A New Cuban Revolution

Capitalizing on emerging capitalism.

There’s a revolution going on in Cuba. There are guerrillas walking the streets of Havana. They bear little likeness to Fidel’s cadre, though — the one that installed a Marxist dictatorship in 1959. Instead they’re free-market reformers, responding to Raúl Castro’s 2010 easing of restrictions on small business entrepreneurship. They are the island’s first capitalists in three generations, and they’re creating from scratch a uniquely Cuban approach to guerrilla marketing.

They’ve embraced the guerrilla approach — that unconventional, low-budget and ever so effective style of advertising — not because they’ve heard it’s trendy here in the States. They’re doing it because they have no other choice. Print and broadcast media in Cuba is still state controlled and doesn’t accept advertising. Internet connectivity is severely limited. The new entrepreneurs of 2010 were faced with the challenge: how to let their fellow Cubans know they were open for business.

They met that challenge with ingenuity we should all find instructive. They accepted their limited resources, their limited access to mass media, and worked around them.

There’s the restaurant owner, for instance, who takes to the streets of Havana in his garishly painted MG Roadster (displaying the restaurant’s logo, of course). Cuba’s license plates are color coded, so he keeps an eye out for the blue plates designating foreign tour groups, and leaves discount coupons on their windshields.

And there’s the mobile phone repair company (which also does a brisk business unlocking iPhones). They wanted to differentiate themselves from their hundreds of competitors, so they’ve branded themselves as a “clinic,” complete with a cartoon mascot: a cellphone wearing a stethoscope. That icon is becoming familiar throughout the island, thanks to professional signage and thousands of flyers handed out.

Perhaps most innovative is a popular Havana burger stand. They offer 25% lifetime discounts to motorists willing to carry bright yellow advertising decals on their cars. They also managed to get 30 marchers, all wearing branded t-shirts, into this year’s May Day parade (one of Cuba’s biggest public events). The result was mass-market coverage that would have been otherwise impossible.

At this early stage, Cuban marketing is still in its infancy. The same can be said for all aspects of Cuban free enterprise. But as long as they go on showing this same level of resourcefulness and resolve, their future is bright indeed.

And along the way they might have some lessons to teach the free-enterprise giant just 90 miles off their coast. Here’s hoping we’re willing to learn them.

The C4:

1. In 2010 Cuban president Raúl Castro opened the way for limited entrepreneurship throughout the island. Within months thousands of small business — restaurants, specialty stores and beauty shops — hung out their shingles. 
2. They quickly found, however, that they had no easy way of communicating with their customers. Mass media is controlled by the Cuban government and conventional advertising doesn’t exist.
3. So they embraced what we call “guerrilla marketing.” They leveraged ingenuity, meager resources and every opportunity for exposure. It worked. It’s still working.
4. It’s a fascinating, real-time experiment in creating a free-market system from the ground up. There are lessons to be learned in Cuba. Wise marketers everywhere should pay attention to this developing story.

A Foreign Way of Doing Business?

Are business practices universal?

There are countries with bureaucracies so corrupt that it’s said to be impossible to license a car or pull a building permit without the greasing of many palms.

American companies seeking to do business in these countries — in any country in fact — are under the jurisdiction of the Foreign Corrupt Practices Act (FCPA) of 1977, which applies American law, and perhaps even American morality, to overseas commerce. In a nutshell, the law states that Americans can be prosecuted at home for bribery abroad.

On its face the FCPA seems righteous, responsible and correct. It promotes honesty and fair practice, even in nations that can’t or won’t promote these things for themselves. And it ensures that American businesses represent our country and our way of life in the best light possible.

But couldn’t it be that the FCPA is hamstringing American commerce, especially when we’re competing against economic powers operating under no such strictures? If there are truly places where business is impossible without graft, aren’t we effectively closing those territories to American businesses by holding them to the FCPA?

You might recall the recent Walmart controversy, wherein the retailer was accused of FCPA violations while operating in Mexico. This case might seem cut and dry, but the question begs: could Walmart have operated at all in Mexico, without those bribes?

We like to think morality is absolute. It would be nice if that were so. But ideals of fair business practice are clearly not universal, or at least they’re not universally enforced. We have to wonder if our moral high ground, as enshrined in the FCPA, isn’t ultimately self-defeating.

The C4:

1. The FCPA was enacted in 1977 to prevent American businesses from engaging in corrupt practices abroad.
2. Walmart has recently been accused of FCPA violations for bribing Mexican officials.  
3. We wonder if adherence to the FCPA doesn’t put American companies at a disadvantage, when competing against companies and nations who obey no such laws.
4. This is a distressingly gray area and we’d love to hear your opinion: should morality be absolute, or should we afford our businesses the leeway necessary to compete?

Keep ’Em Close

Defeat? Yes. Destroy? No.

Competition is healthy. That’s something businesspeople grasp almost intuitively. We understand that competition creates efficiencies and forces us to better serve our customers. It can even make our work more enjoyable. Some of us thrive on competition and enjoy the fact that it brings out the best in us.

But it can also bring out the worst. Quick self-diagnosis: Do you consider your competitor to be your mortal enemy? Ever use words like “destroy,” “bury” or “scorched earth” when describing your competitive plans?

Now that’s not healthy.    

There are very few industries in which competition is a zero-sum game. In other words, your competitor’s successes are not necessarily your failures. Thinking of them as such only leads to ugliness in the marketplace.

Instead, focus on areas of possible collaboration. Are there projects in which you and your competitor can form a strategic alliance? Failing that, can you pool resources to influence public policy on behalf of your industry at large?

If nothing else, just have a conversation. Take a lunch every now and then to talk through differences or just get to know each other. You don’t have to be best friends, but you should come to accept each other as decent human beings just trying to earn a living.

We’re all just trying to earn a living, but chances are, we’re all someone’s competitor. And it’ll take all our efforts to make sure that competition stays healthy instead of turning into something ugly.

The C4:

1. Business competition drives market efficiencies and creates choices for the consumer. All else being equal, it’s a positive force for our economy.
2. But competition can turn ugly. It’s all too easy (and far too common) to dehumanize our competitors and to work toward their destruction.
3. That’s not healthy and it’s not good for our economy. Competition is about finding an equilibrium. Very little in business is zero-sum. There is room for success for all of us.
4. Look for common ground. Look for areas of cooperation. Keep lines of communication open. Compete, by all means, but remember you’re competing with decent people who tuck their kids into bed at night. Hopefully they’ll remember the same about you.