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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 […]
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.
- Approval vs. Disapproval
- Autonomy vs. Control
- Capability vs. Motivation
- Attraction vs. Interest
- 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:
- Compact & Agile Innovation Footprint
- Capabilities & Structures for Communication
- 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.
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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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Customary 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 […]
Customary 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:
- Determine our Distinctive Capabilities in Relation to IT.
- Prioritize our IT Project Portfolio.
- Develop Technology Roadmap of IT Investments and Activities.
- 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.
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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 […]
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:
- Market-backed Analysis
- Darwinian Competitive Review
- 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.
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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 […]
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A 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:
- Does the company have well-defined Strategic Priorities that concentrate on strategic growth and which direct its investments?
- Do the company costs align with the Strategic Priorities? i.e., efficient and effective employment of resources toward the Priorities.
- 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:
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.
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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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– David Coloma, Consulting Area Manager at Cynertia Consulting
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– 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 […]
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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Mergers 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 Deals, Geographic 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:
- Enhancement Deals
- Leverage Deals
- 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.
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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.
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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 […]
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.
* * * *
Rising 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:
- Delineate Purpose
- Plan around Purpose
- Functionalize Segmentation
- 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.
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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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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
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– Roderick Cameron, Founding Partner at SGFE Ltd
Early 2000s saw a change of mind regarding the Globalization of commerce by members of the political and economic arenas. This change of mind was instigated by myths perpetuated against commerce Globalization because of the dichotomy that appeared between existing Operating Models of companies and needs of the emerging markets. These perceived trade-offs that were myths included […]
Early 2000s saw a change of mind regarding the Globalization of commerce by members of the political and economic arenas. This change of mind was instigated by myths perpetuated against commerce Globalization because of the dichotomy that appeared between existing Operating Models of companies and needs of the emerging markets.
These perceived trade-offs that were myths included ideas like choosing between centrally-controlled Operating Model and local responsiveness model.
Proponents of the central model had the view that intellectual power and Innovation capability had to be centralized, all products and services brought in line everywhere, foregoing catering to diverse needs and demands of customers in every emerging market.
The converse view was that in order to have locally applicable distribution systems, proactive Supply Chains, and reduced costs of emerging-market management, it was necessary to devolve the company and operation as a loose federation.
This trade-off incompatibility was addressed by the Hub Strategy where, in place of a single center, companies set up principal office “hubs” in as many of the 20 gateway countries of the world as required—a global corporate structure with no headquarters.
These 20 gateway countries represent 70% of the world population and generate 80% of the world income. The gateway countries include Australia, Canada, France, Germany, Italy, Japan, the Netherlands, Spain, the United Kingdom, and the United States from the developed economies. Rest of the 10 are emerging markets of Brazil, China, India, Indonesia, Mexico, Russia, South Africa, South Korea, Thailand, and Turkey.
This new Business Model covers both the recognized advantages of developed markets and the possibilities of emerging economies. A model that handles decentralization, centralization, existing practices, and possible disruptions not as trade-offs, but as complements.
It is, however, important to understand that for the model to have its full impact, 3 core pillars have to be integrated and pursued simultaneously. The 3 Pillars of Globalization are:
- Customization
- Unity
- Arbitrage
Only business leadership that has taught itself and its teams to be very careful about where to customize, how to develop capabilities, and what to arbitrage are the ones reaping benefits from this model.
Let us delve a little deeper into the details of the 3-pillar Business Model.
Customization
Variation in needs, wants, and cultures of consumers makes it impossible to customize centrally. Providing products and services in a locally competitive manner is therefore central to become a global enterprise.
Customization entails fulfilling the requirements and wants of varied consumers, in areas such as product or service features, affordability, and cultural alignment. Hub Strategy provides the leverage to fulfill this demand by enabling companies to customize only in the 20 gateway countries.
Unity
Unity entails worldwide alignment of the company with, a unified central purpose, a body of exclusive first-rate knowledge, and capabilities that differentiate the company from all others.
Core purpose must be understood in the same manner by all functions of the company, in every geographical location.
Arbitrage
Arbitrage is a methodical initiative that consists of increasing effectiveness and Cost Reduction by discovering materials, manufacturing methods, logistics practices, funds sourcing, or infrastructure that are less expensive.
Interested in learning more about the 3 Pillars of Globalization and its Case examples? You can download an editable PowerPoint on 3 Pillars of Globalization here on the Flevy documents marketplace.
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Site Selection is the practice of choosing a new facility location. It involves measuring the needs of a new project against the merits of potential locations. The practice became popular during the 20th century, as operations of many organizations expanded to new geographies on a national and international scale. Selection of sites has been known to have […]
Site Selection is the practice of choosing a new facility location. It involves measuring the needs of a new project against the merits of potential locations. The practice became popular during the 20th century, as operations of many organizations expanded to new geographies on a national and international scale.
Selection of sites has been known to have taken place due to factors such as:
- Best required skills being available in a particular city.
- Setting up in an off-the-trail location because all operations will be managed remotely.
- Following the trend to set up offices and facilities in a particular city because every company is doing so.
- Factory facilities of the company being close-by.
- Top boss living in the vicinity.
- Person tasked with choosing the site liking the area for a particular feature such as restaurants and the like.
Making such significant long-term choices based on haphazard and indifferent reasons is a blunder. The consequences of the mistake are exacerbated when such sites are being selected in emerging markets.
Site selection, in particular, for R&D, Design, and Engineering, warrants a more serious approach than is given to it. Employing a formalized selection method aids in eliminating sentiment in the concluding decision. The orderly selection procedure is also valuable in conveying the ultimate decision to all involved. Selection criteria and their priority should be agreed to in advance for removal of any partiality from the Site Selection process.
Site Selection, especially when being done in emerging markets, has to be conducted while considering at least 5 factors—or the 5 Cs of Site Selection. Companies ought to identify which among the 5 factors they deem significant and prioritize the factors accordingly:
- Cost
- Capacity
- Capability
- Communications
- Culture
Selecting a site in light of the set priority order, the company has to take into consideration the characteristics of the site in the present time as well as in 3 to 5 years.
Let us delve a little deeper into some of the factors.
Cost
Ideally, Cost Reduction should not be the only factor influencing site selection decisions. If Cost factor is predominant in the decision, then the local standard of living and the changes there to, have to be taken into consideration. Costs in setting up a site include items such as:
- Buying or leasing land.
- Office equipment costs.
- Communication infrastructure and operations costs.
- IT infrastructure costs.
- Employee Training costs.
Companies basing their decisions exclusively on Cost factor rather than what suits their requirements end up paying more than estimated.
Capability
Capability is the ability of the site under consideration to provide the necessary infrastructure, resources, and the work/ operational environment required by the company. Capability includes existence of exclusive skills and expertise that a company explicitly needs.
Also advantageous to capability are nearby R&D, design, testing, and prototyping centers setup by foreign and local companies.
Capacity
Capacity refers to the abundance of qualified skill available on the site under consideration. Capacity comes into play when the company needs rapid scaling up of its operations.
Although the 5 Cs are of extreme significance, there is an additional factor that cannot be ignored—the Customer. Recent advances in technology and communication have further empowered the Customer. The result is that more organizations are seeking to focus on Customer-centric Design.
Interested in learning more about 5 Cs of Site Selection? You can download an editable PowerPoint on 5 Cs of Site Selection here on the Flevy documents marketplace.
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– Roderick Cameron, Founding Partner at SGFE Ltd
Editor’s Note: If you are interested in becoming an expert on Human Resource Management (HRM), take a look at Flevy’s Human Resource Management (HRM) 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 […]
Editor’s Note: If you are interested in becoming an expert on Human Resource Management (HRM), take a look at Flevy’s Human Resource Management (HRM) 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.
Disruptive technology is re-shaping the present-day work environment. Technological advances are making long-standing job roles superfluous.
Digital Disruption being faced by many companies is exacerbating the gap between what employers want their employees to be able to do and what they can actually do. This skills gap needs to be bridged rapidly but with due consideration to the course taken to fill it.
A change in job roles with the help of Upskilling has become necessary in light of the evolving Disruption. Upskilling comprises of acquisition of new and pertinent competencies, made necessary because of the current or emerging work environment. Upskilling adds to the skills the employee already possesses. It is a key component to robust Talent Management and can be a source of Competitive Advantage.
Having a robust Upskilling Strategy in place is the first step towards a successful Upskilling effort. Upskilling Strategy can create new roles for existing employees leveraging their experience.
However, the brass tacks of an effective program to bridge the talent gap are the following 7 tactics to Upskilling which can help employers Upskill their workforce:
- Learning and Development
- Job Rotation
- Job Enlargement
- Job Enrichment
- Peer Coaching
- Peer Mentoring
- Hire External Experts/Specialists
Contingent on the organization’s requirements, based on a skills gap analysis, one or more tactics in combination may be needed to fill the skills gap.
Let us look at some of the tactics in a little more detail.
Learning and Development (L&D)
L&D programs are a common approach to Upskilling and foundational to becoming a true Learning Organization. These programs are dependent on a number of factors. One of the key factors is L&D Strategy, which can be developed based on a number of models. Depending on the model chosen, L&D Strategy development will generally go through the following 4 phases:
- Training Needs Analysis
- Learning objective stipulation
- Training material and approach design
- Monitoring and Evaluation
Methods chosen for Upskilling will naturally vary for every organization due to the variation in L&D strategy and program, for e.g., online courses, online courses along with live lectures, peer coaching with an Upskill track on Learning Management System.
Job Rotation
Job Rotation is another first-rate technique to Upskill. New skills, knowledge, and competencies can be learnt by moving employees between jobs. Employees learn skills, knowledge, competencies of a specific job other than their own.
Purpose of Job Rotation can be preparing backups for a job, exposing future managers to all types of jobs, exposing HR employees to other jobs for better understanding. Job Rotations are generally at the same level and are temporary in nature.
Job Enlargement
Job Enlargement comprises of adding more activities within the same level to a current role. It expands the ambit of a job by spreading the breadth of duties and responsibilities usually within the same level.
Purpose of Job Enlargement is to encourage employees to expand their skill set by intensifying their performances and exposure. Job Enlargement imparts diverse skills to employees and aids their career growth. Added job responsibilities necessitate training and assist in gaining further experience.
Interested in learning more about the 7 Tactics to Upskilling? You can download an editable PowerPoint on 7 Tactics to Upskilling here on the Flevy documents marketplace.
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The purpose of Human Resources (HR) is to ensure our organization achieves success through our people. Without the right people in place—at all levels of the organization—we will never be able to execute our Strategy effectively.
This begs the question: Does your organization view HR as a support function or a strategic one? Research shows leading organizations leverage HR as a strategic function, one that both supports and drives the organization’s Strategy. In fact, having strong HRM capabilities is a source of Competitive Advantage.
This has never been more true than right now in the Digital Age, as organizations must compete for specialized talent to drive forward their Digital Transformation Strategies. Beyond just hiring and selection, HR also plays the critical role in retaining talent—by keeping people engaged, motivated, and happy.
Learn about our Human Resource Management (HRM) Best Practice Frameworks here.
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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 […]
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.
What makes companies great in their industries is sustained above-average Growth.
Conventional approach to Organic Growth has business leaders extending their existing product lines and brands, as well as entering new geographic regions. This conventional Growth Strategy at some point in time starts failing to provide the results required to hold market leadership positions.
Focus-driven Growth is an approach that provides results regardless of the economic environment. The approach demands that the leadership team keep a methodical approach that covers the entirety of the business cycle i.e., from Strategic Planning and Strategic Vision to Strategy Execution and Performance Management.
Outwardly mature businesses can be reinvigorated by making a small number of—but larger—bets and by concentrating unremittingly on implementing a straightforward but forceful vision.
This approach has been successfully tested and has proven its mettle in at least 3 well-known companies, on 3 continents, over a span of 10 years.
Focus-driven Growth demands that the organization progress sequentially through a set of 7 steps.
- Discovery—Through a Discovery process, determine what works and what does not for the organization.
- Strategy—Through the Strategy step, group and prioritize what works for the organization.
- Vision—By outlining a Vision statement, line up organizational efforts behind an unmistakably comprehended goal.
- People—Through this step, place the right people in all functions and give them their required resources.
- Execution—Through Execution, elucidate who does what and transfer decision making closer to customers and consumers.
- Organization—Through the Organization process, manage the Growth initiative by establishing communities and networks throughout the organization.
- Metrics—Through this step, keep a track of Growth with objective yet uncomplicated scorecards.
When taken collectively in the right order, these steps embody a formidable prescription for generating profitable Growth.
Let us delve a little deeper into some of the steps.
Discovery
Every organization has segments of Growth areas. This step entails discovering those areas for further processing. Leadership of the organization should gather in a series of workshops and identify which areas of the business are performing far better than the others. Identified segments become the focus areas of Growth because it is easier to refine and enlarge the successful areas rather than remedy what is not working.
Strategy
Focus areas discovered in the 1st step need to be grouped and prioritized in order to delineate the focused bets that the company ought to make. Focus areas may be categories, brands, geographies, platforms, that are doing well.
A single page preliminary strategy roadmap giving priority for each area results from the above process.
Vision
Outcomes of Step 2 have to be summarized into a forceful yet uncomplicated Vision which serves to align efforts behind a clearly grasped goal.
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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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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:
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– 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
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