Archive for the 'Business' Category

Strategy as a pattern

I recently had a conversation with a client who wished to develop a strategy for her team. She manages a creative team of people who she felt were looking for more direction. During the conversation we discusses strategy as a pattern  in which "strategy is consistency in behaviour, whether or not intended" (Henry Mintzberg, California Management Review, Fall 1987) and emerging strategies in which the "strategy can evolve in response to an evolving situation" (Henry Mintzberg, Harvard Business Review, July-August 1987). In essence, the pattern of actions her team performs defines their strategic direction. This approach to strategy definition suited the creative nature of her team and the constantly changing environment in which they work. So how was she to address their need for direction? Some team members were happy to work in an environment that was guided by high level goals yet others wanted more specific direction.

One approach we discussed was for her to essentially ask her team members what actions they feel the team should be pursuing and then to identify patterns in those actions and infer the strategic objectives. A problem she had with this approach was that it didn’t address the needs of the team members who wanted direction as she was the one who was asking for direction. In the end we settled on the following approach:

  1. She would reflect on and document the current, and past, activities the team is pursuing
  2. She would complement this list of activities with activities she felt the team should be pursuing
  3. She would identify patterns in the list of activities and infer strategic objectives from them
  4. She would present her strategic objectives and ‘action’ plan to the team for discussion
  5. She would incorporate feedback into the strategic objectives and plan
  6. She would "sanitise" the strategy by conducting an environmental analysis and a competitive analysis
  7. She would identify the core competencies and capabilities of the team
  8. She would document, as best she could, what it is the customer values
  9. Together with the team, she would refocus the strategy and plan based on her findings from steps 6, 7 & 8
  10. She would identify key performance indicators, measure performance using those indicators and regularly communicate back these performance results to the team
  11. She would use the regular meetings she has with each team member to capture new emerging strategies

The open source business model

Many people often find it difficult to get their heads around how exactly open source companies survive, after all they give their product away for free. Today, one of the largest open source companies in the world, MySql AB, was purchased by Sun Microsystems for a cool $1 billion. Jonathan Schwartz, CEO of Sun, in a great blog post explains the economic justification for the purchase. In it he quotes Marten Mickos, MySQL AB’s CEO, on his explanation of the open source business model:

the spectrum describing the marketplace spans those with more time than money, who form the user and developer communities around free software; and those with more money than time, who purchase commercial support contracts typically in more mature enterprises. To win in the long run, you have to win on both sides of the spectrum - with the same product. Crippling products, or sneaky licensing exceptions don’t work - freedom does

Jonathan himself says of both companies:

we both invest in very high quality free software and the cultivation of large communities, then turn our efforts to monetize at the point of value for companies that want commercial support

Now that’s what I like about open source - it is an understanding of what customers value. How many companies out there don’t know what their customers value and how many don’t even try to figure it out. Remember it is the customer that defines value, you as a business are simply required to create it.

Internationalisation for SME’s is not optional

According to a European project on Supporting the Internationalisation of SME’s (December, 2007),

SMEs that do not consider internationalisation are unknowingly self imposing a severe restriction on their potential for long term survival

According to the report, the barriers SME’s face with regard to internationalisation

are a lack of financial resources but most of all lack of skills or skilled human capital to tackle internationalisation

The report recognises the important role technology has played, and continues to play, in breaking down borders and facilitating globalisation. It also makes an important observation; even if you as an SME decide not to trade internationally, and instead concentrate on your domestic market, you must still be able and willing to compete with international SME’s that target your market.

Therefore, a pro-active attitude to global competition and markets is increasingly becoming not a choice but a matter of necessity.

It is not just access to new markets that is driving SME’s to internationalise but also access to technology and, not surprisingly, those SME’s that do internationalise have shown a greater capacity to innovate.

So what are the drivers?

  • The “international orientation of decision makers”, which is, more often than not, the owner/manager.
  • The size of the SME.
  • The industry/sector to which the SME belongs to.

Interestingly, although the research indicates that international firms are more productive, this is not limited to firms that export. Firms that import are also international and have equally demonstrated increases in productivity.

Finally, seeing it is something close to my heart,

In relation to SME competitiveness, for the vast majority of companies there is a large potential for innovation in operations and management, including the acquisition of IT and quality systems and capabilities. To further highlight this point its is important to remember that “marketing” entrepreneurs will go international before “technical” entrepreneurs and that innovation at plant level is not a guarantee per se of improved or increased performance. In this sense, greater use of the possibilities offered by IT and support for greater use of ecommerce and CRM systems (just to mention two examples) point one way forward and can be the most relevant innovation strategy for small companies, crafts and services.

If you can’t measure it, it doesn’t exist.

A popular business adage is “if you can’t measure it, it doesn’t exist” (I’ve also heard it extended with “and if it doesn’t exist you can’t manage it”). I’ve regularly heard business consultants recite this when they are justifying the need for key performance indicators in relation to a set of objectives.
Anyway, the same holds true for the TippSoc community blog. I have noticed that, according to the TippSoc home page, I regularly have 1000+ “hits” on my blog. But what exactly constitutes a hit? Where are the hits coming from? What percentage of hits actually represent “eyeballs”? If I can’t answer these questions, and I can’t, it means I can’t measure what is being asked of me, and if I can’t measure the number of visitors to my blog then they don’t exist.
So what next? We at TippSoc need to measure who/what is visiting our blog site, when they are visiting our site, how often, what do they read, what do they have for breakfast? Has anyone any ideas how best we can do this?

Innovating the service sector with technology

Last night I was reading about technology management strategies, most of the comments were centred around organisations that provide products and not services. It got me thinking about the service sector (the biggest sector in Ireland and in many other “developed” countries) and how technology can be used as an innovation tool within the sector and in particular the professional service sector e.g. healthcare, education, finance, legal, etc. As with all innovations the focus should be on improving customer value. One characteristic of the professional service sector in general which differs from the industrial sector is the time required to “transfer” the service to the customer. I can purchase an iPod (once I have decided that’s what I want) in minutes, but to purchase the service of a doctor, solicitor or teacher can take anything from hours to years. That increases the cost of the service (the cost of time) for the customer. Surely technology can be better used in innovative ways to reduce this cost? Do I have to visit my solicitor in person to discuss the purchase of my new house? Do I have to sit with my mortgage provider for an hour as she “transfers” her service to me? Do I have to go to class to learn how to do my business accounts?

There is a lot to be said for out sourcing

There are many arguments for and against outsourcing IT functions. Many believe that if it is not part of your core business then you should outsource. I tend to agree. But one thing is for sure - if you can’t do it in-house don’t try. If you have problems managing your email (or are simply fed up with it) then you should seriously consider moving to Google Domain Apps.