Tuesday, April 30, 2013

India needs strategy not ideas!!

Entrepreneurship is a word used interchangeably with new Ideas everywhere in the world!! But, NOT IN INDIA. The country with 1.3 billion population have enough problems which needs to solved. for ex- transportation, electricity, water resources, unemployment etc. Some of these problems are global problems whose solutions are already devised in developed countries. Hence, they can be replicated in India. Some of the ideas which was just an Indian adaptation of the popular ideas have gained exorbitant response in the Indian market are -
  1. Snapdeal.com: This company is often called as the "Groupon of India". Earlier, it was a challenge for retailers, restaurants, entertainment-centers, spas, dance classes to get themselves connected to consumers. Snapdeal adopted the Groupon model and formed a network of merchants across the metro cities and offered users the discount from these merchants ranging between 50-80%. This idea got the initial traction and through social media it became viral over the internet. The main reason for their success was their aggressive sales team for making relationship with merchants and great customer service.
                               
  2. Flipkart.com : It is often termed as the Indian-ized version of e-commerce behemoth Amazon.com. As many people think, It was not the first e-commerce company in India. So, what strategy it adopted so that it became the largest e-commerce platform in India while others couldn't? There can be several reason to explain this : 

    • They strategically positioned their fulfillment warehouses to enable same day deliveries.
    • In a country, where people are scared to pay online. They introduced payment on delivery which helped them to gain customer confidence.
    • Biggest book catalogue in Indian market.
    • Earlier websites had the poor customer experience and Flipkart website was easy to navigate with relevant recommendation based on customer profiling.
    • Huge discount on books to attract consumers from brick and mortar stores.
References:

Monday, April 29, 2013

Nonprofit Doesn’t Have to Mean No Income


Just like how corporations are now looking to create “shared value” and contribute to society while making money, nonprofits are beginning to more seriously consider adding a section titled “Earned Income” to their strategic plans. Nonprofits tend to focus on strategies to find donations and grants, but ignore earned funds, which are vital to the organization’s financial health and sustainability. In fact, earned income is the largest source of revenue for the entire nonprofit sector. “According to the Center on Nonprofits and Philanthropy, private-sourced fees for goods and services made up more than 45 percent of total nonprofit sector revenue in 2010.” 1 Although, the main purpose of nonprofits is to fill a societal need, it is important to start thinking like a business in order to keep financially stable (especially, since donations have been on the decline). How does an organization fit earned-income into their strategy?

First step to developing an earned-income plan is to assess the organization’s current financial state. How much (if any) earned income does the organization currently bring in? What is the Private-sourced Earned Income index (PEI)? (This is the ratio of the total earned-income to the total cash revenue.) Then compare this to other organizations. Determine the costs and benefits to increasing earned income. Are there any risks? One common risk is losing the tax-exempt status. Make sure the earned-income goes hand-in-hand with the mission. Last step is to develop a plan.1

There are a variety of resources nonprofits can use to help them develop an earned income plan. The Society for Nonprofit Organizations’ Fundraising Guide to Earned Income at www.snpo.org/funding/earnedincome.php gives advise to determine if your organization is ready to take on earned-income ventures such as “What programs, products, and services does your organization already have in place that you could adapt for the marketplace?” and then provides tips to develop a business plan. The Stanford Graduate School of Business website at http://alumni.gsb.stanford.edu/act/alumni/best-practices/earnedincome.html provides case study examples of nonprofits increasing their earned income and their planning processes as well as a “FAQ” section and “Recommended Reading” on the subject. And if you want to really be an earned-income expert, take the full-day course “Building a Sustainable Nonprofit Organization” at The Foundation Center. Register to be a Foundation Center member at grantspace.org and go to http://grantspace.org/Classroom/Training-Courses/Building-a-Sustainable-Nonprofit-Organization to find upcoming dates and locations. The course is meant for small to medium established nonprofits that wish to find new revenue streams that are dependable and sustainable.2

Nonprofits have been hit hard by the recent recession and are looking for ways to become more financially independent in order to better ride the waves of the economic marketplace. There are plenty of resources available to nonprofits to help them create a business plan and most nonprofits have some earned-income resource that they are able to expand. In summary, nonprofits may always depend on the kindness of strangers for a portion of their income, but organizations must also be wary of the dependency of donations and search for more independent financial resources.


 Sources:
1.) Tait, Richard. "Stanford Social Innovation Review : Informing and Inspiring Leaders of Social Change." The Importance of Earned Income in Your Funding Model. N.p., 7 Nov. 2011. Web. 29 Apr. 2013. <www.ssireview.org/blog/entry/the_importance_of_earned_income_in_your_funding_model>.

2.) "Earned Income." Earned Income. N.p., n.d. Web. 29 Apr. 2013. <http://www.grantspace.org/Tools/Knowledge-Base/Nonprofit-Management/Sustainability/Earned-income>.

Misguided Approach to Creating Shared Value


The capitalist system is alive and well, contrary to what Michael Porter and Mark Kramer write in “Creating Shared Value.” Companies continue to “prosper at the expense of the broader community,” politicians vie for the title of “business-friendly” to reap the campaign contributions it brings, and so-called economic developers push their politicians to give more incentives to companies to locate in their district in the name of attracting jobs. These patterns have been in place for the past, um, few centuries at least. If the capitalist system is “under siege,” it may well be the longest siege on record.

Resource extraction companies from colonial powers led the modern method of taking advantage of communities, mining and drilling without regard for local communities. Terms like “exploitation” and “indentured servitude” come to mind. Before you start thinking that times have changed, think about George W. Bush’s Treasury Secretary Paul O’Neill’s description of the process of deciding to invade Iraq in 2001.[1] This happens locally, too. Gas pipeline companies use eminent domain lawsuits to acquire land when the deed-holders do not want to sell it amicably.[2] This is, of course, not confined to resource extraction either. The Congressional Budget Office is documenting the increasing wealth that goes to the already-wealthy relative to the not-so wealthy,[3] the media covers the obnoxiously high salaries and bonuses of those in the financial sector, and the government rescues the economy from the poor decision-making of the bankers. It is not simply the perception, as Porter and Kramer think, that companies are prospering at the expense of society; it is fact.

Moreover, companies know which politicians will be more and less malleable to their machinations. The moniker “pro-business” or level of “business-friendliness” seems to be code for “willingness to give higher incentives and lower regulations.” No politician wants to be labeled “anti-business” because no politician is actually anti-business, but they need to be seen as pro-business in order to attract contributions for future campaigns. This is even more important after the Citizen’s United decision. Moreover, economic developers engage in a race to the bottom to attract businesses that they think bring jobs. But those businesses eventually leave and the local communities then suffer. Since I have described this phenomenon earlier on this page, I will not go into it again.

Porter and Kramer describe how companies should invest where they work because it is in their own self-interest.  This is true. But they draw the causal conclusion that as more businesses engage in social responsibility, they are blamed for more of “society’s failures.” Companies are part of society, they argue, but they write as if there are two separate entities: a capitalist system and the rest of society. They make a reasonable push to make explicit and convey the importance of the relationship between companies and place, but their approach is misguided.


[1] Leung, Rebecca. “Bush sought “way” to invade Iraq?” 60 Minutes February 11, 2009. Accessible at http://www.cbsnews.com/8301-18560_162-592330.html
[2] Lord, Richard. “Eminent domain plays a key role in U.S. pipeline projects” Pittsburgh Post-Gazette April 27, 2013. Accessible at http://www.post-gazette.com/stories/local/marcellusshale/eminent-domain-plays-a-key-role-in-us-pipeline-projects-685203/
[3] White, Mercedes. “Increasing income inequality is changing the way people in the U.S. live, new research says” Deseret News January 11, 2013. Accessible at http://www.deseretnews.com/article/865570486/Increasing-income-inequality-is-changing-the-way-people-in-the-US-live-new-research-says.html?pg=all

H&M…A Story of more Stories


To our mind, we have two brands for each industry. To illustrate my point, with soft drinks. Coca Cola and Pepsi comes to our mind automatically. This is an apt illustration of the binary system of brands. Similarly, when we speak about cheap fast-fashion clothing for teenagers and adults (men and women), then two names comes to our mind Zara and H&M. Admittedly, Zara has the lion's share as a mother company of Spanish-based Inditex, but the other side of the coin, is the Swedish firm, H&M.

 First, H & M, is a environmentally conscious company, which provides economical fashion products around the globe (43 countries) in order to fulfill the seven commitments to the communities; provide fashion for conscious consumers, choose and reward responsible partners, be ethical,  be climate smart,  reduce, reuse, recycle, use natural resources responsibly, and strengthen communities (2).  Moreover, H&M developed a new viable water strategy, by working with NGO's water institutions, WWF and government agencies in order to better manage  water resources. Personally speaking, as an aware engineer, this environmental mindset is ideal for a company. But strategy is only half of it. Strategy for H&M, is a critical stepping stone in order to fulfill its goals; in particular, to gain more market share, by positioning highly its brand in the mind of customers. Hopefully this brand from a recent survey of Interbrand, is in the Top 20 brands(4), which its value comes up to 12-16 billion.


H&M's recent strategic was to open new upscale stores in order to expand its horizons into a new lucrative strategy, through "& other stories", is a successfully tested policy, since Inditex has acquired "Massimo Dutti". Thus, H&M follows the "upgrading stores" philosophy of Inditex and puts in the portfolio another  brand to increase the  diversity within the H&M brand. "& Other stories", is a fashion brand offering women a wide range of shoes, accessories, bags, beauty, and ready-to-wear to create their personal style. In the spring of 2013, they will be launched in selective European countries. Furthermore, this brand can be sold over the internet, as well. 


H&M, apart from "& Other Stories", also has other sub-brands under its umbrella; COS, Monki, Weekday, and Cheap Monday. Brands with unique identity that give the customer a different fashion experience. From the standpoint of the experience and given the fact that H&M  has collaborated with many renowned designers and celebrities such as Karl Lagerfeld, Roberto Cavalli, Matthew Williamson, Jimmy Choo and Madonna among others. H&M will collaborate with  Beyonce Knowles, this summer, something that it is likely to be the flagship of the marketing campaign. 


Sources:
1.http://www.businessweek.com/articles/2013-04-25/h-and-m-a-master-of-cheap-fashion-moves-upscale#r=com-s

2.http://about.hm.com/AboutSection/en/About/Sustainability/HMConscious/Strategy.html


5.  Interbrand, Best Global Brand List.
6.  [2] The H&M group website, accessed on April 5, 2013

Sunday, April 28, 2013

Southwest's strong positioning with simple strategies

This week we discussed about how organizations can achieve competitive advantage using Cost leadership and Differentiation. This brings up an interesting point on how customer attaches satisfaction to different needs and wants, and how organizations can exploit this fact. 

Differentiation reminds me of a job negotiation workshop that I went to, couple of months ago. The workshop was about how employee-recruiter can reach a win-win deal by evaluating different factors, which are valued differently by different employees/recruiter, involved in the offer. This approach applies to organizations where in they can evaluate different ways they can provide value to the customer and become efficient in the one where their expertise is. 

Southwest Airlines is a good example on how successful companies can be by differentiating themselves while providing value to the customers at such low costs. Right from very beginning Southwest had single main motive, to provide 'low-cost' flights to as many cities as possible. This was against the then existing belief that customers values service more than cost. 

Southwest achieved operations efficiency with a strategy which is difficult to imitate by existing players. One of their strategy is to use only a particular (Boeing 737) type of flights. This helps them save on training costs that increase when carriers multiple varieties of flights, interchange flights when there's maintenance issue. This approach is difficult to replicate by an existing airline who are already invested in different types of flights.

While, on face of it, Southwest's differentiation seems to be their low ticket prices, but there's lot of other factors that help them maintain their low cost, for instance their operation efficiency, simple in-flight services and talented and satisfied employees. Over years many Airline companies tried to replicate Southwest's strategy, but failed miserably. Few even went out of business. The failures can be attributed primarily to the fact that these airlines tried to compete with Southwest at the price level and not with the operations efficiency, employee satisfaction and other factors which helped Southwest maintain its low cost and have a satisfied customer base

[References]

Walmart’s Indian Saga


Walmart’s foray into the Indian market has been eventful, to say the least. Many big companies try to tap into the emerging markets when their growth in the developed markets stagnates. Even though the bulk of Walmart’s operating income comes from its operations in the US, its growth internationally was 7.6% compared to 4.4% in the US. By 2021, the India retail market could be worth $80 billion.

                                                                                                               source – [4]
All of the above makes sense, but Walmart continues to lobby in the US over India’s FDI policies and currently there is a probe on its lobbying policies in the US. In addition to this, Walmart’s entry into the Indian markets has hit many stumbling blocks. It has partnered with Bharti Enterprises in India. In 2012, the company was able to open only 5 wholesale stores, when 22 were planned. Under operation ‘Jai Ho’ (‘Let there be victory’) they wanted to be India’s top retailer by 2015. There are a number of reasons why that will not happen anytime soon.

Infrastructure

India’s transport infrastructure and storage facilities are simply not good enough to support the operations of retail giant like Walmart. Indian trucks manage an average of 186 miles a day due to bad roads compared to 500 miles in the USA. Cold storage units in India have a capacity to serve only 11% of the food produce. Only a giant retailer with big pockets can fix the infrastructure. Walmart seems like it has that capability, but infrastructure is not enough.

‘Soft’ Infrastructure

Companies rely on a number of agencies, services and other companies when it makes a foray into any market. In a developed economy it is relatively easy. But in emerging markets, companies are unable to identify firms which can help them with data and very few people aggregating data which the company can use directly. Companies, due to a lack of hard data, end up making decisions based on intuition or whim. By partnering with Bharti Enterprises Walmart alleviated some of its problems as Bharti Enterprises is an established player in the Indian market with resources and knowledge about the Indian market.

Bureaucracy and middle men

From the time that the farmer gets paid for his/her produce till the time the food actually reaches the shelves the price increases significantly. And therein lies Walmart’s biggest challenge. An army of middle men and agents who inflate the prices are dead against Walmart’s entry into the country. Add to that, the vast number of permits needed from both the central government and the respective state governments to begin work. There is no doubt that all this has frustrated Walmart to no end. In 2011, Walmart’s plans of opening a facility in Tamil Nadu was thwarted by the local municipal corporation due to the lack of permits. The over-zealous developer began construction without having the requisite permits and the government sealed the location.

The ‘right’ way of doing things

Walmart wants (has) to do things the right way. Having already signed on many farmers, they are only looking to sign on landlords who are not involved in any kind of corruption and illegal activities. In India, that is much harder than it sounds. But if they are successful, there work might lessen some corruption in India. Also, they need to train their Indian counterparts adequately. There have reports of its Indian staff not following protocols by starting on initiatives not yet approved by the chain of command.

Livelihoods of people

Whilst many jobs (mostly agents and middlemen) will be destroyed if Walmart has its way in India, many more will be created. Not to mention, Walmart’s pretty good at what it does (100 million Americans shop at Walmart every week!!). It will transform the retail industry in India. But many political parties in India oppose the entry of Walmart and FDIs in general. Also, state governments will decide for themselves whether they want to allow Walmart to do business in their states. This could complicate matters even further.

India is a huge market to tap into. Also, Walmart’s philosophy of selling things as cheap as possible will sit well with the average Indian consumer. Having said that, I don’t see them making much head way into the Indian retail market anytime soon. There are simply too many hurdles to cross. From an infrastructure point of view, Walmart will have to invest massively. Whilst it does have the resources, whether they make the necessary investments or not will only depend on the returns they perceive in the long run. In addition, they can expect very little help from the government. Corruption runs rife in the in government offices and Walmart would need to be patient and resilient in order to clean up the system. It could be years before we see Walmart dominating the Indian retail industry, if at all they ever will.

Sources
1.       Sharma, Amol, and Biman Mukherji. Online Wall Street Journal. Online Wall Street Journal, 11 Jan. 2013. Web.
2.       Choudhury, Chandrahas. "World ViewHot Topics in Pivotal Markets." Bloomberg. Bloomberg, 20 Dec. 2012. Web. 28 Apr. 2013.
3.       Editorial Board. "How a Wal-Mart Struggle in India Shows World Progress." The Christian Science Monitor. The Christian Science Monitor, 02 Apr. 2013. Web. 28 Apr. 2013.
4.       Bahree, Megha. "Wal-Mart's Path to Power in India Hits Its Limits: The Lawyers." Online Wall Street Journal. Online Wall Street Journal, 2 Apr. 2013. Web.
5.       Michael. "Is Wal-Mart Destroying America? Facts About Wal-Mart That Will Absolutely Shock You." The Economic Collapse. The Economic Collapse, 4 July 2012. Web. 28 Apr. 2013.
1.       Khanna, Tarun. "Strategies That Fit Emerging Markets." Harvard Business Review, June 2005. Web.

Friday, April 26, 2013

Creating Shared Value


Michael Porter and Mark Kramer have been trumpeting the idea that businesses should seek to “create shared value.” This is not some empty phrase or vapid concept like, say, blue ocean strategy. Rather, Porter and Kramer argue that businesses can connect company success with social progress. Companies can reinvent, redefine, and reconceive themselves and their products to create opportunities that benefit their own bottom line as well as society. What does this idea look like in practice?

Environment
In 2005, General Electric created its “ecomagination” program as both a business plan and marketing campaign. GE ‘s website for the program emphasizes maximum resource efficiency, “cutting edge technologies and services that deliver economic and environmental gains,” and “leadership in shaping sustainable practices.” Products in the program “must deliver a significant energy savings or environmental benefit over previous designs.” Sales revenue from these products nearly doubled between 2005 and 2010.

Low-Income Households
Intuit offers free tax services online to households with incomes under $31,000. “The program blurs the line between charity and marketing, because millions of people who are sampling the company’s product, may well become paying customers as their incomes rise.” Thirteen million people have used those services since 1999.

Agriculture
Creating shared value is a major idea behind economic development lately. Farmers in third-world countries often have limited information and technology. Some companies, like Intuit, are offering low-cost or free text messaging services to farmers that relay local crop prices. This enables farmers to sell their goods for better prices at local markets and, based on surveys, they are earning about 25% more money. Intuit is looking to capitalize on this service by making money from text-based advertising.

In reference to creating shared value, Jeffrey Immelt of GE said “we did it from a business standpoint from Day 1. It was never about corporate social responsibility.”  As businesses find new ways to generate money while increasing benefits to society, they are validating Porter and Kramer.

Do you think this is a sustainable model? Can businesses help themselves while increasingly helping society?

Source:
Steve Lohr, “First, Make Money. Also, Do Good.,” The New York Times (13 August 2011), http://www.nytimes.com (accessed 20 April 2013).

Thursday, April 25, 2013

Bit on soft power, seeing the US and China as examples for business strategy execution


The articles from this sections reading got me thinking about how these leaders actually incorporate their strategies in execution in terms of soft skills. It was quite interesting that the Neilson et al article “The Secrets to Successful Strategy Execution” had a section for the general direction of their soft skills, soft power as being a part of the determinants for successful strategy implementation. That was under the trait “It is more accurate to describe this organization as ‘persuade and cajole’ than ‘command and control’” that I started thinking about how these particular strategies are implemented on a personal level throughout the organization. Although in business we often see the use of soft power as an art to be trained by excellent managers, our academic research often builds frameworks for us to hold our ideas. The both the US Military and the Chinese National congress have invested a great deal of energy into developing ideological presence around the world using soft power. So why is it more difficult for business organizations to design models for soft power internally?
For one, the field is shifting and players have more identifying features. The framework of power for military and national use has a great deal of cajole and persuade which can be useful for strategy execution. However, businesses are often more compact than these counterparts. So it may not seem necessary to create some of the policy measures that nations would have – especially with the close and connectedness of workers and managers within a business. But it is the creation of alignment which allows for the military and national strategies to become successful. In the military, alignment is an ongoing priority and rules are created for the quick execution of new ideas and concepts. While I’m not the first to promote the idea of how this alignment is obtained (bootcamp) I do believe that the outcome is quite substantial. Other teams which have undergone a series of bonding experiences and become aligned to a set of group rules tend to be more successful in their execution of projects. Similarly I believe it is the alignment of ideas and concepts which allow for managers and workers at all levels to be engaged with the strategy of the organization. This means transparency of strategy just as much as consistency.

Wednesday, April 24, 2013

In every "cloud" there is a silver lining, namely IBM


As far we are concerned IBM is one of the leading IT companies worldwide, by laying emphasis on hardware, software, microelectronics and storage. Analysts regard IBM as the second major player of the industry, after Microsoft (based on long-term growth rate and net income). 
 If a strategy consultant  goes further with a thorough analysis of IBM, with the manifold provided  business tools such as 5 of Forces or even a SWOT analysis, he will acknowledge the fierce competition of the industry and how Microsoft, Dell and HP act promptly. Another important feature in the IBM's core operations that should be taken under consideration is the declining profit margins of hardware.  For this reason IBM has decided to take some important initiatives and to take advantage of a new middleware product. 
    IBM's orientation in the future, by selling erstwhile strong "assets" such as PC and now servers to Lenovo (1), shows a trend, that IBM is reluctant to take more pie in a wizened market, while HP doubles on the servers division. Yet, IBM sows seeds for cloud computing that it is the threshold of a new era in IT industry, the third era. After Industrial Age and Information age, comes the Insight Age (4). The sale of the server division, gives liquidity to the company and it's really something noteworthy. It also helps the company focus further in the development of new middleware services, for primarily private cloud infrastructures.
     Next, IBM's strategy logic is to link the revenue streams with the product line. This logic can bring success in the firm, by acknowledging the initial conditions and management choices. These parameters drive the customers to pay more for the added value of the Mobile Cloud (cloud, data and real-time social media), which is a sustainable competitive advantage of IBM, and given the fact that the industry and IBM's relative position (2). We can see that this Mobile Cloud will be the vehicle for further brand awareness for IBM. 
         At the same time, even though IBM is focusing on delivering Software Middleware services for Enterprise Clouds, it is still researching new hardware technologies. There are some encouraging breakthroughs that will distinguish IBM from the rest. a) The racetrack memory b) Graphene chips, that are better wireless chips and both energy-friendly and energy-efficient and finally c) carbon nanotubes in order to make smaller chips (3), apropos to IBM's vision for a smaller planet with sustainable solutions (6). In this way, IBM will offer mobile services with better batteries and greater memory or better performance. Although carbon nanotubes are a reliable advance, it relies on transistor technology which faces numerous operational problems, in this way other companies use Quantum Computing, DNA computing and even brain-like computers (3); Watson's achievement is a bright example of artificial intelligence in which IBM is willing to invest.
All these strategic moves by IBM are a testament of IBM’s commitment to develop their Smart Planet Initiative (6), which consists of products and services designed for the collective needs of their customers who now have to deal with petabytes of data, and require big ideas for their Big Data needs.
                
Sources:     
1.http://gigaom.com/2013/04/19/why-ibm-might-ditch-servers-and-become-intelligent-business-middleware/
2.http://gigaom.com/2013/02/21/ibms-mobile-first-plan-is-really-about-cloud-first-thats-all-you-need-to-know/
3.http://gigaom.com/2011/12/05/ibms-3-big-chip-breakthroughs-explained/
4.http://gigaom.com/2011/05/15/question-everything-a-new-processor-for-big-data/
5.http://gigaom.com/2013/03/02/watson-goes-to-college-how-the-worlds-smartest-pc-will-revolutionize-ai/
6.http://ibm.com/smartplanet

Where did General Motors go wrong?


‘What is good for GM, is good for America’. This slightly out-of-context comment made by the CEO of GM in the 1950’s proves how intertwined with the country’s fortunes. So why did such a colossus have to file for bankruptcy in 2009.
There was a time when almost half the cars in the USA were GM made, 1 in every 200 Americans worked at GM. GM’s growth into a colossus of the American car industry is attributed to Alfred Sloan, a quintessential engineer who had it all figures out. A figure who has divided opinion in recent times, nevertheless made GM the biggest car maker in the country.

While Henry Ford revolutionized the way cars were made, Sloan and GM revolutionized the way they were marketed to the customers. The market was segmented into the different types of users and GM had cars for each segment. They were the first company to annually change the styling of its cars and created a culture of replacing cars in the American public. Innovations like power-steering, automatic transmission, power breaks and independent suspension also revolutionized the automobile industry.

Operations in GM were decentralized. This worked for GM when it was doing well, but also created competition within the different groups. One division often cannibalized the sale of its other cars and this led to the creation of fiefdoms among the company. When Japanese companies like Toyota entered the fray, 
GM could not adapt. Also, worker’s unions gave them a lot of trouble. GM was forced to pay their workers lavish pay and benefits due to which they were unable to cut costs, in a time when low-cost but high quality Japanese cars were flooding the market. Also, the higher management got isolated from the other employees in the company, thereby having little interaction with customers and dealers.

This isolation impacted their ability to read the changing markets. Japanese car makers took advantage of the oil crisis by flooding the market with smaller, more fuel efficient cars in the 1970s while GM was still making big gas-guzzlers.

GM did try to adapt, but their first move like many other big companies was to cut costs. That failed as the unions were not ready to renegotiate their pay and benefits. But cutting costs would not have helped. They should have focused on their core strength – Cars for every customer segment. They should have again tried to adapt to the customers’ needs in a changing market. They eventually did manufacture smaller cars but they were not well-designed. They also had disasters like the Chevorlet Nova which in Spanish means ‘it doesn’t go’. It did not do well in the Latin markets, of course.

We have seen companies like GE and IBM survive the test of time. They reinvented themselves but built on what they already had. Also they did not simply reorganize their management or cut costs. Operational efficiency will only take you so far. They adapted to the changing needs of the customers. That is what GM failed to do.

After bankruptcy, GM’s product line is being overhauled as we speak, a lot of brands have been sold and margins are improving. But GM does need to focus on its product. It is the only way it can change customer perception about its brand and be successful again.

Sources
1.       TheWeekStaff. "The Rise and Fall of General Motors - The Week." The Week. The Week, 11 June 2009. Web. 24 Apr. 2013.
2.       Rosevear, John. "3 Reasons to Buy General Motors Today." (GM). N.p., 16 Apr. 2013. Web. 24 Apr. 2013.

Barclays

Barclays is in the midst of reevaluating its strategy and its target demographic, said the BBC today.

In redefining itself as a "go-to bank," cutting back on its investment banking session.  As a result, it has lost 25% of its typical profits, to £1.8bn.  This is fresh on the heels of finance director Chris Lucas announcing he will step down.

I'm not sure what they mean by "go-to bank" - one where the common man can walk in and start a savings account?  With such large amounts of money being managed, I think they are still focusing on corporate accounts.

The Collis & Rukstad article outline several banking institutions, and the different markets each of their strategies are targeting.  I'm not sure if Barclays is 100% sure where they need to direct themselves.  The subject of recent scandals, and relying heavily on foreign investment from Qatar and the UAE, this is a critical juncture for them to define that position.

Restructuring is the probably the right first step - and they are going to have to endure some heavy losses while they weather those changes.  If so, and if they can resolve the scandals, maybe they can "go with what they know," as Lohr writes.



Sources:
http://www.bbc.co.uk/news/business-22275840
http://www.bbc.co.uk/news/business-21314810
http://www.bbc.co.uk/news/business-21373153

"Keep It Simple Stupid" is an Incredibly Smart Strategy to Implement

I've lived by the KISS Principle since first learning of it while watching an episode of The Office a few years ago. KISS stands for Keep It Simple Stupid. In a nutshell, it espouses the benefits of not making things more complicated and restrictive than is absolutely necessary. Many groups I've been involved with over the years (through school, employment, or social settings) could greatly benefit from keeping this principle in mind. 

, 3 Secrets to Success for the World's Oldest Tech Company, describes how IBM's key principles of
  1. The market matters more than the machine,
  2. Don't be afraid to try something new, even if it threatens you,
  3. and "THINK"
have guided the company to success and profitability for around a century. This is a great example of the KISS Principle in action. I was shocked, and pleasantly surprised, when I learned they had kept things so simple for so long. 

How complicated and detailed would you have expected the guiding principles of a company with as many products and as long of a history as IBM to have been?


Can McDonald's Say What Its Strategy Is?

Corporations, especially those with world-wide locations in extremely competitive industries, invest a significant amount of resources in the development of their strategy. Once the organization has charted a course and pointed its compass in that direction, shouldn't it stay the course (barring a paradigm shifting event)? McDonald's doesn't seem to think so.

I've been a regular McDonald's customer for about 20 years. I eat a lot but prefer not to spend a lot of money or time doing so. McDonald's fit that bill perfectly. I could walk in, order without having to look at the menu, and be eating in my seat in less than 5 minutes. Then things changed. The menu expanded to include wraps, smoothies, and many other options that I had no interest in. If that wasn't enough, the cashier told me that the food I usually ordered was no longer on the menu and I now had to choose something from the cramped, convoluted mess they now called the menu. My 5 minute order-to-eat time was a distant memory as well.

What do you want to be McDonald's? Do you want to maintain your traditional position as a fast food hamburger restaurant, do you want to be a more relaxed or a slow paced smoothie bar? No person, or organization, can be all things to all people, or customers. 

If you eat at McDonald's, has your recent experience mirrored mine? If you don't patronize McDonald's, are there any number of changes the chain could make to turn you into one?




Story of a 30 year old Startup

Intuit, a company which many of us know as the Turbo-tax and Quick books maker is one of the few companies in the software industry that have sustained itself since past 3 decades. Intuit was started in 1983 by Scott cook and Tom Prolux with a vision to simplify the way in which people manage their finances.


Their first product, Quicken became an instant hit and caught the eyes of Industry behemoths such as Microsoft. There was nothing unique about the technology, algorithm and solution that they discovered. So, what leverage did they have except first mover advantage? What strategies did they adopt to gain market shares? How did they averted danger from deep pocket competitors? How did they kept re-inventing themselves?
In my opinion, these are several reason which led them to become market leader in personal finance space -

  1. Vision led acquisitions: The company strength has always been identifying the key problems and assessing them to make sure that solution for those problems align with their long term vision. Company acquired San Diego based Chipsoft in 1993 which brought Turbotax in company's portfolio.  In their 30 yrs, they have made more than 20 acquisitions which either aimed at consolidating their existing business or opening a new revenue stream for them.
  2. Intuit versus Microsoft: In 1991, Microsoft released Microsoft Money and it was targeted at cannibalizing the sales of Quicken. Microsoft was strategically much better positioned than Intuit in terms of money, influence, resources, technology and subscriber base. But Intuit beat Microsoft in this battle of packaged software on their home turf due to their aggressive consumer marketing. They introduced 15$ rebate on their software which was all new strategy for software products in those days. Once they won this battle, it was evident to whole world that Intuit is the best at what they do.
  3. Aggressive marketing strategy: Scott cook had a vision that Quicken will be a household name as any shampoo or a soap bottle and he spent outrageous dollars to achieve that. Once Quicken became an household name, it was easy to create an ecosystem around it with products like Turbotax, Quickbooks and hence, revenue model got stabilized with locked-in customers.
  4. New products and versions: They have adopted a very customer focused strategy in both product development and product marketing. Over the past 3 years, they have launched more than 50 products which contributes more than 100 million$ to their revenues. The company has adopted to new technologies very quickly such as cloud computing, mobile etc.
  5. Excellent Leadership: The guidance and vision of great leaders like Bill Campbell, Scott was unparalleled by any other company in the tech world.
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