Monthly Archives: January 2012

Find Your Next!

Our last post discussed the need for Next Practices and an innovative approach that will get the organization there so that it can continue to survive, and even thrive, in today’s harsh economic climate. Today’s post is going to review Andrea Kates’ Find Your Next, a new book that describes the Business Genome approach — which is a strategic toolkit that an organization can use to identify one or more strategies that could take it to the next level.

The difference between a great idea and a great business result is the ability to integrate insights from lots of different sources and get an entire organization on board quickly.
Mark Vachon, GE Company Officer

No single quote better captures the state of business today and the need for a 360°view of the market in which an organization is competing and an enterprise-wide response to market changes in real-time. That’s why SI agrees with Mark Vachon when he says that Find Your Next is a must-read. Very few books capture the spirit of the approach that an organization must to take in its strategy formulation efforts like this book. As business has progressed beyond the point where a single blueprint can guarantee success, an inquisitive approach that can help an organization identify all of the relevant factors that are influencing the market from a product, process, customer, talent, trend, and innovation perspective is desperately needed as an organization must be continually asking the right questions and identifying the right answers if it is to compete effectively. Getting to the heart of the innovator’s dilemma, this is one of the few books that accurately describes a strategic formulation approach that is both powerful enough to meet organizational needs and easy enough to be adopted.

One of the great things about the book is the author states right off the reality of business strategy generation: there is no science to prediction. You can sit down in a laboratory with rats for a month and track what you see. Even armed with data on how biological change has occurred in the past for each rat, you wouldn’t be able to figure out what changes will happen next. And why not? Because you have not been trained to see the world of rats through the subtle cues and environmental shifts that would allow you to see ahead to the next phase. In other words, there’s no way to know for sure.

In addition, Andrea then goes on to note that forecasting is rarely enough. The traditional tools don’t adequately address the significant trends that shape today’s competitive arena. This is partly because adding up the elements of the past doesn’t get you to the full impact that you can have in the future but mostly because no model is complete — the market is continually shifting — and you have to keep up with it.

Just like Nilofer Merchant provided us with a simple five-step approach for achieving The New How when he noted that we needed a framework for collaboration if we were truly going to collaborate on business strategy, Andrea Kates presents us with a simple four-step process to the business genome approach that anyone can follow. But that’s not what makes this book great. Anyone that has been keeping up with recent thinking on innovation and innovation trends can probably figure out a process. What makes the book great is the advice provided on implementing each step and the detailed lists of important questions that need to be asked, that are not always so obvious. And then there’s the case studies that explain the importance of asking the right strategies and using the business approach to Find Your Next.

Consider the questions posed in relation to your secret sauce:

What is it about you that keeps your customers coming back? Do they see all that you are and all that you have to offer?
Who stands a chance of stealing those devotees or encroaching on your competitive space?
How can you stay wired to the market pulse, even as it vacillates?
What will make your company a market leader in the next year or two?
What’s the secret to differentiating your brand in today’s competitive landscape. Have others in industries outside off yours figured it out?

Each of these goes beyond the traditional set of questions asked by a company employing standard best-practices when trying to determine it’s next product. A typical company

would ask what is keeping customers coming back and not if the customers are seeing everything they have to offer now — this is important as your company might already have it’s next killer product on the market or might be offering products and services the market doesn’t want, and mis-applying resources that should be reapplied
would focus on current competition and not on potential new market entrants that could move into its space and change the game — like Netflix changed video rentals and the iPad changed laptop sales
would be focussed on reading the market now and now how it could ensure it could read, and react, to the market as the product was released and competitors’ products were released
would be focussed on now, and not after-now, and overlook the importance of minitrends to continued success
would focus on its market space, and not other market spaces where a new market entrant might have figured out the key to new customer acquisition in what was thought to be a stagnant or non-existent market (like Starbucks changed the coffee shop)

Find Your Next is a great book and a must read for any executive or strategic planner that wants to understand the foundations for asking the right questions that will be the ultimate key to success in a strategic planning session. As Seth Godin says:

Every great strategic thinker uses the ideas in thsi book … but it took Andrea Kates to write them down for the rest of us.

New Year, New Genome?

A new year is upon us. A new year that will not only be fraught with Risk, as per our recent series on Risk 2011 / Risk 2012, but a new year that will be brimming with opportunity, for those with the insight to identify it and the innovation to capture it.

And when SI says innovation, it means innovation, not renovation. Sergio Zyman may have preached renovation before innovation, but it’s not enough anymore. Any company that has survived the recent downturn relatively intact has more than likely already renovated its brands, products, and core competencies to the max and needs something to get it to the next level. And, more than likely, that something has to go beyond a traditional Blue Ocean innovation strategy (as one never knows if that’s a sea anyone wants to sail) to a Golden Apple strategy that will enable the company to deliver products and services that the majority of customers in its target market segments want (and that will sell out months in advance in pre-orders).

This will require a shift from Best Practices to Next Practices as the organization redefines how it does business. One way an organization can achieve this is to employ the Business Genome approach described by Andrea Kates in Find Your Next.

The Business Genome approach is based on a genome mindset [that] sparks new insights for translating the DNA of one business to the growth challenges of another as this allows strategists to see through a new lens — an absolute necessity if an organization is going to identify the Next Practices required to take it to the Next Level required to develop, and deliver, a Golden Apple strategy. [In olden times, everyone wanted the Goose that Laid the Golden Eggs. Today, everyone wants an i-Device — an iPod, an iPhone, and an iPad — these are the golden eggs of modern consumerism and the Apple strategic mindset that created it transformed Apple from has-been to global leader.]

Our next post will discuss the Business Genome approach, described as the Key to Next, and review Andrea Kates’ Find Your Next. Stay tuned!

Risk Mitigation 2012: Economic

In our last post, we covered some potential mitigations for each of the top three geopolitical risks that we identified in our Risk 2011 series. In this post, we are going to cover some potential mitigations for each of the top three economic risks as we continue our series of posts inspired by the World Economic Forum‘s recently released 6^th annual Global Risks report, 2011 edition.

03: Asset Price Collapse

Most of an organization’s capital is tied up in two things — its people and its assets. This includes its buildings, its inventory, and the raw materials that will be used to create future inventory. If all of a sudden the value of each of these assets drops 50% over night, the organization loses 50% of the value of these assets — and will likely sustain additional losses when it has to sell its inventory at a deep discount.

While asset price collapses can’t be prevented if a market is flooded, or a market is cornered, or asset prices are artificially inflated by collusion and then drop rapidly when the inflation cannot be maintained, it is often the case that impending asset price collapse can be predicted in advance. Asset prices rise and fall, and they always fall if they get to high. While the exact time, and degree, of collapse cannot always be predicted accurately, it’s often possible to predict an approximate time of collapse, and an approximate degree. If a price collapse is coming, the organization can reduce buys to minimal levels, sell off unnecessary assets in a controlled manner, or, if possible, hold onto them until such time as asset prices return to reasonable levels.

02: Extreme Energy Price Volatility

Today’s organizations are ultimately dependent upon three things – people, raw materials, and the energy required to transform the raw materials into the product the organization will sell. If oil doubles in price, that could make the difference between being able to produce the goods in China and import them into the US for sale at a profit and having to import them into the US for sale at a loss (or risk losing the entire inventory).

Energy price volatility is not going to go away. An organization has two options, try to predict the volatility and ride it out as best as it can, or try to restructure its operations such that it is not (as) dependent on volatile energy sources. There are two ways it can achieve this goal. First of all, it can focus on streamlining its operations to make them as lean as possible. Reducing the energy required is the first step. Secondly, it can invest in creating its own green energy sources to minimize its dependence on external sources. This will go a long way to not only stabilizing its energy costs, but to preventing energy spikes in the future.

01: Fiscal Crisis

The fiscal crisis can lead to many things — currency volatility, a credit crunch, and overall infrastructure fragility. Weakening currencies can cause costs to skyrocket. A credit crunch can severely restrict cash flow and make it almost impossible for an organization to temporarily borrow the cash it needs to secure the inventory required to produce the goods it plans to sell to create revenue and, eventually, generate profit. And infrastructure fragility, which weakens every time there is insufficient cash to invest in necessary maintenance, can result in transportation lanes, power plants, and basic utilities becoming unavailable overnight.

If the organization is a global multi-national, currency volatility can be mitigated by keeping keeping cash in multiple currencies. If a credit crunch is likely, the organization can reduce its expansion and investment plans to maintain enough cash on hand to continue operations without interruption. And if the infrastructure is becoming fragile, the organization can invest in infrastructure improvements. If the government will take loans (by selling bonds) to finance improvements, the organization can invest to insure continued availability of necessary public infrastructure. If not, the organization can invest in its own infrastructure to the greatest extent possible or relocate operations to where the infrastructure is strong and expected to stay strong.