Blog 4: Should indie film distribution companies articulate the business strategy?

The article ‘Can you say what strategy is’ emphasizes the influence of articulated strategies within a company, but neglects the possibility that these strategies can also be internalized within customers. It allows everyone on the demand and supply side to make individual decisions that reinforce one another.

I remember the words they put on the plastic bag of Walmart: everyday low price. Beside it, there was also a smiley face. That was before I went to kindergarten in China. It seems like not only the employees in Walmart know exactly what their business target is, but also the customers. Words do lead to actions. It is more comfortable to be exposed under the glare of incandescent tubes in Walmart because there seems to be a safe consumption zone for middle-class families. We believe in that slogan and enjoy it.

What about smaller companies? Is there any risk to articulate the strategy?

When I interned in an independent film distribution company in Taiwan, I made a chart to track all the titles that were going to be released in the second half year of 2017 in Taiwan. There are certain patterns that I found about other independent companies. There are 2-3 indies focus on horror and R-rated films. Most indie film companies have to distribute at least 2-3 horror and R-rated films to guarantee the profit. Their strategy is to correspond their films to the taste of mass audiences in Taiwan. Horror and R-rated films are guarantees for profit, considering the fact that most of them have a very low budget and have a certain market. There is also one indie that’s called ‘ifilm’ differentiates itself from other indie companies by providing art films from International film festivals. That’s really rare for indie film companies even in the US. Living on a smaller scope of market share, most indie film companies cannot take the risk to articulate their business strategy. Concentrating their investment on specified genres, even on horror films, might exterminate their possibilities to make a profit. Audiences love stimulation, but keep stimulating them with horror films would one day lose the expected effect. There were several weeks that horror films won the top box office in 2017 in Taiwan, but that worried indie film companies even more. One thing that is really interesting in the cultural product: you can neither betray the taste of audiences nor obey them. There is one company called Cohen Media Group which focus on collections of classic films and art films in the US. I happen to know one who interns over there. He tells me that the only reason that this company dares to ‘articulate their business strategy’ is because the boss is really rich. The boss doesn’t have to rely on this company to make a profit. 

What is the exit or golden rule for indie film distribution companies? That might take my entire career to answer this question.

Crafting a Result-Oriented Strategy Statement

According to the articles assigned for this week, many managers and business leaders have a hard time describing their strategy, making it hard for other employees and entrepreneurs working in the company to make good choices that match with the strategy. Collins and Rukstad say that a good way to do this is to define strategy as a simple, clear, and succinct statement that everyone can understand and internalize to use it when making their own department strategic choices. The authors recommend the strategy statement to be about 35-words long. They also emphasize on the need for the strategy to have a clear objective, with a well-defined end-point and time frame, the scope in which the strategy applies (customer type, service offered, geographic location…), and the strategy’s advantage, defining what your company will do differently than others offering the same services and how. After reading this article, I realized that only one of the companies I have ever worked for do this kind of statement, which may explain why I was so invested in my job as a fundraiser in the State Theater of NJ. Before I even took the job, I was told exactly what the company was hoping to accomplish. They said that their goal was to become more accessible to the community, and that they were going to accomplish that by renovating the theater, installing elevators and new sitting arrangements to welcome the elderly community and gain competitive advantage over their peers. They also set a time frame of 5 years and a precise amount they needed to raise. Hence, when I started working, I knew exactly what to do, what kind of donors to reach, and what kind of events to plan for next. In contrast, this summer, I worked the Cultural Trust as an education program manager, being responsible for multiple arts camps, half of which were pilots which I needed to evaluate. However, the Cultural Trust being so big and so wide in program offerings, I never understood where the company, and/or the education department was trying to accomplish with these programs. This made it difficult for me to find the right kind of evaluation for the programs I was in charge of piloting.

The article, “Bringing Science to the Art of Strategy”, expanded my insight about how to craft a good strategy and its statement. In this article, the writers give a great method for how to choose the right strategy for your company when facing an industry challenge or company issue. First, they recommend looking at the issues you are trying to solve as choices and possibilities to get ahead of the market. Looking at the issue with positivity seems like a great way to encourage teams to find good alternatives; something I will use as a manager in the future. I particularly liked the way that this article suggests companies to pick the strategy by first proposing multiple possibilities (one per team member), then analyzing each of these possibilities in the light of what things need to happen in order for that strategy to be successful, and finally, bringing in an outsider to help the company analyze, from less likely to most likely, which possibility is the safest strategy choice.

Finally, the last two articles point out a few tests and challenges that you will need to take into consideration to make your strategy statement successful. For instance, Horan and Connerty talk about making sure your team is invested in the strategy, by getting them involved, hearing their opinions on how to go about the strategy chosen. Bradley, Hirt, and Smit, discuss the importance of checking for bias in your strategy, making the strategy actionable, and balancing the commitment and flexibility of it. All these advices and methods helped me understand the complexity of crafting strategy and the importance of defining it so well that everyone in the company is motivated and in the same page. This is something that I will take with me to use when I get on my next managing position at a company.

References:

Bradley, C., Hirt, M., & Smit, S. (2011, January). Have you tested your strategy lately? McKinsey Quarterly. Retrieved from https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/have-you-tested-your-strategy-lately

Collins, D. J., & Rukstad, M. G. (2008, April). Can You Say What Your Strategy Is? Harvard Business Review.

Hotsn, S., & Connerty, M. (2017, November 3). Good Strategy Execution Requires Balancing 4 Tensions. Harvard Business Review. Retrieved from https://hbr.org/2017/11/good-strategy-execution-requires-balancing-4-tensions

Lafley, A., Martin, R. L., Rivkin, J. W., & Siggelkow, N. (2012, September). Bringing Science to the Art of Strategy. Harvard Business Review.

Blog #4 - Good Strategy requires balancing four tensions

The success of strategy often involves managing strategic tensions. While reading the article “Good Strategy requires balancing four tensions”, I was reminded about how we managed to deploy a running software that improved the efficiency of design engineers at Ford. Every step towards the final product required managing the four tensions as stated in the article.

Tension #1: An inspiring end-state versus challenging targets

After a brief meeting with the Stakeholders, the inspiring end-state was outlined by our technical manager. The end product was a technical user-interface that would make everyday life of a design engineer much easier. The end-state served as a motivation and direction to the aggressive challenging targets. At the same time, it helped ensure the whole team align their objectives towards a common goal. We, as a team framed our own challenging targets by deciding on how to approach the end-state. Challenging targets involved:

• Laying a strong infrastructure to manage the database, which served as the repository from which data is to be accessed for further action. 
• Authenticating the authorized users to access the data to ensure confidentiality and integrity as we deal with future car products that are to be released in the market. 
• Surveying design engineers about the expectations of their user-interface and their preferred method of access. 
• For providing a better end-state product, we would acquire the feedback from the Stakeholders and the Design Engineers by developing a proof of concept. 
• Developing the final software. 
• Testing functionalities and handling errors in a graceful manner. 
• Deploying the application to the Software Release Process.

Without having challenging targets nor understanding the 5 W’S , it wouldn’t have been possible to achieve a successful change journey. Understanding the business needs by surveying, helped us immerse ourselves into the shoes of the design engineers to better serve them.

Tension #2: Top-down control versus democratization of change

In the process of releasing the product, the technical manager and stakeholders did a good job by not micromanaging the team every minute. Instead, they acted as an appropriate top-down leadership by helping us stay focused on the ongoing alignment without dashing off in multiple, uncoordinated directions. We were given the freedom to make decisions on who does what among the team. Speaking on a team-level, we did a good job by capitalizing on the strength of every team mate and complimenting on the weakness of the team. “Everyone in the organization felt empowered to make decisions that can influence change, thus creating a palpable energy”. Top- down control and democratization of change go hand in hand to deliver a successful outcome.

Tension #3: Capability development versus pressure for results

I see them as competing demands; and when they compete, pressure for results wins. As a team, we have been in the same boat of deciding between capability development and releasing the existing product with required functionalities. Sooner we release the product, higher the savings in job-hours. This in turn translates to higher efficiency as the design engineer can finish his 8-hour job in 4 hours enabling quicker completion of projects. Time being an essential component, the management and stakeholders decided to release the product. This strategic move bought us time to add a lot more functionality to the product. Simultaneously, the design engineers had also started using the product to design the various components of a car.

Tension #4: Creativity versus discipline

In our scenario, this tension was the most difficult to balance. Since the vanilla version of the product had been released, the team was very enthusiastic to add in additional functionalities. When we were provided the room for innovation and creativity, each one of us went on unmatched coordinates. Our technical manager was quite surprised to see this behavior. Rather than totally putting us down, he served as an amazing guide by aligning us in the right direction. Creativity shaped by discipline is a powerful attribute that could foster relationships among the top-down organizational level.

Citation:

[1] https://hbr.org/2017/11/good-strategy-execution-requires-balancing-4-tensions

Blog 4: How Agile helped balance the 4 Tensions

This past week, I had an opportunity in my Agile Methods class to participate in an actual scrum-based work setting to deliver a project for the client. As I was reading the article titled “Good Strategy Execution Requires Balancing 4 Tensions” I drew parallels with how we functioned as a team in that activity. After participating in the exercise this week, I can clearly see why it is so highly preferred. It essentially addresses each of the four tensions that were mentioned in the article.

Tension 1: An inspiring end-state versus challenging targets

During the team activity we had a clear “end-state”, which was to get a working animal website targeted at children. The aggressive “mid-state” targets that the article talked about are similar to the 3 sprints that we had. Each sprint focused on producing a finished increment of the product.

In the first sprint we built the landing page and added a couple webpages providing habitat and facts about animals. The second sprint added on to the first one providing more details about food and eating habits. The third sprint allowed us opportunity to combine and consolidate the entire website. These sprints were especially challenging because of its time-boxed nature but it helped us stay on track for delivering the final product.

Tension 2: Top-down control versus democratization of change

One of the best aspects of Agile-Scrum is its ability to effortlessly infuse a chain of command and employee empowerment at the same time. During the exercise, we clearly assigned roles and defined who would oversee what. The product owner would control the order of the product backlog (various features of the website we needed to implement). The Scrum master would oversee the development team and help address any impediments to their progress. Finally, the development team would have the liberty to choose what tasks they want to accomplish in each sprint, self-organize and assign work to each member.

Tension 3: Capability development versus pressure for results

This was a very noteworthy aspect of the of the entire team project. At various points during the sprints, we wanted to add new functionalities to the websites and/or make it more aesthetically pleasing. However, we had to have a cap on those ideas, as our highest priority was to deliver a fully functioning website within the given time frame. We made sure that all our ideas were heard and picked which ones we could realistically implement within the deadline.

Tension 4: Creativity versus discipline

This goes hand in hand with capping the idea generation phase. Specifically, in the third and final sprint, we set aside 15 minutes (overall sprint was 35mins) to hear out any innovative and radical ideas, to see if we could add them to the website. We ensured discipline earlier, to give us a chance at experimenting towards the latter stages. This mimics how companies first develop a brand name and then expand into other fields.

In conclusion, the agile framework provides a clearly defined structure to help find an optimal balance among the 4 tensions. It helped us set priorities in deciding on the right mix of each.

References

1. https://hbr.org/2017/11/good-strategy-executionrequires-balancing-4-tensions

Week 6 Blog 4 : Netflix: A perfect example of Disruption!

Netflix: A perfect example of Disruption!

 

In a business, disruptive innovation is defined as “ an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market-leading firms, products, and alliances” [1]. Disruptive innovation can occur when there are a lot of underserved customers in the marker. A company’s primary objective is to keep its customer happy and meet the customer’s expectations and at times exceed these expectations. But what comes after exceeding these expectations? Companies start adding bells and whistles to their existing products to make it more efficient and fancier, but the base value remains the same. Some customers are unwilling to pay these extra amounts for bells and whistles and look out for cheaper alternatives in the market that satisfy their needs. This gives a launch pad to the disruptors!

Blockbuster was an industry titan and pioneer in the DVD rental business and was pushed to a diminishing (and now extinct) position by Netflix. Netflix digitized the whole DVD – renting business and started with in-mail DVD that catered to the needs of the underserved customers of Blockbuster. Blockbuster had a limited set of physical copies of movies and that made it difficult to serve similar needs of a large number of people. People had to go to the store to get DVDs Netflix targeted the prime customers of Blockbuster by providing high-quality, cheap, large catalogue and easy approach to watching movies. Netflix began the mailing business and increased convenience.

Post the in-mail business model Netflix started the streaming video and that made watching movies very accessible and convenient. Netflix disrupted itself! The incumbents often tend to overlook the disruptors. CNBC has reported that about $400 billion are spent on Netflix’s streaming service in United States of America alone. Apart from tie-ups with distributors and streaming, Netflix stood out because it started creating its own series, shows and movies. It creates content for its own platform. It began producing its content with the very popular show – House of Cards. Today Netflix has numerous popular shows that go by Netflix Original – Sacred Games, Orange is the New Black, Jessica Jones, Safe, Lust stories, etc.

Netflix made extensive use of technology, its entry into the world of machine learning and analytics made it difficult for customers to part from Netflix. The artificial intelligence algorithms they have built enable customers to get suggestions on what to watch on the basis of their past viewing history. This has created a market that never existed before!

Netflix has proved to be an evolutionary disruptor- it improvised an existing product in an existing market. Supply-side factors such as reduced costs, ease of accessibility and faster access enabled Netflix to flourish. It induced a change in demand-side factors as well -consumer behaviour began to change and technology made their experience more enjoyable than what they have with Blockbuster.

REFERENCES

[1] https://en.wikipedia.org/wiki/Disruptive_innovation

https://www.cnbc.com/id/100653971

https://zync.ca/netflix-the-great-disruptor/

https://www.aib.edu.au/blog/innovate/netflix-digital-disrupter/

https://www.businessinsider.com/the-father-of-disruption-theory-explains-why-netflix-is-the-perfect-example-and-uber-isnt-2015-11

Blog 3 - Why do big companies get Disrupted?

Why do Big Companies get DISRUPTED?

It always sounds a mystery when we hear about the downfall of multinational companies due to advancement in technologies to which we term as disruption. The giant companies are better equipped to innovate and to tackle disruption but still, we find many giant companies failing to identify innovation as a threat to the current operations of the company. Let’s try to analyze the reasons behind it:

       Large Companies are customer and investor-centric: The big giants are led by great managers and great managers do what makes the most sense. These companies have a large value network that involves customers and investors. To get the maximum revenue and profits the companies need to satisfy the entities of the value network with the products services and revenue that the companies generate. This situation gives limited flexibility to the companies and often they end up investing in the sustaining technologies rather than the innovative ones.

      Smaller markets of innovation do not solve the growth needs of larger companies: Larger companies want to grow because of two major reasons:

a.     Create more internal opportunities.

b.     Increase the market value of the company.

  

Smaller markets do not serve the purpose of short-term growth of larger companies. This leads to larger companies not entering the emerging markets and they end up waiting too long till the market becomes established and lose the first mover advantage. A perfect example would be the late adoption of Britannica towards the online Encyclopedia. In this case, the online encyclopedia by Microsoft was the first of its kind and with personal computers being the emerging market at that point Britannica failed to identify it as a threat to their business model now.

      Large companies are unwilling to change the sustainable business models: With the innovation and emergence of the new markets companies are bound to bring a change in their Business Model as well, but the established companies are reluctant to bring this change as it disturbs their value network. A good example of this situation would be the downfall of Blockbuster with the emergence of video streaming and players like Netflix. Blockbuster followed a franchise model and rented the DVDs offline but with the emergence of video streaming platform the market for DVDs took a hit, but Blockbuster could not shut down the franchises and open an online platform to sell or rent their DVDs as the franchise owners were a part of their value chain. Reluctance to change this business model led to the delay in the adoption of the innovation and Blockbuster was not able to catch up again.

The companies are finding ways to overcome the issues in adapting to the innovations. Some of the ways are:

1. Create an organization whose size and values matches to that of the opportunities being created and work towards innovation.
2. Acquire a small company whose structure and resources matches the opportunity.
3. Create plans for learning rather than just planning to grow and increase market value and this learning phase would help to deliver better quality services and products.

Innovation is a threat to the larger companies but identifying it at the correct time and adapting to it could work wonders for the giant companies.

Innovative Strategies & the Corporate Governance Considerations That Follow

This week’s articles weighed the importance for companies, when developing their strategic options for future growth, to ensure they do not merely foresee potential technology and innovation shifts, but also to embrace the future disruption by investing in the development of such technologies and their respective infrastructures necessary for market scalability. According to John Chambers, former Cisco CEO, it is essential for survival and a sustained future growth to embrace new-frontier technologies that are responsible for causing irreparable damage to companies caught flat-footed amidst the resulting market shifts. A topic I wish was addressed in the articles is the challenge corporate governance presents for company leadership and the recommended strategies for mitigating shareholders concerns while appropriately navigating the fiduciary duty to them in attempts to maximize shareholder value. From the list of companies that were cited as casualties of previous disruptive technological shifts, I would like to know how many the CEOs had the foresight to anticipate changes, had the urge to reposition the company accordingly, but did not have shareholder support, or the board of directors’ support for that matter.

To the credit of the articles, it is repetitively mentioned that the temptation is for leadership to maintain share prices and to continue investing in the high revenue-generating activities, which historically leads to the dogmatic behavior of investing in what profitable customers want now, and not what they might be demanding in the future. My question is, how do the CEOs who make the proper investments toward future technologies justify such moves in front of their boards, and how receptive are the boards towards the innovation? Clayton Christensen concedes in “The Innovator’s Dilemma” that larger companies have harder times arguing that “emerging markets can remain useful engines for growth,” especially considering how difficult it is to quantify market sizes and financial returns for markets that do not exist yet.

It has been argued that convincing the board falls secondary to the challenges a large company’s highly hierarchical and compartmentalized organizational structure creates when attempting to embrace disruptive innovation early on.[1]  While internal structure can cause adoption challenges, it still is imperative for leadership to establish the vision first and to embrace technologies of the future, which reintroduces the question regarding board approval. In December 2017, Harvard Business Review featured an article titled, “The Board’s New Innovation Imperative.” The piece attributed the lack of innovative strategy adoption to overly cautious boards who often face time constraints, lack industry experience, and generally prefer outdated innovation that “goes toward improving the organization’s capacity to execute its current strategy” rather than staying ahead of technology shifts, as John Chambers suggests.[2] The recommended remedies by the authors stem from the need to “redefine the partnerships” between the board and management, keeping their respective legal power and executive powers in a checked and cooperative balance. In building a board that is receptive to innovation and debate, diverse in member background and expertise, and attuned to the understanding that “avoiding risk can be the riskiest proposition of all,” perhaps today’s iconic companies will be spared the fates of yesterday’s forgotten giants. [3]

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[1] http://thecombine.co/monetize-corporate-innovation/

[2] https://hbr.org/2017/11/the-boards-new-innovation-imperative

[3] https://hbr.org/2017/11/the-boards-new-innovation-imperative

Week 5: Christensen's Ideas in Technology Startups

As per Moore’s Law, technology is progressing faster than ever before. Accordingly, disruptive innovation is happening more than ever before. Unfortunately, many established companies have not been to thrive in these emerging innovative markets. As noted in the ‘Discovering New and Emerging Markets’ article, one major reason for their failure in such dynamic environments is their inability to fail and pivot quickly.¹ The companies that have been able to test out their assumptions on a smaller scale and pivot their investments and resources when necessary have succeeded. 

It is not surprising that this lesson has been taken to heart by today’s startup community, as is evidenced by the agile methodology: a product development and project management approach rooted in adaptive planning, early delivery, and continuous improvement.² Its primary goal is to enable companies to respond to change quickly and easily. Most startups today operate in an agile fashion. Similar to Christensen’s recommended ‘discovery-driven planning’, an important step in product development in many of today’s technology companies is the ‘discovery’ process, in which the product manager uses behavioral analysis and research to validate assumptions about the product and market.³ It is an iterative process that enables continuous testing of the product to ensure that the product meets the needs of the market. 

Today’s advanced customer behavioral analytics tools also lend themselves beautifully to Christensen’s assertion that ‘no one’ can understand the influence of a disruptive product before they have experience using it. Having learned from past mistakes, many of today’s technology companies are using such behavioral analytics tools, such as Google Analytics and Mixpanel, to understand how their customer behave and help drive product and company strategy decisions. Christensen was certainly right: it’s hard to know how customers will act based on how they say they will act. However, with the exponential growth of data, it may be easier than ever before to understand customer behavior. For example, analysis of Google search data (using Google Trends) can provide us with novel insights into the inner workings of the human mind, including our truest needs and wants. 

A legendary example of a company operating in an agile approach and using behavior analytics to adjust their strategy is the pivot of Odeo, a podcasting company, to Twitter in 2005.⁴ The founders of Odeo invested in creating a platform for podcasting around the same time that Apple launched podcast support for iTunes. After researching the market and understanding user adoption rates and customer acquisition costs, the founders of Odeo realized that they didn’t have a chance of competing against Apple. As a result, they pivoted their existing platform, which had great scalability and potential, to create Twitter. 

Fortunately, we now live in a world that’s moving towards agility, where we are encouraged to fail fast and often. As per Christensen’s suggestion, it’s vital that we learn to quickly adapt in today’s ever-changing world of emerging technologies to succeed. 

References:

1.    Discovering New and Emerging Markets (Christensen, Chapter 7 of The Innovator’s Dilemma, 1997)

2.    https://www.qasymphony.com/blog/agile-methodology-guide-agile-testing/

3.    https://clearbridgemobile.com/an-introduction-to-product-definition/

4.    https://blog.marketresearch.com/blog-home-page/bid/334826/how-3-companies-used-market-research-to-pivot-their-businesses

Subscribing to Surviving

Subscribing to Surviving

Strategy Development Weekly Reflections

When the software industry was growing, the internet was still not around so much. and the way software was being sold, was quite similar to any other physical entity, usually in floppy discs and later in compact discs. Hence the distribution of these software followed similar supply chain infrastructure and therefore somewhat similar sales and marketing techniques as any other physical product. Over the years, as more people are getting connected over the internet, enterprises are also shifting to distribute their software products and services online, and more so not just as a one time purchase, but a periodic subscription. We can also look at a trend in other industries such as FMCG that draw similarities to the subscription models of the software industry as a strategy to differentiate themselves from the big players in the industry.

Software subscriptions

Software subscription models have proved to be a win-win situation for the consumers and the enterprises alike1. Instead of paying a huge amount upfront, they can pay as they go along and receive a faster return on investment, they also have the liberty to stop their subscription when they have no further use of the software anymore. The companies writing the software have to constantly upgrade them to keep up with improving hardware and consumer requirements. But once they win a subscription, they can enjoy regular monthly payments for developing the software further. This also gives them a competitive advantage and a touchpoint to up-sell or cross-sell other products.

Subscription models for consumer products

In 2012, Dollar Shave Club became a viral sensation when they launched their subscription service of shaving blades going up against industry giants like PnG’s Gillete2. Their viral marketing strategy differentiated them from other conglomerate brands while also offering a cost advantage and a monthly delivery model ensuring convenience and assurance of quality. Today many brands offer a subscription model of products such as socks, books, coffee and other consumables for their loyal customer base and as long as they are maintaining their benefits over bigger brands, the customer doesn’t even bother to think about changing their preference, and with auto-payment, they virtually forget they are paying for the service. 

The battle to deliver food in India

Around 2013 and 2014, there was a boom of hyperlocal tech startups in India, and as potential investors got excited about the growing market, many startups were receiving easy funding without a strong foundational business plan. The hottest competition was among the food delivery startups whose immediate response was to burn their investor's cash to provide discounts on food and free delivery as a strategy to win the market. Evidently, over the period of next two years, the investors started questioning this strategy and many startups dropped out of the race. The one that survived the battle had focused on strengthening their logistics, developing subscription partnerships with the restaurants and device a pricing strategy that was lucrative for their customers and set them up to make profits. Today instead of trying to compete on discounts, the other plays in the game are trying to compete on the subscription model they have for their consumers.

Subscriptions are not just beneficial for the consumers, but also offer a fair market opportunity for competitors to win customers and build brand loyalty. With the internet and digital payments, it has become easier for companies to retain their consumer, and convenient for consumers to ‘click and forget’.

Footnotes

1. Wilson, Seth. “Why Software Is Moving to a Subscription Model, and Why It's a Good Thing.” Protected Trust, 25 May 2018, www.protectedtrust.com/blog/software-moving-subscription-model-good-thing/
2. Sukhraj, Ramona. “How Dollar Shave Club Grew From Viral Video to $1 Billion Acquisition” ImpactBnD, 21 July, 2016, www.impactbnd.com/blog/how-dollar-shave-club-grew-from-just-a-viral-video-to-a-615m-valuation-brand