Category Archives: Strategy

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:

  1. 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?
  2. Who stands a chance of stealing those devotees or encroaching on your competitive space?
  3. How can you stay wired to the market pulse, even as it vacillates?
  4. What will make your company a market leader in the next year or two?
  5. 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

  1. 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
  2. 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
  3. 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
  4. would be focussed on now, and not after-now, and overlook the importance of minitrends to continued success
  5. 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!

Is It Time To Move Your (Supply Chain) Operations to an Emerging Economy?

After reading this recent piece in Chief Executive (CE) on how US companies are “garotted by red tape”, SI is wondering whether the time has come to follow the lead of IBM and other big multi-nationals and move your supply chain, followed by your headquarters, to China or another emerging economy. Even though I still think North America is going to retain the edge in High-Tech Innovation for a few more years (despite the fact that the numbers say that both India and China should be producing four times as many geniuses each year), the cost of doing business, or at least of keeping your supply chain and headquarters, in the US is becoming too high.

Consider these vary scary stats from the CE article:

  • In 2010, the Feds spent 55.4 Billion enforcing regulations
  • In 2009, economists Crain and Crain estimated the true cost of the Feds’ regulations was 1.75 Trillion – or 12% of GDP – compared to only 1.46 Trillion in pre-tax profits businesses earned
  • The Federal Register that compiles regulations is over 81,405 pages long
  • Since Obama took office, regulators have imposed 38 Billion in new costs
  • There are 2,785 proposed rules in the pipeline and 144 are economically significant and will add burdens of over $100 Million each for a collective burden of over $14 Billion on this 5%!

At the moment, federal regulations are a runaway train that no one can stop. And until the US gets a Denzel Washington or a Keanu Reeves that can deal with the situation, it’s only going to get worse before it gets better.

As a result, it might be time to consider moving your supply chain operations somewhere where the regulations are a little less severe … even if you have to pay a few government bribes or deal with a few pirates. After all, 238 Million (which is the amount paid to pirates in 2010 for ransom) is a lot less than 1.75 Trillion (at 0.01%), and a few hundred thousand goes quite a long way in developing economies where bribes are concerned. And while SI is not condoning bribery or pirate ransoms, there are much better uses from an innovation and jobs standpoint for 1.75 Trillion dollars than red tape.

Maybe if a few big companies start leaving and the feds realize that if they don’t stop the runaway train that the city will be empty by the time it arrives they’ll bring in a Denzel or Keanu to deal with it. SI doesn’t know, but thinks it’s a good question to ask.

High Tech Needs Next Generation Supply Management

As chronicled in this recent commentary by Bob Ferrari over on Supply Chain Matters, not only do accelerating dynamics reshaping high tech supply chain networks bring implications, but there is continuing turbulence among and across high tech and consumer electronics value-chains. This means that now more than ever, firms in these segments need to continually re-visit their strategic sourcing and supply plans for long-term implications and, in SI’s view, they need to start by adopting next level supply management strategies when they revisit their plans.

And, as Bob suggests, it is imperative that senior management is continually educated to developments and that strategic strategy sessions and interchange be more than just a periodic occurrence. As clearly indicated in this morning’s post, Next Level Supply Management requires Collaboration, Stakeholder Partnership, Leadership, Early Involvement, and Alignment. Not only does Supply Management need to speak as one voice, but the entire company needs to speak as one voice in this sector. The storm is too violent to ride out if everyone is rowing in different directions.

Do You Know Your Legal Risk In An Acquisition?

Chief Executive just ran a great article on “how to evaluate legal risk in acquisitions” that I believe is a must read for any Supply Management department asked to consult on a Merger or Acquisition. Especially since, like the article states, it is nearly impossible to find a company not involved in some sort of litigation. The traditional analysis of the management team, cash flow, and market share is not enough — a risk assessment on pending litigation must also be made.

So how do you assess legal risk? The first thing you do is get an expert advisor, and a litigation manager in particular. Once you have this individual, who is an attorney with a significant business background as well as a litigation background, you work with her to evaluate the:

  • materiality of the litigation, the
  • potential for future suits, and the
  • connection between the litigation and the business plan.

The materiality is important not just from a relevancy perspective (that attempts to define the validity of the claim and the chance of success by the claimant) but from a cost perspective. If the cost of defending the litigation, regardless of expected outcome, will cost the company more than it can afford, the company will be bankrupted. The potential for future suits is also important because if the business model, or technology platform, opens the company up to other potential litigations based on equally (in) valid claims, the company could be bankrupted as it grows (and becomes a target by patent pirates). Finally, it is critically important to understand if the litigation exposes a problem with the core business model. If this is the case, and there is no easy, or at least manageable way, to correct the model, there is not only a great potential for further suits but a great potential for failure and bankruptcy.

However, if a litigation manager properly evaluates the potential for materiality and future litigation, and the connection between the litigation and the business plan, and finds no significant risks, then investors, who can make informed decisions, with a full understanding of the legal risk associated with a potential company, can confidently invest in the acquisition.

Be sure to check out the article on how to evaluate legal risk in acquisitions. It has a lot of great advice and a great case study on how a residential and commercial brokerage firm sized up the risk of an acquisition.