Thursday, February 10, 2011

Looking Out the Window and Seeing the Evolution of All Our Connections

I was in Honduras last week looking at birds. Honduras has a great ecosystem, but a quite miserable economy. It is the poorest Central American country and significantly lags Nicaragua, Guatemala, El Salvador, Columbia, and Panama in per capita GDP. Honduras is at $3,430 per capita vs. the US at $41,890. I expected to see not much there, outside of a lot of birds. Third world. Nothing special. Bad assumption.

The entire country has adequate cell phone coverage, and everybody seems to be talking and texting on a cell. Most of the decent lodgings have free Wi-Fi, so lots of folks are on the internet. Actually, they are addicted to it – for very different reasons than we are.

Most of the vehicles you see are used, small, and utilitarian. The most common “platform” comes from India – Tuck Tucks. The Class-8 trucks driving down the Pan American highway are huge, powerful, and in great shape – looks like the kind of haulage you see on the Mass Pike. Much of the real traffic consists of subcompact cars, small SUVs, small pickup trucks, and vans, which are pretty much all used – Japanese or Korean – and imported from the United States.

The vehicles come from the US-based auctions that many used cars wind up at when you trade them in. Ever wonder about where they all go? When Polk data shows registration mortality for 5 year old vehicles, some portion represents exports – certainly the big portion represents junking and totals. Alternative sources of demand for auction vehicles prop up resale values and new car leasing. So, little old Honduras is helping you lease your new car with higher residuals and lower lease payments. Look and ask around and you will find that the favorite Honduran OEM is Toyota. Why? Because they hold their value longer in the tertiary third and fourth-hand Honduran markets. Hyundai and Kia are not far behind if you are buying new – seems that everyone knows that their quality is on par with Toyota … and they are less attractive to car thieves.

Where do they get hard-to-find parts? It used to be that you needed a local distribution network in Honduras. Now, everybody who owns a used Toyota, Isuzu, or Dodge Caravan can get plugged into the internet and enjoy the same service levels we all enjoy. It is easy to find US B2C sites (dealers, IAM, etc.) that will provide VIN matched parts catalogs and ship parts next day via FedEx. Costs of this are already in the OK-range. I wonder if our second-tier market strategies have adapted to this? Some global markets are evolving based not so much on what strategies we engineer, but based on the excess infrastructural capacities of other strategies. International FedEx next day is important to a company like Vintage Parts – they ship parts with a 99.999% fill rate, globally, on a daily basis. FedEx fits the bill for them in terms of order response time and cost. It also works for Estefan, a Honduran Dodge Caravan owner.

Our last eco-lodge was 5 hours from Copan and some of the roads were a bit challenging. Shocks must last at least 2,000 miles there. AT&T couldn’t cut it – you needed Verizon or another carrier that integrated with Tigo. No matter. I installed the Skype app on my iPhone and called the kids via the lodge’s satellite Wi-Fi. On Sunday we watched the Super Bowl on the satellite TV in the bar. It was hard to find a station that wasn’t Spanish language. The Chevy Glee-cast commercial blew me away. Where did this come from? Hip Glee cast singing a vintage Chevy jingle on an all-white set that looked more like a clip from a 1950’s Broadway musical extravaganza. White cars all targeted at young buyers. Simultaneous with belting out the Chevy jingle they integrated a clear reference to the Glee website for free repeats of the commercial, downloads, and a “documentary” about the making of the commercial. Seamless integration of the commercial into a Glee script. Where did the show end and the commercial begin? More than that, how do you describe the broadcast media on that one? Super Bowl ad? Internet advertising? Geritol-like TV show sponsor? Regardless, it ignored boundaries and redefined marketing. All inside 60 seconds during a Super Bowl timeout. In Honduras.

Our Honduran bartender could care less about all us Green Bay fans. Smiled during the Chevy commercial, took out his iTouch, tapped in the website, and serenaded us with, “See the USA in your Chevrolet” during the next time out. Third-world?

Bottom Line: More than ever we need to look out the window and see how fast our world is evolving. We need to unlearn a whole bunch of stuff. We need to re-think sound strategies that were developed during the cold-war pre-internet years. We need to notice how people, our customers, behave. What’s important to them. How they process information, how they buy stuff. Smart companies right-size their costs and capacities. Smart companies follow rapidly. Smart companies unlearn how the world worked yesterday. We need to look out the window and rethink how everything works, together. Communication. Transportation. Warehousing. Service levels. Advertising. Marketing. We all need to learn how to really and truly see the USA in our Chevrolet.

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