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January 26, 2008

Three Questions You Need to Ask About Your Brand - by Keller, Sternthal, and Tybout

Have we established a frame of reference?

 
  • The frame of reference signals to the customers they goal they can achieve through using the brand
  • The frame of reference may change as the product goes through its lifestyle, and as new competitors enter the market
  • Example: Fed Ex as an overnight delivery service, then as a speed and dependable overnight service, now more focused on tracking capabilities (to compete with email and faxes that are often lost)
 

Are we leveraging our points of parity?

 
  • Think through the points of parity your brand needs to have with competitors if it is to be accepted
  • New brands – normally points of parity are thought of new brands
  • Brand extensions – can be dangerous, is your point of differentiation go against the minimum requirements for the consumer to recognize you as a legitimate brand in this business
  • Established brands – over time points of differentiation becomes points of parity
 

Are the points of difference compelling?

 
  • Three types of difference:
    1. Brand performance – how it meets the consumers functional needs based on intrinsic properties of the brand, does the product do what it says?
    2. Brand imagery – when choices are based on experience, who uses the brand and under what circumstances?
    3. Consumer insight associations – when imagery and performance is less attractive, show you know the customer

Don’t:

  • Build awareness before position
  • Talk about what customers don’t care about
  • Invest in differences that are easily copied
  • Focus too much on the competition
  • Reposition unless absolutely needed
 

Must make sure position is internally consistent at any point in time.

 

“Ladder up” – first round describes concrete attributes, second round how those attributes change the users lifestyle, third round how better lifestyles lead to happiness

 

“The big idea” – identify the main idea and over time show a variety of attributes that imply the benefit

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September 29, 2006

What Leaders Really Do – article by John Kotter - blog by Karl Janowski

“No one has figured out how to manage people effectively into battle; they must be led”

 

Leaders – coping with change

  • Set a direction and create visions – broad based thinkers willing to take risks
  • Aligning people – empowering them, getting them to believe the vision
  • Motivate and Inspire – the more change the more inspiration needed 

Management – coping with complexity

  • Plans and budgets – planning is designed to produce orderly results, not change
  • Organizing and staffing – create human system like architecture
  • Controlling and problem solving – fast and efficient solutions to problems

This was a Harvard Business Review article that I read published in Leadership Insights a collection of 15 HBR articles. Although it talked about what leaders "do" it does not talk about one of the main Peter Senge leadsership topics: a leader leads through commitment to the vision, a manager manages though compliance. I think this is a key distinction that is maybe implied but not stated in this article.

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September 14, 2006

The Manager’s Job – article by Henry Mintzberg - blog by Karl Janowski

HBR Article

Do managers just plan, organize, coordinate, and control? 

The author of this article doesn’t believe so. After conducting studies of managers in the work place the author has come to some other conclusions, classifying the managers role into three main categories:


1.)    Interpersonal Roles – a key to authority

·        Figurehead – ceremonial duties of someone with authority

·        Leader – motivate and encourage employees

·        Liason – making contacts outside the vertical chain of command

2.)    Informational Roles – comes from interpersonal relationships

·        Monitor – scanning the environment

·        Disseminator – letting subordinates in on information

·        Spokesperson – communication outside of the unit 

3.)    Decisional Roles – comes from information

·        Entrepreneur –improve the unit or group

·        Disturbance Handler –fix problems and handle pressures

·        Resource Allocator – deciding who will get what

·        Negotiator – making tradeoffs between two things 

The managers’ effectiveness is related to their insight into their own work which is an integrated job of the roles given in the list above.

“Influence is seen in the leader role, formal authority vests them with great power; leadership determines how much of it they will realize”


My Thoughts: It is interesting to see a article almost solely on management in a leadership compellation. I wish this article talked more on the differences between leadership and management. It sort of falls into the trap of thinking that all managers are leaders of their subordinates. Anyway I would summarize this as: managers’ personal contacts lead to information which leads to decision-making. Managers must do all three. I am not sold on the “leader” part without a further discussion of the difference between a manger and a leader.

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June 27, 2006

The Right Game: Using Game Theory to Shape Strategy - article by A. Brandenburger and B. Nalebuff - blog by Karl Janowski

Two main types of games:

  • Structured (rules based)
  • Unstructured (open market)

Business is a combo of both.

 

In unstructured actions you cannot take away more than you bring to the table.

 

Egocentric – focus on your position in the game

Allocentric – focus on other’s positions in the game

 

Business strategy is about shaping the game you play as much as playing the game (think of all the companies that have lobbied the government to “change the rules” of the game)

 

Business is not a war, there are many times you may op for a win-lose strategy but several other companies have made plenty of money working on a win-win strategy.

 

Three advantages of Win-Win

  • More opportunities because less explored
  • Easier to get cooperation
  • Imitation helps

Value Net – (this sounds a lot like Porter's Five Forces)

  • Customers and Suppliers,
  • Complementary Products and Substitute Products

Five Elements of Game Theory (PARTS)

  • Players
  • Added Value – what each player brings to the game
  • Rules – how the game is played
  • Tactics – moves that shape how one plays the game and perception of the game
  • Scope – boundaries that sometimes can be changed 

Changing Players – Coke and Pepsi example with Nutrasweet (they created a rival to Nutrasweet just for negotiation purposes, they didn't contract with the rival, the rival should have asked Pepsi and Coke to pay them just for exisiting), Pay me to play

 

Create Cheap Complements – Software companies that let any company create hardware

 

Changing Added Value – raise your own value (or protect your current value) or lower others (card match game where you burn matching cards to raise the value of yours - Did I read something similar in a judo-economics article?)

 

Change Rules – like “one price to all” rule , or have “last bid” clauses in contracts

 

Tactics: Change Perception – show the effects of a price war by starting a small one to prevent a big one

 

Change the scope – Nintendo didn’t follow Sega quickly into the 16-bit market so it could prolong its profits in the 8-bit market

 

Traps to Avoid

  • Thinking you can’t change the game
  • Thinking your change has to cause a win-lose situation
  • Thinking you have to do something that others can’t do
  • Failing to see the whole game
  • Failing to think you’ll need to change the game again after you’ve done so already

This article was published in Harvard Business Review (R95402).

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June 20, 2006

What is Strategy - article by Michael Porter - blog by Karl Janowski

 “Strategy is the creation of a unique and valuable position, involving a different set of activities (from your competitors)”

 “The essence of strategy is choosing to perform activities differently than rivals do” 

Operational Effectiveness – performing similar tasks better than your competitors

Strategy – performing different tasks or similar activities in different ways than your competitors 

Main Strategies 
Generic Strategies: Low Cost Leadership, Differentiation, Large or Small Segment Focus

More Detailed Versions of Generic

  • Variety-based positioning – producing a subset of products or services (Jiffy Lube oil only), does not rely on customer preferences
  • Needs-based positioning – targeting a segment of customers (Ikea – all home furnishings for customers) ), does not rely on customer preferences
  • Access-based positioning – targeting customers who need different activities to reach them
 
Porter’s Five Market Forces
  • Threat of new Entry
  • Intensity of rivalry among existing market
  • Pressure from substitute products
  • Bargaining power of buyers
  • Bargaining power of suppliers

*Many people add that government is the sixth force

Productivity Frontier – a curve of buyer value (Y axis from low to high) versus cost position (X axis from high to low)


Because of rapid diffusion of best practices operational effectives does not span the test of time. It is not a strategy!

 
 

Player 2

 
 

MAKE Product

Outsource

Player 1

MAKE Product

MM

MO

Outsource

OM

OO

 

I like to think of this in Game Theory terms. If there are two companies and both have the decision to make or outsource Product X. If they both choose to make Product X themselves then the only advantage Player 1 can gain is to be more operationally effective than Player 2.  Similarly if both outsource the one that finds the best partner wins. In both of these cases it is operational effectiveness (which is easier to copy) rather than strategy that determines the outcome of the competition (in game theory this would be clear by the payout).

 Two Types of Imitators
  • Reposititioners – move to a new position
  • Straddlers – hold same position but change to match benefits

Tradeoffs prevent imitation by creating the need for choice between two positions

Tradeoffs Occur for Three Reasons

  • Reputation and Image
  • Activities themselves
  • Limits on internal coordination and control

Quality versus Cost tradeoff is only false when you are behind on the productivity frontier or the frontier shifts outward

“Strategy is making tradeoffs in competing”

“Strategy is choosing what not to do” - Without tradeoffs you could hold all positions at the same time. Tradeoffs therefore dictate strategy

Strategy fitness – all tradeoffs support the same position, activities support each other, lists like “core competencies”, “critical resources” and “key success factors” normally go against fitness 

Three Types of Strategy Fitness

  • Simple Consistency – among activities (e.g. all are aligned on low cost strategy)
  • Reinforcing Activities – activities make the other activities stronger
  • Optimization of effort –

 “Strategy is creating fitness across a company’s activities”

What Prevents a Sound Strategy, (decreases fitness)

  • Misguided View of competition
  • Organizational Failures
  • Desire to grow – forces broadening of position over deepening it

Many go after operational effectiveness because it is tangible and measurable

Extend your uniqueness

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May 26, 2006

Dreyfus Model of Skills Acquisition- Web - blog by Karl Janowski

Hubert Dreyfus has five levels of skill: 

1) Novice - lacks sense of the task, learns rules to follow

2) Advanced beginner - more rules, uses some situational elements that are learnt from experience but the use can't formalize them

3) Competent - recognise many context-free and situational elements but can get overwehlmed at the number of rules, understands strengths and weaknesses

4) Proficient - mostly performs tasks intuitively without analytical thought

5) Expert - always performs tasks intuitively, stops for relection on intutituion

So the key here is to improve communication by understanding skill level, when communication seems hard, think to yourself "What skill level am I?" "What skill level is the person that I am talking too?"

http://www.cornetdesign.com/2006/03/dreyfus-model-experiment.html

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Customer Value Propositions in Business Markets - article by J. Anderson, J. Narsus, and W. Van Rossum - blog by Karl Janowski

How to show your customers the value of your product in your sales pitch

3 Types of Propositions:

  • All benefits - you give the customers the list of all your benefits of your product, the more the better, answers the question, "Why should you buy our product?" little knowledge of their true needs is needed
  • Favorable points of difference - compare yourself against the best competition, show all the favorable points of difference between you and your competitor, answers the question "Why should you buy our product over our compeititor's product?
  • Resonating focus - one or two points of difference that delivers highest value to customer, you need to know your customer's main needs and main compeititor's value, answers the question "Why buy their product when ours has your most important needs in mind?"

Points of parity - you are equal to your competitors

Points of difference - you are different than your competitors

Substantiate Customer Value Propositions - use word equations to show your value

Value Case Histories - show proof of value through documented studies

Document customer value - to use for next customer, create "value calculator"

Use value proposition as a business strategy

This article was published in Havard Business Review.

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May 19, 2006

The Forgotten Strategy - article by Pankaj Ghemawat - blog by Karl Janowski

This article was published in Harvard Business Review. 

The normal Chinese strategy is to create a mix of local products and services and global products and services to sell in China. The essence of the strategy is to determine the mix.

The forgotten Chinese strategy is to exploit the differences betweem regions. To do this there are four forms of arbitage:

  • Cultural Arbitage - opportunities that pop up because of local cultutre, example: fast food chains that serve both local and American food in foreign countries
  • Administrative Arbitage - legal and political differences open up opportunities, example: tax differences
  • Geographic Arbitage - although the world is getting smaller there are still several ways to use geographic arbitage as a strategy, example: crops or resources found only in one area  
  • Economic Arbitage -  exploit certain economic conditions, example: cheap labor in a country

At the same time companies expoit the differences they should also look to exploit the similarities between regions

Complex Aggregation Strategies - align business model not by having country by country strategies but by regional or business strategies and build global networks

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Trouble in Paradise - article by Katherine Xin and Vladmir Pucik - blog by Karl Janowski

This article was published in Harvard Business Review

This article gives a fictitious story about Mike. Mike is a manger in China who is having problems with the equity joint venture that he has inherited. His home company is not happy with the 4% ROI that they are getting out of the venture. They want to update equiptment and layoff employees to create higher quality products to pursue 20% ROI. Homebase assumes Mike will make this happen. The Chinese partners do not want to layoff anyone, they want to expand. At a dinner the Chinese high level manager gives a speech that sets the expectations that they will expand. What should Mike do? Four authors give their opinions.

Summary of what Mark should do 

Mike needs to determine what the goals of the EJV were when they started and if the goals are still true or if the long term goals of each member of the EJV are different. Is this relationship worth saving?

Mike needs to be honest when communicating with his homebase.  

Mike needs to realize that relationships drive business in China and that senior management from back home needs to be a part of forming these relationships.

4% ROI is pretty poor, what is the problem: the market, the venture, or Mike?

 

 

 

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May 17, 2006

Entering China: An Unconventional Approach – article by Wilfried Vanhonacker - blog by Karl Janowski

This article was published in Harvard Business Review

EJVs are the conventional way to enter China but often they do not give corporations what they need to succeed. 
 
WOFEs are the way to go as long as companies can find guanxi (political and personal connections).
 
China more concerned with what companies bring to the deal not how the deals are constructed
 
Every Chinese company operates under local, regional, and national government regulations which all have their own agendas, not many EJV partners can bring a national presence to the table
 
Conflicting Perceptions
Most Chinese companies lack experience to keep up in fast pace market
Companies do not know how much technology to share in EJVs
Many Chinese seek shorter-term profits (than their partners) due to worry that capitalism may not last

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May 16, 2006

To Reach China’s Customers, Adapt to Guo Qing – article by Rick Yan - blog by Karl Janowski

This article was published in Harvard Business Review.  Guo Qing – “Chinese characteristics”

The Chinese Consumer

Uses consumption as a pleasure

Depend on reputable brands, Are reluctant to pioneer new brands

Have time to browse, “never make a purchase until you have compared three shops”

Don’t like promotional gimmicks, use official media

Like powerful sounding names

Want details about the product

Believe cheap products are never good

Examples of Guo Qing

½ of China’s premium products go to the only child of the family

Prime shelf space is unnecessary, Chinese consumers will hunt for products they've heard of and distrust many western ways of promoting products

 

To start, choose 3 – 5 key cities to market too, then expand.

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May 14, 2006

Short-Term Results: The Litmus Test for Success in China – article by Rick Van - blog by Karl Janowski

This article was published in Harvard Business Review. 

Companies take the long term-approach too far.
 
Long-term results are best achieved through several measurable short-term gains.
 
Equity joint ventures – more managerial power
Cooperative joint ventures – less managerial power
 
Coke Story
When Coke started in China, it was not well received. Coke took control of its joint ventures by gaining majority equity when Pepsi still had cooperative joint ventures. Coke’s plan was simple: direct distribution.  It worked. Early success reinforced long-term commitment. Now Coke is way ahead of Pepsi in China.  

Patience and Longevity aren’t enough
Early moving is not as important as managerial capacity, critical mass scale, and product portfolio
 
Kraft has had a harder time succeeding than Nestle who introduced both global brands and products tailored for the Chinese such as Chinese flavored instant noodles.
 
Diving in and treading water can be just as expensive as getting in late
 
Aiming short term allows you to learn and adapt, plan to have some failures
 
Short-term success is the best litmus test for long-term success

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The Hidden Dragons – article by Ming Zeng and Peter J. Williamson - blog by Karl Janowski

This article was published in Harvard Business Review.  

As of 2002:
 
Corporations normally think of China as cheap labor and a huge market for products but ignore Chinese firms as powerful rivals in the global market
 
China is the fastest growing market on the planet, but there are more regional brands than national brands partly due to economic rivalry between China’s providences, with most of the global companies still state owned.  Still a new breed of Chinese firms are becoming rivals for global businesses
 
4 Types of the “New Breed” of Chinese firms
 
China’s National Champions – own the China market and look for niches abroad where they can use their skills at meeting the low cost needs of the China consumer and become profitable in places where their multinational rivals can’t (Haier example)
 
Dedicated Exporters – knew that competition in their business was global and when China opened up set their sites on the global market, often have low prices (Pearl River Piano example)
 
Competitive Networks – clusters of many small family owned companies located in one geographic area that work together to form one global entity, can change fast due to low bureaucracy (Wenzhou network manufactures lighters for 70% of the world), one weakness is that the networks do not build brands
 
Technology Upstarts – companies started from research firms and technology that were state owned for military development

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The Chinese Negotiation – article by John L. Graham and N. Mark Lam - blog by Karl Janowski

Americans often have difficulty negotiating with Chinese due to cultural differences
 
Americans see Chinese as inefficient, indirect and even dishonest
Chinese see Americans as aggressive, impersonal, and excitable
 
Superficial obedience to the rules of etiquette gets you only so far
 
Americans look to forge a good deal while Chinese look to forge a long-term relationship
 
Chinese Culture
Agrarianism – come from communal farming backgrounds, for some time commerce was looked down upon

Morality – beliefs of Confucious, Taoism, adherence to hierarchical relationships, more concerned with process

Their pictographic language – looking at pictures over letters makes Chinese focus on the big picture over details

Wariness of foreigners – history has taught Chinese not to trust foreigners
 
Eight Elements of Chinese Negotiation
 
Guanxi (Personal Connections)  - individual social capital, depends on reciprocity (hui boo) but for Chinese it does not have to be right away like it normally does for Americans, agrarian roots make Chinese more patient
 
Zhongjian Ren (The Intermediary) – wariness of foreigners means a trusted business partner must introduce new partners, find the personal link, use as a interpreter of cultures
 
Shehui Dengji (Social Status) – Must send high enough ranking person to table, Chinese Senior management may meet but they won't negotiate because it is not their role, they are just checking out the relationship being forged
 
Renji Hexie (Interpersonal Harmony) – harmonious relationships between business partners
 
Zhengti Guannian (Holistic Thinking) – Americans make a list of smaller issues and discuss each one-by-one where Chinese look at the big picture and jump around from issues to issue
 
Jeijian (Thrift) – Culture has taught them to save their money, Chinese use patient and silence as a negotiating weapon against American impatience and volubility
 
Mainzi (Face) – reputation and social status rest on saving face, face can be earned, lost, given, or taken
 
Chiku Nailao (endurance and relentlessness) – hard work ethic, 251 day school year (China) versus 180 day school year (USA)

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May 13, 2006

The Great Translation - article by Kenneth Lieberthal and Geoffrey Lieberthal - blog by Karl Janowski

At the start companies moved to China to manufacture products that they will sell abroad. Now corporations can go after the domestic market.  
 
China’s two main opportunities: domestic market and lower labor costs due to human capital and infrastructure investment
 
Multinationals – china and external company form a venture
 
State owned corporations have stress political skills over managerial skills in Chinese labor
 
Many companies came to China with domestic plans but China forced exporting goods, trade surplus
 
China will remain the fastest growing major economy for the next decade
 
China has created oversupply of capacity to overcome shutting down of state run enterprises
 
EJV- Equity Joint Venture – working 50-50 with a company in China
WFOE – Wholly Owned Foreign Entity – company externally owned
 
3 phases of expansion
 
Entry – establish a presence, build a brand, learn the environment – need management that works well in unstructured environments and that is creative in finding resources
 
Country development -  expand into localities, establish “one face to China” for political negotiations, need senior management with strong ties to home office
 
Global Integration – fully integration of China and global ops, need senior management that can work with several divisions
 
CEO Advice
Focus on nesting China effort into organization as a whole and show “one face” to China
 
Have national and tailored local strategies
 
Have a “Show me attitude” to EJVs – government promotes companies that are down, Chinese many time are more concerned with maintaining a large labor force than downsizing to increase profit,
 
Limit the risks of operating in China – hire China experts, do not put all resources in China for critical operations, keep China out of critical technology
 
Avoid irrational exuberance in response to the opportunities China will present

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April 29, 2006

Offshore Software Development: Managing the New Attitude – article by Starsoft Labs – blog by Karl Janowski

Article can be found here:
http://www.the-chiefexecutive.com/whitepapers/30693/paper1.pdf 


10 Reasons why offshore software fails
 
People
            Wrong build / buy / partner decision
            Poor project and / or team selection
            Culture alignment failure
 
Process
            Underestimating startup effort
            Misaligned SDLC (software development lifecycle) documents or processes
            Failure to integrate Offshore Development Center with internal staff
            Failure to manage expectations
 
Technology
            Ad hoc collaboration / communication
            Little or no effective SDLC acceleration or support tools
            Little or effective services automation platform 
 
More concepts
Increased communication leads to lower unnecessary communication
Don’t let the core relationship be the contract.
Create a  true win-win partnership
Russia is now becoming a software offshore destination.
 

 

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April 28, 2006

Characteristics of Socio-technical Systems - article by Fred Emery - blog by Karl Janowski

The article can be found online here: http://moderntimesworkplace.com/archives/ericbio/ericbio.html

Here are some ideas discussed in this article:

Systems Topics

A system is a group of elements, that through their mutual interaction, achieve something unique. von Bertalanffy’s definition of a system
 
Emergence – the unique characteristic created through mutual interaction in a system
 
Closed System – a system that does not interact with its environment
 
Open System – a system that does interact with its environment
 
Any open system can become a closed system by defining the environment as part of the system.
 
Many people define a system as a physical group of elements, but many times that definition is wrong because there is more than one unique emergence. So it help to find the emergence first then defined the system as just the elements that through their interaction create that emergence.  Otherwise you’ll have defined a group of systems as one whole system.

Socio-technical Systems

“Systems where man interacts with man, man interacts with machines, and machines interact with machines" What demands does the technical system place on the social system?
 
Eric Trist and Fred Emery (Tavistock Institute) developed the concept of socio-technical systems from their work as social scientists right after World War II. Their main body of work dealt with being open system theory to organizational development.
 
Their famous paper “Participative Design for Participative Democracy”.
 
In ”Characteristics of Socio-technical Systems”, Fred Emery talked about an enterprise being a STS with three main analysis points: analysis of component parts to revel contribution and interaction (work relationship structure), analysis of these parts with reference to problems of internal coordination and control thus created, and analysis of relevant external environment and the way the enterprise manages it.
 
Aspects of technical systems that place demand on the social system
  • Nature of material being worked on
  • Level of mechanization (or automation)
  • Units of operation and grouping of these units into production phases
  • Degree of centrality of different operations
  • Maintenance operations
  • Supply operations
  • Spatial layout of process over time
  • Physical work setting


Task breakdown (simplest terms)

  • Dependent tasks
  • Independent tasks


Two types of dependent tasks

  • Simultaneous interdependence (two tasks must happen at same time for outcome to be valid)
  • Successional dependence (two tasks must be performed either serial or parallel to achieve outcome) 
Formal symbiotic ties between people– sanctioned by management
Informal symbiotic ties between people – “friendships” and other non-sanctioned ties
 
This makes it hard for management to map roles and tasks to a formal structure. Many jobs success is based on informal relationships (“social networking”).
 
Suggestions

“Large groups of people inhibit stable interactive patterns” With groups over 12 people the multiple relationships become too great for every individual to maintain so sub groups are formed.
 
Increase likelihood of friendship via sociometric self-selection.
 
Do not assume “job satisfaction and output are positively related”
 
Manager's job is not to manage the role/task relationship of the worker but the external boundary conditions that relate the worker to the larger organization. 

Individual Psychology of the Worker 

Explore these ideas:
  • “satisfaction” with work/role and alienation
  • “recalcitrance”, control through coercion and manipulation
  • non-sanctioned purposes inside the enterprise
To perform a task one of these conditions must exist:
  • Performance satisfies some psychological need
  • Performance is not satisfying but a prerequisite to achieving other psychological satisfaction
  • Performance is induced by demands perceived to arise from the task itself (“task orientation” the task itself induces strong forces that lead to completion, or task gives individual control that is satisfying)
“dull contentment” sort of satisfaction gained from habitual work

Consider, “The child’s relationship to the learning material is given little opportunity to develop into an interest relationship because it is overshadowed by the teacher-child relationship”

Discretionary content of a task – parts of tasks where worker has choice and authority Time span of responsibility – time free from managers looking over the workers shoulders
 
Alienation – the individual may be alienated from his or her workers, or from the product itself

 

 

 

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