transformation of China (Bill Gates, his own site). Bill Gates writes book reviews. That’s right, Bill Gates WRITES BOOK REVIEWS. HOW AWESOME IS THAT?? PS I have yet to read this book but I will.

    If you’re going to read one book about modern China in the period after Mao, then this is the book you should read.

  • What tips and tricks have you learned that have made it easier to live in China? (Kaiser Kuo, Quora). Most of you know I’ve moved to Shanghai to experience China first-hand, and the advice here is very applicable and original.

    Chant the mantra, “Don’t be a whiny little bitch.” Don’t surround yourself with complainers. Steel yourself to the fact that people will crowd you, will spit, will cut queues, will stare at you at least outside of first-tier cities if you look foreign, will ask you direct questions that in your home country might seem wildly inappropriate.

  • Michael Jordan Has Not Left The Building (Wright Thompson, ESPN). Great article on the greatest retired athlete ever. Keyword: retired.

    Jordan might have stopped playing basketball, but the rage is still there. The fire remains, which is why he searches for release, on the golf course or at a blackjack table, why he spends so much time and energy on his basketball team and why he dreams of returning to play.

  • 50 Sure Signs That Texas Is Actually Utopia (Summer Anne Burton, Buzzfeed). Just because I’m from Austin, the greatest city in the great state in America, that doesn’t make me biased. Really!

    4. Breakfast tacos. An essential part of every Texan’s diet. The New York Times once ran an entire story titled “Tacos In The Morning?” about how Austin loves breakfast tacos and we were all like, “YES, TACOS IN THE MORNING. Tacos all the time.” Get with the program.

  • The Gates Foundation Annual Letter (Bill Gates, The Gates Foundation). Like all great, long-lasting performers (Jordan, Madonna), Bill Gates has reinvented himself well.

    According to a long-held Ethiopian custom, parents wait to name their children because disease is rampant, health care is sparse, and children often die in the first weeks of life.

  • What Shamu Taught Me About A Happy Marriage (Amy Sutherland, NYT). Not the first time I’ve shared this, but great reads are both re-reading and re-re-reading.

    I was using what trainers call “approximations,” rewarding the small steps toward learning a whole new behavior. You can’t expect a baboon to learn to flip on command in one session, just as you can’t expect an American husband to begin regularly picking up his dirty socks by praising him once for picking up a single sock. With the baboon you first reward a hop, then a bigger hop, then an even bigger hop. With Scott the husband, I began to praise every small act every time: if he drove just a mile an hour slower, tossed one pair of shorts into the hamper, or was on time for anything.

For a complete list, check out my Amazing media page. Most of these will be added there.

What did you read and love in February? Please share! Thanks as always for your time.

March Quotes: “The past does not repeat itself, but it rhymes” (Mark Twain)

For a full list of my favorite quotes, see here. Send me yours, I’m always looking for more.

At 15 my heart was set on learning; at 30 I stood firm; at 40 I had no more doubts; at 50 I knew the mandate of heaven; at 60 my ear was obedient; at 70 I could follow my heart’s desire without transgressing the norm. – Confucius

/** The man is so ridiculously wise and insightful…did you know the Chinese gov’t has setup Confucius Institutes around the world as an investment in soft power? **/

An intellectual giant. The world’s loss now that he’s gone. – random YouTube commenter on David Foster Wallace

/** Just started reading Infinite Jest. It is not easy. It is quite different from anything else I’ve read. DFW is clearly very smart, and a great explainer-of-things. **/

The past does not repeat itself, but it rhymes – Mark Twain

/** Another really smart man, and one who is able to tell hard truths by using humor. **/

Comparison is the thief of joy. – Teddy Roosevelt

/** Yup…desire is the root of suffering. **/

Evict your inner wussy – one of David DeAngelo’s 77 Laws of Success :)

/** I’ve had the good fortune to work with Rob Kelly, who is the former CEO of David’s company Hot Topic Media, and he clearly lives by many of these principles (whether consciously or not). Quite inspiring **/

“Tension is who you think you should be. Relaxation is who you are.” – Chinese Proverb

Desiderata by Max Ehrmann

Thanks for sharing with me Diane!

In the vein of Emerson’s familiar poem (which, interestingly, is not actually Emerson’s!), and among my favorites now. Hope you enjoy!

Go placidly amid the noise and haste, and remember what peace there may be in silence.
As far as possible without surrender be on good terms with all persons.
Speak your truth quietly and clearly; and listen to others, even the dull and ignorant; they too have their story.
Avoid loud and aggressive persons, they are vexations to the spirit.
If you compare yourself with others, you may become vain and bitter;
for always there will be greater and lesser persons than yourself.

Enjoy your achievements as well as your plans.
Keep interested in your career, however humble; it is a real possession in the changing fortunes of time.
Exercise caution in your business affairs; for the world is full of trickery.
But let this not blind you to what virtue there is; many persons strive for high ideals;
and everywhere life is full of heroism.

Be yourself.
Especially, do not feign affection.
Neither be critical about love; for in the face of all aridity and disenchantment it is as perennial as the grass.

Take kindly the counsel of the years, gracefully surrendering the things of youth.
Nurture strength of spirit to shield you in sudden misfortune. But do not distress yourself with imaginings.
Many fears are born of fatigue and loneliness. Beyond a wholesome discipline, be gentle with yourself.

You are a child of the universe, no less than the trees and the stars;
you have a right to be here.
And whether or not it is clear to you, no doubt the universe is unfolding as it should.

Therefore be at peace with God, whatever you conceive Him to be,
and whatever your labors and aspirations, in the noisy confusion of life keep peace with your soul.
With all its sham, drudgery and broken dreams, it is still a beautiful world. Be careful. Strive to be happy.