Strategy Development Blog Post 5

In this week's blog, I want to focus on the Strategic Scenario Planning and Development process. Scenario planning is the action of generating actionable insights by creating a small set of scenarios for an organization's future environment. This environment is relevant to critical business decisions, distinct, individually realistic and together cover the depth and breadth of uncertainties. Let us discuss the few scenario considerations, to begin with. There could be various external factors that influence business performance. What will the customer value in the future? Will the growth be stable? Will government regulations impact corporate activity directly? Do we have the right balance on the resources needed? These questions would help determine the major factors such as Quality of Life, economic momentum,  volatility, market vs government, resources, and environment which in turn influences the business performance.

The scenario planning process can be a five-step approach. The first one is to define the scope. The primary task would be to identify the core problems and frame the analysis. A framing checklist could be used to perform this task. The second step is to analyze the perception and understanding the trends and uncertainty. this perception could vary from capturing the stakeholder feedback, identifying the user needs and the assumptions and mental models. The relevant trends in the market need to be understood and discussed so that the worst case scenarios could be formulated to avoid roadblocks. The third step is to build a scenario around the possible roadblocks. There need to be certain measures that could be taken to mitigate the calculated risks based on these key uncertainitites. The fourth step is to define and develop the optimal strategy. This is the primary step where viable action plans need to be deducted for implementation. A strategy manual needs to be built which would drive the process in an iterative manner and provides space to make adjustments to the strategy when a need arises. The final step is to monitor the challenges and assumptions. Systematic monitoring of the various assumptions made enhance the responsiveness to new challenges and align the strategic planning activities.

Adaptability to Change

It is rightly said that change is the only unchangeable thing in this Universe and getting adapted to this change is the only way to survive in this dynamic world.

This law holds true in the corporate sector of the society. Businesses if do not adapt to the changes will not be able to survive the test of time. Business models should be updated to fit the changing markets, technologies, trends, etc.

One of the major driver of change in todays world is Internet and data. The businesses that adapted to this model survived the change but many other business who did not adapt to the changes started falling down slowly and gradually lost their market. Take example of retailers like Best Buy, Cosco. These business have lost lot of their market to Amazon which had revolutionalised the way people shop, through internet shopping. Amazon has taken over the market for all types of Businesses from Electronics products to sport goods, textiles, house materials, etc.

In Developing countries like India and China where many small businesses survive on their shops and outlets to sell goods, commodities, food, etc. have been ruined due to the advent of online shopping. These shops have lost lot of their customers to online shopping websites.

If these small businesses had updated their business model and strategy to getting attached to Amazon for selling their products online then they would have not only sustained their businesses but would have increased their profits by huge amounts as now they have large customer base because their product is accessible to a large audience.

Other major driver is the huge amount of information being generated all over the world. This has led to increase in the need for storage devices, managing databases and servers, a strong requirement for technologies and skills for analyzing this data and development of Machine learning algorithms to use this data for automation. Smart people and businesses who have observed this trend have started investing heavily into this segment because they have realized that in order to stay in market they have to adapt to these changes and start using the information available for their benefit.

For example, many medical/insurance companies who were initially only in the medical sectors have started to expand in the IT and consumer electronics sector. They have started to partner with wearable device consumer product companies like Apple, Samsung etc to collect vitals of the users using these devices in order to monitor their client’s health and also predict fatal strokes and diseases. They are using the power of Machine learning to predict any future diseased that the person may suffer due to their current eating, drinking and sleeping habits.

The companies that created or changed their already existing business models with respect to the changes in market and technology survived the test of time like Apple, Microsoft, HP, Google, etc.

On the contrary companies like BlockBuster, Kodak, Yahoo lost lot of their market share due to their rigidity to the changing markets and technologies.

Reference -
1. https://money.usnews.com/money/blogs/flowchart/2010/08/19/10-great-companies-that-lost-their-edge
2. https://www.collectivecampus.com.au/blog/10-companies-that-were-too-slow-to-respond-to-change

Reshoring could be reading from the script of "Creating Shared Value"

President Trump’s Promise of Reshoring could be reading from the script of “Creating Shared Value”

Reshoring Initiative, a US-based Non-profit organization defines Reshoring as “the practice of bringing manufacturing and services back to the U.S. from overseas”.[1]

Throughout his campaigns, President Trump promised American voters that he would bring back manufacturing jobs to the US. If the protectionist trade tariffs imposed by his government are anything to go by, he is living up to this promise. Interestingly, there is a tide of companies that moved their manufacturing concerns offshore that are now consolidating their businesses back to the US. But rather than as a response to the president’s vision for the country, their change in strategic direction appears to be informed by concerns such as protection of intellectual property, increasing cost of labor in the countries where their manufacturing operations are currently based, environmental degradation, quality concerns, lack of specialized labor in the offshore locations and a host of other non-political reasons. [2] My suspicion is that politicians, particularly the President, will claim the credit of returning jobs to America any way.

Of greater interest though, is how the current reshoring tide is aligned to the idea of creating shared value. Based on the Harvard Business Review Article “Creating Shared Value”, companies lose more from offshoring production. The cost of transport is high, and they lose out on potential cluster development in the communities in which they operate. By consolidating their production in the US, companies not only reduce costs but also help the environment by reducing carbon emissions produced by transportation. Reshoring may therefore create shared value in the US because companies will lose less while advancing the economic and social conditions of the communities in which they operate. Was President Trump thinking about Creating Shared Value when he promised to return manufacturing jobs? We may never know. But it sure looks like his promise is related to the idea.

Reshoring, if successful in the short and medium term, may not remain that way in the long run. Organizations are going through radical changes that affect the future of work. It is predicted that nearly half of all jobs in the US could be automated by 2050. Automation is expected to replace the assembly line and office workers who perform repetitive tasks. It will be interesting to see how this plays out considering reshoring because reshoring involves movement of production activities such as assembly lines. [3]

Blog Post 5

This week’s readings describe the future of strategy. Specifically, the Bhalla and Strack article, Twelve Forces That Will Radically Change How Organizations Work, focuses on the changes in the demand for talent and the changes in the supply of talent both of which are working together to transform companies. The force that stuck out most for me was the “skill imbalances” force which describes the process by which more and more companies are reporting inability of finding qualified employees. What I found interesting about the article was that it failed to explore two consequences of skills imbalances both of which, at least to me, can also be seen as forces that are transforming how organizations work. 

The first consequence of skill imbalance can be that US companies may more consistently start to hire more international workers to meet the need for skilled digital talent. According to the article, US companies cite the lack of qualified employees as the biggest constraint to a full digital transformation. This labor shortage has been reported as a crisis that is getting is worse. If companies choose to get around this problem by hiring more international workers, this too will change the way organizations function.     

The second consequence would be income inequality. Because of technological change business are requiring more advanced skills and capabilities. According to Frank and Bernake, because technological change is made easier for those with high levels of education due to their ability to learn and adapt, these individuals will be better able to compete in the market than those with lower education. Higher education individuals will begin to out earn others thereby creating income inequality. This consequence is once that has potential to affect the larger market rather than an individual company.

Who Creates Shared Value?

Michael Porter and Mark Kramer’s suggestion of creating shared value sounds great. Who--among citizens feeling they lack agency, local businesses feeling squeezed by the pressures of globalization, or large corporations feeling demonized by the public--doesn’t like the idea of a bigger pie for everyone? Unfortunately, the concept of shared value proves as elusive in practice as the ideals of democracy: on one hand nobody disagrees that we should have better schools for our children, clean air to breathe, or fairly administered taxes; on the other, nobody agrees on how to go about these things and how to run the politics of the process.

The same may be true with shared value--few companies want to be the first to take a hit to this quarter’s bottom line to create positive externalities while their competitors are looking out for themselves. Porter and Kramer’s CSV proposition reads long on good ideas but short on nuts and bolts implementation. Sure, the authors suggest areas for creating shared value--energy use and logistics, resource use, procurement, etc--but how do companies actually get down to implementing a shared value strategy? Does the onus fall on hired consultants? Board presidents? CEOs? Shareholders? Government? Other “cluster” companies? The result of cooperation is better for everyone, but in practical terms, the decision matrix for any given combination of parties here comes out looking very much like a classic prisoner’s dilemma: a better alternative (CSV) exists, but only if multiple parties will act against their rational self-interest.

This is where the Boston Consulting Group’s Twelve Forces That Will Radically Change How Organizations Work gains traction. Both articles (Shared Value and the Twelve Forces) stand up as more descriptive than instructive; however, shifts in supply of and demand for talent, the linchpin of BCG’s Twelve Forces, may turn out to be the silent driver of company transitions to shared value strategies.

Consider the terms of accountability for a corporation. While top executives and corporate boards may not be legally mandated to maximize shareholder profit monstrously at the expense of ethics and the community, money still talks--the next quarterly report looms large and accountability for “rational” pursuit of the company’s best interests persists. Government entities, in a shallow sense, at least, are often constricted by corporate interests that may be invested in preventing regulations encouraging shared value. In this respect, a critical mass of talented, highly sought-after employees may, peculiarly, be the group with the most power to influence the creation of shared value.

As BGC’s Twelve Forces article predicts, “nearly every organizational role will eventually require the use of sophisticated technology,” driving up demand for a technically skilled employee base. That base’s accompanying demand for many corporate goals that Porter and Kramer describe as shared value (indeed, BCG points to a survey finding that “62% of millennials said they want a career with social impact”) may be the ignition other major players don’t have the keys to turn to drive a movement toward creating shared value.

References

Vikram Bhalla , Susanne Dyrchs , and Rainer Strack. “Twelve Forces that Will Radically Change How Organizations Work. Boston Consulting Group. March 27, 2017. Retrieved from https://www.bcg.com/en-us/publications/2017/people-organization-strategy-twelve-forces-radically-change-organizations-work.aspx 

Michael Porter & Mark Kramer. “Creating Shared Value.” (Cambridge, MA: The Harvard Business Review, Jan. 2011)

Lynn Stout. “Corporations Don’t Have to Maximize Profits.” New York Times. April 16, 2015. Retrieved from https://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-obligations-to-shareholders/corporations-dont-have-to-maximize-profits

How New Trends of Data Analytics Transform Chinese Traditional Way of Marketing

Three years ago, when I interned in a brand consulting company in Shanghai, China, companies came to us asking for a “hit”. They want their marketing campaigns big, out of the box, and seen and discussed by as many people as possible. At that time, creative content and marketing was still the main-stream way of winning customers.

Two years ago, before I came to the US, Chinese first bubble tea shop, Sang Tea (yes bubble tea is a quite big business in China) featuring “misfortune” became a big hit – its unusual focus on the negative signals of the brand won the heart of young people; and its unprecedented style became the symbol of fashion. However, after a few months, when people stop talking about this marketing concept anymore, the bubble tea shop were closed accordingly.

In the past decade, as China’s economic growth has begun to slow, the market has become increasingly competitive, and customers are becoming increasingly picky for the products and less loyalty to the brands. All these trends indicate that the businesses can no longer rely on “big hits” to acquire and retain customers. On the other hand, Chinese internet adoption rate has sped up in the past few years. According to a report by McKinsey, Chinese internet’s contribution to the total GDP is expected to increase from 7% to 22%[1]. The digital revolution in China can be a huge opportunity for its businesses to tap into big data analytics to transform its customer acquisition and retention, along with other management functions such as process and inventory management.

As businesses have come to realize that marketing “hits” like Sang Tea can no longer satisfy the young generation nowadays, they start to turn to big data analytics to generate more accurate and targeted branding and marketing. For example, Rupam Borthakur, CEO of consumer insights at Kantar Hong Kong, pointed out that US$335 billion will be spent on digital ads by 2020 – this means consumers are seeing more brand-related content than ever[2].

At the same time, when breaking into the Chinese market, it is also important to understand the huge cultural and customer differences compared to other western countries where big data is relatively maturely adopted. For example, Chinese customers may be more fragmented, or even “dustified” than other societies, as the economic development level in each province, city or even neighborhood varies so wildly, the examination of data need to be in a more micro level to become meaningful. While Chinese businesses’ current attempt still focus on the macro level of customer data, there is still a long way to go till China fully embrace the transformation of data analysis.

---

[1] Capturing the Chinese Consumer with Data-Driven Marketing. https://www.marketing-interactive.com/capturing-the-chinese-consumer-with-data-driven-marketing/.

[2] China's Digital Transformation: The Internet's Impact on Productivity and Growth. https://www.mckinsey.com/~/media/McKinsey/Industries/High%20Tech/Our%20Insights/Chinas%20digital%20transformation/MGI%20China%20digital%20Executive%20summary.ashx.

Creating A Sustainable Strategy

Mission and Vision for an organization set the objectives that the senior leadership of the company wants to achieve. A set of methodologies will make sure that these objectives are actually achieved. Formulating a set of strategies to make sure that the objectives are sustainable and help the organization thrive for years is paramount.

How do you define the strategy that will prove to be sustainable?

Sven Smit in his McKinsey article explains that “strategy is not about developing certainty but boosting your odds. That knowledge will guide your decisions about where to dedicate your efforts^[1]”. There a lot of variables that are determinant of corporate success, but some are more important than others and acting on these levers is of prime significance. In the Back Bay Battery simulation that we did as part of the class I was exposed to some of these levers. Some common tasks that help companies define sustainable strategies for them are:

Risk Management – The process of forecasting and identifying potential risks and opportunities to be addressed in time to mitigate the risks and seize the opportunities. In the simulation we were able to identify that as NiMH battery was slowly becoming a commodity, its price would be the differentiating factor and having a low price in later years would give us some competitive advantage.

Investing in the future (R&D) – Investing in your product features or talent to make sure that the product will be able to meet the demands and compete in the future markets. As per a McKinsey article “You need to be in the top half of your industry in your ratio of R&D to sales to gain a significant benefit from this variable^[2]”.  During the simulation we analyzed and found that to meet the technological advancements we need to be able to deliver Ultracapacitor batteries at a lower cost with better features, so, we started investing in feature R&D as well as process improvement to lower the cost.

Revenue and Debt – Growing your revenue by capturing right opportunities and mitigating debts helps companies focus more on the other aspects of their strategies. As revenues and profits tend to increase companies can take more risks, invest in product development and test different business models. In the Back Bay simulation as our revenue and profit declined for a couple of years we were not able to invest the same amount in our R&D as earlier years, which also is the case in real world scenarios.

The best strategy for a company is hard to shape but finding the right strategy that helps your organization reach its objectives is feasible. By constantly keeping track of the strategical levers and how they influence each other companies and leaders are able to formulate the secret recipe for their organizations.

References:

[1] https://www.linkedin.com/pulse/why-strategy-like-poker-golf-sven-smit/

[2] https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-strategy-and-corporate-finance-blog/how-to-create-a-real-hockey-stick-strategy

Future Strategy in Government Regulation of the Sharing Economy: A Case Study of Uber and Airbnb

In the article, “The Big Idea: Creating Shared Value”, the authors Michael E. Porter and Mark R. Kramer consider capitalism’s impacts on our society using economic, social, and environmental lenses. [1] They proposition that businesses grow and prosper at the expense of our society, instead of adding explicit and shared value to it. In the past, businesses best contribution to the economy was just their existence, providing that their growth required creating jobs and hiring new workers. Environmentally and socially, the authors contend that businesses had either neutral or negative impacts, because businesses considered these factors detrimental to profit and their bottom line. With the boom of the “Sharing Economy” with companies like Uber, Airbnb, and others, the authors argue that businesses have flipped the model, and are now generating economic, social, and environmental value for their suppliers and customers alike.

One interesting aspect of the future of the shared economy is regulation. Legislative and regulatory bodies in the United States have created and amended regulation for a capitalist business landscape from the beginning, and the authors of this article consider what sensible regulation might mean for the sharing economy. The sharing economy can disrupt and sometimes even replaces traditional businesses. Because the disruption is often swift and firm, regulatory bodies have trouble addressing the development of sensible legislation and regulation in a reasonable time. As stated clearly by the authors, “The right kind of government regulation can encourage companies to pursue shared value; the wrong kind works against it and even makes trade-offs between economic and social goals inevitable.”  

Uber and Airbnb have faced a series if fascinating regulatory issues since their founding. The types of businesses they replaces, taxis and hotels, are heavily regulated to ensure the safety and rights of workers and users alike. In some cases, Uber and Airbnb have been banned entirely from cities or countries that can’t regulate them fast enough. [2] Because of a federal law that protects internet-based companies from liability for “improper user behavior”, Uber and Airbnb are interestingly protected from many of the same risks that taxis and hotels are held liable for. [3]

So what is the right amount and type of legislation for businesses operating in the sharing economy? Firstly, all of the regulations should be informed by technologists or specialists in each area to counter misinformation often seen in lawmakers regulating businesses that they don’t understand. When this criteria is met, sensible regulation can be generated and should have a few key components. Regulating bodies should set performance standards, but allow the company to make the ultimate decision on their method for achieving performance. They should require reporting and performance measurement systems, so their development is transparent and visible. The authors included this notion for regulation, which I quite agree with. They said, “appropriate regulations require efficient and timely reporting of results, which can then be audited by the government as necessary, rather than impose detailed and expensive compliance processes on everyone.” [1]

Because regulation can bolster or stifle beneficial innovation, sensible informed regulation should remain involved in the strategic conversation. 

[1] https://hbr.org/2011/01/the-big-idea-creating-shared-value

[2] https://en.wikipedia.org/wiki/Uber_protests_and_legal_actions

[3] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3106383

 

The Future of Strategy

The future of a company’s strategy is vital to the longevity of any organization. A company is an intimate part of the community surrounding it. Just as the community develops and changes so should a company and its strategy. 

Initially, I thought of strategy as just a plan that is thought through and put into action. However, this class and the Battery Pack simulation taught me that strategy is so much more. I learned from the Battery pack simulation that strategy is continuously shifting and updating. It is a living blueprint that updates in response to the environment around. During the Battery Pack simulation, my team modified our strategy every year. It was important for us to do this because customers desires changed, technology updated, and the company made R&D developments. To continue to be profitable and not get fired, we had to adjust. For example, when we first started out, our strategy was for all products to be profitable. However, we quickly realized that putting money into R&D so that our products would fit with customers desires would yield more future profits. There were a few years where we did not make as much as we could have if we would have spent money differently or increased price, but in the long term our strategy paid off.

Change Management

Implementation of strategy is as important as development of a coherent strategy. Based on the strategy formulated, organizations may be required to create significant changes to operations, structure and skill sets. Since these changes are necessary for the strategy to succeed, change management becomes an essential aspect of strategy implementation. For the team involved in strategy development, certain changes might seem obvious and necessary. Yet convincing the employees to accept those changes ends up becoming the biggest hurdle for the strategic planning team.

A strategy might look brilliant on paper, but if not implemented suitably could end up causing more damage than before. The organization’s employees are the drivers for its strategy and the ones to realize the changes outlined in the strategy. Thus, understanding the factors determining the likelihood of employees accepting change will better prepare the strategy and operations teams to tackle hurdles during implementation. One of the biggest factors that influence employees are the leaders of the organization. If these leaders have the ability to gain trust and convince the employees about the necessity of changes, employees will be more receptive to the new strategy. Another factor that plays in is the fear of unknown. Employees could be overwhelmed by changes or at times get defensive about moving away from the status quo. Their behaviors and attitudes towards a new strategy can result in anger and resentment all of which could be detrimental to the progress of the organization.

Strategic planners and operations managers often consider transformation to be a minor detail in the strategic implementation process. The ‘people factor’ is always swept under the rug either because it is considered insignificant or because it cannot be measured. However, according John P. Kotter, this is where most organizations fail. In his article, “Leading Change”, he talks about looking at implementing change as a process rather than an event.^[1] Kotter’s 8 steps of leading change although are written for all transformation effort in general, can be perfectly applied to strategy implementation. The 8 stages provide a roadmap for change for organizations starting with establishing an urgency of the situation all the way to institutionalizing the new approaches. The steps also include creating, communicating and empowering others to act on the vision. This can be made possible only if the organization has developed a clear strategy that can be understood easily by all layers within the organization. Although these 8 steps of change management come into picture after strategy has been formulated, they in a way inform the process of strategy creation too.

Change management can make or break strategy implementation and should not be taken lightly. Organizations should work towards formulating a process for transformation and developing metrics to measure the success of these transformations. If the organizations do not consciously create an environment for acceptance of change, creation of new strategies will be a futile effort.

References:

1] Kotter, John P. "Leading Change: Why Transformation Efforts Fail." Harvard Business Review, January 2007.

Riding the wave of organizational transformation

After reading BCG's article on "12 Forces that will radically change how organizations work", I realized that information technology has already transformed the way many organizations operate. However, there are many companies yet to transform their organization to play catch up with the information revolution currently taking place. The reason I say catch-up is because the current revolution has got as much change in a decade as that could be observed over a century. To complement this revolution, organizations will need a revolution in management practices. If they don't then they will have to face a risk of being left behind.
In the BCG article, the authors highlight the trends affecting the supply and demand of the workforce that organizations will need to get things done. With what I gathered from their analysis, I believe organizations should consider in the below three valuable steps in transforming:

1. Focus on problem-solving
Creating a workplace that is focused on solving problems using information technology and systems that are made easily available in the company's ecosystem can enhance performance and induce flexibility in collaboration. The company's ecosystem should comprise of resourceful talent, processes like "agile methods" and systems like new software that help an individual to be able to leverage them when he needs.

2. Evolve talent
From the article, I understood that Talent is crucial. The current leadership skills found in many companies' aren't enough to manage these trends. However, the companies' leaders can make a substantial effort to notice and understand the effect of these trends on your business. This would be a first step in recognizing how a companies' teams and departments are required to evolve and adapt. Organizations can financially encourage their talent to master new skills and competencies to compete in the digitally transforming world.

3. Promote the culture of collaboration
This summer, I was lucky to get an internship opportunity at a start-up that was born during the information revolution. The company environment was highly collaborative with many employees with very diverse backgrounds both professionally and culturally. This made the people efficient and more willing to take up different kinds of work. I could sense a general feeling of professional purpose among my colleagues. These are a few things I think lacked in the way companies' traditionally worked.

In conclusion for me, the central concept of these 12 forces for a company is to utilize the available technology to transform into a more resourceful ecosystem. This transformation is challenging as it will be going against opinions, work traditions, and values. However, with technological advancements entering almost every industry, it is a necessary challenge to overcome. I think its high time organizations pull up their socks by revisiting their strategies and catch on to this train of technological change before it's too late and they are left behind.

 References:
1. BCG: Twelve forces that will radically change how organizations work

Balancing social impact and creating shareholder value - Shared value creation

Milton Friedman famously proclaimed that the responsibility of a business is to create maximum shareholder value for its shareholder. Over the years, it has been empirically proven that it is not sustainable and can erode shareholder value in the long run.

This is especially true in today’s global economy where Gen-Z employees are actively looking to create a social impact through their work and hold their employers to the same high standard as discussed in BCG article “Twelve Forces That Will Radically Change How Organizations Work”.

Hence, societal impact that was once hard to internalize for companies as it related to various externalities has started to impact companies in ways that are critical to their business performance, talent acquisition and sustained competitive advantage. This is especially true for emerging technological frontiers like AI, quantum computing and advanced analytics where talent is scarce and hence enjoys leverage over their employers to a certain extent.

An example would be recent Google announcement that Google Cloud would not renew its contract with the United States Department of Defense which expires in 2019. It came because of huge internal dissent from Google employees who objected to the use of Google infrastructure for Project Maven that uses AI and image processing to improve targeting capabilities of military drones. The contract was worth upwards of worth USD 12 million but was viewed by Google as a potential market worth USD 4 billion. It marked a huge win for Google Cloud division which was struggling to find its footing in a market dominated by Amazon Web Services (AWS) and Microsoft Azure. What Google didn’t foresee was the huge pushback it received when upwards to 4,000 employees signed a letter calling that Google disassociate from the business of war. Many employees followed through on their threats through resignations and public appeals including leading AI researchers especially at Deep Mind. Eventually, Google yielded to the pressure and disassociated itself from the contract.

Another example that I saw was the recent tech fair when undergraduate students at CMU started an impromptu protest against university decision to allow weapons manufacturers to recruit students at CMU.  The CMU student body led protest was covered by tech press and eventually spread to other tech universities (Stanford, Cornell, MIT) that was an embarrassment to the weapons companies that were looking to hire talent from these universities. Since the pool of talent is very limited and connected, peer pressure acts as a major hindrance to students who might be willing to work for the companies but fear the social repercussion of such a decision when they can continue the same work at a somewhat lower pay at an emerging socially conscious tech firm.

Hence  as corporate dynamics evolve companies that once viewed negative externalities as a cost of doing business would need to internalize this aspect into their decision making as they can no longer be pigeon-holed into the Friedman doctrine of shareholder value instead of shared value as espoused in the article “Creating shared value” by Kramer and Porter.

References:

1.      http://thetartan.org/2018/10/1/news/sds-toc
2.    https://mashable.com/2018/06/02/google-defense-department-project-maven-contract-not-renewed/#urC.t6WSgPqk

Crossing the Chasm

Crossing the chasm from a new establishment or a startup to an extremely successful organization is some a lot of organizations are struggling with. While most of the new establishments are dangling somewhere in the middle, it is imperative to decode the strategies of the ones that managed to successfully cross this chasm. As mentioned in the article - “Twelve Forces That Will Radically Change How Organizations Work”, Technological and Digital productivity are one of the leading forces to sustain a business. In this day and age, nothing works better than automation of processes and heavy reliance on big data. Most of the successful companies are extremely data driven so much so that, companies even their interview processes extremely data driven. They want to know what keywords you used, how many times you used it, what context did you use them in. Thus, the key driving factor for any business to thrive in today’s world is their inclination towards technical innovation.

Another big facilitator to this transition is the strategic vision and objective of the company. The problem statements and customer needs addressed by the company decides their future in the market. Disruptive companies have always had the edge in such cases. Be it Uber that has established itself as one of the biggest car rental service without owning a single car or Airbnb, that has disrupted the hospitality industry without owning any real estate. Companies that have disrupted the way people think and experience products, have always had a better chance than companies that enter the market only to provide improved services in the market. Thus, the problem statement being targeted by the company and clearly understanding the customer base they are solving for, are key for a company to successfully thrive.

While it is important to evolve and grow, it is also key to have a core set of values the company is to abide by and not get distracted from. As mentioned in the article - “2018 Corporate Longevity Forecast: Creative Destruction is Accelerating” having a dual approach enables firms to evolve without having to completely uproot their core values. A constant drastic shift in strategy and values many a times takes companies down in a spiral they can barely recover from. Tesla as a company has come across as not so rooted when it comes to values and principles. With a difficult work culture and an autocratic approach that dillydallies between its umpteen objectives, the company many a times loses the essence of its core product, which is - sustainable production and functioning of automotive vehicles. If a company is able to master these three key aspects of technical and digital transformation, disruptive innovation and dual approach, it is better equipped to cross the chasm. However, surviving and thriving once the chasm is crossed is a whole new battle altogether.

----------------
References
• https://www.innosight.com/insight/creative-destruction/
• https://www.bcg.com/en-us/publications/2017/people-organization-strategy-twelve-forces-radically-change-organizations-work.aspx
• https://www.forbes.com/sites/danschawbel/2013/12/17/geoffrey-moore-why-crossing-the-chasm-is-still-relevant/#6294469f782d

Taking Strategy Forward

In this article, I would like to include an analysis of how my understanding about strategy has evolved through the course of this semester, my best takeaways and what the future of strategy might look like, in my opinion.

Strategy to win:

Be better than your competitors, beat your competitors. In the business world this would have a strong implication on your market share, customer retention, sales growth and overall performance. Roger Martin in his book ‘Playing to Win: How strategy really works identifies key choices in the 

strategy choice cascade. For example, one of the questions he speaks of “what is our winning aspiration?”. What does winning really mean to the organization. For P&G, winning implied more consumers loving and using its product than anybody else’s. Likewise, it is for the leaders to constantly challenge their positions in the marketplace and envision what it would a “winning” outcome look like.

Strategy with foresight:

Being mindful and clairvoyant about things that would matter the most to the organization, what could go wrong, know your customers. Essentially, this revolves around drawing up actionable insights in order to build the future of the company. Being wary of upcoming changes, be it external (market-related, economic, technological etc) or internal (organizational structure, process-level changes, resources). For one of the most important decisions that executives must know is when it is time to change, to adapt, and to grow. Great leaders identify changes, experiment with new styles of working that most closely align with sustaining what their organization has to offer, and continuously delivering better results to stakeholders.

Foresight for potential market disrupters is another with regards to adopting a customer-centric approach for delivering products and services, leaders must constantly keep a check on what their customers really need, whether they are giving customers more than they are willing to pay for? That sort of thinking is useful because it helps you evaluate how disrupters could start small, and claw into their market with products/services just right enough for customers.

Strategy with (more) informed decisions:

One of the most profound learning from this course has been that being more “informed” about a situation that competitors is significant. It works in the favor of an organization to know something about a particular entity say the market, customer, demand etc more than your competitors. In this regard, it is important for leaders to understand the dynamics of how “data” can be leveraged and translated to make strategic moves.

Moving on to how strategy is likely to continue evolving and adapting for companies in terms of delivering value, BCG explains how that would mainly be around the demand and supply of talent – 12 trends that will shape how organizations operate. In the long term, for any successful organization of the key factors that will contribute to their success as a market-leader will depend on how effectively leaders understand their organization, their people and strengths, market and customer behavior and deliver a value proposition that would be hard to say no to.

References:

1. https://rogerlmartin.com/thought-pillars/strategy

2. https://www.aaltoee.com/aalto-leaders-insight/2016/what-is-strategic-foresight-and-why-it-matters 

Blog #5: The Future of Strategy: Is It Really Going to Change?

We discussed different elements of strategy formation in a lot of detail. What matters when we move forward though is how do we go about implementing it once we return to positions where strategy matters.

The problem is that what we learn in class is applicable now, but no one truly knows what the future will look like. Or is that really the case? We started the course off by discussing Battle of Cannae which took place in 216 BC and yet not much seems to have changed between now and then in terms of what factors we consider before deciding what needs to be done.

The framework of how we approach strategy remains the same: there are environmental forces, industry forces, and company forces that all inform our strategy. What changes, however, is how we approach these elements and what weight we assign to them based on current events and trends.

Based on the BCG and Innosight reports we can see that one of the main changes we observe now is that the way corporations work seems to be dramatically changing and therefore the way in which strategy gets executed in those companies needs to change as well.

One of the common trends that all of the readings for this week mentioned is the importance of structuring the company in a way that gives purpose to its workers. People no longer want to work just to get money in return but to have some higher sense of purpose in life and creating shared value.

Still, looking at the way corporations are currently set up, their goal stands in direct opposition to that trend. Eventually, the ultimate purpose of any corporation is profit maximization for its shareholders, and that might not always be in line with focusing on the greater good.

For this reason, a new, interesting, legal entity has emerged: B Corporations. According to the official definition, this is “a new kind of business that balances purpose and profit. They are legally required to consider the impact of their decisions on their workers, customers, suppliers, community, and the environment. This is a community of leaders, driving a global movement of people using business as a force for good” [more information to be found here]. It is a very interesting trend that enables entities to address these new trends in the world: trying to reconcile business needs with ensuring access to the best employees and keeping them motivated.

With the increase in numbers for B Corporations, this is just one of the emerging changes a person developing strategy needs to look at and consider. Let’s see what the next one is going to look like.

The Future of Strategy in Entertainment

In this week's readings of The Future of Strategy, I found that many of these forces and trends are currently gaining traction in the entertainment industry. Regarding the article “Twelve Forces That Will Radically Change How Organizations Work,” the shifts in resource distribution along with the changes in workforce cultures and values are causing the industry to react.

For example, the shifts in geopolitical and economic power has fueled the global rise of Peak TV international. The term Peak TV refers to the impending content ceiling, where there is finally too much content for audiences to watch. Internationally, audiences have been entering the middle class due to globalization and digitalization. In turn, these audiences are more able to pay for content. As a result, it has been a race between online streamers, traditional Hollywood firms, and local and region firms to provide content.

Similarly, diversity and inclusion has been an evolving initiative across the industry. Only within the past two years ago with #OscarsSoWhite and the #MeToo movements has this risen to become the forefront of concern for major studios. Taking into consideration that in the coming years, the workforce will become more and more racially diverse in the next decade, in contrast to the traditional studio system being predominantly male and white. While diversity and inclusion will change the studio system, it will take much longer for it to impact Hollywood as a whole.

Speaking from my experience working at a B-movie studio, while this sect supports diversity and inclusion initiatives, it is not necessary at the forefront of their concerns. With B-Movies, the focus is the star-power of the talent. The more star-talent you have, the easier it will be able to sell the film’s licensing rights. I remember being in casting meetings where white actors were given the top roles, while people of color were left to the wayside — what frustrated me the most was that the top roles were given to white actors that we clearly knew who would reject the roles on such a small film. Needless to say, the film is still in development / “pre-production.”

Overall, the entertainment industry has a long way to go in order to integrate these new forces; however, when the entertainment industry implements them, they will find that these new forces will ultimately create more value, in comparison to their former practices.