Business Strategy Navigation 2009
June 25, 2009
Welcome Back. We've got lots of in depth business strategy to share with you today.Let us Consider:
Our corporate strategy research has determined that firms that lack acceptable profitable growth are driven by one or more of these five issues:
1.Lack of Profitable orientation
2.Not enough focus on customers to drive the competitive advantage
3.Lack of cross-functional, cross-border, intra-hierarchical teamwork
4.Lack of sense of urgency
5.No shared vision or common strategy planning
This business strategy report expresses a solution for the strategic planner to solve these problems.
Every American third-grader is taught to chase her dreams—if not by Oprah, then (surprisingly) through the oft-dreaded academic discipline of social studies. Textbooks regale children with stories of the great explorers (Cortés, Drake, Erickson), whose adventures are celebrated with pomp and circumstance. When Columbus Day meant a class popcorn party, the explorers’ heady determination was the stuff of heroic myth. As Columbus Day became less important—coincided with the high school marketing test or, later, the marketing managers’ meeting—so did the explorers. Our new heroes are successful entrepreneurs who command wealth from mahogany desks instead of wresting it from foreign mud. Upon reflection, though, it becomes apparent that in a New Economy as vast and exhilaratingly uncertain as the (old) New World, today’s successful manager more resembles explorers half a millennium away than s/he does the CEOs of two decades ago.
Consider Ferdinand Magellan, who piloted the first global circumnavigation. Magellan’s ambition drove him to forsake his unsupportive Portuguese government, relinquish military titles, and bargain for patronage with the king of rival Spain. Having found support, Magellan set his sights on reaching the Spice Islands, a globally coveted commodity, via a circuitous and uncertain route around South America. In September of 1519, Magellan left Spain with five ships, 250 men, broad sailing experience, a general plan, and a fistful of chutzpah. While at sea, he encountered and over-came mutiny, debilitating storms, malnutrition and scurvy, the loss of ships and theft of supplies, and ambi-guous direction. In order to discover and navigate the now-famous (and globally indispensable) Strait of Magellan, the crew tried inlet after inlet without success. 38 backbreaking days after its discovery, the icy-cold Strait coughed them into the Pacific Ocean, a vast field of adventurous potential. Magellan’s navi- gational strategy was simple: goal in sight, he set off with a general master plan—and trusted his knowledge and intuition to guide him through waves of uncertainty.
The New Economy and the New World may not be physically identical—but in an age when knowledge is gold and markets depend on the windy whims of innovation, a comparison between managers and Renaissance explorers is apt. It was the explorers’ well-defined missions and plans, combined with capitalization on uncertainty, which facilitated profitable serendipity. Like Magellan, every company needs a strategic navigational tool that’s strong but flexible; that impels, inspires, and self-enforces; and that encourages creativity, adaptability, and surprise. Next week we will discuss the State of the Environment and How to Get Started.
Competitive Advantage
June 22, 2009
Long gone are the days of reticence in the public display of knowledge. To the contrary, corporate strategy takes into account the technological trappings of the Information Age (see the Gates estate) have placed knowledge at a premium. Paparazzi-plagued computer programmers and $150,000 college degrees render the materials-oriented Industrial Age as obsolete as a decorously hidden pocket watch. In a world sliding toward Silicon Valley, time is not money, physical resources are not money—money itself, even, isn’t money. Knowledge is money, and knowledge is king. This is not unique to the sprawling IT industry. Every corner of the business strategy belongs to the knowledge culture. Every savvy strategic planner must learn to manage the world’s best wealth-creating resource—which happens to be almost inaccessible to traditional management.
Definitions
Two behemoth catchphrases—and industries in their own right—have grown from our obsession with knowledge. Each is central in
strategy management for any twenty-first-century enterprise.
Intellectual capital is “intellectual material that has been formalized, captured, and leveraged to produce a higher-valued asset,”i or “proprietary information and knowledge that lowers costs or increases customer value.”ii Intellectual capital, analogous to physical or structural capital, is any intellectual resource in your company that already is or could become an asset. This includes, but is certainly not limited to, employees’ personal knowledge; human-technology interfaces; databases; patents; archived information; and industry secrets.
Knowledge management is how intellectual capital is assessed, stored, maintained, and put to good use.
It begins as a mindset; it is first “the conceptualizing of an organization as an integrated knowledge system,” and then “the management of the organization for effective use of that knowledge” (emphasis added).iii Notice: knowledge management is management of the organization—not of the knowledge itself. It is not Orwellian invasiveness. It ystematically recognizes the personal nature of knowledge and encourages knowledgeable people to use their energies well. Next weeks we’ll continue with ‘Why intellectual capital’?
Customer Satisfaction
June 11, 2009
Does your business strategy created in your strategic planning process create competitive advantage and therefore customer satisfaction?
You skipped dinner last night to apply the final touches, and you’re not
disappointed. The frame is a masterpiece, the mounting ingenious. You
imagine the customer blinking madly to check his tears, solemnly promising
his eternal loyalty to you and your business. When he arrives and you show
him his treasure, his face changes, indeed: he crinkles his eyes and tilts
his head momentarily before slapping his Visa on the counter, mumbling “thank you,” and stalking out the door. You spend the next few hours lamely playing the same guessing game you used as a child to divine your mother’s mood: what did that face mean? Was he thrilled? Touched? Unpleasantly surprised?
Will you be hearing in three days from his attorney?
Customers – not you – ultimately make or break your business.
Far too often, we find ourselves here: running our businesses according to our expertise and intuition, celebrating our successes, swallowing our
obvious failures, and hoping against hope that most of our customers will be
back. This guesswork, though, is both needless and detrimental. There
exists a reliable method to ensure and increase your customers’ satisfaction
with your work: study it.
Power in small business has slowly shifted from those with the expertise to
those with the credit card; your customers —not you— ultimately make or break your business. Tom Friedman of The New York Times explains this shift in terms of the “democratization of information,” the availability of myriad alternatives to every contemporary customer. Whereas in an industrial economy the average person knew only of the framing shop or bookstore down the street, our present era of globalization gives the average Joe access to your shop and three others in the area, as well as an infinite number of Internet solutions. Customer loyalty, then, has eroded: a customer may love the work you did for him last month, but if he finds a lower price or faster turnaround with your (local or global) competitor, he’ll likely have no compunction about taking his business elsewhere. (Consider your own purchasing behavior. To how many businesses do you truly consider yourself loyal—regardless of price increases, occasional mistakes, and idiosyncratic service?)
