Project Planning, Scheduling & Control–Chapter 20: Dealing More Effectively with People

In chapter 19, Dr. James Lewis talked about project managers and their vertical relationships in the upward direction, that is, with senior managers.   In this chapter, he talks about project managers and their vertical relationships in the downward direction, that is, with the project team members.

Dr. Lewis starts out with the observation that we generally know more about getting high performance out of our capital equipment that we do about getting it from the people who run the equipment.   An additional problem in the IT application area is that many individuals who have strong technology focus are introverts who often lack people skills.

Peter Drucker once said that a manager must get people to go beyond the minimum acceptable performance level in their jobs, because that minimum acceptable performance level is the survival level.    However, since the company is competition with other companies that are constantly moving forward, the organization needs to constant improve itself in order to survive vis-a-vis that competition.


One place to start is to start thinking about what your beliefs or your paradigm is with regards to people in the workplace.   Answer the following questions:

  • Do you think most people want to do a good job?
  • Do you believe most people are motivated by pay or by the work itself?
  • Do you trust most people to keep on working even if you aren’t around?
  • Do you think that most people are pretty “straight” with you, or that most of them have hidden agendas that they are trying to advance?
  • Do you believe that you must protect yourself from political maneuvering by other would-be managers?
  • Do you think people will take advantage of you if they get a chance?
  • Do you think you can depend on most workers to do what they say they will do?

Were your answers mostly negative, or mostly positive?   Dr. Lewis contends that the attitudes you have will dictate what kind of behavior you find in those who work for you.

One thing that reinforces our beliefs as outlined above are the processes which filter the information we receive, the processes of deletion and distortion.    We either do not allow into our awareness information that would contradict our beliefs, or we take the information and distort is so that it conforms to those beliefs.


Abraham Maslow’s Hierarchy of Needs postulates that our human needs can be placed in five categories, listed below in order from lowest to highest:

  • Physiological
  • Security
  • Social
  • Esteem/Recognition
  • Self-Actualization

Most recognize the truth in this model, but our incentive schemes often don’t match that realization.   Most organizations concentrate on reward systems that emphasize the lower two levels, and give employees external rewards that meet their physiological and security needs.   However, Daniel Pink in his book Drive: The Surprising Truth about What Motivates Us (2009) makes it clear that research indicates that all true motivation is internal to the person.   You don’t have to pay a person more to do something that he or she is already driven to do.   To achieve high levels of motivation, a person must be given work that in and of itself meets his or her internal drives or needs.


Each of these topics require entire books to do justice to them, so Dr. Lewis recommends the following books:

  • Cialdini, Robert B.  Influence:  The Power of Persuation (New York: Quill, 1993)
  • Patterson, Kerry, Joseph Grenny, David Maxfield, Ron McMillan, and Al Switzler Influencer: The Power to Change Anything (New York: McGraw-Hill, 2008)
  • Fisher, Roger, and William Ury, Getting to Yes (Penguin, 1991)
  • Stone, Douglas, Bruce Patton, and Sheila Heen, Difficult Conversations (New York: Penguin, 2000)


One of the first things you find out as a project manager is that dealing with stakeholders is often more challenging that dealing with project team members or senior managers.   The reason is that stakeholders often do not understand the nature of the project or worse, don’t care about the project.    Communicating with them in a way that makes them understand the project and care about its outcome is challenging.   Even more challenging is the fact that some of the stakeholders are at odds with each other so there is literally no way of satisfying them all.

Dr. Lewis recommends that for larger or more complex projects, project managers have assistants that can take care of many of the administrative tasks involved in project management in order to free them to deal with political issues.


For those who feel they are not good at people skills, Dr. Lewis closes the chapter with a positive note:  like anything else, dealing with people is a skill that can be developed by anyone.   However, it is not a technical skill, but more of a performing art.   One unconventional suggestion that Dr. Lewis gives is from John Grinder, the cofounder of Neuro-Linguistic Programming who says that good managers should all take an acting class!   You won’t win any Academy Awards for your performance, but it will increase your performance as a project manager.



Project Planning, Scheduling & Control–Chapter 19: Working with Senior Managers

In this chapter of his book Project Planning, Scheduling & Control, Dr. James Lewis tackles the political sensitive issue of working with senior managers.

He starts off with the observation that many project managers get promoted from positions of being a technical specialist.   Not only does the technical specialist need need new skills to be a manager, but he or she needs to speak a new language in order to communicate with senior managers.

Many technical specialists when they become managers are more passionate about the technical work they are managing than the managing itself.    If you end up hating the “management” part of being a project manager, getting really good at it won’t make you like it better, but it will help you do make the best of your job.


Project managers are evaluated on how well they meet the goals and objectives given to them by the managers to whom they report.   Most commonly, you are expected to achieve the performance, cost, time and scope (PCTS) targets for your projects.

Way back in Chapter 1 Dr. Lewis describes how only three of the four project targets can be dictated.  The fourth constraint or target will be a function of the nature of the job.    As a visual picture, think of a triangle written on the surface of a balloon.   As the balloon is pumped with air, the area covered by the three vertices of the triangle will change.   Those three vertices are analogous to the three project targets that can be dictated.   But the fourth constraint, the area contained by the triangle, will depend on how much air is pumped into the balloon.

Senior managers CANNOT dictate all four targets.   If the functional relationship is given by the formula

C = f(P, T, S)

then the value of C, or the cost of the project, will be a function of

  • P = performance requirements (technical and functional)
  • T = time required for the project
  • S = scope or magnitude of the work.

If the senior manager dictates what P, T, S are, and then says the project has to be done for a cost of C, then that manager may end up being unreasonable.   To bring in the cost of the project for a cost of C, you may have to reduce the scope, the requirements, or extend the time of the project.    Something may have to give.   If the senior manager is constitutionally incapable of understanding this fundamental point, then you are being set up for failure.

Let’s assume that the P, T, and S targets have been dictated because of organizational needs.  It is your job as project manager to determine what it will cost to meet those targets, within some sort of tolerance such as 5% of the estimate.    It is the senior manager’s job to either

  • authorize the costs to meet those targets, or if only a lesser amount of funds are available given the organization’s budget, to
  • authorize the adjustment in the P, T, or S targets that would allow the project to be realistic brought in for the amount of costs that are feasible.


Many managers will not understand the more structured approach you are taking.   Dr. Lewis relates a story of a project manager who showed his boss a proposed schedule for the project, and the boss asked what the thin trailing line was at the top of the bar chart representing the schedule.  The project manager explained that it indicated the earliest and latest finish times for the task.  If the task were completed later than the latest time shown by the float line, then the end date for the project would slip.

The boss came back and hour later with a revised schedule, saying “I’ve taken all that float out of the critical path–you should be able to finish earlier.”   The boss didn’t understand that, by definition, there is no float in the critical path, but only in non-critical paths.   By removing the float from the non-critical paths, he did nothing to make the project itself finish earlier.   Make sure your manager has a clear understanding of what you are trying to accomplish, so that they do not get unrealistic expectations.


Chapter 5 of Dr. Lewis’ book was on “Whole-Brain Project Management.”  This went into the various thinking styles that people have.    There are four thinking styles which are represented in quadrants starting with A in the NW corner and going around counterclockwise.

  • A quadrant–prefers thinking in terms of “action”
  • B quadrant–prefers thinking in terms of “process”
  • C quadrant–prefers thinking in terms of “people”
  • D quadrant–prefers thinking in terms of “ideas”

Make sure you identify the thinking style of your senior manager, and try to communicate with them and make presentations to them using the type of thinking style that manager prefers.

NOTE:   I was at a District Executive Committee meeting for District 30 of Toastmasters, when an exercise was presented to all of the Area Governors to identify their thinking style.   It turned out that my preferential style was D–I’m an “idea” person, it looks like.   Following in terms of strength, were B (“process”), C (“people”), and A (“action”). The purpose of the exercise was two-fold.   First of all, in our speeches and in our interactions with other club officers, we needed to have greater awareness of the different thinking styles of others.   We needed to start incorporating elements that spoke to each “constituency” or quadrant, and not just stick to the familiar style we are strongest in.   But the second reason for introducing this exercise came in the next segment.   We were told to break into divisions, and have each Area Governor write down in a square which quadrants were our first and second preferences.    At the end of this, each Division Governor noted that, as a team, ALL four quadrants were covered by at least one Area Governor for whom it was their first or second preference.


You need to identify what criteria your boss will be evaluating you on, and on how the manager will be able to know whether those criteria have been achieved.   You will be focusing on your project, but the manager will be focusing on all of the projects, especially on the business case which gives the justification for the project’s very existence.   If there is a proposal for a change in the project that will affect the return on investment, for example, reducing it because the project will take longer than expected, then you should bring this issue to the senior manager right away. If the ROI of your project suddenly becomes less than it was originally, to the point that it is less than another project that had been considered, then that project may become more viable than yours.


One way to understand the manager’s point of view is to have one of them be your mentor.   What is in the senior manager’s background or experiences that led them to be in their position?   Don’t be afraid to ask your senior manager to coach you in areas they think you need to improve in.   Another form of mentorship is through reading popular books on managing.   You can combine these two approaches, mentoring and reading, by asking what business books your senior manager is reading.     Read those books yourself, and discuss them with your senior manager!   You’ll learn more not just about the subject matter, but about the way your senior manager thinks and approaches his or her job!



Project Planning, Scheduling & Control–Chapter 18: Improving Your Effectiveness

In this chapter of the book Project Planning, Scheduling & Control, Dr. James Lewis talks about becoming more effective, not just as a project manager, but as a human being.    That is one of the central messages of his book, frankly, which is that the core of being an effective project manager is being able to treat your project team members well as human beings.    The way to get more out of your team members is not to treat them as a human resource with the emphasis on the word “resource”, as in a commodity which they perceive as being a renewable resource.    You should treat them as a resource with the emphasis on the word “human.”    This requires you to learn how human beings are motivated, and also in the process what motivates you as a human being as well.


According to Brian Tracy in his book The Psychology of Achievement (Nightingale-Conant, 2010), the following five conditions must exist if you are to be successful:

a.  You must have peace of mind, or freedom from fear, anger, and guilt

b.  You must have good health and high energy

c.  You should have loving relationships with people

d.  Financial freedom

e.  A sense of fulfillment, or self-actualization


There are several laws which govern your ability to perform in order to achieve success.

a.  Law of Control

An internal locus of control is having a sense that you control your destiny and the events in your life; this sense is called self-determination.     Conversely, if you have an external locus of control, then life will seem just like a series of random events, like Winston Churchill’s sardonic definition of history as being “simply one damned thing after another.”   

b.  Law of Belief

What we believe, we make real.  Once we hold a belief, we delete or distort information which may conflict with that belief.

c.  Law of Expectation

The beliefs we hold create in us expectations for how things will be in the world.   These expectations become self-fulfilling prophecies.   In the June 2012 edition of Scientific American, there was an article called “Armor Against Prejudice” about the phenomenon of “stereotype threat.”   This is where students about to take a test fear confirming derogatory stereotypes about one’s social group, and because of that preoccupation end up performing poorly on the test, thereby confirming the stereotype in a self-fulfilling prophecy.    The way to combat stereotype threat is for students, before taking the exam, to participate in essay-writing assignments, in which students reflect on what matters to them—boosting their positive self-image and making them resilient against internalizing any racially-based stereotypes.


Self-concept consists of three components:

  • One is your concept of your ideal self, or your concept of what you would like to be
  • Second is your self-image, or your image of yourself as you are actually like
  • Third is your self-esteem, or your feelings about yourself

To boost the self-esteem of you and others on your project team, you should plan small wins for yourself and others.  Begin at a level at which you and others on your project team can perform, and move up from there.


If you do not believe you can do something successfully, you will most likely not be successful at it.   But how to you believe you can something successfully, if you haven’t yet done it?   Here is a major secret to success:   behave as if the thing you want to achieve is already a fact.

One another way to achieve something is to emulate the behavior of those who have already achieved it and turning them into your role models.

When you get ready to do something, besides believing that you can do it, you should actively imagine or picture yourself in that situation.   Visualize yourself actually performing well, and you will greatly improve your chances of succeeding.    Will it absolutely guarantee success?   No.

However, it reminds of the quote from John F. Kennedy when he announced to the nation on April 12, 1961 that he was embarking on a space race with the Soviet Union to put a man on the moon by the end of the decade:  “For while we cannot guarantee that we shall one day be first, we can guarantee that any failure to make this effort will make us last.”

One of the elements of picturing yourself succeeding at a task if by creating affirmations or goals, positive statements that are in the present tense that affirm your achievement of that task.   Rather than saying, “I would like to see the project succeed,” which puts the event somewhere not even in the future, but in a hypothetical future, you should say, “The project is a success.”   You should create this affirmation at a time when you are relaxed.    In that state of relaxation, practice repeating your affirmations while picturing them in your mind.

NOTE:  You can use your own affirmations, or those of a skilled neuro-linguistic programmer such as the British hypnotist Glenn Harold.

Finally, one last word of caution about programming your mind for success:  you have to be willing to reduce the time you spend with people who have a negative outlook.

NOTE:  I found this out through painful experience when networking that, if I would ask for career advice from somebody and they gave me a lot of negative advice I would not ask that person again.    Since I am fluent in Japanese, I asked someone about the possibility of being a consultant to either a Japanese firm or to a firm that wanted to do business in Japan.    Someone told me I should ask a certain person who was a consultant in such a capacity.   That person was so passionately pessimistic about the possibility of me ever becoming a consultant that for a while, I was really down in the dumps.   However, I snapped out of it and then realized the truth:   the person was being pessimistic about my being a consultant not necessarily because of an objective evaluation of the merits of the idea, but because frankly he didn’t want the competition!


Success can come to you only if you place people first and practice the Golden Rule, which is the moral foundation of all of the world’s great religions.   You may be the manager of a project team, but you need to treat your team members as if they are equals, at least on the basic level of humanity.


Project Planning, Scheduling & Control–Chapter 17: Managing Multiple Projects

In this chapter, Dr. James Lewis talks about how to deal with the increased level of complexity that is involved in trying to manage multiple projects at once.

His informal surveys of project managers reveal that the typical project manager is trying to deal with four to six projects simultaneously.

1.  Problems in Managing Multiple Projects

First of all, what are some of the typical problems project managers face when trying to manage multiple projects?

a.  Meetings

A typical project will require at least two hours of meeting time every week.   If you tried to manage 20 projects, therefore, your entire 40-hour work week would be taken up with meetings!     Cutting out meetings, however, is counterproductive, because it will cause you to spend more time dealing with the problems that occur because of the lack of coordination caused by the skipped meetings.

b.  Being a Working Project Manager

Many corporations have the project manager doing some of the project work, as well as managing the project.   This is, according to Dr. Lewis, a big mistake.   Why?   Because if there is a conflict between managing and doing the work, the work always takes priority, which means that managing will suffer.

c.  Multitasking

The prevalent myth in the work world today is that multitasking is the best way to get productive work out of people.  In reality, multitasking reduces productivity because it causes a high level of “setup time”, that is, the amount of time it takes to get up to speed after switching tasks.

d.  Priority

If a project manager’s supervisor doesn’t assign priorities between the multiple projects that project manager is assigned to manage, then they will be worked on haphazardly.   The projects need to be assigned priority, and the tasks within each project need to be assigned priority.   If a project manager’s supervisor hasn’t done his or her homework by assigning priorities, the project manager should be proactive and come up with his or her own list of priorities.   These should be then send it the supervisor for approval.   Even if the supervisor disapproves of the ranking given by the project manager, at least the issue will be addressed and the project manager will finally know what the priority is as conceived by the supervisor.  

Remember, a person can be an efficient time manager and yet not be effective.   Efficient means doing things right (preferably the first time), but it is even more important to be effective, which means doing the right thing.

e.  Planning

If you are managing multiple projects, each projects must have its own plan.    That will allow you, once you decide which priorities your projects have, which projects will get the resources first, and which projects may have to have certain tasks delayed because they are not as high in priority.

2.  Factors Effecting The Maximum Number of Effective Projects

a.   Complexity

The more complex the project, the fewer that can be done by a single project manager.

b.  Number of project team members

The more team members on a project, the fewer such projects can be done by a single project manager.

c.  Working project management vs. dedicated project management

The more projects a project manager is doing project work for in addition to his or her project management duties, the fewer such projects that can be done by a single project manager.    Of course, Dr. Lewis recommends against a project manager doing project work in addition to managing that same project.  

d.  PMO

When there are shared resources, there needs to be an agreement about priorities between projects, otherwise there will be conflicts between project managers, or in a matrix environment, between functional managers and project managers. The existence of a PMO may help coordinate these resource issues for projects.

e.   Geographical scope of project

A global project will require a lot more communicating with team members than local projects.

f.  Authority level of project manager

A project manager that is given little authority and who has a weak role will have to spend a lot of time getting the decisions backed up by management.    If management takes the time to set up the project manager with sufficient authority to handle most decisions on his or her own (up to a pre-determined authority level), then the project manager will be able to handle more projects without having to get “second opinions” on decisions effecting the project.

g.  Mental flexibility

What is your personal level of flexibility?   Those with higher flexibility will be able to cope more easily with switching from task to task.

NOTE:  On a personal level, I have noticed that the online app called Lumosity does help increase your brain performance index in several areas, including flexibility.    If you are a project manager, I recommend getting this app and using it on a daily basis to increase your flexibility, as well as problem-solving ability, etc.

h.  Administrative assistance

Does the project manager have a project coordinator, project expediter, or dedicated scheduler to handle the administrative aspects of project management?   Dr. James Lewis recommends this, because the project manager should place greater emphasis on the people skills needed to manage the project rather than trying to micromanage the details.   Having these two roles of leadership vs. administration separated into different people will make it possible for the project manager to handle more projects effectively.

i.  Organizational structure

In a matrix environment, where that person has authority over a project but not only individual project members, is going to take longer to deal with issues that a person who DOES have that authority, such as a functional manager.    The reason is because the project manager will have to use influence rather than direct authority to get many things done, and will have to negotiate for resources with the functional managers.    Those in a matrix organization will not be able to handle as many projects as those in a projectized organization.

One last piece of advice from Dr. Lewis is that, if you are managing multiple projects, you need to capture how much time you are spending on each project.   This will allow you see how much of your “time budget” is being spent by each project.


Project Planning, Scheduling & Control–Chapter 16: Closing Out the Project

Dr. James Lewis does not consider a project complete until a final lessons-learned review has been conducted and documented.  There are two kinds of organizations–those that are getting better and those that are dying.  Or as Woody Allen once said in Annie Hall, “A relationship, I think, is like a shark.  It has to constantly move forward or it dies.  I think what we’ve got on our hands is … a dead shark.”

Chapter 13 covered the subject of various types of project reviews, including lessons learned reviews at the end of the project.   The purpose of this chapter is to reiterate the importance of this type of project review, and to go over the other formalities of project closure that are very important for the continued growth of an organization.

1.  Administrative Closure

Here’s a summary of the various types of administrative closure that need to be done at the end of a project.

  • Collection and archiving of all project documents (final costs, schedule data, risk register, issue log, etc.).
  • Update records and product specifications to reflect what was actually achieved, so that this can be compared to the specifications in the original plan.
  • Revising employee records to reflect the skills they developed or enhanced during the project–this will help the organization anticipate future training needs.
  • Preparation of a final project report that summarizes the history of the project and describes the final product of the project.
  • Final lessons-learned review conducted with all stakeholders (not just with members of the project team)

2.  Lessons-Learned Review

As described in Chapter 13, the lessons-learned review needs to be completed with all team members present, but it should not be limited in its scope to all team members:   shareholders need to be interviewed as well.

Knowing what has not worked is obviously important because the organization won’t repeat mistakes in the future that were made during the project.    But it is equally important to know what has worked, so that these “best practices” can be replicated in the future as well.

3.  Personnel issues

Since projects are temporary endeavors, there may be apprehension on the part of some team members as to what their future with the organization will be, if any.   Project managers should do whatever they can to protect the jobs of team members and let them know that their jobs are secure.   In a matrix organization, where the hiring and firing of employees is under the control of the functional manager, and not the project manager, there is only so much the project manager can do.

There may be strong feelings associated with disbanding project teams, as strong as the feelings generated by the sense of camaraderie that has developed during the project itself.    The project manager should try to manage not just the paperwork, but the emotions involved with the end of a project.    True project closure involves emotional closure as well.

Integral Life Practice–Chapter 2: What is Integral Life Practice?

This is the second in a series of 10 posts, each covering a chapter of the book Integral Life Practice, which is authored by Ken Wilber, Terry Pattern, Adam Leonard, and Marco Morelli.    After having completed a course on Integral Theory in the latter part of 2013, I wanted to start 2014 with attention to taking that theory and putting into practice in my daily life.

To that end, I am going through the book Integral Life Practice so I can introduce others to the concept of creating your own Integral Life Practice matrix, which will contain practices in the core modules of

  • Body
  • Mind
  • Spirit, and
  • Shadow (the psyche)

Besides the core modules, there are other optional modules that are available, such as

  • Integral Ethics
  • Integral  Yoga
  • Integral Work
  • Integral Parenting
  • Integral Relationships
  • Integral Communication

Before discussing the contents of the core modules, I want to get to two questions that the first two chapters ask:   Why and What?

In chapter 1, I summarized the chapter that discusses the reasons why you might want to do Integral Life Practice.   In this chapter, chapter 2, I summarize the chapter that discusses what exactly Integral Life Practice entails by listing some adjectives that describe it.

1.   Radically inclusive

The “Integral” part of Integral Life Practice means that it is radically inclusive:   it includes the various insights that come from ancient spiritual traditions, modern science, developmental psychology, philosophy and other traditions.    Sometimes this conceptual map is described by AQAL, which is short for integral theory, which covers “all quadrants, all lines”.    The details of this will be covered in chapter 5 on the Mind Module.   Simply put, it means that it incorporates all perspectives, and includes all lines of development.

2.  Intuitive

Integral theory is a map of consciousness, and integral life practice helps you map the terrain of your own awareness.

3.  Modular

Integral life practice has different modules which relate to specific parts of your being:   your body, your mind, your spirit, or your psyche (also known as the shadow module).

4.  Scalable

Integral life practice allows you to adopt practices that fit into your schedule, so that you can do it whether you have an hour or as little as 10 minutes on any given day to complete your practice.

5.  Customizable

Integral life practice isn’t a rigid, “one size fits all” structure, but rather it allows you create a flexible space in which you can choose those practices which have the most significance for you.

6.  Distilled

Many practices are called Gold Star Practices, because they give you what is most essential in any given module without taking a lot of time.   These are “distilled” or “condensed” practices, which is why they are given the name Gold Star Practices.

7.  Synergistic

By doing practices in various modules, you will find that the gains in one module actually accelerate gains in the others.    Don’t ask yourself if you have enough time to do practices in all four core modules; you don’t have time NOT to do practices all four!

8.  Post-Metaphysical

Rather than just trying to develop your consciousness and gain perspective through the study of theory, Integral Life Practice helps you develop your consciousness by enacting different perspectives.

In sum, Integral Life Practice will allow your to bring a sense of awareness, care, and presence to every moment of your life.

The Consumer Goods Industry in 2014–an EIU webinar

On Wednesday, January 15, 2014, the Economist Intelligence Unit hosted the first in a series of six webinars on Industries in 2014.  This first webinar is on the consumer goods industry, and was presented from London by John Copestake, the Retail & Consumer Goods Editor at EIU.


The EIU looked ahead at various industries in 2014 using a combination of forecast data, a survey of industry professionals, and insights from industry analysts.  Global aggregates allowed EIU to forecast sales growth in 2014.  The survey was done by asking 647 industry executives about various issues in the industry.

Respondents to EIU’s global survey were largely optimistic for the year ahead, although optimism was largely reserved for the specific company they represented.  Expectations for the retail and consumer goods industry and the global economy as a whole were both more muted.  This is cautious optimism rather than a “ringing endorsement.”  Note that as many as quarter of the respondents thought that, rather than improving, that conditions were worsening for the consumer goods sector, which is line with the sentiment the respondents expressed regarding the global economy.

Expectations for 2014 Better Same Worse
For your company 50.0% 35.3% 14.7%
For the retail and consumer goods industry 32.4% 44.1% 23.5%
For the global economy 42.4% 36.4% 21.2%


Europe in particular will swing from declining volume in 2013 (-1.0%) to modest growth in 2014 (about +0.2%).  Out of all the regions in the world (North America, Western Europe, Asia-Pacific, Latin America, MENA, and transition economies), Latin America will record the strongest increase in growth from 2014, from 1.5% in 2013 to 4.0% in 2014.  There were two reasons for this:  in Latin America, there is a return to earlier trends for the entire region.  In addition, the fact that Brazil is hosting the World Cup will bring some one-off gains to that economy.  Asia will experience the highest growth but not a big increase from 2013, up to 4.5% from 4.2%.

In Europe, particular markets such as Greece will continue to see declines, but at least the declines will be of lesser magnitude than in 2013.


In China fears of a slow down in demand have been compounded by campaigns against corruption, against conspicuous displays of wealth and by increased regulatory scrutiny.  China has been the subject of the rumor of slower growth for about a decade, but it looks like it is finally starting to happen.  There have been high-profile examples of Western firms facing regulatory pressures regarding issues of price fixing and food safety.  Foreign firms seem to be singled out, and so this has an effect on foreign investment.

When asked whether they think that slower growth and greater scrutiny on foreign firms will detract from China’s appeal in 2014, half of the respondents agreed with this statement (as opposed to 20.6% who disagreed, and 29.4% who neither agreed nor disagreed).  In the luxury goods market, those firms selling luxury goods are being streamlined; for example, Revlon will quit the market.

In India,  weaker consumer spending and ongoing uncertainty over multibrand foreign direct investment in retail have undermined opportunities.  Only TESCO has formally expressed interest in investing in India.  Many are waiting for the results of the election in May.

This has forced firms to revisit strategies.  Many firms are both slowing down investment in China and halting plans for India until the issue of foreign direct investment is FDI is resolved.  When asked whether elections and the resolution of concerns around FDI legislation would prompt significant inbound retail investment in 2014, 23.5% of the respondents agreed, 17.7% disagreed, and 58.8% neither agreed nor disagreed .


The five individual countries showing the fastest growing retail markets in 2014 will be

  • Algeria (13.8%)
  • Azerbaijan (9.6%)
  • China (9.5%)
  • Vietnam (8.0%)
  • Thailand (7.6%)

Algeria and Azerbaijan are showing the fastest growing retail markets, but from a relatively small base.  We still expect China to be among the fastest growing retail markets in 2014.

Others set to experience fast growth will be smaller markets and in some cases, such as Algeria, will also have risk attached to opportunity based on political instability.

The presence of Vietnam and Thailand highlights the emergence of new Asian retail markets.  Asian countries are beginning to step out of the shadows of China and India.


Since much of the focus is on the BRIC economies (Brazil, Russia, India, China), the EIU did a survey of 10 markets beyond the BRIC economies that had a mixture of developed and emerging markets.

The question was asked “Beyond China, Russia, India and China, in which three countries do you see the greatest opportunities for growth in 2014?”  The countries are listed in order of which received the total “votes” for either 1st, 2nd, or 3rd choice for having the greatest growth opportunities in 2014.

  1st 2nd 3rd TOTAL
USA 9.1% 12.5% 8.0% 29.6%
Mexico 12.1% 6.3% 4.0% 22.4%
South Africa 6.1% 3.1% 0.0% 18.3%
Turkey 15.2% 3.1% 0.0% 18.3%
Germany 3.0% 6.3% 8.0% 17.3%
Indonesia 3.0% 3.1% 8.0% 14.2%
Vietnam 3.0% 6.3% 4.0% 13.3%
UAE 6.1% 3.1% 4.0% 13.2%
France 6.1% 0.0% 4.0% 10.1%

Uncertainty in China and India has allowed a number of smaller markets such as Indonesia and Vietnam to step out of the shadows.  Recovering confidence in Europe has also led to a renewal of interest in markets in countries such as Germany and France.  But there are some surprises, such as South Africa Turkey and the UAE, which will also experience high growth in the retail and consumer goods industry in the coming year.


What is driving this moderate growth in 2014?  For one, e-commerce will continue to be a game changer.  The movement of e-commerce into the mainstream will be matched in 2014 by the accelerated role of mobile devices. This is expected to come at the expense of brick and mortar stores, and closures of these will be inevitable.  However, traditional retailers remain valuable and will continue to evolve through technology and service-led innovations.

About three-quarters of the respondents felt that

  • Store closures in mature markets will continue in 2014 as E-commerce sales grow
  • M-commerce (purchasing via mobile phones) will be a strategic priority in 2014 as showrooming and smartphone penetration rises.

The only areas that will continue to thrive in terms of brick-and-mortar stores will be highly populated business centers in large urban areas.

However, when it came to the following statements, only about half of the respondents agreed.

  • Pure-play (online-only) retailers will make inroads into developing physical stores and showrooms in 2014
  • Consumer behavior will be more influenced by ethical and sustainability concerns in 2014

Regarding this last issue, although only about a half of respondents felt that consumer behavior would be influenced by ethical and sustainability concerns in 2014, this figure is up from previous years.  This is because as the global economy recovers, those issues regarding ethical and sustainability concerns that had taken a back seat to other issues of pricing that had higher priority will now start to become more prominent once again.


a.  Data data data!

The use of data will become a crucial factor influencing retail strategy and purchase decisions.  PayPal and Ebay are currently at the forefront of mobile data. This however could turn out to be a double-edged sword, as issues related to government spying  and cyberattacks (Target) became prominent in people’s attention.

b.  Shopping Experiences

Shopping experiences Bricks & Mortar will create retail experiences to drive footfall and maintain loyalty.  Mobile phones will be a big part of this, as those going to consumer electronics shows, for example, use app-based QR coding to get more information on products, and then use social  media to broadcast their experiences at those venues.   Showrooming is increasing, as stores like TESCO for example buy up cafes in order to allow people to experience leisure while they are shopping.   Luxury firms in particular are working to create a space conducive to increased sales.

c.  Personal services

Online sellers are ramping up services to compete with traditional retailers.  For brick-and-mortar stores this is crucial because it is one of the few things that they can use to distinguish themselves from online stores.

d.  Race to the doorstop

The race to the doorstep using anything, from drones to courier company acquisitions, continues apace as the reduction of delivery times are a crucial new battleground.  Obviously here brick-and-mortar stores have an advantage.  Amazon is buying smaller warehouse spaces closer to population centers in contrast to its earlier strategy of relying on out-of-town megasheds.   Ebay has bought up shuttles to outsource delivery to courier companies in order to reduce delivery to as little as 1 hour in some select areas.  Drones won’t appear in 2014, but will be in place by 2020.

e.  Social branding

The events in Bangladesh in 2013 have pushed such ethics back up the consumer agenda.  Last year, there were plenty of stories about the growing dangers of climate change, and there was a big focus on the factory collapse in Bangladesh.  This has always been an underlying trend.  In 2007, the credit crisis hit, and cost consciousness became key for the next few years.  Consumers have been slowly recovering income, however, and in 2014 they are looking again ethics so that they don’t compromise value for money.  The problem is that firms will have to meet these consumer demands without adding a price premium to their goods.  Before 2007, people were actually willing to pay more for ethically-branded goods, but now they are not willing to pay as much.  Companies will be focusing more on accentuating ethical claims in their media.


a.  Does the growth in Asian markets mean that it will remain the focus of FDI?

Yes.  India in contrast has a challenge in proposed FDI laws at the moment, so investment there will be put on hold until the outcome of the elections in May becomes clear.  There is still an appetite for investment in China, despite talk of slowdown.  The retrenchment in FDI is not a result of the rejection of BRIC countries as much as it is the result of investment coming back to home markets where there are finally signs of growth starting to occur.  In addition, there will be a lot more domestic demand from China and India.

b.  What insights could you give on the US retail and consumer goods market?

The US market is difficult to call.  There are a lot of mixed messages; it is relatively positive in terms of positive growth in the aggregate, but individual stores face a difficult operating environment.  There are huge losses:   Best Buy, Target, and WalMart are all facing difficulties.   There is a msmatch between profitability of retails companies and the state of the overall economy.  It is a tough operating environment although it is relatively stable.

c.  What can you say about the Japanese retail market?

Fiscal stimulus dubbed “Abeconomics”continued. Traditionally Japan has been a stagnant market with negative inflation.  Because of the sales tax increases that will take place in 2015 and 2016, the sales increase in 2014 that will occur in order to beat the looming sales tax increass may create a short-term inflationary spike.  It’s still highly profitable market, although growth is slow.  It makes a lot of money for those companies that have invested in Japan.

d.  What are the particular challenges in the Chinese retail market?

In China the problem is exposure to investment.  China is going to be the 3rd highest economy in 2014; it will overtake the US in 3 or 4 years to become the world’s largest.  Relative to its historical performance with double-digit growth, the current growth rate is perceived as slow performance.  Many investments are operating on slim margins, because they have previously been expecting double-digit growth.  It is a difficult operating environment:   increased regulatory scrutiny, changes in government policy, and more frequent media campaigns are all taking their toll on foreign companies.  Starbucks had recent problems, for example, because of their pricing policy.

e.  What are your thoughts about E-commerce regulations in India?

India FDI commerce regulations are still up in the air.  There is a greater appetite for e-commerce in India, but the outcome of the May elections will be crucial to this.

f.  What about M-commerce and S-commerce (social-media commerce)? 

Social media commerce (e.g. Facebook) is waiting to explode.  It has been predicted as a trend since 2011, but it still hasn’t materialized.  The highest growth rates in the Facebook user market are coming from Brazil and Latin America.  Pinterest in particular was a great traffic driver in 2013.  We haven’t seen, however, viable S-commerce growth.  It is used as a tool for consumer engagement and brand promotion, however.  The real strength of S-commerce has in terms of peer reviewing and direct sales.

The problem is about data—consumer goods firms may be reluctant to use Facebook, because proprietary data is owned by Facebook, not by the retail firm.

g.  What about the retail market in Russia?

Russia’s retail market is growing along with the economy at about 4.5%, but other elements are undermining that potential growth.  Just remember that Russian growth levels were in double-digit territory before the 2008 global slump.  There has been increased taxation of beer, vodka and tobacco.  Inflation undermines real growth.  A lot of Russia’s trading partners are in Western Europe which had been some of the hardest hit by the global slump after 2008.  However, as their economies start to grow, albeit slowly, Russia will experience some increase as a spillover effect.   trading partners are in W Europe which have been hard hit.  There is increased spending on malls in Russia.  The luxury goods market is being driven, as you would expect, by the oligarchs; it is the key market for luxury goods in the world outside China and Dubai.

h.  What about the retail market in Latin America?

There has been much emphasis on Brazil in recent years.  The real surprise has been Mexico; Mexico could well be the new Brazil in the region, due to its ties with the US through NAFTA.   Columbia and other Latin American markets are smaller than Mexico and Brazil, although there is significant growth in both Argentina and Venezuela.

i.  Are the megasheds in danger of disappearing?

Megasheds are here to stay; they are prevalent because they are in places where real estate prices are very cheap.  They are still within commuting distance from towns and centers, in a sort of wheel-and-spoke arrangements.    Level of demand is already there; Amazon sales were $50B last year.

The real development isn’t in megasheds; although they are developing in East Europe, they already exist elsewhere.  The megasheds however are being supplemented by smaller sheds that are closer.  Only in key markets around key cities will same-day delivery be a viable option in 2014.

j.  What about retail tourism in 2014?

Other than the obvious case of Brazil because of the World Cup, thebig growth driver is China, which overtook the US as the biggest destination of retail tourism spending.  The other world leaders in retail tourism are London, Paris, NY, and dedicated retail hubs like Dubai, Abu Dhabi.

Brazil is tangential.  It will experience a spike in sales, but those who are going to Brazil are visiting for the World Cup, not for shopping.  The trend to watch will be how London, Paris, NY, etc. address the Chinese propensity to spend abroad.  The demand for Mandarin speakers in tourist destinations is on the increase.  UK has a convoluted system to allow Chinese visitors, and so is in a disadvantage vis-à-vis Europe, where the visa system is simpler and they can go to several countries based on a single visa.   The UK will have to address this issue to remain competitive.

The other development related to the rise in Chinese retail tourism is the fact that many Chinese consumers are being served in countries in South East Asia like Vietnam and Thailand.