Editor’s Note:  If you are interested in becoming an expert on Innovation Management, take a look at Flevy’s Innovation Management Frameworks offering here.  This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts.  By learning and applying these concepts, you can stay ahead of the curve.  Full details here.

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Humans inherently connect to each other in an indigenous context, generate knowledge, and develop a product to be disseminated by way of commerce.  Traditionally, Global Innovation practice has seen assembling of people with vital capabilities and essential knowledge via co-location. 

Co-location is the gathering of Innovation specialists into a handful of Innovation centers, domestically and in prime markets.  The innovative products and/or services created by them are then dispersed to markets throughout the globe.

However, as the array of knowledge required for Global Innovation becomes extensive and diverse, co-location has become inadequate.  Today’s dynamic and shrinking world necessitates taking an expanded approach to Innovation Management.

Most of the organizations have not been able to sufficiently internationalize their Innovation Strategies to make use of the multifaceted knowledge scattered world-wide; knowledge necessary for present-day products and services.

Cause of failure is the generally accepted but perceived trade-offs listed below.  The challenge is to surmount these trade-offs, which research has shown is possible. 

  1. Approval vs. Disapproval
  2. Autonomy vs. Control
  3. Capability vs. Motivation
  4. Attraction vs. Interest
  5. Achievement vs. Potential 

 

Most companies leverage their international networks just to engage in mundane tasks, and are unable to make use of opportunities for Global Innovation to gain Competitive Advantage.

Let us go into some detail of these tradeoffs. 

Approval vs. Disapproval

When pitched generally, the idea of taking Innovation to the global level is agreed to by everyone across the organization.  When the task is directed towards a specific entity or specifics of it are assigned, Disapproval ensues.

Autonomy vs. Control

This is the trade-off between granting local autonomy vs. losing centralized control over the Innovation process.  Reason for such interpretation is the inability to consider knowledge and power separately. 

Capability vs. Motivation

A singularity exists where companies with elevated Innovation Capability exhaust their enthusiasm for Global Innovation.

Attraction vs. Interest

Taking Innovation to the global scale often necessitates partnerships.  Such partnerships typically present the predicament that the more desirable the probable partner appears, the less those feelings are reciprocated. 

Achievement vs. Potential

There is a trade-off between the over-emphasis on historical achievements vs. the potential for future achievements, as over-reliance on what has worked in the past will hinder Creativity required for a new environment.

Effective Global Innovation of products and services has the hallmark of unrestricted reciprocity of unstated knowledge between people scattered around the world.  Such an evolution can be achieved by optimizing 3 diverse aspects of Innovation, generally simultaneously.

The 3-prong approach to Global Innovation Strategy that overcomes the Global Innovation trade-off of Knowledge Complexity vs. Global Dispersion comprises of:

  1. Compact & Agile Innovation Footprint
  2. Capabilities & Structures for Communication
  3. Internal & External Collaboration

Universal principles of Global Innovation Strategy keep evolving for making each of these attributes work, based on the experience of numerous entities.

Let us delve a little deeper into the 3 principles.

Compact & Agile Innovation Footprint

This relates to the quantity of tangible sites in an Innovation network.  Only that number of physical sites should be included in an Innovation network which are able to add exclusive and discerned knowledge. 

Capabilities & Structures for Communication

This aspect has to do with overcoming the challenge of distance, time, and culture when taking Innovation to the global level.

Communication is a momentous challenge when there is distance, time, and culture difference.   Developing a culture of open knowledge-sharing is vital for taking Innovation to a global scale.

Internal & External Collaboration

This aspect looks at collaboration protocols for co-located sites versus globally dispersed collaboration.

Interested in learning more about Global Innovation Strategy?  You can download an editable PowerPoint on Global Innovation Strategy here on the Flevy documents marketplace.

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To be competitive and sustain growth, we need to constantly develop new products, services, processes, technologies, and business models.  In other words, we need to constantly innovate.

Ironically, the more we grow, the harder it becomes to innovate.  Large organizations tend to be far better executors than they are innovators.  To effectively manage the Innovation process, we need to master both the art and science of Innovation.  Only then can we leverage Innovation as a Competitive Advantage, instead of viewing Innovation as a potential disruptive threat.

Learn about our Innovation Management Best Practice Frameworks here.

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Str Games2Organizational leadership can draw on 3 Strategic Thinking Games to master Business Strategy and apply in varied scenarios and organizational structures.  The Strategic Thinking Games provide Decision Making models for senior executives to choose from and use as per the situation.

The Strategic Thinking Games are based on mathematics and statistics, particularly Probability Theory, and exhaustive research into the Business Strategy realm.  Probability Theory is actually a branch of mathematics that deals with analysis of random phenomena.  The basic element of Probability Theory is an experiment that can be at least hypothetically repeated under identical conditions, but may lead to different outcomes on different trials.

Each of the Strategic Thinking Games warrants employing a different mindset and decision-making approach to confront the challenges presented by a particular problem.  Executives can apply these Strategic Thinking Models to control their future:

  1. Planning as Positioning
  2. Organization Learning
  3. Constructive Transformation

Let’s discuss these Strategic Thinking Models in detail.

Planning as Positioning

The 1st Strategy game allows the players to make 40 blind draws from a pot holding 25 black and 75 red balls.  It costs $10 per draw—which has to be paid beforehand—and it allows the players the opportunity to win $20 on drawing a red ball but naught on drawing a black ball.  The game imitates a scenario where managers make informed bets about the future based on data and insights into the level of uncertainty encountered.

The Planning as Positioning Model enables the executives to learn about their industry and competition, gauge ambiguities and uncertainties, and select markets that have the potential to generate a positive Return on Investment (ROI).

A classic example of a company operating on the Planning & Positioning Model was the International Telephone and Telegraph Corporation (ITT).  For 17 years, the company was led by Harold Geneen (from 1960 to 1977).   Harold Geneen was unrestricted by any company mission.  He expanded in multiple industries, acquired around 350 enterprises from varied industries, including auto parts, cosmetics, hospitality, insurance, and technology.  As a formal accountant, Harold considered facts as indisputable, final, and a foundation for making strategic decisions.  He would travel to far-flung regions to meet his business unit managers, who were free to make their own strategic decisions but were responsible for their unit’s performance and objectives’ achievement.

Organization Learning

The 2nd Strategy game allows the players to blind draw from a pot containing an unknown mix of red and black balls.  This time it costs $5 per draw.  Players have to bet on either color before each draw.  They can draw up to 50 times, or stop whenever they want, and win $20 if they draw the right ball.  This game imitates a scenario for training managers to dynamically respond to upcoming events with unpredictable degree of uncertainty.

Through the pot filled with balls experiment, it was revealed that when people are given complicated choices, they behave in manners conflicting with their beliefs.  In his famous Ellsberg Paradox, Ellsberg hypothesized that people make illogical preferences in order to avoid ambiguity.  The Organizational Learning Model underlines that in a world full of uncertainties instead of spending too much time predicting the future, planning and positioning, organizations should devise and implement an evolving strategy, take one step at a time, search for viable patterns, and then adjust the course based on results.

An example of successful implementation of the 2nd Strategic Thinking Model is Corning Inc. that embraced Organizational Learning to develop a healthy product pipeline.  The company developed Pyrex, TV tubes…..

Interested in learning more about the 3 Strategic Thinking Games?  You can download an editable PowerPoint on Strategic Thinking Games here on the Flevy documents marketplace.

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10080294288?profile=RESIZE_400xCustomary practice to Capital Budgeting for satisfying needs of Information Technology development and support pursues a fragmented process and considers requests as stand-alone projects, each with its particular business justification.

The approach bases most of the capital allocation on historical expenditure patterns and financial projections.  It handicaps the underlying Enterprise Architecture making it inflexible and layered with unnecessary complexity.  The practice results in inferior outcomes with far greater expenditure.  It also increases the fixed costs of IT operations because of reluctance to retire legacy systems.

Conventional approach to Capital Budgeting for IT projects is too outdated and sluggish for today’s Digital Age, where technology has taken a more strategic role.

In the Digital Age, technology needs to be rapidly developed to support not only the operations of the organization, but also to directly support Corporate Strategy.  Thus, we need a faster, more agile approach to IT Strategy.

Capabilities-driven IT Strategy uses an approach where a comprehensive view to IT is adopted based on unique proficiencies of the company.  It shapes an organization-wide justification for Information Technology.  It also puts IT function and business unit together for developing the IT Strategy.  Capabilities-driven approach highlights the strategic worth of visionary IT leadership, particularly in assisting companies comprehend which strategies are most feasible.

The approach presses the company to base judgment on the manner in which the company creates value, on the investment required for distinguishing capabilities, and on the contribution that IT ought to make.  Capabilities-driven approach centers investment on limited distinctive capabilities that set the company apart.

Quite a few companies have employed such strategies, over a short period of time, and have attained a new kind of IT and operational leadership.

Capabilities-driven IT Strategy is achieved through a 4-phase approach:

  1. Determine our Distinctive Capabilities in Relation to IT.
  2. Prioritize our IT Project Portfolio.
  3. Develop Technology Roadmap of IT Investments and Activities.
  4. Develop Culture and Governance to Support IT Strategy.

The phases are sequential, where in each phase, a fundamental question regarding the role of IT in the organization is answered.

Let us probe some aspects of the phases a little more deeply.

Determine our Distinctive Capabilities in Relation to IT

The question answered in this phase is regarding Distinctive Capabilities of the company—capabilities that sustain the company’s strategic priorities and gives it a Competitive Advantage—and how Information Technology can play a part in improving them. 

Prioritize our IT Project Portfolio

The question answered in this phase is how should the IT projects that will enhance the distinctive capabilities identified in phase 1 be prioritized?

To do this, an IT investment portfolio matrix—based on Strategic Importance and Value Potential criteria—is used that places the IT investment in 1 of the following 4 categories:

  • Invest to Grow
  • Invest to Sustain
  • Invest to Refine
  • Invest to keep the lights on

Develop Technology Roadmap of IT Investments and Activities

The question answered in this phase is regarding the order of investment and activity that will permit the company to achieve the goals set and fill the gaps that need closing.

Develop Culture and Governance to Support IT Strategy

The issue to tackle in this phase pertains to the nature of Cultural and Governance support needed to put this IT strategy into practice.

Interested in learning complete details of Capabilities-driven IT Strategy and its phases?  You can download an editable PowerPoint on Capabilities-driven IT Strategy here on the Flevy documents marketplace.

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– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

10063155661?profile=RESIZE_400x

Mature markets, where the customer base begins to stagnate, call for structured Organic Growth founded on a superior Customer Value Proposition (CVP).  CVP encompasses all that is gained by customers for the money they pay—material as well as intangible.  Customer Value can be articulated by the equation:


Customer Value = (Product Performance + Service Delivered + Image) / Price Paid

 

CVP endeavors can be lacking due to many reasons such as use of incorrect Research Method, misapplication of a correct statistical method, incorrect interpretation of research outcomes in the background of current brand position, market situations, or capabilities system of the company.

Crafting an effective CVP requires insight and experience, but the probabilities of realization escalate by applying a structured process.  Organizations that defy odds and repeatedly thrive with many new-product unveilings lean towards applying a disciplined approach to developing their CVP.  The approach that these organizations follow comprises of 3 distinct practices, blending creative inventiveness and analysis.  The 3 Pillars of Product Launch Strategy are:

  1. Market-backed Analysis
  2. Darwinian Competitive Review
  3. Capabilities-Forward Assessment

Each of the 3 practices has the two-fold effect of being an idea generator as well as an idea sifter.

The practices produce fresh thoughts regarding trends for growth and also assist in determining the products and services to launch and the way to position them.

Let us go a little further into details of each pillar.

Market-Backed Analysis

Market Research merely queries consumers regarding their attitudes, inclinations, and aversions.  Real focus of such research should be on comprehending behavior; such as the trade-offs consumers make when deliberating a purchase.   Market-Backed Analysis is a method of collecting consumer insights that isolates the value imputed by consumers to various components of a product or service, and generates practical information as a consequence.

Darwinian Competitive Review (DCR)

Executives are always on the lookout for new product and service innovations that can distinguish their companies.  New ideas are always more exciting than an innovation that the industry has already introduced.  Darwinian Competitive Review suggests that even a new idea must follow some demonstrated Value Proposition—i.e., proven success somewhere else.  DCR calls for scrutiny of those Customer Value Propositions that have exhibited success across several markets, and of competitors who have already instituted themselves in those markets. 

Capabilities-Forward Assessment

Capabilities-Forward Assessment is a thorough evaluation of what the company already does skillfully, and which novel Value Propositions its Capabilities System will be able to sustain.  Possessing the correct Distinctive Capabilities that are aligned can be the difference between being common place and being great.  An example of the above would be the difference between offering a product at low cost and at the lowest cost.

Interested in learning more about the 3 Pillars of Product Launch Strategy?  You can download an editable PowerPoint on 3 Pillars of Product Launch Strategy here on the Flevy documents marketplace.

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– Roderick Cameron, Founding Partner at SGFE Ltd

OM1Most people believe that the value and impact of the C-level leadership originates from the number of meetings conducted, having the ability to plan for long term, and make key strategic decisions collectively.  However, in reality, the C-level seldom works in unanimity to make collective decisions.  They often have animosities with each other and lack collaboration and mutual trust.

The real impact and success of the top team emanates from the informal and social networks of its members, their resolve to capitalize on those connections for strategic decision making, and their competency to perform well in subgroups created to solve pressing concerns.

Effective C-level leadership is conscious of the value of their informal / social networks and their ability to deal with serious issues.  They organize themselves in a way to work as the nucleus of the organization, which gives them the leverage to promptly act on adversities or opportunities.

Leadership’s Social Network Analysis

C-level’s informal social network enables an organization to draw combined capabilities—in-house as well as the extended network.  Top leadership needs to evaluate the strengths of their social network by mapping their informal associations.  This can be done by conducting surveys, analyzing meetings, phone calls, and emails.

The social network analysis reveals that 90% actionable information comes from this informal leadership network rather than through internal reports and datasets.  These linkages aren’t distributed evenly; some members may be highly networked commanding a major chunk of two-way interactions across the organization whereas others may have a smaller network and lesser influence accordingly.  The analysis also suggests that poor leadership connections lead to failed decisions—whereas enriched networks cause advancement in Innovation and Organizational Efficiency.

To design—or redesign—an effective Leadership Operating Model, organizations need to incorporate 3 key principles in their operations:

  1. Leverage Focused Subgroups
  2. Improve Networking Effectiveness
  3. Manage Conflicts at the Constituent Level

These 3 principles aren’t simple to implement.  It warrants evolving the very nature of how the senior leadership team functions and design a more poised and assimilated Operating Model.

Let’s discuss these principles in detail.

Leverage Focused Subgroups

Senior leadership’s performance cannot be judged solely by its ability to revamp the enterprise’s organogram.  Effective top leadership demands from the team a capability to form peer-to-peer, top-down, and bottom-up relationships; and work in discrete yet linked groups, each of which is focused on solving a unique problem or tapping an opportunity.

Depending upon the circumstances, leaders should adopt any of these modes when dealing with networks.  Focused subgroups work best in 3 discrete modes:

  • Discussion Groups – These groups focus on information flow, comparing notes, and updating each other on progress. The mode does not cater strategic decisions or active leadership.
  • Single Leader Units – In this mode, every executive of the group has clear responsibilities and is accountable to one boss who has the authority over the others to enable speed and efficiency.
  • Real Teams – This subgroup includes executives possessing similar capabilities, who are committed under an accommodating leader to achieve shared objectives.

Networking Effectiveness

It is culturally acceptable at many organizations to utilize time on trivial matters—e.g. unnecessary e-mailing, lengthy approval cycles, long-drawn-out meetings, or to schedule events.  These matters cannot be eliminated altogether however, meticulously planned informal networking between the top team enhances efficiency of leaders to a great extent.

Each member of the C-level should connect the right people together, lead and support subgroups, and maintain associations.  Gaps in informal communication between leaders damage the implementation of organizational strategic plans.  Interaction between top executives is often limited to participation in senior level meetings for information sharing purposes only, lacking collaboration to pursue shared objectives.  To make matters worse, they spend too little a time with their direct reports, employees, or customers.  This detachment creates widespread unease and skepticism.

Interested in learning more about the 3 key principles necessary to design a Leadership Operating Model?  You can download an editable PowerPoint on 3 principles key to design a Leadership Operating Model here on the Flevy documents marketplace.

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– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Editor’s Note:  If you are interested in becoming an expert on Strategy Development, take a look at Flevy’s Strategy Development Frameworks offering here.  This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can stay ahead of the curve.  Full details here.

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10039968067?profile=RESIZE_400xA question faced by many business leaders in today’s dynamic, uncertain, and changing business environment is:  Is our organization “Fit for Growth?”  In most cases, unfortunately, the answer to this question is “no.”  Reasons include the manner in which costs are managed and resources deployed.

The fundamental question needed to be asked is: how to assess whether the organization is Fit for Growth?  Such an assessment is effortlessly possible through answering the following 3 questions:

  1. Does the company have well-defined Strategic Priorities that concentrate on strategic growth and which direct its investments?
  2. Do the company costs align with the Strategic Priorities? i.e., efficient and effective employment of resources toward the Priorities.
  3. Does the Organizational Structure enable achievement of those Strategic Priorities?

Imagining the converse side of these queries makes the picture clearer.  That is, what are the consequences of: Not having clear Priorities, Inappropriate deployment of Costs, Not having a well-designed organization.

Positioning the company to be Fit for Growth requires basing it on the following 3 pillars of Growth:

  1. Set clear Strategic Priorities.
  2. Transform Cost Structure.
  3. Reorganize for Growth.

Setting the company on the 3 pillars enables it to direct investments towards the Capabilities that are most crucial and reduce—or eradicate—other costs. 

Let us delve a little deeper into the details of these 3 pillars. 

Strategic Priorities

Numerous warning indicators are apparent if the Strategic Growth Priorities of a company are not crystalized.

Warning signs such as being unable to keep track of the numerous initiatives that the company has going at the same time.

Senior executives of the company attending lots of unrelated meetings in a day.  Executives being divergent on the most important capabilities of the company and how they relate to the strategic objectives.

Areas that can distinguish the company from its competitors not being properly invested in.

Research has established an important correlation between Capabilities and Strategy.  Capabilities require lots of attention and investment because of their cross-functional effect and limited number.

It is therefore, needed to have clear Priority regarding which Capabilities to invest in.

Cost Structure

Inappropriate Costs Structure is also an indicator of incorrect priorities, particularly the amount spent on non-essentials.  

Organizations aiming to be Fit for Growth make themselves lean and expend money purposefully.  They can maintain their commanding position in such Cost Transformations by pursuing the 12 principles.

Costs are managed for efficiency as well as effectiveness using tools and practices that are usually grouped into 3 categories.

Growth

Organizations, over time, become slow in reacting to opportunities and do not move quickly enough, or are not in-line enough to work in unison.  These are common manifestations, even in organizations that are run and managed well.

Interested in learning more about Fit for Growth?  You can download an editable PowerPoint on Fit for Growth here on the Flevy documents marketplace.

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“Strategy without Tactics is the slowest route to victory. Tactics without Strategy is the noise before defeat.” – Sun Tzu

For effective Strategy Development and Strategic Planning, we must master both Strategy and Tactics.  Our frameworks cover all phases of Strategy, from Strategy Design and Formulation to Strategy Deployment and Execution; as well as all levels of Strategy, from Corporate Strategy to Business Strategy to “Tactical” Strategy.  Many of these methodologies are authored by global strategy consulting firms and have been successfully implemented at their Fortune 100 client organizations.

These frameworks include Porter’s Five Forces, BCG Growth-Share Matrix, Greiner’s Growth Model, Capabilities-driven Strategy (CDS), Business Model Innovation (BMI), Value Chain Analysis (VCA), Endgame Niche Strategies, Value Patterns, Integrated Strategy Model for Value Creation, Scenario Planning, to name a few.

Learn about our Strategy Development Best Practice Frameworks here.

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“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

SCMMajority of pharmaceutical companies are persisting with decade old processes and routines.  They have transactional relationships with suppliers, lack of concerted efforts to progress ahead, and no vision to reap productivity rewards.  The reasons for continuing with these traditional practices include tax regimes, regulatory hurdles, and stable revenues from customers dependent on existing industry offerings.

Disruption—spurred by technological Innovation, fluctuating customer demand patterns, and more agile and creative competitors—has forced the pharmaceutical sector to think of ways to face these challenges, survive, and thrive.  One of the strategic response to this competitive disruption—by leading manufacturers—is to reexamine their manufacturing operations, embracing agile principles, reducing costs, revolutionizing procurement and distribution functions, and striving to achieve Operational Excellence.  Above all, they view their supply chain not as a cost center, but as a source of Competitive Advantage.

The increasing influence of generic drugs is another challenge for large multinational pharmaceuticals.  In the past, multinational companies (MNCs) dominated the market owing to possessing a number of high-market drugs protected under patents.  Patent protection afforded them the leverage to set high prices on each product.  The scenario is fast changing.  Expiry of high-market drugs patents is creating a huge opening for generic competitors and the space is widening compared to the past.

In the past, pharma manufacturers were able to counter the threat to generic competitors by developing new drugs.  However, this is becoming difficult and the new drugs pipeline is shrinking with time.  R&D expenditure has continuously gone up, however, drug approval from the authorities has not kept paced with it.  It has rather declined, straining the MNCs further.

Other disruptive factors include newer distribution methods, public health plans favoring generic drugs over proprietary ones due to cost effectiveness, the newer internet / mail delivery options displacing traditional pharmacy dispensing options.  Pharmacy chains—e.g. Walgreens—have given a leverage to the retailers to negotiate reduction in medicine prices where again generics have an edge over MNCs.

Moreover, the trend of drugs purchased through a formal tender process is increasingly gaining acceptance, adding to the difficulties of large pharma manufacturers.  Additionally, strict regulations are minimizing the cost benefits that MNCs traditionally enjoyed in the past.

All these factors have forced the pharma companies to reorganize their Supply Chains in a more flexible manner to manage complexities, bring in efficiency, and contain costs to compete in off-patent segment with generics.

Reorganization of a conventional pharmaceutical Supply Chain into an Agile, flexible, and inexpensive Supply Chain warrants developing Operational Excellence and Cost Reduction competencies.  This necessitates 5 strategic steps (phases):

  1. Avoid a one-size-fits-all approach to SCM
  2. Develop Agile product design and packaging capabilities
  3. Restructure the Supply Chain footprint
  4. Establish partnerships with 3rd party suppliers
  5. Enhance planning capabilities

Let’s discuss these steps in detail.

Step 1 – Avoid a One-size-fits-all Approach to SCM

Large pharma MNCs typically maintain the Supply Chain of all of their drugs with a single strategy of retaining high inventory and service levels.  Such a strategy can only work for products having a high profit margin, in a static environment.  It is not suitable for low-margin products, contrasting environments, and does not take into account fluctuations in demand patterns.  An appropriate approach is to implement a multiple Supply Chains model based on individual products and markets.

Step 2 – Develop Agile Product Design and Packaging Capabilities

The 2nd step in Pharma Supply Chain Reinvention involves quick distribution of different versions of products to markets based on demand. For low-margin products with high demand volatility, the Supply Chain Management Strategy should be to employ Pack-to-Order system.  The Pack-to-Order approach involves developing a version of a product that could be timely dispatched to several markets of varying demand across the globe.  This approach coupled with Postponement Strategy—where products are packed to order during later stages of production based on regional demand—assists in trimming down the inventory, reducing complicatedness, and enhancing Supply Chain nimbleness to demand volatility.

Interested in learning more about how to reinvent your Pharmaceutical Supply Chain?  You can download an editable PowerPoint on Pharmaceutical Supply Chain Reinvention here on the Flevy documents marketplace.

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“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

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– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Editor’s Note:  If you are interested in becoming an expert on Post-merger Integration (PMI), take a look at Flevy’s Post-merger Integration (PMI) Frameworks offering here.  This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts.  By learning and applying these concepts, you can stay ahead of the curve.  Full details here.

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10005404057?profile=RESIZE_400xMergers and Acquisitions (M&A) generally do not produce the outstanding results that they are envisioned and purported to provide.  Some companies in certain industries, however, demonstrate consistent success when it comes to M&A.

A constant question across all industries, as far as M&As are concerned, pertains to the factors that differentiate organizations with successful histories.  The magic ingredient in the success of these companies is their Corporate Strategy that utilizes Capabilities as the source for inorganic Growth.  Capabilities-driven M&A have managed to raise shareholder value for the acquirer despite the tough years since the economic crisis of the 2000s.  The majority of other inorganic Growth attempts produced a loss of value.

Companies employing the Capabilities-driven Strategy were recompensed with deals that had a Compound Annual Growth Rate (CAGR) average of 12 percentage points greater in shareholder return compared to M&A deals by other acquirers in that very industry and region.

Particular industries, for instance Information Technology and Retail, demonstrated a bigger effect. However, all industries displayed a steady, noticeable, Capabilities Premium in M&A.  Capabilities-driven Strategy is exceptionally beneficial in M&A transactions where, frequently, time window is narrow and the risks elevated.

Capabilities Systems are defined as 3 to 6 reciprocally strengthening, distinguished Capabilities that are structured to hold up and drive Organizational Strategy, integrating people, processes, and technologies to create something of value for customers.

Setting apart likely M&A success factors is accomplished more easily by separating successful deals by their declared Intent consequently, capturing the dominant view regarding purpose of each deal.

Intent can be classified into 5 categories: Capability Access Deals, Product and Category Adjacency DealsGeographic Adjacency Deals, Consolidation Deals, and Diversification Deals.

There is a lot of talk about Fit during M&A discussions.  Fit does not mean introducing an ostensibly linked product or service, plugging a gap in a category, or moving in a new geography—such sorts of acquisitions are frequently unsuccessful.

Fit relates to unity, the benefit that ensues when Capabilities of a company fit mutually into a system, lining up to its market position, and employed to its complete array of products and services.

Deals when cross-categorized by their Capabilities System Fit, fall into following 3 categories:

  1. Enhancement Deals
  2. Leverage Deals
  3. Limited-Fit Deals

Let us delve a little deeper into the 3 categories.

Enhancement Deals

Enhancement deals enable the acquiring company to include new Capabilities so as to close gaps in its present Capabilities System or counter an alteration in its market.

Nearly 2/3rd of the deals studied—in a 2011 study spanning 8 sectors—used Capabilities to good effect, either by way of Enhancement or Leverage. 

Leverage Deals

Leverage deals are where the acquirer makes use of prevailing Capabilities System in their company to handle incoming products and services, customarily augmenting the acquired company’s performance.

Leverage deal are frequently low-risk deals that may not require the acquirer to alter anything concerning its inhouse Capabilities System to make it work. 

Limited Fit Deals

Limited-fit deals are deals where the purchasing company generally ignores Capabilities.  Normally such deals provide a purchaser with product or service that need new Capabilities.

Interested in learning more about Capabilities-driven M&A?  You can download an editable PowerPoint on Capabilities-driven M&A here on the Flevy documents marketplace.

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M&A is an extremely common strategy for growth.  M&A transactions always look great on paper.  This is why the buyer typically pays a 10-35% premium over the of the target company’s market value.

However, when it comes time for the Post-merger Integration (PMI), are we really able to capture the expected value?  Studies show only 20% of organizations capture projected revenue synergies and only 40% capture cost synergies.  Not to mention, the PMI process is typically very painful, drawn out, and politically charged, often resulting in the loss of key personnel.

Learn about our Post-merger Integration (PMI) Best Practice Frameworks here.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

Editor’s Note:  If you are interested in becoming an expert on Strategy Development, take a look at Flevy’s Strategy Development Frameworks offering here.  This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts.  By learning and applying these concepts, you can stay ahead of the curve. Full details here.

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10000176067?profile=RESIZE_400xRising competition and introduction of new ways of capturing large amounts of customer data has necessitated advancement in capabilities of organizations to foresee and fulfill customer needs and wants.

Ever more B2C concerns are going all-out to Design Customer-centric organizations.  Organizations pursuing Customer-centricity depend on some type of Market Segmentation.  Market Segmentations assist in understanding the customer more intimately.

This understanding has to be based on solid data.  Even though the collection of customer data is at its highest of all time, organizations are still finding it difficult to apply the insights being offered by Customer Segmentation to propel Change and enhance Performance.  This is the Customer Data Paradox.  With more customer data, it has ironically become more difficult to derive useful insights from the data.

Data-driven enterprises are sensing that their Segmentation endeavors have been unable to provide anything near the extent of benefit they should.  Cause for such failure is development of Segmentations founded on contradictory Business Purpose; purposes that are not widely comprehended or communicated or cannot be immediately acted upon.

Segmentation is indispensable to the process of dealing with the intricacies of constantly evolving and dividing customer clusters and their diverse demands.  Need for developing a company-wide Operating Model that is able to transform this extensive data into valuable information so as to enable improved Go-to-Market decisions is essential.

This intricate Segmentation process can be handled more effectively by following the 4-phase approach to Customer-centric Segmentation:

  1. Delineate Purpose
  2. Plan around Purpose
  3. Functionalize Segmentation
  4. Control Implementation

 

Segmentation offers clarity and insights regarding customer behavior, tendencies, and proclivities.

Customer Segmentation also amplifies the chances of effectiveness of Marketing and Customer Experience management campaigns, and impelling Brand Positioning and Product Development. 

Let us look at the 4 phases in detail. 

Delineate Purpose

Clearly defining and understanding the Purpose of Segmentation is necessary to set the base for the type of Segmentation effort that is required to be undertaken—i.e., Strategic or Tactical or both.

Strategic Segmentation is applied for all-embracing, enterprise-wide purposes.  Tactical Segmentation is adopted for a far more precise purpose.

Goal is to guarantee that Segmentation results in distinct processes and actions that augment Performance.

Plan around Purpose

Segmentation research needs to be meticulously planned to manifest the Purpose decided, and to make certain that the outcomes are insightful, practicable, and discernable.

Segmentation research has to encompass several dimensions such as behaviors, outlooks, demographics, channel use, inclinations, and profitability. 

Functionalize Segmentation

This phase involves determining changes that will take place in the decision processes and communicating them to the concerned business partners so as to deliberate on and devise adjusted metrics that reflect the new capabilities.

Control Implementation

Means for administering change—directed and customized communications arranged to stimulate understanding, interaction, and approval—are required to be utilized completely.

Interested in learning more about Customer-centric Segmentation?  You can download an editable PowerPoint on Customer-centric Segmentation here on the Flevy documents marketplace.

Want to Achieve Excellence in Strategy Development?

Gain the knowledge and develop the expertise to become an expert in Strategy Development.  Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.

“Strategy without Tactics is the slowest route to victory.  Tactics without Strategy is the noise before defeat.” – Sun Tzu

For effective Strategy Development and Strategic Planning, we must master both Strategy and Tactics.  Our frameworks cover all phases of Strategy, from Strategy Design and Formulation to Strategy Deployment and Execution; as well as all levels of Strategy, from Corporate Strategy to Business Strategy to “Tactical” Strategy.  Many of these methodologies are authored by global strategy consulting firms and have been successfully implemented at their Fortune 100 client organizations.

These frameworks include Porter’s Five Forces, BCG Growth-Share Matrix, Greiner’s Growth Model, Capabilities-driven Strategy (CDS), Business Model Innovation (BMI), Value Chain Analysis (VCA), Endgame Niche Strategies, Value Patterns, Integrated Strategy Model for Value Creation, Scenario Planning, to name a few.

Learn about our Strategy Development Best Practice Frameworks here.

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You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd

opportunity 2Potential opportunities always surround leaders.  It is up to them to pounce on those or regret overlooking them, when someone else takes advantage of them.

Leaders’ personal beliefs and assumptions often clash reality.  The trait is categorized as “confirmation bias” in Psychology, where individuals pick the data that supports their existing opinions and approaches and doubt information which defies their mindsets.  Leadership needs to develop themselves to the level to consider the slight hints of the opportunities surrounding them.

There are 10 hidden strategic opportunities that—exist in all businesses and geographies but—are often overlooked by the leadership due to personal biases.  These opportunities go unnoticed because they are often disguised in the form of anomalies and contradictions to leaders’ existing beliefs and assumptions.  It’s up to the leaders to control personal bias; explore anomalies; and develop capabilities to uncover and seize these 10 Hidden Strategic Opportunities before rivals do.

In this article, we will discuss the first 3 strategic opportunities.

Opportunity 1: Assuming a product already exists, but actually it doesn’t.

Most people assume that a certain product already exists.  Its only when an organization ventures into that segment—with a new value proposition—that people realize that there was a void there.  Such gaps are there in almost all industries, but only visionaries are able to recognize and capitalize on them—through innovation and creative product development.  A number of well-known inventions—e.g., tablet computers—were thought to have already existed, but actually didn’t.

For instance, Kate Brosnahan, accessories editor for Mademoiselle magazine, realized in the 1990s that the handbag market lacked stylish yet economical functional bags.  The market at the time was replete with expensive but impractical bags from top designers and functional bags deficient in style.  Kate left her job and founded Kate Spade LLC, with her partner Andy Spade.  Together they began creating fabric handbags which were practical as well as trendy.  Soon, their products started getting appreciation from customers, including media icons.

Opportunity 2: Customer Experience should be anything but strenuous, costly, or irritating (but most of the time it is).

Fragmented and delayed customer experience results in customer churn.  Annoyance caused by poor Customer Experience presents potential strategic opportunity to win customers by fixing it.  They are able to see the bigger picture and strive hard to relieve customers’ aggravation and offer exemplary Customer Experience.

For instance, creation of Netflix Inc. was the result of Reed Hastings having to pay a fine of $40 as late fee for a rented video cassette he had lost.  Leading organizations, such as Netflix, offer quality offerings and provide their customers seamless, quick, and pleasing experiences.

Opportunity 3. An item is often priced low only because not many people know about it.

Hidden merits of a location offers an opportunity for sharp people to invest in for future appreciation.  One of the reasons for inexpensive resources or items is the lack of their awareness and cognizance of their true potential among people.  When people recognize the potential of a property or resource, its price rises steeply.

Interested in learning more about the other hidden strategic opportunities?  You can download an editable PowerPoint on 10 Hidden Strategic Opportunities here on the Flevy documents marketplace.

Do You Find Value in This Framework?

You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library.  FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.  Here’s what some have to say:

“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market.  They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.  I strongly recommend FlevyPro to any consultant serious about success.”

– Bill Branson, Founder at Strategic Business Architects

“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.  For us, it is an invaluable resource to increase our impact and value.”

– David Coloma, Consulting Area Manager at Cynertia Consulting

“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.  In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!  The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”

– Roderick Cameron, Founding Partner at SGFE Ltd