Blog #5 The Future of Strategy

We have seen disruptions throughout this decade in businesses: continued growth of Amazon giant, renewed double-digit growth for traditional retailers who embrace e-commerce (i.e. Target, Walmart), the expansion of Uber Lyft to overtake taxis in most cities etc. International students who keep an eye on the U.S. job market at CMU could also notice that the majority of job offerings belongs to software developer, data scientist, AI engineer. There has been a disruption of Internet, digitization and big data that is brought forward by lowered cost and increased performance of computers. Correspondingly, existing companies face a fast-changing environment that promises both risk and reward, and it is important for their strategists to recognize the trends that help shape future plans.

CVS used to devise strategy based on the principle that it should be close to customers, i.e., by occupying positions of stores that locate closest to local communities. It worked out well for the past before 2010s, when people mostly travelled by cars to purchase their daily shopping lists. However, the forces for technology and digital productivity have been shifting. The business model of e-commerce, which utilizes large warehouse and connects to people online has gradually influenced many players within the industry with decreased costs, lower inventory level and higher operating efficiency. CVS has business sectors in both pharmacy and retail. Its competitors, for example, are respectively Walmart and PillPack, an online prescription service startup backed by Amazon. Their adaptions of digitization have been forcing CVS to make following moves nervously. In 2018, CVS slowed its expansion of store openings, stepped into e-commerce developments by rolling out its own online shopping mall and delivery systems.

For such disruptions, CVS would prepare to shift its focus from seeking maximum offline foot traffic into attracting more users into its online digitization platforms. In this way, it is expected to emphasize more on app design, push recommendations to increase the efficiency of online shopping. Respectively, it would prepare to recruit more data scientists who specialize in advertisement and software developers who can build good online platforms. CVS has already been changing slow compared to other traditional retailers, and it is obvious that it needs a different set of expertise to conduct shifting strategies into e-commerce, which undermines some competitive advantage and poses challenges to manage its existing operation, culture and resources. If CVS would not adapt to the online trend, however, it would be long-term strategically disadvantaged in retail sales. Therefore, by recognizing the forces of changing business models that origin from technology change, CVS management has already made a right strategy decision of following up in e-commerce even though it has large advantage in its existing field.

Blog #5

Being a 90’s kid, I have witnessed many changes and technological innovations that are transforming our lives and business today. From the first web browser in 1990 to having everything from shopping or dating online, we have come a long way. These changes in technology, demographics, and the way people think have affected the way we operate in every industry. 

The BCG article by Vikram Bhalla, Susanne Dyrchs, and Rainer Strack mentions that change is not only constant but also exponential in its pace and scope. They have identified 60 major trends that shape the change which they have grouped into 12 major forces. They have identified that there is a change in the demand and supply for talent. These forces are further classified into four categories:

• Technological and digital productivity: automation, big data, and advanced analytics, and access to information and ideas
• Shifts in ways of generating business value: simplicity in complexity, agility, and innovation, and new customer strategies.
• Shifts in resource distribution: a new demographic mix, skill imbalances, and shifting geopolitical and economic power
• Changing workforce cultures and values: diversity and inclusion, individualism and entrepreneurship, and well-being and purpose.  

As a technologically-oriented person, the category I am inclined to dig deeper into is Technological and digital productivity. An article published by The Economist in 2017, mentions that data is the most valuable asset in the world today. Data analytics has been around for many years now. Earlier, the data was modeled into spreadsheets and business decisions were taken based on the inferences that these spreadsheets would help us draw. With the advancement of technology and software systems powerful enough to analyze large datasets, everything changed. These software systems now let us draw conclusions, patterns and give insights into what business decisions would make it successful. 

Big Data is being extensively used by almost all companies today. Some of the uses of data in companies are - customer retention, supply chain management, advertising and marketing, risk management, product creation and development, pricing. 

Considering Airbnb, the company uses data in almost everything they do. They not only use it to improve their application but also use data to determine the hiring practices and customer groups. They use it personalize search results, improve services and change the searches based on demographics. Airbnb has stated that they used to have a basic model where the highest rated house would show first in the result. Due to advanced data techniques, they now tailor their results based on what the customer wants, increasing the user experience. 

Airbnb is just one example. Every company, big or small, produces data and is currently analyzing it. With this changing world, industries need to keep up with the tidal wave of change and deal with it by redefining the way they conduct their business and form their strategy. They should keep in mind the purpose of the organization and manage change in the environment of transformation. 

References: 

[1] https://www.bcg.com/en-us/publications/2017/people-organization-strategy-twelve-forces-radically-change-organizations-work.aspx

[2] https://kipwise.com/a/read/eyJtZXNzYWdlSWQiOiI0YWJhYWU0MC0xODcwLTQ3OWYtYTI5ZC1kZDNlOTVlNjViOGIiLCJhcnRpY2xlSWQiOiJiNWU5NzdjZi1hNWYxLTQ2OTUtYTk5OC01YTBiN2E1MTY0OGQifQ==

[3] https://www.economist.com/leaders/2017/05/06/the-worlds-most-valuable-resource-is-no-longer-oil-but-data

[4] https://www.forbes.com/sites/quora/2018/03/12/how-is-big-data-changing-the-business-landscape/#22fdaecc3db2

[5] https://www.wisdomjobs.com/e-university/business-ethics-tutorial-384/changing-business-landscape-25039.html

[6] https://medium.com/kipwise-sharings/how-airbnb-uses-data-science-to-improve-their-product-and-marketing-6b55e7ede650

Blog Post #5: The Future of Strategy

During this week’s readings, there were two key takeaways I wanted to address explicitly in the discussion post. The first topic, discussed in Creating Shared Value by Michael E. Porter and Mark R. Kramer, highlights how “shared value” economic and social progress has to be tackled using value principles.

For organizations to be successful in their future strategies and endeavors, it is important to keep in mind these shared values discussed by Porter and Kramer. It is the power of the organization itself to identify the economic and social benefits moving forward, and implementing decisions and strategies to fulfill this ideology. For example, companies like Amazon and Apple have been successful for dozens of years due to accurate projections and strategies following accurate economic and social principles. Apple has taken information related to market demand, industry trends, and potential disruptors in the market to create a beneficial and valued economic strategy. Apple has then created concepts that would add social value, without losing the interest and loyalty of its customers. Apple customers, seen directly from the new iPhone models always have quite specific, sometimes harsh critiques of each update of the iPhone, however, Apple never seems to be deterred by this feedback. By staying true to these shared values, Apple is confident in its strategy surrounding the social value of its product, and has seen flourishing consumer response rates for its products.

The article, Twelves Forces That Will Radically Change How Organizations Work by Bhalla, Dyrchs, and Strack supports the above concept of shared values by emphasizing that two crucial forces will revolutionize how companies function: they are “simplicity in complexity” and “new customer strategies”. Simplicity in complexity is the notion of being able to convey the nuances of a company and generate appropriate techniques for its business that will be helpful, especially in the long run. As an example, a commercial camera installation company I worked for a few years ago hired a technical writer to learn the ins-and-outs of the company. By articulating the concrete, fundamental aspects of the company’s operations, the technical writer immediately added immense value to the business by communicating the effectiveness of its business operations and explicitly highlighting the processes it had in place. Additionally, “new customer strategies” expresses how customers want both personalized offerings and environmentally/socially responsible behavior from its supplier companies, due to the ability of consumers having access to an abundance of company data. Thus, this adds even more weight on companies to constantly reflect on shared values, and remind itself of the economic and social reasons behind a certain strategy or method.

Generating future strategy to maintain long-term success resides in shared values and a complete awareness of prominent forces within industry that can alter how organizations operate. If companies stay alert and updated on these particular measures and tendencies, there is a higher chance of overall success moving forward.

References:

1.     Creating Shared Value – Michael E. Porter and Mark R. Kramer (Harvard Business Review)

2.     https://www.bcg.com/en-us/publications/2017/people-organization-strategy-twelve-forces-radically-change-organizations-work.aspx

Blog 5

As discussed in the article "Twelve Forces That Will Radically Change How Organizations Work", organizational complexity can slow down business growth because it relies on adding new teams and people to solve new problems, rather than being lean and pivoting with existing people infrastructure. I have experienced this myself interning at a big company. While big corporations have many resources and no shortage of good people working to solve a problem, it often takes a really long time to complete a single milestone because of the amount of stakeholders involved. That is why, in today's current landscape, I believe small companies are poised to excel and at a faster rate and really drive innovation. Then, big companies can swoop in with an acquisition and absorb the technology.

Unfortunately, this trend actually halts innovation because the reason that the small companies were able to excel so well is due to their lean structure. Speaking of acquisitions, structure is not the only thing that will halt innovation in these cases. As the article mentioned, "Facebook has 'acquihired' the employees of more than a dozen companies- buying these companies as much or more for the employees as for the business itself" The younger workforce has become more aware of things like work life balance and are harder to retain and please. So, in order for big companies to attract talent, they are trying to just buy it out. In some cases, the big companies allow the acquisitions to keep their own culture and area, operating more like a subsidiary under a parent company, rather than integrating fully. A great example of this is Microsofts acquisition of LinkedIn. Now, LinkedIn is not traditionally considered a "small company", but the culture of the two companies is very different. LinkedIn was allowed to preserve its branding, offices, logo, and culture. The company still offers free food and corporate sponsored events like InDays where employees are allowed to come to work or work from home on a side project once a month. These benefits are vastly different from the parent company, Microsoft, but have helped retain the Li employees.

The rise in companies like Zoom have enabled an entirely new way of workplace communication and collaboration. No longer to people need to be in the same room to meet with each other. In fact, many people spend their entire day video conferencing for meetings. This enables companies to search outside their traditional geographic region for talent. The problem that I am seeing is more traditional companies are slower to pick up on the freelance/remote trend, which makes millennials & Gen Z'rs more inclined to choose companies who do enable this type of employment, since they value freedom to move around more.

Overall, I see the future of the workplace benefitting small companies more. However, capital and resource constraints motivate these companies to join or become acquired by bigger companies looking to stay afloat. This, in turn, slows down the pace of innovation.

Blog #5 The Future of Strategy

After planning, analysis, development and implementation, the final step in the entire strategy process is being able to recognize and analyze the future of strategy in general: What are the trends in customers, companies, markets, processes, etc.? And how will these changes and patterns have an impact on your strategy or business? This final step should not be ignored, even if all of the previous steps have been wildly successful. Several successful businesses have risen and fallen over the years, and no company is immune to change, competition and the possibility of becoming obsolete or irrelevant. In order to give a company the best chance of long-term success (and in some cases, survival) the people in charge of overall strategy must continue to monitor trends and attempt to adapt and plan for the future as they see fit. BCG noted 12 “forces” that will impact the future of strategy and work in general, mostly focused around trends in technologies and the workforce themselves. Several of the forces play a role when determining what future strategy a company should focus on, with some forces being more impactful than others depending on the industry, capabilities, etc.

This is extremely important in the world of strategy consulting, something that I am very interested in as a possible future career choice. I mentioned business cases in the past, which do have an element of strategy to them, but I feel like that is a very formal, dry and black and white view of strategy, especially when trying to look at what a company should do in the near future. I much more prefer group cases and client readiness cases, where I feel the dialogue and problems that arise are a lot more organic and therefore more representative of a real-world strategy problem facing a particular client or business.  

During my group case, the objective was to evaluate current performance and capabilities, as well as four possible strategies, and present a unified recommendation to the client. We had to keep in mind the potential ramifications in the future of all four strategies, as well as market trends and competitors and what particular “forces” were at play. We ended up going with a machine learning strategy, which coincides with one of BCG’s forces based on leveraging big data and advanced analytics. In my client readiness case, I had to convince the client to go from a traditional brick-and-mortar business to a more online focused platform. This goes along with two other forces: new customer strategies and employee wellbeing and purpose. Customers drive the markets, and when their choices and preferences change, a company must be agile enough to change with them. Also, as younger generations enter the workforce, they are looking for a much greater emphasis on work-life balance and are therefore harder to retain. One must look at several forces when looking at the future of strategy, but BCG notes the 12 most important and impactful ones, some of which came up during interviews.

Blog #5

Blog #5 – The Future of Strategy

I am of the opinion that the future of strategy is very bright. One of the key benefits of the multitude of information we now have readily accessible through recent technological breakthroughs, is better retention of the lessons of the past. We have seen what happens with and without strategy, we have seen examples of amazing strategy execution and we have seen cases where maybe a bit more strategy would have minimized severe losses. I would consider it very dim to proceed into business in the future without employing strategy. Especially in the current socio-economic climate, where, as HBR insinuated - businesses are being viewed as prospering at the expense of the greater good, leading to government sanctions that can stifle competition and become unprofitable for business. Unfortunately, it’s a vicious cycle that businesses are being caught in as they can never seem to do enough to appease the public outcries. Never has greater tact and poise been required to navigate the teeth of economic activity.

Being strategic means overlooking short means of success, the temporary fixes that sufficed in the past are no longer sufficient in today’s definition of value creation. Furthermore, the pressures of a playing field that is extremely uneven as some dinosaur corporations refuse to conform to a changing landscape and continue to feed off primal capitalistic instincts can make it very hard to compete. Creating an advantage must be done with strategy or else the companies who take the wholesome view of shared value creation risk annihilation.

One key takeaway I would like to shed some light on is the idea that all involved parties, including the government must undertake certain actions to ensure that the creation of shared value is enable rather than inhibited. The creation of shared value must be viewed as a shared responsibility. I think this idea is particularly impressive to me because of my interests in Real Estate Development. I feel like the property development process/lifecycle is one that functions at its best when all involved member pursue shared value. This goes from the government & policy makers making it attractive/financially viable for development to happen. Public works, security and transportation ensuring that value diminishing attributes are minimized in neighbourhoods. Down to even building occupants ensuring that they conduct themselves in a manner that is not detrimental to the shared value.