Breakout is an Epi-V initiative, delivered by Transitions.

Module 2 – Setting your Strategy for Growth

Shai Vyakarnam

Aligning Vision and Values

You

Business

Team

VisionAnd

Values

Tool box

Crossing the Chasm(s)

Has implications for:- Customer behaviours – what they need- Cash flow, funding, dilution, strategy

The

Ide

a/te

chno

logy

Pro

of

of c

onc

ept

Pro

toty

pe,

beta

tes

ts

Ear

ly e

ntry

Science

Technology

Applications

Markets – commercial advantage

Customers – viable applications

May need infrastructureLike electricity, construction industryManufacturing, trained labour force

Distribution channels

Unmet needs

Understanding the journey

Funding needs

Big Wins

Proof of conceptNeed, solves a problem

Prototypes

Reliability,Ease of use, safety,…

Creativity, networkingBlind alleys, need for cash

Ratio: 1:3:10 – ability to cross Death Valley

From idea to feasibilityWhat stage are you at?

Technicalattributes

Technicaladvantage

ApplicationsApplications -

commercialadvantages

Significantwins

Viableapplications

NovelPatentablePoliceable

Technology

Faster

Smaller

Cheaper

New effects

Filter

Comparisonwith rival

technologies

10x

2X

1X

Brainstorm

CreatePotential

Applicationsand understand

Potential applications

Relevanceof technicaladvantages

MARKETS

Market sizePotential buyers

Reasonable returns

Sciencebase

How the cash flows

Growth rateOf industry

Relative Market share

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++---

+++- + - - -

Being focused and alert

Profit Pyramid

Income Costs

Actions to generate:

Sales revenuesMargins

Customer retentionClient acquisition

Fixed costs:Those you incur anyway

Variable costsThose you incur for each transaction

Creating a Star Team

VisionTask Leadership

Personal CommitmentValues

Social IntegrationInner/outer team

Team Resources

Structural Effects

How the team is organised

Who knows what

Harnessing the energy of people

“Founders”

Tools for top down

• Competitive strategy – requires

• environmental analysis,

• SWOT,

• Plans – the business; marketing; Organisation

• Milestones

• Quarterly forecasts and results

• ….simple really!

Five Competitive Forces

• “Formulating competitive strategy is relating a company to its environment”

• Every company’s environment is populated with customers, competitors, suppliers and, in most cases, regulators.

Michael Porter

Competitive Forces that can shape an industry

Threat ofnew entrants

Degreeof

Rivalry

SupplierPower

Customer(Buyer)Power

Threatof Substitutes

How competitive is it?Concentration (number of competitors)

Growth rate of industry and of main rivalsFixed cost/value added

Product differencesBrand identity and loyalty

Switching cost (for customers)(Over) capacity in the industry

Exit barriers for firms

The greater the customer power the less value the firm captures

Who are they?Buyer concentration or dispersionBuyer volume on each transaction

Buyer information – how knowledgeable are theyAbility to package supplier’s

product oneself (backward integration)Substitute products

Product differences or varietyBrand identity/perception

Price/total purchases

The greater the supplier power the less control over inputs

Supplier concentration – who are they?Substitute suppliesSupplier volume (numbers of them)Product differences?Switching cost to youPrice/total purchasesThreat of forward integration – Can they do what you do?Importance of volume to supplier

How easy is it for new rivals to enter the industry?Scale economies

Proprietary product differencesBrand identitySwitching cost

Capital requirementsAccess to distribution

Absolute cost advantagesLearning-curve effects

Government policy, regulatory environmentAccess to (low-cost) inputs

Expected (perceived) retaliation

What alternative products and services are there and what threat do they pose?

Number of alternativesCost effectiveness of alternatives

Even different ways to spend holiday moneyRelative price/value

Price sensitivity of customersBuyer propensity to switch/substitute

15

Kevin Forbes

Tac

it

Ro

uti

nes

Relational

Assets

Tangible Assets

Sys

tem

Ass

ets

Knowledge Assets

Cultura

l

AssetsPUV

PP

Responsiveness

Creativity

Co-operationProfessionalism

Learn

ing

Operating

Systems

ControlSystemsHRM Systems

InformationSystems

Co-ordination

Systems

Lo

cati

on

Bui

ldin

gsEqu

ipm

ent

Patents

Information

Trust

Reputation/

Brand

Switching

Costs

Con

trac

ts

Tec

hn

ical

Kn

ow

led

ge

Kn

ow

-ho

w

Insi

gh

t

Strategic assets – your own or how will you help your customers?

Cliff Bowman

Perceived User value

Price point

Value innovation

What factors can be eliminated that the industry takes for granted?

What factors can be reducedwell below industry standard?

What factors should be raisedwell above industry standards?

What factors should be createdthat the industry does not offer?

Cost savings througheliminating and reducing

Buyer value enhanced,thus creatinghigher revenues/volumes

Strategic Innovation

Adapted from Kim & Mauborgne 1999

Value gap analysis: budget hotels

Data Source: Kim & Mauborgne 1999

0

Rest. Lounge Room Bed Silence Price

Rating

0.25

0.5

0.75

1

2* Hotels

F1 Hotels

1* Hotels

Elim

inate

Red

uce

Rais

e

Do You Know What Makes GOD Laugh?

Keeler – Profumo affair

Lord Macmillan

A few ideas for bottom up planning

Transitions Growth Model‘Breaking through the glass ceilings’

Tactical

Strategic

Visionary

A B

Doing things right / wrong

Removal of barriers

CULTURE AND EMPOWERMENT

Long term future

Operational focus

Clarity of direction

Breaking Through Glass CeilingsWorkshop

T

ell

Del

egat

ion

C

oach

ing

sel

l

Selli

ng

Mar

keting

B. P

lann

ing

Tro

uble

Wee

kly

Org

anisat

ion

sh

ootin

g

plan

ning

p

lann

ing

Book

keep

ing

M

anag

emen

t

Corp

orat

e

Acc

ount

s

Fin

ance

Ord

er

M

arke

t

S

trat

egic

taki

ng

r

esea

rch

alli

ance

s

So How Do We Break Through the Glass Ceilings

• Roosevelt - New Deal (not New Labour!)

• Relief

• reduce errors

• reduce wastage

• improve the quality of sales

• Recovery

• ABCD - become more strategic with growth

• Reform

• articulate the vision and start to live it

Relief

Create head room for thinking

Relief

• SWOT - W = OTSU list

• Very basics must be right

• Investments to reduce errors

• Can add 5% to bottom line!

• Also then much more fun

Potential impact of operational effectivenessThe Power of 1%

• Selling price 100 101.0

• Direct costs 80 79.2

• Gross profit 20 21.8

• Marketing costs 87.92

• Admin costs 87.92

• Operating profit 45.96

An increase 149% on operating profit!

Transitions Model of Growth

Tactical

Strategic

Doing things right/wrong

Time

Doing the right things

Strategic Option Questionnaire

www.transitions.co.uk/tools/soq

You have to sell something to someone to make a living

Totally new

Existing

Existing

Totally new concept

A

CD

B

Technology solutions

Mark

ets

an

d

CU

STO

MER

S

Igor Ansoff, S Vyakarnam and J Leppard

Implications for marketing and market research

Chapter 2Chapter 3

Chapter 4Chapter5

Implications for Finance

Chapter 6

Implications for People

Chapter 7

Business Direction Let’s Explore Your Current Opportunities

Tech 1 Tech 2 Tech 3 Tech 4 Tech 5 Tech 6

1

2

3

4

5

6

Technology

Customers

Tech 1 Tech 2 Tech 3 Tech 4 Tech 5 Tech 6

1

2

3

4

5

6

Mar

kets

and

Cus

tom

ers

Technology – Product and service solution

Reforming

The Planning Pyramid

Vision

Mission

SMART GOALS

VALUES

Personal ValuesTeam ValuesPersonal ObjectivesPersonalityCreativityManagementResources

ASSUMPTIONS

CompetitionEconomicSocialPoliticalInstitutionalTechnological

STRATEGIES

TACTICS

DAILY ACTION PLANS

Results

Process / Activities

This BHAG is the beacon and is the overriding guiding light that provides focus to the business

Valu

e C

reat

ion

Our BHAG

BHAG

A big hairy one !

Strategy

Our game plan

Strategic Themes

What we need to do

Balanced Score Card

Implementation, Focus, Targets

Personal Objectives

What I need to do

Outcomes from four perspectives

Satisfied Shareholders

HappyCustomers

EffectiveProcesses

Motivated & ReadyWorkforce

Translating our Audacious Goal into operational terms