Monday, February 27, 2012

Does America Really Need Manufacturing?
by Gary P. Pisano and Willy C. Shih
HBR, March 2012 Magazine

This is a fascinating article that discusses the underpinning issues that should be determining your sourcing decisions in the context of promoting innovation and growth. The posting should wet your appetite to read the full article. Note, ALTHOUGH THE TITLE FOCUES ON AMERICAN COMPANIES, IT IS GERMAIN TO ALL COMPANIES.

Too many American companies base decisions about how to source manufacturing largely on narrow financial criteria, never taking into account the potential strategic value of domestic locations. Proposals for plants are treated like any other investment proposal and subjected to strict return hurdles. Tax, regulatory, intellectual property, and political considerations may also figure heavily in the conversation. But executives, viewing manufacturing mainly as a cost center, give short shrift to the impact that outsourcing or offshoring it may have on a company’s capacity to innovate. Indeed, most don’t consider manufacturing to be part of a company’s innovation system at all….… Part of the problem is that it’s devilishly difficult to determine when manufacturing is critical to innovation and when it can be safely outsourced to lower costs and reduce capital outlays. In this article we’ll provide a framework that will help business leaders and government policy makers navigate this issue. Our hope is that it will lead to better sourcing decisions that will reinvigorate America’s innovation-driven economy.…. How can you tell if moving production halfway around the world, far from R&D operations at home, will hurt a company’s ability to innovate over the long term? You need to look at two things: the ability of R&D and manufacturing to operate independently of each other, or their modularity; and the maturity of the manufacturing technology.,,,… Viewed through the modularity–process maturity lens, relationships between manufacturing and innovation fall into four quadrants

Thursday, February 23, 2012

How Companies Learn Your Secrets

This is a MUST read article!!

The article reviews the importance of people’s habits in driving their buying decisions. The major stories involve the Target department store and P&G (both B to C)  but I believe the concept of habits driving purchase decisions is as critical in B to B situations.

….. The reason Target can snoop on our shopping habits is that, over the past two decades, the science of habit formation has become a major field of research in neurology and psychology departments at hundreds of major medical centers and universities, as well as inside extremely well financed corporate labs. “It’s like an arms race to hire statisticians nowadays,” said Andreas Weigend, the former chief scientist at “Mathematicians are suddenly sexy.” As the ability to analyze data has grown more and more fine-grained, the push to understand how daily habits influence our decisions has become one of the most exciting topics in clinical research, even though most of us are hardly aware those patterns exist. One study from Duke University estimated that habits, rather than conscious decision-making, shape 45 percent of the choices we make every day, and recent discoveries have begun to change everything from the way we think about dieting to how doctors conceive treatments for anxiety, depression and addictions….
…. There is a calculus, it turns out, for mastering our subconscious urges. For companies like Target, the exhaustive rendering of our conscious and unconscious patterns into data sets and algorithms has revolutionized what they know about us and, therefore, how precisely they can sell.

Thursday, February 16, 2012

Using Market Footholds to Confuse the Competition
A niche in a new market can be a base for growth — or a way to keep rivals off guard.

Title: Competitor Analysis and Foothold Moves
Authors: John W. Upson (University of West Georgia), David J. Ketchen (Auburn University), Brian L. Connelly (Auburn University), and Annette L. Ranft (Florida State University)
Publisher: Academy of Management Journal, vol. 55, no. 1
Date Published: February 2012

I thought this was an interesting article well worth the read. It talks about a different type of approach than the norm of positioning your company/business/product vs. competition.

Establishing a foothold in a new market can be a potent weapon against rivals, according to this paper, which finds that the value of footholds far exceeds their small size and the costs of their maintenance. The reason, this paper says, is that footholds deter competitors and make it more difficult for them to predict their rival’s next move. 
The authors define a foothold as a tactical or strategic move in which a firm purposefully establishes a small position in a market — by branching out into an untapped geographic area, for example, or introducing a new product. From the foothold, firms can attack (by acquiring a smaller firm, launching a promotional campaign, or simply opening more branches, for instance), withdraw (by stopping the sale of products or services in the market), or maintain a wait-and-see approach. 
IKEA’s strategy for international expansion is an example: By opening a single store in each targeted country, IKEA has a foothold for establishing its unique brand in the market before spreading to more locations….. 
…..Establishing a small position in a new market can give firms the ability to affect the behavior of their rivals and gain a competitive advantage that isn’t always about aggressive expansion. Although costly to maintain, footholds can pay off by discouraging aggression from competitors and by keeping them guessing about a company’s next move. 

Tuesday, February 07, 2012

Facebook’s Mobility Challenge
Published: February 5, 2012

Route-to-market issues—how to get to the target customer group—are one of the most critical but yet least considered strategy decisions. If affects most aspects of your Business Design: you really can’t tailor an offering to a target a customer group if you can’t get to them cost effectively with your message/offering and, as shown in this article, it can have a huge impact on profitability.

…..Amid the jaw-dropping financial figures the company revealed last week when it filed for a public offering was an interesting admission. Although more than half of its 845 million members log into Facebook on a mobile device, the company has not yet found a way to make real money from that use….
…..In a world that is rapidly moving toward an era of mobile computing, this is a troubling issue for Silicon Valley’s brightest star — particularly since much of Facebook’s growth right now is in countries like Chile, Turkey, Venezuela and Brazil, where people largely have access to the Internet using cellphones. Facebook is not the only company struggling to translate the success of its Web site to mobile devices, where screen space is at a premium and people have little patience for clutter or slow loading times. It is a problem that plagues companies as diverse as news publishers and the streaming radio service Pandora, and it is likely to loom larger….
……“It’s a huge Achilles’ heel for them,” said Susan Etlinger, a consultant at the Altimeter Group who advises companies on how to use technology. “There’s clearly a movement toward more social media consumption on mobile devices, and Facebook doesn’t have a revenue strategy for that shift. They haven’t figured it out yet.”