Tuesday, June 26, 2012

Zynga Pursues New Hits for a Fickle Market

Zynga Pursues New Hits for a Fickle Market

Zynga is the one of the big names in social on-line gaming.  Their success is due in large part to their cooperative agreement with Facebook.  Lately, their dominance on Facebook and their overall success in providing on-line games has decreased.  Their stock shares have been valued at ½ their original IPO offering and their reliance on Facebook to promote and offer their games has slowed, just as the growth rate of Facebook.  Part of this decline can be attributed to game apps that are used through a smart phone, while other gamers simply want to try something new.  In response to the decrease Zynga strategic plan has been to expand to acquire some smart phone app games and is looking forward to new games that might score the big silver bullet.  They exist in a fast-paced, ever-changing, fickle market with customers that readily drop one game in favor of another.      

The company appears to apply the same type of strategy to their business plan as they do to their software which is the same model McFarland writes about in, “Should You Build Strategy Like You Build Your Software?”  As I read both the article and the assignment, I can see the value in this strategic planning process for certain industries, but it might not be a strong fit for others.  For example, I cannot see the value in this planning process for a university such as CMU or even in the commodities market or medical field.  I think one of the downsides of using the spiral model for strategic planning is that it could be very easy for leaders to change direction and forget about the big picture or using Collins’ term the BHAG. 

In the case of Zynga, comparing their current efforts to Collins’ flywheel theory there is a risk if they don’t maintain the big picture.  They are passionate about on-line gaming, it is what drives their economic engine, and they could very easily be the best at.  However, they will miss out on gaining the momentum of the flywheel if they try and move away from their core strengths. 

I have the same concerns with the organization we selected for our group project, lululemon.  I do not believe that the spiral model would fit their business model.  Having and maintaining the big goal of expansion in the U.S market is their single focus.  Using a traditional model for strategic planning supports their overall vision.  Using the traditional model does not mean sacrificing the ability to change or react to an opportunity, but it is important to remain focused on the main goal.  For clarity, I am not stating that using the spiral model prevents an organization form maintaining its focus on the goal, it just seems easier to get caught up in the spiral and lose focus.      

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