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Good Strategy Is Not An Accident

Customer Really Does Rule

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Strategy

The Customer Really Does Rule

The Customer Really Does Rule

By Dave Carey

dave.carey@eminentlogic.com

Among the business lessons and rules learned over the years is that the customer really does rule. This was learned in the context of understanding that there are a finite number of sources of actual, hard cash for a business. Among the alternatives are:

•  Borrowing it (in the form of debt or equity or venture capital)

•  Selling assets (if you have them to sell) or

•  Getting it in the form of revenue from customers

Among the three, it makes sense that if one could choose, they would choose revenue from customers. Debt, equity, and venture capital, in the beginning start up phases, are fine. Unfortunately each has continuing costs associated with it. Continued borrowing over time can become onerous and cheaper viagra eventually lead to a company’s demise. Selling assets is fine until the assets run out. But over time, revenue is the sustainable source of cash that is the reward that the customer bestows upon a company for its excellence and the value of its offerings. There is nothing onerous in reasonably “growing the top line” on a continuing basis.

Now customers have numerous choices as to where they send their money and who they reward, i.e. they have alternative choices called “the competition”. A competitor, by definition, is “the customer’s alternative choice”. There are direct competitors (those that are very much alike in appearance), indirect competitors (those that do not look alike but serve the same customer need), DIY (do it yourself) alternatives and in some instances, doing nothing is an alternative choice for the customer.

So how does a business capture the customer reward?

Since the goal is to have the customer send you the money, and lots of it, the first step in maximizing cash from revenue is to find a group of customers that can be served in a meaningful and sustainable, economic fashion. This is called “target market selection”. One of the first major strategic decisionsthat any company makes is deciding what market it will serve. Since it can’t be all things to all people, it must be something meaningful to some group. In nature there is a saying “no species can live everywhere, but each species must live somewhere”. Translated into the business world, this means find a specific, relevant target market that is compatible to your business strengths. Focus on that market. Don’t spend a lot of time considering irrelevant markets; a waste of resources.

Once that target market has been selected, the second major strategic decision that a company must make is deciding what will be its basis for a sustainable competitive advantage. There will usually be alternative choices for the customer’ money in the target market; called competition. And in order to maximize the revenue stream from the customer, one must have a unique and distinctive advantage over those alternative choices. Lower cost, unique features, superb service, distinctive positioning, are a few of the alternatives for establishing a competitive advantage. Whatever one selects, be sure it is sustainable and affordable.

Well, having selected a target market and buy cialis super active established a basis for competitive advantage, the next step is to set revenue goals and operationaltracking measures that will be the predictors and evidence of the wisdom of the strategic decisions. Another lesson or rule is that one should always be number one in market share within the relevant target market, or at least a close number two. The customer’s response in revenue terms is what drives market position. The more they like and value what you are doing, the more revenue they will send you. Market leadership reflects the relevance of the market selected the strength of the offer’s unique and distinctive advantage and the value seen by the customer. Conversely a weak market position indicates the weakness of the strategic decisions and, of course, less revenue.

As noted above, operationally, the relative value of the offer as seen by the customer, in comparison to their alternative choices, is an accurate leading indicator of what their actual in market performance will be. Value can be determined by:

•  Ranking and valuing the offer’s features in terms of their importance

•  Rating one competitor Vs another on the features, and

•  Rating each competitor Vs the other in terms of its perceived value (CVA score)

All these measures aid in predicting what the customer will do. Since customers usually behave in relationship to the value they perceive, the highest value score for a competitor will lead to the highest revenue stream to that competitor.

There is another aspect to being the market leader and that is the competitor with the highest market share (by virtue of selling the most volume) is usually the low cost producer within the selected market segment; or they should be. Through scale and experience effects, market leaders should have the lowest costs. Combined with the greatest revenue, this makes the market leader the competitor with the highest margins and returns, i.e. the financial leader. Not a bad combination.

In the long run, some companies seem to continually outperform the others in terms of market position, margins, returns, and creating shareholder value. Others do not, lagging behind in market share and financial performance. Since the marketplace is neutral to everyone, why do some companies do better than others? Winning companies have a winning strategy as it relates to target market selection, unique and distinctive offers, cost control and investing scarce cash resources. Winning companies become number one with their customers in their respective markets. And they understand the value of being the low cost producer. But most importantly, they recognize the value of the customer who is the final arbiter of their success. WHAT’S IN YOUR WALLET?

Eminent Logic Think Tank  Team

“Enjoy the value it brings it you”

Good Strategy Is Not An Accident

Good Strategy Is Not An Accident

By Ryan D’Souza

Strategy involves gaining continuous insights on the external market, creating innovative alternatives, developing a business design and ensuring the executability of that design by orchestrating and developing the organization’s capabilities. It is not principally about creating a document or following a planning calendar, although both play a role.

What is good strategy? How can I ensure my strategy delivers business results? Strategy has never been more important. A good strategy targets high value customers, ensures your offerings are distinctive, positions you for strategic control and secures future profits. Weak strategies fail to take stock of the changing landscape and rely on tired or unproven business designs that typically result in poor market performance. Good strategy looks carefully at the organization’s capabilities and ensures that critical tasks are assigned and appropriate measurements in place. Good strategy ensures that critical skills are in place and that the organization’s culture supports outstanding performance on the critical work of the business. Weak strategies ignore organizational capabilities and blame resulting shortfalls on execution.

How good are you at strategy today? Do you want to get better? Strategy is not about a document. Strategy is about action. Whether good or bad, strategy shows itself in the everyday actions of the business. It is reflected in the quality of the dialogs we hold, the decisions we make and the actions we take. A structured assessment of those activities can tell us how good we are at strategy, and how we can get better. Developing effective strategy involves a range of skills that can be developed and practiced.

Organizations are complex systems. All the parts and their connections need to work well together. Superficial diagnoses of organization issues are the enemy of senior management. They can lead to a loss of credibility and sap valuable energy from employees. We take care and avoid the temptation to go for the silver bullet. We emphasize the attunement of cultures that enables people to be committed entrepreneurs for their company with processes that provide discipline and measure results.

Developing and executing a winning corporate strategy isn’t easy even in the best of times. There are so many factors of uncertainty like business, global, economic and political to name a few that challenges companies today. To succeed in today’s climate, companies must:

  • Understand and leverage the intersection of technology with customer requirements and business design to drive measurable results
  • Identify and focus on your most profitable customer segments to understand and meet their needs
  • Better leverage technology to increase your return on business investments
  • Align the business and IT organizations via shared metrics and ownership
  • Become an adaptive organization with the flexibility to adjust to market changes and seize new opportunities
  • Cultivate and reward executional expertise to achieve competitive advantage in the near and long-term

Strategy cannot be predetermined despite a companies true intentions. True strategy helps clients transform enterprise and operations by:

  • Framing industry opportunities and challenges into specific strategic options
  • Formulating actionable strategies that intersect business and technology; and
  • Accelerating implementation through tailored operations and change programs.

Your needs may fall or more categories below.

  • Streamlining Costs: Determining how to cut costs that have built up over the past 10 years of economic growth to improve financial performance and fund new initiatives.
  • Timing of Investments: When to move forward in this climate determining the rate and timing of investments.
  • Enhancing Productivity: Maximizing returns on past and future investments in technology, processes, and people.
  • Growing Revenues: Determining how to grow the business in a stagnant and uncertain economy and in a marketplace where “customers pick you.”
  • Investing for Future: Building flexible organizations and capabilities that can compete successfully in a future that requires us to constantly adapt.
    • Linking Strategy to Execution: Determining how to ensure that strategies can be implemented, and that implementations achieve what the set out to accomplish.

Eminent Business Institute Team

“Enjoy the value it brings it you”

 

comment@eminentlogic.com

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Marketing

Six Successful Ways To Enhance Business Value

Six Successful Ways A Business Can Enhance Business And Customer Value

 

By Ryan D’Souza

Company’s today need to develop a high performance culture to ensure it’s value is market-driven, compelling to customers, differentiated and sustainable and effectively enabled for sales, resulting in revenue growth. By implementing a value-add Market Planning process, one can become more knowledgeable about the marketplace, customers requirements, competitors and the competitiveness of your capabilities. This will allow a company to invest in the offerings/solutions and programs customers value most, and the marketing, development, alliance and sales activities necessary to bring those offerings/solutions and programs to the market. In turn, the company will benefit from improved management of those offerings/solutions and programs over their life cycle in order to meet performance goals.

How fluid are you in moving from strategy to execution?

This is dependent upon a seamless, well-choreographed performance ofMarketing and Sales. A company marketing organization needs to flow from strategic to tactical — to produce a strategy with aligned offerings/solutions and program plans, and to enable execution

Marketing Management’s contribution to High Performance Marketing is about defining value for a Company;

• Value perceived by customers, conveyed by and provided through the Company brand

• Value received by Company, in return, through execution of competitive business designs

Below are 6 ways to enhance your company or business unit business value.

a) Understand and Choose Value

Understanding and anticipating the customer’s changing definition of value in a dynamic marketplace, with shifting customers, competitors, capabilities and company strategies. Choosing the opportunity, market segment(s), and/or customers, and the scope of value to be delivered by a company at a profit to these segments, with or without partners.

Phase 1. Understand the Marketplace to Select Markets and Business Segments

Phase 2. Develop Value Proposition(s) to Articulate Relevancy and Differentiation

b) Create and Return Value

Developing customer-driven offerings/solutions and programs to deliver maximum value. The strategic and tactical approaches for returning value including profit models, branding and pricing structures.

Phase 3. Develop Business Design to Ensure a Sustainable Business

Phase 4. Design Marketing Mix Elements to Embody Value Proposition

c) Communicate and Deliver Value

The five “Ws” of customer communication: Who says what to whom in which channel, when and with what effect? Deploying and enabling routes-to-market to deliver value to customers, down to the named customer.

Phase 5. Assign, Allocate and Optimize Resources to Ensure Efficient Execution

Phase 6. Measure Customer Conversion to Validate Business Value

The take away is for companies to realize that proficiency in understanding markets and creating customer value is a primary determinant of its long-term performance. In addition, instilling key marketing processes and methodologies that are not only strategic but both strategic and tactical in nature. By implementing the above process, a company can increase their mind share, market share and revenue in today pervasive global economy when executed efficiently.

Eminent Think Tank Team

“Enjoy the value it brings it you”

ryan@eminentlogic.com

comment@eminentlogic.com

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IT Management

CIO Roadmap To A Self-Funding Innovative Model

CIO Innovation Corner

CIO Roadmap to a Self-Funding Innovative Model

By Ryan D’Souza,

Innovation has become a key driver for CIO’s today. The role of the CIO is transforming from a manager of Information Technology (IT) to C-suite leader who enhance business strategy and innovation that results in a competitive advantage. With budget pressures and increase costs escalating, CIO’s are looking to moving away from their traditional business model that constrains innovation and efficiency to a model that enhances business value through innovation and business growth.

Successful CIO’s also recognize that IT has become far more than a means of increasing efficiency and reducing costs. Rather, they see that innovation can create new and differentiating business value for their organizations, and IT has an integral role in that process. Research shows CIO’s today are taking some important steps in helping to reposition their IT infrastructure to support business growth, as well as to continue to drive IT operational efficiency. In addition, IT organizations may find it difficult to meet the rising demands of the public. After all, they’re expected to create new services on top of existing infrastructure, which requires extensive integration work as well as ongoing change and upgrades to those systems. They are also dealing with outdated components and an overall infrastructure that isn’t based on open standards, which creates a great deal of complexity. On top of all that, IT organizations have to make sure that they’re complying with regulations, protecting the privacy of their citizens and following security-rich processes and procedures.

So how can “CIO’s, who are already under pressure reduce the cost of their IT, help drive business model innovation, enhance collaboration and integrate business/technology?

The answer is: Create a self-funding model to Innovative your business

In this value model, the IT infrastructure itself can become a critical part of the overall funding equation. By taking costs out of infrastructure and reinvesting the savings, CIO’s and IT executives can drive both cost reduction and enhance business enablement and innovation. Below roadmap outline steps IT executives and CIO’s can take to develop a self-funding innovative model in order to increase IT efficiency and effectiveness within your organization.

1. Assess Current Infrastructure State

From analyzing your current IT infrastructure, aligning IT with business initiatives to unlocking the value of your current IT investments, saving can be generated which in turn can invested for new service capabilities.

2. Optimize your Project Roadmap

Work through the set of activities that are required to move you along the desired path to get to that aspirational state. You can then create a prioritized roadmap of improvement projects that will enable you to maximize your business benefit. The first wave of projects you implement should be those with the highest benefits; that is, those that most closely align your IT and business strategies. By prioritizing your IT improvements, you derive the greatest business value up front and those savings can be reinvested in new capability development to drive additional business value. This is done through Portfolio Management andBusiness Case Management.

3. Develop Sourcing Alternatives

After establishing the set of improvement projects that are key to moving you toward your end-state objective, look at the available options to source and fund those activities. Think through each project and consider a myriad of factors to develop a position as to whether a particular project should be sourced internally, have some out-tasking applied to it or be fully outsourced. Many of these factors, which can include your available capital, your own IT expertise and the savings potential for the particular project under consideration. In addition, think develop an end-to-end sourcing strategy that will help you achieve your agenda in an efficient and cost-effective manner.

4. Design Future State

Develop an Architectural blue of your organization, choosing the right Vendor and as well as managing and monitoring your progress are some approaches to take. As we said at the outset of this discussion, what you’re striving for today is an infrastructure that is flexible enough to respond rapidly to legislative changes as well as organic changes driven by constituent requirements. These changes, which take the form of service and business model innovations. These are the kinds of changes that enable fundamental change in the way government provides public services. To make those changes possible, you have to have an infrastructure that is flexible enough to accommodate change easily and cost-effectively. The result of working through these four steps will provide you with an actionable IT plan that aligns with and enables your business objectives.

Summary

By incorporating and taking the above fact based and actionable steps mentioned above, CIO’s are generating the below savings that in in turn enhances business and customer value with their organization.

% IT Savings Generated from:

Portfolio Management (25-40%)

Data Center Consolidation (20-40%)

Server Consolidation (10-25%)

Network Infrastructure (LAN, MAN, WAN) (10-30%)

Outsourcing Alternatives (15-30%)

Legacy Systems (40-60%)

Eminent Logic Think Team

“Enjoy the value it brings it you”

 

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