Tuesday, May 31, 2016

Internalizing Intrapreneurship

Entrepreneurism within a large company structure is referred to as “intrapreneurship” in many businesses and is critical in creating a culture of innovation. When organizations talk about internalizing culture and instituting practices to drive strategic growth, innovation is one of the hardest areas to measure and manage. The role of the intrapreneur has long been established within large organizations, but was not always clearly articulated in the job descriptions of those individuals. They now exist in many forms across industry and are critical to finding, developing and testing new ideas to keep innovation as a part of the company culture.

Intrapreneurs embrace the common idioms of “fail early, fail often” or “failing up” because they embrace change and want to continue to test boundaries and capabilities. This can as small as A/B testing with Google Analytics to large scale organizational innovation campaigns like GE’s Imagination Breakthroughs which come with multi-billion dollar implications for the company’s bottom line.

You don’t have to be in a startup to be an entrepreneur, every new project or initiative is the chance for a company to embrace intrapreneurship and encourage taking risks in hopes of realizing outsized returns. Being an intrapreneur is a mindset that encourages openness to new ideas, an established company infrastructure, and hopefully budget to test out the best concepts. This doesn’t mean throwing caution to the wind and trying out every idea, but a focused and methodical approach to testing new concepts for viability. Without having to take on the full risk of joining a startup, ambitious employees can create a Minimum Viable Product (MVP) and move to test and iterate on a minor scale until a valid prototype service or product is ready. This type of methodical testing can give companies a sustainable competitive edge in creating new revenue generating services and products.

With intrapreneurship embedded in a company culture, new ideas will not be shunned and pushed away, but embraced and executed. To make sure culture is being internalized, and growth opportunities are being funded, a company must embrace their inner entrepreneur. This might be one of the most important strategic growth options available to a large company, and it requires minimal funding but maximum organizational encouragement. 

References:

Bartlett, Christopher A. "GE's Growth Strategy: The Immelt Initiative." Harvard Business School Case 306-087, February 2006. (Revised November 2006.)

Monday, May 30, 2016

What happens next



In all that we are reading, one of the trends I am seeing in the articles and lecture is that there is no right way to develop a strategy of success for every single organization. In reading “what happens next”, this idea was validated. With growing market economies and expanding globalization of business and technology, companies need to consider how they are going to evolve in their strategies to remain current. Being aware of how the consumer will change is also important. The five crucibles are a good platform for beginning to plan and be aware of the changing needs within an industry. For example, MySpace was one of the leading social media sites in the late 90s and early 2000’s, it soon has become obsolete to recreational users and is now a music forum and taken over market by Facebook. In Recently, Facebook has become popular among ages 30 and up. The younger generation, including my 14 year old niece does not have Facebook. It’s not as “cool” to her. She uses Instagram, which is another social media site for sharing photos. Facebook developed Instagram. They seem to keep up and lead the way with the evolving media trends. It is consistently changing.

The world is becoming smaller and smaller and spinning faster and faster. This provides for growing competition. People and organizations must be innovative and adaptive in order to maintain successful within their industry. A quote from the article stood out to me, “The best companies will learn how to maximize returns from people who think for a living”.  Sourcing the best talent will become a new mission of many organizations in order to carry out their visions. How will organizations do this? Where will they find them? The market for talent will continue to become more competitive and companies will have to evolve in their strategies and methods to hold onto and obtain their brightest employees.

5 Forces in the Home Brewing Industry

Five Forces in Home Brewing Industry -  Industry Analysis


Industry Overview
How much interest is there for homebrewing?  The closest industry I identified in IBIS was Craft Beer Production, which often has limited distribution and high price points.  Oddly enough, craft beer is still increasing in popularity among US beer drinkers[1].  One possibility is that, during the recession, there was a consumer shift to drink at home instead of nightclubs and bars to save money.  This shift resulted in the craft beer industry growth of an annualized 10.9% to $3.9 billion during the past five years to include an anticipated growth of 11.9% in 2013[1].  Increasing market acceptance of craft beers have in turn attracted many to try beer and wine brewing at home for themselves.  The American Homebrewers Association (AHA) estimates that 1 million Americans brew beer and make wine at home at least once a year[2].  In addition, the “Brew Your Own,” beer magazine, the #1 selling homebrew magazine estimates that their readers spend over $82 million spent annually on craft and import beer[3].


Areas of Chaos
Regulation and Policy – Although homebrewing is federally legal and is exempt from tax for beer brewed for personal or family use, the 21st Amendment predominantly leaves regulation of alcohol to the states[2].  In 2013, the last two states remaining with laws against homebrewing, Mississippi and Alabama, passed legislation to permit making beer at home[4]. Even though homebrewing is legal for all states, individual laws between states vary widely. Some states have very specific laws that outline exactly what can and cannot be done with homebrew, others are vague[2]. There are laws that limit consumption of homebrew solely to the residence where it was brewed, while other laws allow for transportation to events such as homebrew competitions and club meetings[2].
Price of coarse grains - The price of coarse grains tracks the prices of barley, oats and sorghum. Grain is a major input for beer production, so this driver represents the dominant inputs for craft breweries. Increasing grain prices pushes up production costs, and, in turn, decrease profit. The price of coarse grains is expected to increase during 2013, posing a potential threat to the industry[1].
Price of fruit- The price of fruit affects the profitability of wineries because grapes are a key input in the wine production process. These prices are affected by climatic conditions and the quality and quantity of grapes yielded. The price of fruit is expected to increase during 2013, posing a potential threat to the industry[7].


Industry Drivers
Per capita disposable income - The level of disposable income affects spending on industry products.  When people have more money, they are more likely to consume premium wine and beer at higher price points.  Per capita disposable income is expected to increase slowly during 20131.
Consumer Sentiment Index – As noted above, since income is linked to spending on industry products, the consumers will increasingly look for cheaper alternatives[1].
Per capita alcohol consumption - Alcohol consumption can affect craft beer sales, either positively or negatively. Additionally, consumers' cultural and attitudinal changes can alter demand for beer. For example, many people drink only in moderation due to personal beliefs, which reduces alcohol consumption and ultimately industry revenue. Per capita alcohol consumption is expected to increase slowly during 2013[1].


Industry Trends
Baby boomers (ages 46 to 64), who have fostered growth in wine consumption for the past 30 years, will enter retirement in droves during the next five years. As they adjust to fixed incomes, they will consume their cellar reserves and downsize their purchases by volume and price point.  Millennials (ages 15 to 32), who will become a larger consuming population than boomers, will represent a larger portion of demand, particularly for rogue varieties and wines priced between $7 and $256.  The most popular home brewing magazine BYO, quotes their 96,000 subscribes spend, “over $76 million by readers annually on homebrew supplies and equipment.” [3]
This industry is growing at a much faster pace than the overall economy. New product introductions and increasing market acceptance are propelling this growth. Craft beer's popularity boosted its prominence on many store shelves, which further contributed to growing consumer awareness of homebrewing. Industry value added (IVA), which measures the industry's contribution to the economy, is forecast to rise at an annualized rate of 8.1% in the 10 years to 2018. Meanwhile, GDP is projected to grow at an average annual rate of 2.1% per year[1].














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References
1 “Craft Beer Production.” IBISWorld Industry Report. August 2013.
2 “Talking Points for Homebrew Legalization.” American Homebrewers Association.  Accessed May 2016.  http://www.homebrewersassociation.org/pages/government-affairs/talking-points
3 “BYO By The Numbers.”  Brew Your Own Magazine.  Accessed May 2016.  http://byo.com/advertising/
4 Groark, V. (2013). Legally brewed. ABA Journal, 99(8), 11.
5 “Craft Brewing Statistics.”  Brewers Association. Accessed  May 2016. http://www.brewersassociation.org/pages/business-tools/craft-brewing-statistics/facts
6 “Fruit and Nut Farming in the US.”  IBISWorld Industry Report. October 2012.
7 “Wineries in the US.”  IBISWorld Industry Report. June 2013.



Balanced Scorecard - The Value of Program Reviews

I have had the opportunity to manage a number of programs supporting public sector contracts at my company.  Programs are focused on a number of balanced scorecard elements and are typically tied to meeting contractual requirements, compliance, financial goals, and internal performance measures.  Ultimately, these elements are focused on meeting customer satisfaction and/or stakeholder expectations and are interrelated.  Without a clear vision of what these elements are -- or how we measure them -- program success can be inhibited or lead to failure.

This is where the value of the program review enters the picture.  The structure of the program review is really designed around communicating the on-going status of how well a program is performing relative to the balanced scorecard elements.  I have found this form of communication to be extremely effective when the right stakeholders are involved and thus stakeholder identification and analysis is a key aspect of creating a successful review.  This can be a challenge in terms of scheduling an effective session with all of the key executives in attendance but have found that the reviews have provided real value and the majority make the time to attend.  The reviews are usually scheduled on a monthly interval which provides just enough time to refresh key operational metrics/KPI's and have enough new information and data to review and discuss to make the investment of time -- especially executive time -- worthwhile.

The program reviews also serve as a governance type of function since the members in attendance include key decision makers as well as the executive sponsor of the program.  The discussion and collaboration that takes place and centered on understanding program issues and risks has been very valuable and I cannot underemphasize the importance of having key stakeholders review and participate at this level simultaneously.  The review process also allows for course correction on program strategy and also provide key financial support to resolve issues that require additional resources or capital infusion.

In summary, it is important to develop a balanced scorecard with the right strategic fit and alignment and in my observation, the future success and sustainability of this tool is based upon key stakeholder engagement, collaboration, and facilitated by an effective program review process.

Sunday, May 29, 2016

Next Generation & External Influence


Next Generation & External Influence

Individual empowerment is a dominant market force. The generation of Millennials as the most powerful class in the coming decade will force companies to reshape their competitive market analysis. Movement of people to urban areas impacts local economies at a micro level and migration of populations to developed countries creates shift in the geo-political environment. These forces create new markets and introduce new buyer behavior[1]. On one end, this generation is empowered with more disposable income better access to technology on the other side we have migrant families trying to find a living and establish their social footing in a new country. The migration statistics into Europe since the start of 2016 tell the truth in numbers.[2]

In the coming years income inequalities will be on the rise. Companies partly drive this trend by investing the technology making mid-level workforce redundant and paying top dollar for the knowledge worker. The top internet companies in the world – Google or Facebook did not exist in their current form ten years ago and this generation will evolve continuously but their beliefs, their buy, spend and usage patterns, their brand loyalty may all be getting shaped right now.

Companies will need to start treating this as a compelling external factor and respond by trying to re-shape the thinking of this generation. This breed of empowered individuals are starting to influence products, services, government policies, regulations and collectively create a wedge in the definition of a conventional consumer. Social media influence on the geo-political environment and competitive markets is here to stay. More free access to information translates to more knowledge in the hands of the individual not just from a buyer/ consumer standpoint but also as an opportunity to shape the future trends on external forces influencing company strategies.

 

 



MILLENNIALS – The Council of Economic Advisers – Page 5, Page 42
[2] http://www.bbc.com/news/world-europe-34131911 - Migrant crisis: Migration to Europe explained in seven charts

Museum Musings on Competition

The Competitors article prompted me to consider who our competitors truly are – which further prompted me to consider exactly what my product is and who my customers are. 

Generally when thinking about non-profits, donors can be considered our customers.  Non-profit funding comes from government subsidies, grants, cash donations or estate bequests.  And the reality is, in any given location, there are many other worthwhile organizations competing for the same pool of customers. 

My organization has the luxury of being largely self-supporting through earned income primarily through renting out various facilities on our property.  This luxury was a ‘road block’ to teasing out who our competitors are.  I ultimately broke my organization into 4 income-producing silos: Museum, Distillery, Facility Rental, and Village shops.

I’m able to list out product(s) and competitor(s) for each of the 4 silos, but the main product is more gestalt theory-esque:  That the value of the whole is greater that the sum of the parts.  The entire story, space, and range of experiences offered at our organization outshines our regional competitors (especially if we look primarily at organizational budget size within our industry).
But that doesn’t buy us a free pass to not think about competitors:  By treating each silo as an independent industry, we can strategically grow underperforming sources of income, as well as identify the target audience and competitors of each.

Museum: disseminating information via tours, research (of our collections and archives), educational programming, and “edu-tainment”. A quick browse through Guidestar.org shows 124 Pennsylvania museums within the same income bracket as my organization.   And considering I view our geographic scope to include more of a tri-state radius, that number grows higher.  

Distillery:  Whiskey is the product.  We’re reviving the historic whiskey recipe distilled onsite throughout the 19th century using grain grown in the fields neighboring the museum.  There’s a huge boom in the craft distilling industry now, with strong Pittsburgh region distillers, but there’s only one other ‘whiskey museum’ in the country currently. 

Facility Rental: As this is our primary income generator and though it’s my first though when it comes to identifying competitors, it’s not the main focus of our site.  The big questions I have for this silo are: a) How do we diversify the types of events we cater towards: the specific caterers we work with consistently; and the days and seasons we book?   b) How to convert the 15,000 visitors that come for the special event to come back to experience the other aspects of the site?
This is my top concern for competitors: there are many competitors with old barns that are perfect for that “Pinterest worthy wedding”, in addition to the more typical substitutes (e.g., country clubs, hotel ballrooms, and fire halls).

Village Shops:  We lease out the various family and worker houses located in our historic village to private businesses.   The rental income is helpful, especially in the lean months, but the total income generated through the leases pales in comparison to the facility rental fees.