Before becoming mayor of New York, Michael Bloomberg was considered a visionary business man for the strategic insight at the base of his Bloomberg L.P. company’s success. The providers of financial information also needed to offer analytics to help users make sense of the data. The idea should have been obvious to anyone who had ever watched and experienced “a day in the frustrations of the trader” using Reuters or Dow Jones Telerate.
Companies tend unconsciously to do what others do. This herd behavior leads companies to offer more performance on the same standard attributes of the industry and then play catch. This leads to lack of differentiation and commoditization. The implication is that businesses must – now more than yesterday – pursue differentiation and the way to get there is only one, to be innovative.
The business opportunity has been highlighted first by C.K. Prahald with his book “The Fortune at the Bottom of the Pyramid”, published in 2005. The concept is simple: multinational companies should start targeting the 4 billion of poor people in the world, because, even if the pro capita spending is low, in terms of absolute value those people can generate a demand of 5 trillion yearly.
Today, in terms of competitiveness businesses must – at same time – pursue differentiation and low cost. Not anymore one or the other like in Porter’s competitive strategy model. The hyper-demanding customer and the level of competitiveness ask for both.
In recent years, scholars have researched and published on “reverse innovation”, i.e. how to harness and channel innovations from the periphery to the Centre.
In a recent survey, European and American CEOs didn’t show any interest on the insight generation capability of their companies. The “strategic insight generation process” wasn’t included in their top ten priorities. As demonstrated by many behavioral studies, human beings can remember no more than 3-5 items at time. If you are not in the top 10, you are irrelevant.
When planning new products, companies often start by segmenting their markets and positioning their merchandise accordingly. Then they do a concept test, a product test and a quantitative purchase intention test before making the “final go” choice.
A lot of companies are internally driven and spend most of their time, attention and resources on internal issues. Companies can be technology driven, sales driven, Wall-Street bound. There are different pathologies. Jack Welch, months after his appointment as CEO said: “GE is a company with its face in front of the CEO and his ass looking at customers”. He recognized that he most critical barrier to transform GE was its internal focus. Continue reading
At ECSI we have developed a theory of the competition evolution, called Competition H2, i.e. herd plus hell. A good definition of herd is the following: Unconscious and uniform behaviors of a group without a leader; emulation is the key ingredient, the tendency of animals to conform to what the others are doing to feel safe.
Disney is a formidable business with $ 36 billion in revenues in 2009, a media colossus with full coverage of its various channels and a truly global distribution of products and services. Disney business model could be portrayed as a portfolio of characters. To use an analogy, while P&G could be portrayed as a portfolio of brands (Dash, Pampers, etc..), the same thing goes for Disney regrading characters. >more