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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.

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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.

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9920145277?profile=RESIZE_400xEarly 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:

  1. Customization
  2. Unity
  3. 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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“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

DT2Accelerated pace of technological disruption has forced organizations to change.  It has triggered leaders to think of the ways they must adopt to survive in these challenging times.

Organizations are confronting this scenario by embracing digital technologies.  Traditionally, the focus of the organizations in these Transformation initiatives has remained on speed of change.  To get the most out of their initiatives, they are making drastic changes, to include:

  • Creating Agile Teams
  • Introducing Mobile Apps
  • Building Big Data and Analytics capabilities
  • Experimenting with creative Digital Business Models.

Digital Transformation programs are launched with huge fanfare, see success early on, but fail to keep the momentum going.  The issues that plague the sustainability of these initiatives are typically:

  • Aging Technology Infrastructure
  • Incompatible Operating Models
  • Archaic ways of doing business
  • Change-agnostic culture.

Drivers of change for the Digital Leadership have changed significantly over the years.  There is an increased focus on building scale when executing Digital Transformation.  Leaders have realized that quick Decision Making is not the only element required for successful Transformation.  To achieve its full potential, they need to create differentiated offerings and scale the most viable initiatives across the organization to create value.

Traditional organizations have started following the footsteps of digital disrupters like Amazon and Tesla.  They are implementing new digital services and adjusting their operations.  However, typical hurdles—e.g., old enterprise systems, bureaucratic red tape, delayed decision making, and segregation between IT and business units—make them slip back into the outdated ways of doing things.

Sustainable Digital Transformation involves building not only the technology infrastructure but also revisiting the operating model.  Successful Digital Transformations essentially involve embracing 4 key strategies to enable an ecosystem that encourages change to stick as well as scale:

  1. Create a strong Digital Foundation
  2. Integrate and consolidate the Digital Ecosystem
  3. Front-end to back-end approach
  4. Create a new Business Model

Let’s delve deeper into these strategies.

Create a Strong Digital Foundation

Manufacturing and pharmaceutical industries are the major sectors that employ this strategy.  The typical state of affairs in organizations implementing this strategy is such that they are in need of developing new digital capabilities from scratch to tackle nimble rivals who are churning out novel value propositions using digital tech.  These companies are burdened by dated tech infrastructure, sluggish decision making, and dated business models.  The risk of disruption to these businesses is growing but it hasn’t challenged them to transform drastically.

To them, building a digital foundation warrants acquiring novel foundational capabilities.  Their approach should be to start implementing and managing small changes one step at a time.  For instance, building a smart technology architecture with advanced Big Data, Analytics, and predictive modeling capabilities.  This should be followed by testing prototypes of the new model to prove their worth before implementing a full-blown execution.

Integrate and Consolidate the Digital Ecosystem

This strategy has gained traction most in organizations from the Consumer Products industry.  These organizations are typically marred by scores of fragmented IT systems running in different parts of the organization.  There is a general inability to prioritize the most viable projects and scale them.  The need to reform and rapid deployment of Digital Infrastructure is critical for survival.

The approach to Digital Transformation in these organization should be to establish a central management position to manage the initiative and streamline dispersed technology landscape.  This entails revising the technology infrastructure and operating model, deploying a unified IT platform for gathering and storing customer data, establishing a common data repository accessible to all units to recognize customers’ needs, and creating a culture that encourages innovation, acts on creative ideas, and refines them through experimentation and advanced tools.

Interested in learning more about the other strategies to enable Digital Transformation?  You can download an editable PowerPoint on Sustainable Digital Transformation here on the Flevy documents marketplace.

Did 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