Strategy + Solutions

David Novak: CEO and Chairman of YUM! Brands

During this holiday season buy "The Education of an Accidental CEO" by David Novak for yourself or someone you respect who shares the joy of being a small or medium business executive, manager or owner. Here is a nibble:

David's words sum up the essence of the successful practice of business: "I work hard to create a culture that will attract and retain the top people because everything else follows from there.  If we have great people working for us, then we can do a better job of making our customers happy.  If we have great people working for us, then we can handle any problems that come our way.  If we have great people, we can do just about anything."

and...  "Life's too short not to do what you love if you get the chance.  Besides, you never know what you are capable of until you give it a shot."

This book has numerous strategic gems for your business and personal life.  You'll feel good about spending your time absorbing the content and at the end of the day you'll be better off because you took the time to read the book.

Applying Porter's Five Forces Model to Your SMB Strategy

Michael Porter, the famed Harvard professor and the premier thought leader on business strategy, created the Five Forces model.  This model is an effective business unit strategy tool for the small or medium business.  Basically, this model is an effective way to look at your business from the outside-in and analyze the value of an industry structure.  This Competitive Forces model is developed by the identifying the five fundamental competitive forces shaping your small or medium business (SMB):

1. The Entry of Competitors.  Your SMB should ask questions like: What is the level of difficulty for new entrants to start competing.  Is the barrier to entry high or low?  If so, what are the barriers?  Identify them and address them strategically.

2. Threat of Substitutes.  Your SMB should think about how easy its product or service be substituted and made less expensive.  What are the variables at play with regard to marketplace alternatives.

3. Bargaining Power of the Suppliers.  Your SMB should understand the strength of sellers in the market for your product or service and determine whether or not a multitude of suppliers exist for your product or service or if can your product develop a monopoly?

4. Bargaining Power of the Buyers.  Your SMB should determine the strength of the buyers and determine whether or not you can work together to create synergy and growth.

5. Rivalry Among the Existing Players.  Your SMB should determine the level of competition between the existing players or if there is one dominant business or many competing companies with equal strength and size.

In theory, a sixth force could be added that includes the impact of government.  If your SMB is affected by this "force" you will need to make sure you examine it and develop strategy and tactics to effectively compete.

What is your SMB doing today to assess the changing landscape of the U.S and global markets.  This blog attracts readers from more than 75 countries around the world.  If you are only thinking local and not global you will surely miss many market opportunities for growth and market share leadership.  How is your SMB competing today?

On Demand Services Go to Market Strategy Evolving

Great article about Serena Software in SmartMoney (and there are many) including BSG Alliance whose go-to market strategy is wrpapped around Web 2.0, SOA and SaaS services.

The research gem from the article according to Gartner, "Worldwide total software revenue for software as a service (SaaS) within the enterprise software markets is projected to surpass $5.1 billion in 2007, a 21 percent increase from 2006 revenue. The market is poised for strong growth through 2011, when worldwide revenue will reach $11.5 billion." ("Gartner Issues SaaS market report" ~ eBizQ.Com, August,9 2007)

Baldridge Criteria and Fact-Based Management Consulting

A booklet on the Baldridge Criteria in 1997 summarizes the concept of fact-based management and SSI's approach to helping small and medium businesses and SMB divisions with Fortune 500 firms.  SSI's successful and growing international strategic management consulting practice based in Austin, TX, USA uses this approach to help improve sales, marketing, operations, customer service, and thus financial performance. 

"Modern businesses depend upon measurement and analysis performance.  Measurements must derive from the company's strategy and provide critical data and information about key processes, outputs, and results.  Data and information needed for performance measurement and improvement are of many types, including: customer, product, and service performance, operations, market and competitive comparisons, supplier, employee-related, and cost and financial.  Analysis entails using data to determine trends, projections, and cause and effect - that might not be evident without analysis.  Data and analysis support a variety of company purposes, such as planning, reviewing company performance, improving operations, and comparing company performance with competitor's or with 'best practice' benchmarks."

SSI is focused on creating actionable fact based tactics and strategies for measurable results.  How can your small or medium business benefit from this approach?  Email SSI to learn more and receive a free consultation valued at $500.

Differentiation and Blue Ocean Strategy

So what is "Blue Ocean Strategy?"

According to authors Kim and Mauborgne in the Harvard Business Review of October 2004 and later their book,  competition within over crowded or saturated industries is not an effective way to sustain high performance and results.  They believe that by focusing only on the competition and "competitive advantage" that organizations and their advisor's and even scholars ignore two important and vastly more bottom line oriented approaches: to find and develop blue oceans, and to exploit and protect blue oceans.  There are two ways to create blue oceans. 

Some very relevant examples of this ideology could include Google, Apple's IPOD, Digital Cameras and GPS Phones.

For the SMB, utilizing this strategy means aligning your business and its activities towards the pursuit of differentiation and low cost.  Read the book and see if you can leverage the information to grow your small or medium business in 2007-08. 

IT Industry Strategist Phil Wainewright

As always, Phil Wainewright does an eloquent job of discussing IT strategies and topics related to emerging software industry trends.  He is a a Tour-de-Force of IT knowledge and following his blog will provide your SMB with key information to stay ahead of the curve of the factors and trends that might influence your IT strategy, implementation and purchasing decisions.  This must read article by Phil on ZDNet discusses putting the SaaS back into SOA.  Check it out and keep him on your reading list.

Understanding and Using the McKinsey 7-S Framework

The 7-S model was first mentioned in the Art of Japanese Management by Richard Pascale and Anthony Athos in 1981.  At the same time, Tom Peters ( a genius and strategic maestro) and Robert Waterman were exploring what made companies excellent.  This model was created by all four authors in 1978 and was adopted by McKinsey consulting a a basic business tool to evaluate and help improve company performance.

The 7-S model also appears in In Search of Excellence (a must read) by Peters and Waterman.  7-S describes the 7 interdependent factors to organize a company in a holistic and effective way.  Together these factor determine the way in which a corporation operates. (Take note all you COO's reading this blog.) CEO's, COO's and managers in general should consider the 7 factors below in order to successfully implement a strategy no matter how big or small and whether it is a sales, marketing or technology strategic plan.

1. Shared Values: What does the organization stand for and believe in?  What are the central beliefs and attitudes? (Strategic Intent)

2. Strategy: What are the plans for allocating scarce resources, over time, to reach identified goals?

3. Structure: The way in which an organization units/divisions relate to each other: centralized, functional, divisional (top down) or decentralized; a matrix, network, or a holding.

4. Systems: The procedures, processes and routines that characterize how the work should be done: financial systems, recruiting, promotion, and performance appraisal systems, etc.

5. Staff: Numbers and types of personnel within the organization.

6. Style: Cultural style of the organization and key managers behave in achieving goals (management style).

7. Skills: Distinctive capabilities of personnel or organization as a whole (core competencies).

Consider ways you might be able to leverage these factors to enhance the implementation of your strategies at your SMB or Fortune 500 division.  McKinsey is the global strategic thought leader and using their ideas could help you stand on the shoulders of this giant to improve your strategic outcomes. 

Interesting Strategy Quotes

Some say Google is God. Others say Google is Satan. But if they think Google is too powerful, remember that with search engines unlike other companies, all it takes is a single click to go to another search engine.
Sergey Brin 

I think Amazon is the preeminent pioneer in building a new way of doing commerce: personalized, database-driven commerce, where the big value is not in the purchase fulfillment, but in knowing as much about a customer base of ten or twenty million people as a corner store used to know about a customer base of a few hundred. In today's mass-merchandising world, that's largely gone; Amazon is trying to use computer technology to re-establish it.
Andrew Grove

The ultimate search engine would basically understand everything in the world, and it would always give you the right thing. And we're a long, long ways from that.
Larry Page 

eBay's business is based on enabling someone to do business with another person, and to do that, they first have to develop some measure of trust, either in the other person or the system.
Pierre Omidyar 

We don’t have a traditional strategy process, planning process like you’d find in traditional technical companies. It allows Google to innovate very, very quickly, which I think is a real strength of the company.
Eric Schmidt 

The general who wins the battle makes many calculations in his temple before the battle is fought. The general who loses makes but few calculations beforehand.
Sun Tzu 

Some of our businesses use more energy than others, but our strategy everywhere is the same.. first, reduce our use of energy as much as possible. Then, switch to renewable sources of power where it makes economic sense. And, over time, as a last resort, offset the emissions we can't avoid.
Rupert Murdoch 

We don't have much in the way of a business strategy. Like no business plan. Which I say to torment all my friends who are VCs or MBAs. That's always entertaining. The deal is, it's a mixture of luck and persistence.
Craig Newmark 

Apple Strategy

Here is one bloggers interesting thoughts on Apple's strategy from Google finance:

"Big picture--Apple is putting in place a grand digital strategy, which
guarantees the user the best possible experience.  Most of it is now
visible:

1.  Control the distribution of movies, television, music, podcasts
and games. (iTunes).

2.  Control the consumption of all digital media. (iPods, Apple TV,
computers, monitors, later TVs).

3.  Control the creation of media (Laptops and Desktops, Final Cut
Pro, iPhoto, Aperture, Garageband, Pages etc.)

4.  Control personal communications (iPhone, iChat, email, texting, to
come--video messaging).

What's left to put in place?  Leopard--the solid underpinnings of
everything to come; gaming (just got a commitment from EA to develop
for the Mac); movie distribution deals with both indies and studios
for purchases as well as rentals; making iPhone work WITHOUT AT&T or
any other wireless provider (iChat on wifi and/or creating their own
cell network after the ATT deal allows);  adding functionality to the
iPod/iPhone (GPS, live P2P videocam, a million safari based apps
etc.)  And of course constant improvement of the hardware to do all
this.

Expansion of the stores, upgrading the laptop and desktop lines,
excellent customer service are all in service of the above.

Apple will be making money on every part of the digital media
revolution: creation, distribution and consumption.  Ka-ching, Ka-
ching, Ka-ching.

This is a huge undertaking and will eventually create the world's
biggest digital media company.  There will be two steps forward to
every step back.  Old media will take its time to embrace Apple, but I
believe its a juggernaut that can't be stopped.

As far as the next major product launch, I agree that Leopard is most
likely the next big one.  But I can't emphasize enough that these new
products are all pieces of the puzzle that augment each other, have a
halo effect for Apple products and work together in perfect symmetry."

The Mind of The Strategist Refresher

The Mind of the Strategist by Kenichi Ohmae, a McKinsey alum, is a great book and an extremely valuable read for small and medium businesses and especially start-ups.  It is enjoyable to revisit the classics and apply the common sense and wisdom they share.  Here is a section filled with some common sense approaches to management strategy that often get overlooked despite their simplicity.

Ohmae begins "In my experience, there are at least three major constraints to which the business strategist needs to be sensitive." 

"I think of them as the essential R's: reality, ripeness, and resources."

"Let's begin with reality...business strategists must always be aware of the customer, the competition, and the company's field of competence."

"Ripeness, or timing, is the second key consideration that the business strategist must address.  Unless the time is ripe for the proposed strategy, it is virtually certain to fail."

"Resources, my third R, constitute such an obvious constraint that it is amazing that they should be ignored or neglected by strategists.  Yet examples abound of strategies that failed because their authors were not sensitive to their own resource limitations and skills."

These are powerful strategic thoughts to visit from time to time when crafting your next technology, business, marketing, or sales strategy.   

Have you done your homework (market research)?  Have you put the current and potential customer to work for you?   

What is your competition doing?  What are the competitive threats and opportunities? 

Are you sticking to your guns in terms of core competence or are you taking a shot gun approach to earning market share/leadership? 

Finally, are you seizing strategic opportunities with timing and resources in mind?