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Planning for Rapid Growth and Economic Uncertainty
Online Retail Logistics Conference 18-19 November 2014
Charles E. CrouchLecturer in e-Business & Digital MarketingChisholm Institute
CC by 4.0
Images: BBC
Several years ago science historian James Burke hosted a TV show on the BBC, Connections, an Alternative View of Change, discussing the history of science, invention and accompanying changes.
Images: Wikipedia, C. Crouch
For example: The invention of the stirrup in China let people sit securely on horses. Mounted cavalry led to heavily armored knights on massive horses with accompanying squires and attendants. Supporting these knights required major changes to agriculture, estates and towns, leading to centralized commerce.
However, for centuries the rate
of change was slow.
1978! 1979!
Image: BBC
In the last episode of Connections, James Burke discussed change itself, noting that “The ease with which information can spread is critical to the rate at which change occurs.”
But this episode was televised in 1979!
Photos: Wikipedia, Twentieth Century Fox
This was the world in 1979:
The Apple II was a hot computer.
The Internet did not exist. Several universitiesand government labs were connected by something called the ARPANET.
Mobile phones were still a decade away.
Social Media?What’s that?
Photos: Microsoft, iStockPhoto
Today we are overwhelmed by change. Let’s look at a few things you can do to address the challenge of continuous change.
Strategy as Simple Rules
Image: iStockPhoto
Photos: TheOldMotor.com, C. Crouch
When business was simple, one could afford complex strategies
Now complex business needs to simplify
Establish Position
Leverage Resources
Simple Rules
Strategy TypesThe classic view often taught in school. A unique position is exploited in the market.
Photos: C. Crouch
A newer approach in which differentiating resources are used across separate markets
Knowing when to act, seizing fleeting opportunities
Adapted from: Kathleen Eisenhart & Donald Sull, “Strategy as Simple Rules”, Harvard Business Review, 2001
Simple Rules StrategyQuickly recognize positive/negative situations in the marketplace.
Act accordingly.
Military forces have used a simple rules strategy for years by publishing clear, brief Rules of Engagement to tell troops how to act.
3 Approaches ComparedPosition Resources Simple Rules
Competitive Advantage
Unique, valuable position
Unique, valuable resources
Unique, simple rules &
processes
Works Best
Well-structured slowly
changing markets
Well-structured moderately
changing, markets
Ambiguous rapidly changing
markets
RiskHard to alter position as
markets change
Slow to build new resources
as markets change
Hesitant to take promising opportunities
Source: K. Eisenhart & D. Sull, “Strategy as Simple Rules”, Harvard Business Review, 2001
Establish Position
Leverage Resources
Simple Rules
TAXI
Both the Established Position and Leveraged Resources Strategies are under attack today by nimbler, digital-based companies. But having a Simple Rules strategy is one way to adapt.
Maximum 75 employees1.
Smaller companiesGrowth phase
Cheaper
Technology skills75% must be engineers2.
✔
✔
Some years ago Cisco was acquiring small companies at the rate one per week. They
used a set of simple rules to quickly decide which companies to investigate farther.
In Silicon Valley, Mergers Must Meet the Toothbrush TestBy DAVID GELLES AUGUST 17, 2014 9:22 PM
When deciding whether Google should spend millions in acquiring a new company, Larry Page, asks whether the acquisition passes the toothbrush test:
Is it something you will use once or twice a day,and does it make your life better?
http://dealbook.nytimes.com/2014/08/17/in-silicon-valley-mergers-must-meet-the-toothbrush-test
Quickly evaluating potential opportunities is still a vital skill today.
Tall Timber Café
Photo: Eddie Jim, goodfood.com.auSource: Fiona Smith, Australian Financial Review, 25 Oct 14
Steve Rowley, co-owner of the Tall Timber Café in Melbourne, Australia was asked by a customer for some old coffee grounds to use as a scrub for cellulite. Did he just give the customer the grounds…?
No, he built a product and started a business. After18 months FrankBody.com is now selling one pack per minute and shipping to countries around the world.
Business Processes
Photo: C. Crouch
Companies can apply this same idea of Simple Rules to their internal business processes.
Social Media?
Photo: C. Crouch
For example, social media is acommon marketing tool today,but many companies make mistakes using it.
Social MediaPolicy
To provide guidance, many organizations prepare a social media policy (probably because their lawyers or HR told them to). They instruct everyone to read the policy, but how many people actually use it?Could “simple rules” make this easier?
Source: Air Force Public Affairs Agency, Emerging Technology Division, 2009
Respond to online blogs
Flow chart
Easy to use
The US Air Force has a one-page policy/flow chart showing how to respond to online blogs.
Which makes more sense? A heavy document no one reads or a light page everyone can use?
Think Lean
Photo: AngMoKoi, Wikipedia
The Lean Startup movement is popular now as entrepreneurs around the world start their own businesses.
Build Test
Feed
back
Feed
back
Feedback
GatherRequire- cents
Releaseto
Market
Customers
Customer Development
Lean startup began in the software industry where the classic model involved customers at the start, but then ignored them until the final product was delivered. Steve Blank popularized “customer development” which involved customer feedback at all stages in the software development process.
‣ Blank’s Customer Development
‣ Agile Software processes
‣ Toyota Lean Production
Lean: efficient resource use
Especially Time
Agile development uses collaboration and continuous improvement to evolve requirements and solutions.Lean production focuses on reducing waste to improve customer value.
Eric Ries combined Steve Blank’s customer development ideas with agile software development and Toyota’s lean production into the Lean Startup
Business Idea Development
Frontload
Time
Classic
Lean
Classic development loads lots of resources at the front end of a project.
Lean methods run many small trials to continually improve as the project progresses
The Lean Startup idea has proved so useful that a whole ecosystem has evolved.
Thinking LeanDetermine best plan
Identify riskiest parts
Test these first
Small experiments
Build Something
No One Wants
You can use lean startup methods in your own organization. The biggest risk is building something no one wants or uses, so find this out early, rather than at the end.
Photo: iStockPhoto
Source: Botsman, R. “Sharing’s Not Just for Startups” Boss Magazine, Oct 2014
Staff at Marriott hotels noticed people wandering through their lobbies, looking for places to meet and work for short periods. Also, Marriott had loads of underused conference rooms.
Meeting Space: by the hour
They decided to test a new service, renting conference rooms by the hour. One risk was the expense of building a room reservation system. Another was no one would want to use the service.
Photo: Marriott
To reduce these risks they partnered with LiquidSpace to run the booking system and had a trial run at hotels in Washington DC and San Francisco, places where people were used to working remotely.
http://www.workspaces.marriott.com
The test was successful and todayWork[Space] on Demand is operating at over 400 hotels and reaching a new customer base of local lawyers, consultants and independents.
Pascale Helyar-Moray
I wanted to be able to create jewelry exactly
as I wanted it.
StyleRocks is an online Australian company offering customized jewelry.
The owner started StyleRocks when she was home with children and frustrated
she could not get out to shop.
The company provides different options to customize each piece. They offer a free resizing service
for rings but noticed many people still got this wrong.
The website offered a sizing guide which had to be printed, cut, pulled to fit and measured.
3D Ring Printing
Check sizing
Credit on purchase
More committed
Alternatively, customers can order a test ring made on a 3D printer.
This program has recently launched as a test to see how
the market reacts.
The design files for the rings were already at hand, and an outside service prints the 3D rings, reducing the cost of this trial.
Takeaways
Photo: C. Crouch
Today we live in a whack-a-mole world where new products, competitors, services and customers pop up at any time.
Video: YouTube
Simple Rules
Can you simplify your own rules and processes to make them easier to use when conditions change - and they will!
Photo: ad:tech/dmg events
Think Lean
Experiment with new ideas, see what works for you, then do more of them.
Photo: C. Crouch
Assignment
1. What complex process
can I replace with a
simple rule?
2. That new idea I have.
How can I try simple
experiments to test it?
I am a teacher. Now it’s your turn.
Here is your assignment.
Other Presentationson SlideShare
Photo: C. Crouch
Planning for Rapid Growth and Economic Uncertainty
Online Retail Logistics Conference 18-19 November 2014
Charles E. CrouchLecturer in e-Business & Digital MarketingChisholm Institute
CC by 4.0
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