Professional Documents
Culture Documents
PRESENTATION ON METHOD
SELECT A METHOD/METRIC (CLASS NOTES) NOT PREVIOUSLY COVERED
PRESENTATION SHOULD BE APPROXIMATELY 15 MINUTES, WITH 3 CHARTS: 1. THE METRIC 2. APPLY TO AIR PRODUCTS 3. APPLY TO KODAK YOU ARE THE INSTRUCTOR; PROVIDE LECTURE NOTES FOCUS ON: WHY THE ORGANIZATION FALLS INTO A CATEGORY IN THE METRIC IMPLICATIONS (SO WHAT) HOW CAN THE ORGANIZATION DO BETTER DO NOT SPEND TOO MUCH TIME ON DEFINITIONS; APPLY THE MODEL;
REVIEW YOUR SELECTION WITH ME EARLY; A PARTICULAR METHOD WILL BE COVERED ONLY ONCE (FIRST COME FIRST SERVED) ALL CASES AND RESEARCH PROJECT SHOULD APPLY APPLICABLE METHODS PRESENTED BY CLASS
INDUSTRY COMPETITORS
SUPPLIERS
RIVALRY AMONG EXISTING FIRMS THREAT OF SUBSTITUTE PRODUCTS OF SERVICES
BUYERS
SUBSTITUTES
Porter
Technical Environment
SUPPLIERS
RIVALRY AMONG EXISTING FIRMS THREAT OF SUBSTITUTE PRODUCTS OF SERVICES
BUYERS
SUBSTITUTES
Demographic Environment
Social Environment
Macroeconomic Environment
COMMUNICATIONS
Understanding of Business by IT Understanding of IT by Business Inter/Intra - organizational Learning/Education Protocol Rigidity Knowledge Sharing Liaison( s) effectiveness
COMPETENCY/VALUE MEASUREMENTS
IT Metrics Business Metrics Balanced Metrics Service Level Agreements Benchmarking Formal Assessments/Reviews Continuous Improvement
GOVERNANCE
Business Strategic Planning IT Strategic Planning Organization Structure Reporting/ Budgetary Control IT Investment Management Steering Committee(s) Prioritization Process
PARTNERSHIP
Business Perception of IT Value Role of IT in Strategic c Business Planning Shared Goals, Risk, Rewards/Penalties IT Program Management Relationship/Trust Style Business Sponsor/Champion
Level 5
Optimized process COMMUNICATIONS: Informal, pervasive COMPETENCY/VALUE: Extended to external partners GOVERNANCE: Integrated across the org & partners PARTNERSHIP: IT-business co-adaptive/improvisational SCOPE & ARCHITECTURE: Evolve with partners SKILLS: Education/careers/rewards across the organization
Level 4
COMMUNICATIONS: Bonding, unified COMPETENCY/VALUE: Cost effective;Some partner value;Dashboard managed GOVERNANCE: Managed across the organization PARTNERSHIP: IT enables/drives business strategy SCOPE & ARCHITECTURE: Integrated with partners SKILLS: Shared risk & rewards Established focused process
COMMUNICATIONS: Good understanding; Emerging relaxed COMPETENCY/VALUE: Some cost effectiveness; Dashboard established GOVERNANCE: Relevant process across the organization PARTNERSHIP: IT seen as an asset; Process driver;Conflict seen as creative SCOPE & ARCHITECTURE: Integrated across the organization SKILLS: Emerging value service provider;Balanced tech & business hiring Level 2 Committed process
Level 1
COMMUNICATIONS: Limited business/IT understanding COMPETENCY/VALUE: Functional cost efficiency GOVERNANCE: Tactical at Functional level,occasional responsive PARTNERSHIP: IT emerging as an asset; Process enabler SCOPE & ARCHITECTURE: Transaction (e.g., ESS, DSS) SKILLS: Differs across functional organizations
Initial/Ad-Hoc process COMMUNICATIONS: Business/IT lack understanding COMPETENCY/VALUE: Some technical measurements GOVERNANCE: No formal process,cost center, reactive priorities PARTNERSHIP: Conflict; IT a cost of doing business SCOPE & ARCHITECTURE: Traditional (e.g., acctng, email) SKILLS: IT takes risk, little reward; Technical training
Global Integration
Multinational Strategy
Local/National Responsiveness
Dominant standard
Low
Low
C.Kemerer, CISR, 6/92
High
Outputs
Inputs
REVENUE CENTERS
EXPENSE CENTERS
PROFIT CENTERS
INVESTMENT CENTERS
To my customers
Financial Perspective
Customer Perspective
Business Process:
Business Outcome:
PRIMARY ACTIVITIES
Porter
STRATEGY FORMULATION
VISION (WHERE)
(BHAGS)
ANALYSIS
STRATEGY (HOW)
PROJECT IMPLEMENTATION
MEASUREMENTS MISSION (WHAT)
LUFTMAN
Stars
High
Cash Cows
Low
Dogs
MISSION STATEMENTS
Who are we? What do we intend to be? What do we stand for? What do we do for the world? What makes us attractive to each important stakeholder? Why should they support us? What is our long-term unalterable focus, intended area of preeminence? What makes us exciting? What makes this enterprise different? What is it best at? How does it provide unique value to customers and community? How will we provide challenge to our people? How will we extend and grow? What are our key technologies? Intellectual skills? Concepts of customer service? How will we define success? How will we measure it?
Mission
A Mission statement for information systems is a concise statement of what business the group is in. It is a statement of why the Information Systems group exists, what purpose and function it provides for the company. You can also look at the company mission for ideas or themes for the information systems mission. Following are examples of information systems mission statements developed at different companies. An organizations mission is its purpose, or reason for existence.
IT Mission Example -1 of 5
The mission of Information Systems, in partnership with the business units, is to facilitate the availability of timely and accurate information needed to manage the day-to-day and strategic direction of the company by the deployment of systems and tools. This information will assist the company in achieving its objectives and becoming one of the top-ten in the marketplace.
IT Mission Example -2 of 5
The mission of Information Systems in partnership with the business community is to develop, implement, and maintain worldwide business system solutions that provide secure collection, storage, and access to information. We will accomplish this by matching the business requirements with the appropriate technology.
Mission Example - 3 of 5
The mission of Information Systems is to develop, implement, and maintain high-quality efficient and effective business systems that provide the information needed to support the daily operation and strategic business direction of the business at a level superior to the competition with customer satisfaction as the end goal.
Mission Example - 4 of 5
Our mission is to facilitate improvements in operating efficiency and effectiveness by delivering worldwide integrated business systems and services. The business strategies will drive our efforts to ensure that our contributions provide the highest value to the corporation.
Mission Example - 5 of 5
The mission of the Information Systems organization is to provide timely, cost-effective, high-quality information systems and services that meet or exceed our customers requirements for achieving business goals and objectives.
Vision
A Vision is a concise measurable statement of where you want to go, what you aspire to be. Develop this by looking at the companys vision statement and objectives and identifying how Information Systems can assist the company.
Vision Example - 1 of 5
Vision:
Anyone can get any information (site, geographic area or global level) at any time, any where, any way, given the proper security constraints. The end-user does not have to know the location of the data. Maintain data in only one master place within the organization. Implement systems to enhance end-user productivity. Systems are able to support competitive business demands with immediate response to quickly changing business needs. Information Systems adds a competitive edge to the companys product line.
Vision Example - 2 of 5
Vision : We seek to be an integral partner in the achievement of the companys vision and mission through the appropriate application of Information Technology to business needs.
Vision Example - 3 of 5
We will have Business Systems that: Take advantage of global sameness Are purchased whenever practical Have integrated data that is entered only once Provide consistent definitions of information Support functional and cross-functional business processes Deliver the right information, at the right place, at the right time, in the right format Are flexible enough to support changing environments Can be accessed by office, home, and mobile workers Provide capabilities to external customers and suppliers
Vision Example - 4 of 5
The strategic role of Information Systems is to be:
A provider of information technology, which means assessment and acquisition of new technology which will assure that company use of information systems and applications provide strategic advantage in our business markets. A provider of information services, the infrastructure, and environment that assures company-wide information sharing that meets customer requirements. A strategic business partner of the business units to provide timely and cost-effective information systems solutions to business needs A proactive agent of change, providing management and staff with decision making, quality information through automated and integrated information systems and processes.
Vision Example - 5 of 5
Vision of Information Systems : Have delighted customers (users) Proactively address business needs Provide competitive advantage to the company Be recognized in the industry as a world-class Information Systems organization. Have Information Systems employees with a passion and commitment, people that carry the fire and love their job Provide enterprise-wide business solutions. Have a superior functioning team. Simplify standardize,automate, and integrate.
Strategic Objectives
Strategic objectives state how you are going to achieve the vision and mission. Following are examples of objectives from different companies.
Implement solutions in partnership with the business units. Champion each project ( business-requested project, not infrastructure projects) by business management to ensure that business issues drive technical solutions.
Contd...
Align Information Systems projects and priorities with business priorities and direction. Likewise, the strategic direction of the company will determine the strategic direction of Information Systems. Provide responsiveness and flexibility to address changing business requirements rather than simply utilizing technology. Meet External customer requirements and assist in solving our customers business issues. Maximize productivity and reduce costs throughout the business Provide Real information for business decisions (as opposed to endless amounts of data). Information must be available anytime(24 hour access), anywhere in the world, in any way (flexible formats), for any one (with security). Support worldwide information requirements and business objectives.
Contd...
Minimize Information Systems investments through the use of standardized hardware and packaged software, whenever possible. This will minimize support requirements and provide for maximum growth and flexibility to take advantage of the future industry developments. Minimize risk to the company by utilization of proven, yet not out-of-date, technology. Educate the users and maximize their ability , through tools and training, to get information without dependence on Information Systems and utilize new capabilities and leading technology in providing a competitive advantage for the business Balance Information Systems resources and expenditures with the business demands and the return on investment ( ROI ) to the business
Develop an integrated, information systems plan to support global food business and deploy solutions which enable global business processes
Contd...
Suggestions
Specific next steps, due date, risks
1
Obtain Sponsor/ Champion Gap Analysis
7 3a
Implementation Plan To-Be To-Be State of State of The The Organization Organization Periodic Review
3 5
2
Form The Team As-Is As-Is State of State of The The Organization Organization
Measurement Criteria
4
SWOT Analysis
5
Porter Industry Profitability Analysis
6
Ansoff ProductMarket Analysis Strategy Alternatives
1.
Define the organizations mission
2.
Establish objectives
5.
Identify opportunities and threats
6.
Develop and evaluate alternative strategies
7.
Select Strategy
8.
Implement strategy
4.
Perceived Usefulness
Tool Experience
Tool Functionality
Task Characteristics
Always
Consider
Planning
2. Identify Comparative Companies 3. Determine Data Collection Method and Collect Data 4. Determine current Performance Gap
Analysis
5. Project Future Performance Levels
Integration
Action
Maturity
11. Leadership Position Attained & Practices Fully Integrated into Process
Deliver
Define
Finance
Measure
Contract Invest
BENCHMARKING / KIVIAT 1 OF 2
XYZ Software Process Assessment 64 XYZ projects compared to SPR Top 10 (Data provided by Capers Jones)
Physical Env. Metrics
Scale: 1-2 = Leading Edge 3 = Industry Norm Methodologies 4-5 = High Risk
64 XYZ Projects
Tools
Quality Focus
BENCHMARKING / KIVIAT 2 OF 2
Leadership
4.1
3.1
Technology
3.7
4.1 2.6
Companies incorporating
3.0 4.0
Organizational Competencies
Ref : Cisco Systems
Differentiation
Niche Marketing
New Business
Alliance
Porter, Treacy, Oster
Low Cost
Alliances
Porter, Treacy
ORGANIZATION
Strategy formation
Structure and Systems Culture and Power
The Entrepreneurial Concept The Mature Context The Diversified Context The Innovative Context The International Context The Context of Change
Source: Henry Mintzberg, James Brian Quinn & Sumatra Ghoshal
CONCEPTS
CONTEXTS
Strategy
Identify core processes Redesign key processes Continuously improve processes Measure and monitor results
Process
Culture Leadership
Train for leadership in rapidly changing environment Measure and monitor results
Customer
Identify corporate and individual competencies necessary to achieve the strategic vision Identify current competency levels Design and employ plans to close gaps
Source: Labovitz, Rosansky 1997
People
Design and align reward and recognition systems with organizational goals and desired competencies Measure and monitor results
Source: Strickland & Thompson, Strategic Management 11th Edition, 1999, pp. 136
Follow
Interact
Isolate
Shape
Low
High
Innovation Orientation
Ref : Pierre Berthon, James M Hulbert, Leyland F.Pitt, California Management Review Vol 42 , No. 1 Fall 99
Focus on your own business or Ignore the innovation (its is not your business)
Adopt and separate or Adopt and keep internal or Attack back and disrupt the disruption
Ability to Respond
Focus on your own business
Motivation to Respond
Ref: Shifting Cultural Gears in Technology Driven Industries by Paul J.Kampas; MIT Sloan Management Review, Winter 2003 Vol.44.No.2
(1 of 2)
Strategic question
Source of advantage
Performance goal
Simple Rules (2 of 2)
Type How To rules Boundary rules Priority rules Timing rules Exit rules
Ref: Eisenhaldt & Sull,HBR
Purpose
They spell out key features of how a process is executed: What makes our process unique?
They focus managers on which opportunities can be pursued and which are outside the pale They help managers rank the accepted opportunities They synchronize managers with the pace of emerging opportunities and other parts of the company They help managers decide when to pull out of yesterdays opportunities
Top-down
Bottom-up
Top-down/bottom-up
Adapted from Mintzberg (1973, p. 49) California Management Review, vol.16, no.2.
Strict control
Mechanistic Production and control
Facilitate
Organic Marketing and R&D
Differentiate structure and process Matrix organization Key functional areas and product lines Intensive planning
Weak links
None Semiautonomous groups Loose
Formal/hierarchical
Bottom-up
Low formalization
Inside-out
Top-down / Bottom-up
None
Strategic Alliances
Shared risk Multiple, smallscale investments provide strategic options Faster than internal development
Faster than growing organically Acquire innovative technologies become competitors
Acquisitions
Risk of overpaying Cultural integration concerns Involves relying on others for innovation
SOURCE Rothaermel & Hess, MIT SLOAN MANAGEMENT REVIEW, Spring 2010.
Business Objectives Business Functions Top - down Planning Business Processes Bottom - up Implementation Computer Applications Computer Databases
Business Data
Work View
Application View
Information View
Technology View
Source : Paradigm Shift by Tapscott & Caston
1 OF 2
DP organization
Data administration
More lax
Superficially enthusiastic
Level of DP expenditures
Stage I Initiation
Stage II Contagion
Stage IV Integration
Data resource strategic planning Acceptance of joint user and data processing accountability Stage VI Maturity
Technological Discontinuity
1960
Ref: Richard Nolan
1975
1980
1995
2010
Organization led
STROBE
Strategic Orientation of Business Enterprise
Conservative
Low
Technology led
STROIS
Chan& Huff; Venkatraman
High
Strategic Orientation of IS
Pyramid Power
Evolving IS organizations rise through ever-more valuable skill sets
LEVEL 3
These organizations have a great deal of credibility at the senior business-leader level. They have a passion for enabling business through IT. Level 3 Create Value LEVEL 2 Infrastructure has stabilized. These organizations initiate new processes and implement measurement and quality programs. Theyre very good at delivery. Theres commitment to change and improvement.
These organizations take what theyve got and work to optimize it. There is a strong emphasis on infrastructure.
SOURCE: ATTAINING TOP-LEVEL IS PERFORMANCE, OMEGA POINT CONSULTING AND ICEX INC. Mary Silva Doctor, Richard Swanborg Jr.
Who receives, uses and benefits from the products and services this work system produces ?
WORK
SYSTEM
What aspects of the surrounding context have important effects on the work systems operation and success ?
CUSTOMERS
PRODUCTS & SERVICES What are the major steps in the business process ?
BUSINESS PROCESS
PARTICIPANTS
INFORMATION
TECHNOLOGY
INFRASTRUCTURE
How does the system advance the firms strategy ?
Ref: Steve Alter
What dedicated technology is used to perform the steps in the business process ?
What human, informational and technical infrastructure that is shared by other work systems is used by in this work systems operation ?
Layer 5:
Layer 4: Layer 3: Layer 2: Layer 1:
REF: The Future of Competition Co-Creating Unique Value with Customers, by C.K. Prahalad, Venkat Ramaswamy
LOCAL LOW TECH Low cost, low revenue Potentially good margins
Low
Low
Higher performance region
K. Peffers, V.K.Tuunainen
High
OBJECTIVE
Basic agent services Enhanced agent services Message filtering service Enhanced message filtering services First-wave target marketing services
Search products specially for trigger products Large ticket Complex products Targeted passion
Add replenishment products Small ticket Frequent purchases Specificability Toiletries, Stationery Household supplies, Basic foods
High
Winner at risk
Self-aware winner
Self-aware winner
Understands information orientation and uses it
Winner at risk
Delivers good results, but perhaps not for long
Info-oriented laggard
Understands information orientation, but suffers fundamental weaknesses
Low
Info-oriented laggard
High
Information Orientation
Real-time customer feedback through Web server opt in/opt out marketing and promotion response tracking
Online Training
Knowledge Management
Learning Architecture
Infrastructure
Knowledge Strategies
Aggressive
Conservative
Exploiter
Explorer
Innovative
Ref: Zak, The Strategic Management of Intellectual Capital and Organizational Knowledge
Level 2 Prospecting
Level 1 Basic Presence ADDL FEATURES Extensive information Search engine Basic interactivity
Cost $5k-$500k
Cost $50M-$150M+
E-Business Model
Toe in the Water Discovery Phase Minimal E-Commitment Localized Investment Drive With Joint Business/IT Strategy
IS Leads (But Who Follows?) High IT E-Investment Solution-Seeking Problem High-Risk Positioning Needs Integration With Business Strategy
E-Business Strategizing
Opportunities
E-Business Strategizing
Firm Core Competencies
Threats
Kiosk/ATM
Customer database
Electronic
Intermediary Internet/Email
Low transaction costs; significant flexibility Wide coverage; adds value for some segments Face-to-face unstructured
Physical Intermediary
Type of Information Operations cost and prospects and Market Needed to Succeed intelligence
picture
product information
and preferences
Culture
Organizational Effectiveness Acquisition
Conversion
Application
Protection
Ref: Gold, Malhotra, Segars, Journal of Management IS
Business direction Business Performance Measures User View of IT Service expectations Future system requirements
New Markets
BREAKTHROUGHS
WATCHFUL WAITING
Existing Markets
ENHANCEMENTS
CATEGORY KILLERS
Existing Technology
New Technology
Unfocused
Market Focus
High
Distribution Channels
Operations
Marketing, Sales
& Service
Net Market
Suppliers
Ref: NerveWire : www.nervewire.com
Customers
THE IO MODEL (1 of 2)
Information Orientation (IO) Measures the capabilities of a company to effectively manage and use information
Information technology practices (ITP) capability The capability of a company to effectively manage appropriate IT applications and infrastructure in support of operational, decision-making and communication processes
Information management practices (IMP) capability The capability of a company to manage information effectively over its life cycle
Information behaviors and values (IBV) capability The capability of a company to instil and promote behaviors and values in its staff for effective use of information Integrity Is an organizational value manifested through individual behavior that is characterized by the absence of manipulating information for personal gains such as knowingly passing on inaccurate information, distributing information to justify decisions after the fact or keeping information to oneself. Good information integrity results in effective sharing of sensitive information
Sensing Involves how information is detected and identified concerning: economic, social and political changes; competitor innovations that might impact the business; market shifts and customer demands for new products; and anticipated problems with suppliers and partners
IT for operational support Includes the software, hardware, telecommunication networks and technical expertise to control business operations, to ensure that lower-skilled workers perform their responsibilities consistently and with high quality and to improve the efficiency of operations IT for business process support Focuses on the deployment of software, hardware, networks and technical expertise to facilitate the management of business processes and people across functions within the company and externally with suppliers and customers
Collecting Consists of the systematic process of gathering relevant information by profiling information needs of employees; developing filter mechanisms (computerized & non-computerized) to prevent information overload; providing access to existing collective knowledge; and training and rewarding employees for accurately and completely collecting information for which they are responsible
Formality Refers to the degree to which members of an organization use and trust formal sources of information. Depending on the size, virtualness, and geographic dispersion of an organization, this balance shifts towards more formal or informal information behavior Control Is the disclosure of information about business performance to all employees to influence and direct individual and, subsequently, company performance
THE IO MODEL (2 of 2)
IT for innovation support Includes the software, hardware, telecommunication networks and capabilities that facilitate peoples creativity and that enable the exploration, development and sharing of new ideas. It also includes the hardware and software support to develop and introduce new products and services Organizing Includes indexing, classifying and linking information and databases together to provide access within and across business units and functions; training and rewarding employees for accurately and completely organizing information for which they are responsible Sharing Is the free exchange of non-sensitive and sensitive information. Sharing occurs between individuals in teams, across functional boundaries and across organizational boundaries (I.e. customers, suppliers and partners)
IT for management support Includes the software, hardware, telecommunication networks and capabilities that facilitate executive decision-making. It facilitates monitoring and analysis of internal and external business issues concerning knowledge sharing, market developments, general business situations, market positioning, future market direction and business risk
Processing Into useful knowledge consists of accessing and analyzing appropriate information sources and databases before business decisions are made. Hiring, training, evaluating and rewarding people with analytical skills is essential for processing information into useful knowledge
Information transparency Occurs when an organizations employees trust each other enough to talk about failures, errors and mistakes in an open and constructive manner and without fear of unfair repercussions
Maintaining Involves reusing existing information to avoid collecting the same information again, updating information databases so that they remain current and refreshing data to ensure that people are using the best information available
Information Proactiveness Occurs when an organizations staff actively seek out and respond to changes in their competitive environment and think about how to use this information to enhance existing and create new products and services
Delivery
IT is the means of of delivering goods and services Computer-based transaction systems underpin business
Dependent
Business strategies increasingly depend on IT Business and functional strategies are automated
Drive
IT potentially provides new strategic opportunities Specific applications are exploited
Delayed
IT has no strategic impact Opportunities not yet apparent
Characteristics
Bottom-up
Top-down
Inside-out
None
Process Changes
NextGeneration Process Single Dept. Upgrade Tuning and Incremental
Product Changes
New Core Product Next-Generation Product
Modified Goals
Goals to Be Attained
Evaluation of Experience
DE Navigation Characteristics Which sites to visit How long to stay What information to search
Changed Emotion
Emotional State
Specific Evaluation
Brand Image Web site Firm image
ANTHONYS TRIANGLE
Information Content Policies Plans Budgets Objectives Measurement Schedules Revenues Profits Costs Performance Services Goods Management Level Information Characteristics External Source Wide Scope Ad Hoc Unscheduled Future-Oriented Infrequent Summarized Internal Source Narrow Focus Pre specified Scheduled Historical Frequent Detailed
Strategic
Tactical Operational
Responsibility Authority
ZACHMANN
FIRM INFRASTRUCTUTRE
HUMAN RESOURCE MANAGEMENT TECHNOLOGY DEVELOPMENT
Information Systems Technology Planning and Budgeting Technology Office Technology Training Technology Motivation Research Information Systems Technology Product Technology Computer Aided Design Pilot Plant technology Software Development Tools Information Systems Technology
PROCUREMENT
Audio & Video Communication System Technology Recording technology Information system Communication technology Sys. Technology Information System technology
INBOUND LOGISTICS
OPERATIONS
OUTBOUND LOGISTICS
SERVICE
DATA MANAGEMENT
MODELS
Customer files Casual data POS diary Panels inventory Availability HHC www Benchmark Buy
GDSS Time - Varying EIS Mass Graphical Produced GIS Robust PDA Adaptable Summary NeuralNets Statistics Simulation Multimedia Virtual Reality
Evaluation:
Framing the Market Opportunity
Business Model
Customer Market Imple Metrics Communications Interface mentation And and Branding valuation
e-Commerce Strategy
Network Infrastructure
Media Infrastructure
Market Infrastructure
Stable Platform
Affordability
Convenience
Source: Stephen P.Bradley and Richard L.Nolan, eds., Sense and Respond(Boston Harvard Business School Press, 1999).
PORTERS FIVE FORCES MODEL (including the major determinant of each force)
Threat of substitute products or services
(+) By making the overall industry more efficient, the Internet can expand the size of the market () The proliferation if Internet approaches creates new substitution threats
(+) Procurement using the Internet tends to raise bargaining power over suppliers, though it can also give suppliers access to more customers
(-) The Internet provides a channel for suppliers to reach end users, reducing the leverage of intervening companies (=) Internet procurement and digital markets tend to give all companies equal access to suppliers, and gravitate procurements to standardized products that reduce differentiation () Reduced barriers to entry and the proliferation of competitors downstream shifts power to suppliers
(+) Eliminates powerful channels or improves bargaining power over traditional channels
() Reduces barriers to entry such as the need for a sales force, access to channels, and physical assets, anything that Internet technology eliminates or makes easier to do reduces barriers to entry
(-) Internet applications are difficult to keep proprietary from new entrants
Barriers to entry
T-PORTFOLIO TEMPLATE
Low IT SHAPING BUSINESS High
High
IT SUPPORTING BUSINESS
Low
TODAY
Ref: Competing in the Information Age by Jerry N. Luftman
TOMORROW
Competitive Threats
IT Project Barrier
Preemption Barrier
Organizational integration
Decision makers
Systems integration
Systems architecture
Applications
Data
Platforms
Buying Organization
Desktop Procurement
Transaction Engine
Enterprise Systems
Plan and Manage the Enterprise
Enterprise Systems
Rolling Plans
Provides
Bridge Between Short Term Horizon and Long Term Foundations
Portfolio of Ventures
MultiDisciplinary Teams
PERFORMANCE FOCUS
PHASE VI Operating Initiatives PHASE IV Business Enhancement PHASE V Strategy and Organization Redefinition PHASE II Process Improvement PHASE I Strategy Initiative
Infrastructure
External Drivers
New Direction
Internal Operations
Redefinition
ORGANIZATION FOCUS
The IT Platform
Anyone anywhere Customers Partners regardless of facility base
REACH
Whom
RANGE
What Services Can We Deliver
Standard messages
Access to stored data
Internal locations
Single Transactions
Cooperative transactions
Act
Interpret
Decide Responding
Informational
Strategic
Transactional Infrastructure
Business Integration Business flexibility Reduced marginal cost of business unit IT Reduced IT Costs Standardization
Characteristic
Global exporter
Homogeneous
Multinational
Homogeneous,some customized Distributed but highly controlled by home country Sharing innovations outbound from H.Q
Multilocal
Customized,some homogeneous Highly duplicated in each country Local responsiveness
Global
Flexible architecture allowing for mass customization Highly networked and distributed around the globe EOS of production and knowledge,and low cost/customer driven Decisions made at centers of competence Supports global and local customers
Organization
Home country nationals Global or local customers get the same treatment
H.Q.controls national companies Local customers supported by national sales companies global customers with difficulty
Customers
Strong national organizations,H.Q .plays primarily financial role Local customer focus,global customers only with great difficulty
Consulting Methods
Governance
5 Target IS Capability Strategy for Achieving Target
Current IS Capability
8 Project Plans
Technology Projections
10
Periodic Updates
9 Execute Plans
Extensive
Functional Integration
Business Redefinition
Scale of BPR
[ORGANIZATIONS] Limited Functional Refinement Process Redesign
Narrow
PROFIT PATTERNS
Mega Patterns
No profit Back to profit Convergence Collapse of middle De Facto standards Technology shifts the board
Disintegration
Reintegration
Profit shift
Power shift
Redefinition
Multiplication
Compression
Reintermediation
Product to brand
Profit multiplier
Product to pyramid
Product to solution
Operations to knowledge
Knowledge to product
Skill shift
Network
Cornerstoning
Ref: Profit Patterns by A.Slywotxky, D. Morrison, T. Moser, K. Mundt & J. Quella; Random House, 1999
Employee productivity
Category
Cause Cause
Category
Cause Cause Effect
Cause
Cause
Category
Category
SA MATURITY FISHBONE
Partnership
IT as cost center Insufficient role of IT in business strategy
Perceived as service organization
Scope Architecture
poor architecture Slow to move IT lack credibility IT infighting bad experience Little synergy of systems and data
Skills
IT lack business knowledge at all levels Training is left to the individual
quality issues No commitment to learn business (IT) No portfolio mgmt. Lack standards
IT not aware of business direction No knowledge management Info not communicated Pockets of understanding
Communications
Competency/ Measurement
Governance
Analysis
Customer Selection Customer Targeting Relationship Marketing Privacy Issues Metrics
Ref: A framework for CRM, Russell S. Winer
Book by ED DeBono
Shadowing Behavioral Mapping Consumer Journey Camera Journals Extreme User Interviews Story Telling Unfocus Groups
4. REFINING Brainstorm Focus Prototyping Engage the client Be disciplined Focus Get agreement
REF: BusinessWeek
Gray-Haired Revolutionaries
No
No
Can your company create an industry revolution?
Yes
Market redefinition
Incremental
Supply chain
Markets
Customer role
Define
Asses s
Type of communication
Request
Agree
Report
Accept
Supplier role
Negotiate
Perform
TIME
Ref : Steve Haeckel
Compelling direction
Energizes
Orients Attention
+ Norms of Conduct
+ Information System
Performance Strategy
Engages Talents
+ Team Composition
+ Educational System
Culture
Democratic Pacesetting
Coaching
Creates harmony Forges and builds consensus emotional bonds through participation People come first What do you think?
Sets high sta ndards Develops people for performance for the future
Come with me
Self confidence, Empathy, Collaboration, Conscientiousness, Developing empathy, change building team leadership, drive to achieve, others,empathy, catalyst relationships, communication initiative self-awareness Communication When changes require a new vision or when a clear direction is needed Most strongly positive To heal rifts in a team or to motivate people during stressful circumstances Positive To build buy -in To get quick results To help an or consensus, or from a highly employee to get input from motivated and improve valuable competent team performance or employees develop long term strengths Positive Negative Positive
Explorers
Merchants
Architects
Missionaries
Discover
Coordinate
Serve a cause
Purpose
Examples
The Open-Innovation Model, by Chesbrough, MIT Sloan Management Review, Spring 2003, vol. 44, no. 3
Open Enterprise Organization Culture Maximizes the creation of value simultaneously in economic, social, Level 3 and ecological terms. Relationship Management Culture Value created but typically traded off, usually after the demands of investors are satisfied.
Level 2
Level 1
Compliance Culture Preserves value consistent with laws and norms and seeks to avoid the unacceptable destruction of value (economic, social, or ecological.)
Ref: Wheeler, Colbert, & Friedman; The Naked Corporation by Don Tapscott and David Ticoll
Disengagement
Purposefulness
Focus
Procrastination
Distraction
low
REF: HEIKE BRUCH SUMANTRA GHOSHAL
Energy
high
Migration Path
Key Areas
Information Technology
Performance measurement
Rewards Knowledge development / management
PRODUCTION
Results People follow because of what 2 PERMISSION Relationships People follow because they want to 1 POSITION Rights People follow because you have done for the organization
NOTE: People will follow you beyond your stated authority. This level allows work to be fun. Caution: Staying too long on this level without rising will cause highly motivated people to become restless.
NOTE: Your influence will not exceed beyond the lines of your job description.
they have to
The longer you stay here, the higher the turnover and the lower the morale.
ORGANIZATION
Economic Capital Operations Loop
Financial and Physical Capital + Value Processes Intellectual and Human Capital + Transformational Processes
Strategic Capital
Plans Loop
Economic Capital
Risk
Diminishing Returns Innovation
Drivers of globalization
Global market convergence
Government influence
Global strategies
Scale economies Sourcing efficiencies Country-specific costs High product development costs
Cost advantages
Interdependence
Competitors global High exports / imports
Global competition
Ref: G. Yip, Total Global Strategy
CRM can lift revenues (acquisition, retention, cross-sell) as well as reduce expenses (efficiency, effectiveness). Most organizations have focused on the revenue generating aspects of CRM. However, in light of recent changes in the business climate and the economy, companies must begin to realize the cost reduction benefits of CRM
BOTH SIDES OF THE CRM EQUATION PROFITABILITY Financial Performance Customer Strategy Revenue Process Drivers Organization and Technology Enablers Cost
X-sell/Up-sell
Management Effectiveness
Channel Optimization
Efficiency
1 2 3 4 5
Creating a Vision
Creating a vision to help direct the change effort Developing strategies for achieving that vision
6 7
8
System Lock-in
Customer Solutions
Competition Based on Customer Economics: Reducing customer costs or increasing profits
Ref: Wilde & Hax, Sloan Management Review, Winter 1999
Best Products
Competition Based on Product Economics: Low cost or differentiated position
Mass Marketing
Target Marketing
Customer Marketing
1 to 1 Marketing
Characteristics Market Share Individual Sales Limited Segmentation Huge Campaigns Not Cost-effective Single Treatments Focus on Transactions # of Relationships
Characteristics Customer Share Life Time Value Model Distribution On-going Refinement Multiple Treatments Focus on Customers Breadth of Relationships Event-Driven
Characteristics Interactive Segmentation Real-Time Matching Interactive TV Active Web Pages Customer Interaction One to One Relationships Real-Time Marketing Prediction-Driven
Technology In-House Outsourced Mailings Flat Files/Mailing Lists Some Packaged Appls
Technology Individual Database (s) Application for Projects Proprietary Solutions Limited Analysis
Technology Data Warehouse Integrated Data & Appls Customer Knowledge Modeling, Analysis & Refinement Process
Technology Integrated Data Warehouse Internet Enabled Many Touch Point Integrated Cross Organization Process Management by Interaction
Co-Creation Experience Firm and consumer (one to one) Variety of Co-Creation Experiences Firm and Consumer Communities (one to many) Personalization of the Co-Creation Experiences Multiple Firms and Multiple Communities (Many to many)
REF: The Future of Competition Co-Creating Unique Value with Customers, by C.K. Prahalad, Venkat Ramaswamy
Enhance Add functionality or features to current product/service offerings or improve performance of existing business
Extend Enter new line of business and/or add new business models
Extend
Enhance
Expand
Exit
The unexpected Incongruities Process need Structured change Demographics Perception New Knowledge
Mass Customization
Invention
Mass
Production
Continuous Improvement
Stable
Dynamic
Process Change
Discontinuous Innovation New Venture Unit Strategy Evolutionary Technical Innovation Technical Entrepreneur Strategy
Existing
New
Technology
Ref. Gary.S.Lynn
Direct
Sales force Retail Sales Customer Service Representative
Personalized
Permission Marketing Personalized Recommendations Personalized Advertisements Personalized Webpages Personalized Upsell Personalized e-Commerce
General Approaches
Banner Ads E-Mail Viral Marketing Portal Sponsorship/Exclusive Agreements Associate Programs Online and Offline Partnerships Provide Information to Entice Customer Purchase Leverage Customer Base
Program
Time
Ref: Ideas at Work by Thomas H Davenport & Laurence Prusak with H. James Wilson
Experience Networks Experience Integration Supply Networks Systems Integration Experience Innovation
LOCUS OF COMPETENCE
Extended Enterprise
Supply Chains Product Innovation Product Space Solutions Innovation Experience Innovation Experience Integration
Solutions Space
LOCUS OF INNOVATION
High-Volume Product and Service Companies, Upscale Retailers LESS INNOVATION, LESS CULTURAL TENSION Distribution and Logistics Companies Discount Retailers
Weak Weak
Strong
Ref: Shifting Cultural Gears in Technology Driven Industries by Paul J.Kampas; MIT Sloan Management Review, Winter 2003 Vol.44.No.2
THE ABSTRACTENACTED BRAND Tiffany Virgin Harrods (brand is independent of product, or even groups of products, and is used to generate meaning and identity)
Crest
Life Savers Copperslip (brand is strongly linked to the material product/service and is primarily utilized for its functionality)
Ref: Understanding and Managing the Brand Space Pierre Berthon, Morris B.Holbrook and James M.Hulbert; MIT Sloan Management Review, Winter 2003 Vol. 44 No.2
Barnacles Strangers
Low Profitability
little fit between companys offerings and customers needs lowest profit potential Actions: make no investment in these relationships make profit on every transaction limited fit between companys offerings and customers needs low profit potential Actions: measure both the size and share of wallet if share of wallet is low, focus on up-and cross- selling If size of wallet is small, impose strict cost controls Short-term Customers
Ref. HBR, The Mismanagement of Customers Loyalty Werner Reinartz and V.Kumar
Long-term Customers
Description
Divides market into different geographical units Divides market on the basis of demographic variables Divides market on the basis of companyspecific variables Divides market based on how customers actually buy and use the product Divides market on the situation that leads to a product need, purchase, or use Divides market based on lifestyle and/or personality Divides market based on benefits or qualities sought from the product
Examples - Variables
Country, region, city
Firmographics
Number of employees, company size Website loyalty, prior purchases Routine occasion, special occasion Personality (laid-back, type A), lifestyle Convenience, economy, quality
Behavioral
Benefits
Inventoried after Delivered on production demand Manufacturers User Features Provider Client Benefits
Convenience
Risk
Customer Advantage
Industry Advantage
Category Advantage
2 of 3
Disruptive Innovation Categorical differentiation Time to adoption
Product Leadership
Offer quality
Orientation To time
Key metric
Number of misses
Number of hits
Product specifications
10X advantage
Culture fit
Customer Intimacy
Product Leadership
Disruptive Innovation
Skills
Direct marketing
Operations
Economics
Economies of scope
Economies of scale
Efficiencies of speed
Culture
Service-oriented
Cost conscious
Creative culture
ADAPTIVE EXECUTION
Define entry strategies and likely competitive response Create discovery-driven plans Assess project progress
Customer Understanding
Be Unique Be Relevant Built Esteem Know & Understand
Attract Customers
Satisfy Customers
Keep Customers
Customer Focus
Value Exploration
Core Competencies
Cognitive space
Competency space
Resource space
Business Architecture
Business partners
Marketing Activities
Operational system
Internal resource management Business partner management
Value Delivery
Demand Uncertainty
Low High
Supply Uncertainty
(Functional Products)
Low (Stable Process) High
(Innovative Products)
Efficient-supply chairs
attitude
less price sensitive reduce customer churn
CRM Program
Customer Database increased ARPU* cost reductions Data Mining Cross-selling Better Target Marketing more targeted communications new customer insights
* ARPU = average revenue per user
Market Research
1 2 3 4 5
Creating a Vision
Creating a vision to help direct the change effort Developing strategies for achieving that vision
6 7
8
CUSTOMER INTERFACE
CORE STRATEGY
STRATEGIC RESOURCES
VALUE NETWORK
Fulfillment & Support Information & Insight Relationship Dynamics Pricing Structure
EFFICIENT
UNIQUE
FIT
PROFIT BOOSTERS
Niche Players: highly differentiated, usually by quality or design, with narrow scope core business like the Economist magazine Pioneers: very focused scope, highly innovative designs, first movers as in the origins of Apple computers or certain film companies Local Producers: undifferentiated strategies in particular geographic niches, like the corner gas station or the national post office Dominant firms: heavy cost leaders, whether resource producers upstream or mass marketers further down, with wide scope and often vertically integrated, like General motors Me-too firms: like dominant firms but not dominant, with copycat strategies Worldwide replicators: heavy on marketing, producing, and selling in individual markets around the world, according to formula like Coca-Cola or McDonalds Professionals: providing established professional services to customers, such as consulting, engineering and accounting firms Thin producers: filling huge occasional contracts for customer, usually anywhere in the world, involving extensive design innovation and complex technology, like Boeing and an Airbus Rationalizers: so-called global firms that distribute production mandates around the world while selling to large segments on a wide geographic basis like an IBM or an IKEA Crystalline diversifiers or network firms: highly diversified, with wide scope and many producers differentiated by design, mostly created through internal development around core competencies, as in 3M Conglomerates: often made up of unrelated diversification by acquisition of dominant firms
Customization
Community Building
Stage 3
Stage 2 Customer Repeat retention & customers customer loyalty Customer acquisition One-time purchase
Trust
Stage 1
Customer attraction
Loyalty
Black Hole
Strategic Importance of Local Environment
Strategic Leader
Implementer
Low Low
Contributor
REF:MANAGING ACROSS BORDERS THE TRANSITIONAL SOLUTION BY Christopher Bartlett & Sumantra Ghoshal
Discriminator Differentiator
Performance better than competition where it counts
Energizer Exciter
Performance better than competitors
Negative
Tolerable
Performance no worse than competitors
Dissatisfier
Performance below the level of competitors
Enrager
Must be corrected at any cost (to capitalize on competitors negatives)
Neutral
So what?
Dose not affect the purchasing decision in a meaningful way
Parallel
Influences segment attitudes but is not directly related to product or service performance
Hierarchy of Competencies: What Consumers Are Really Saying About How They Want to Interact with Companies?
Attributes
LEVEL
III.Consumer Seeks the Company (Dominate)
ACCESS
Give me a solution; help me out in a bind
EXPERIENCE
Establish intimacy with me by doing something no one else can. Care about my needs and me.
PRICE
Be my agent; let me trust you to make my purchases
PRODUCT
Inspire me with an assortment or great products I didnt know about. Be dependable in your selection and in stock position, so I can rely on you when Im in a bind. Be credible in your product and service offerings.
SERVICE
Customize the product or service to fit my needs.
Be fair and consistent in your pricing. Im not necessarily after the lowest price. Keep the prices honest; dont jack them up or offer big savings when there are none. Be inconsistent, unclear, or misleading in your pricing.
Educate me when I encounter a product or a situation I dont understand. Accommodate me; bend over backward sometimes to show me you care. Give me an experience Id just as soon forget; give me a reason to tell my friends and relatives to stay away.
Make it easy for me to find what I need, get in and out in a hurry.
Consumer Underworld
Block my way, hassle me, keep me waiting, make it hard for me to get in and out.
Competitive-strengths matrix (1 of 2)
Rate the competitor in each of the six areas using the following
5 excellent/superior 4 very strong/competitive 3 adequate/average 2 weak/uncompetitive 1 very weak
Area
Product Manufacturing
Scale
Management
Corporate culture
Competitive-Strengths matrix
Competitive Strategy Offensive Flanking X
(2 of 2)
Defensive X
Guerilla
X X
All industries experience life cycle.The life cycle may conveniently be divided into stages.The rules of the game (key success factors) and competitor strategy change from stage to stage (1 of 3)
Embryonic Growth Maturity Aging
Unit Demand
Maturity
(2 of 3)
Characteristics
Introduction
Low Sales High cost per customer Negative Innovators Few
Growth
Rapidly rising sales Average cost per customer Rising profits Early adopters Growing number
Maturity
Peak sales Low cost per customer High Profits Middle Majority Stable number starting to decline Maximize profit while defending market share
Decline
Declining sales Low cost per customer Declining Profits Laggards Declining number Reduce expenditures and milk the brand
Product extensions,service, warranty Price to penetrate market Build intensive distribution Awareness/interest in the mass market Reduce to profit from heavy demand
Diversify brands and models Phase out weak items Price to match or best Cut price competitors Build more intensive Go selective;phase out weak outlets distribution Stress brand differences Reduce to needed to and benefits retain hardcore loyals Increase to encourage Reduce to minimum brand switching
Situation Analysis
(3 of 3)
The Strategic condition of a business is described by the combination of its competitive position and the maturity of its industry.Strategic condition determines the number of choices available to competitors.
Maturity Stage
Embryonic Growth Mature Aging
Leading
Strong
Competitive Position
Configuration
Joint Capacity Investments Planning Collaborative Supply Chain Planning Execution EDI Web Order Entry Web Procurement
Business to Consumers Business to Business
Business to Business
Buy
Make
Move
Sell
COMPETITORS
COMPANY
COMPLEMENTORS
SUPPLIERS
Ref: Co-opetition: Adam M.Brandenburger & Barry J.Nalebuff
Management team
Network advantage, profitable revenue
Focus
Forecasting, planning, Consumer network customer services, inter-enterprise Metrics, database, mining, electronic commerce Intranet, Internet, Virtual Information system Full Enterprise Demand-supply linkage Global Market Joint Venture Network processing
Tools
Action Midlevel Total organization Area organization Guidance Cost data, Process mapping Advanced cost success funding models, differentiating processes Model None Supply-chain Inter-enterprise intra-enterprise Alliances Supplier Consolidation Training Team Best Partner Leadership Formal Alliance Partnering
Invest to High Protect Build BUSINESS Selectively Build Medium Selectively Manage for Earnings STRENGTH Manage for Low Protect & Refocus Earnings
McKinsey & GE
Planning School
Positioning School
Learning School
Political School
Core Belief
Behavior
Refining and Negotiating reconciling strategy through strategy through power and past experiences politics Adaptive to changing organizational needs Promotes needed change blocked by established forms of influence Direction may be driven by parochial interest rather than common interest
Primary Strength
Primary Weakness
Can become too May promote strategic narrowly drift,requires focused significant resources to implement
SEGARS AND GROVER , Strategic Information Systems Planning Information Systems ResearchVol. 10,No. 3,September 1999
Focuses on a locally oriented link in the value chain, enters a joint venture, or sells out to a multinational Defender
Focuses on upgrading capabilities and resources to match multinationals globally, often by keeping to niche markets Extender Focuses on expanding into markets similar to those of the home base,using competencies developedd at home.
Low
Focuses on leveraging local assets in market segments where multinationals are weak
Industry Transformation
Redefine the basis of competition
Assume another role - E-business storefront - Infomediary - Trust intermediary - E-business enabler - Infrastructure provider
Compress the value delivery system Explode the price/performance ratio
Move the product up the food chain Separate the function from the form
Ref: Net Ready AMIR HARTMAN & JOHN SIFONIS With JOHN KADOR
Transformative experience
Commodity
Ref: Net Ready AMIR HARTMAN & JOHN SIFONIS With JOHN KADOR
Main theme
Distributive Network Allocation/ distribution Facilitate the exchange and delivery of information, goods, and services Sender/ recipient Network optimization Visibility and transparency Distribution
Value proposition
Market player
Timing Market intelligence
Contributor
Price discovery Yahoo classifieds eBay Priceline AdAuction NASDAQ MetalSite FreeM rkets
Market segmentation Supplier offerings Fulfillment Needs matching Amazon.com Chemdex HomeAdvisor Webvan E*Trade Travelocity WSJI
Product design Supply -chain management Cisco Systems Dell Computer General Motors Celestica Bidcom
Stimuli
Marketing Price Product Others
Economical Political Cultural
Buyers Decisions
Buy or not What to buy
Promotion Technological
Quality
DecisionMaking Process
Where to buy (vendor) When to buy How much to spend Repeat purchases