SELECTED TOPICS IN

BUSINESS MANAGEMENT

2015 TUM Asia Course CD 5180

Part 3

Slide 1

Charles

Chow

Part 1:

Business

Efficacy

Business is

like War:

Part 2

New Normal

Business:

Part 3

Business

Champions:

Part 4

LEADERSHIP

MANAGEMENT ADMINSTRATION

Blue Ocean Strategy

SWOT Analysis

implementation

grid

business

plan

framework

2015 TUM Asia

Course CD 5180

Part 2, Slide 2

Charles Chow

APPLIED TO A BUSINESS

TRIZ

value

innovation

Slower economic growth consumption = growth >>> externalize costs (cheaper outsourcing)

Lower returns 99 cents stores / Walmart expensive

Higher unemployment (“employability”)

Job enlargement / flexiwork >>> productivity?

Persistent inflation (energy, food, water)

http://www.youtube.com/watch?v=DmpguwqCESE Professor John Mathis, Thunderbird School of Global Management, published 26 March 2012,

about 59 minutes, Uncertainty & Volatility – The New Normal?

http://www.youtube.com/watch?v=UisuQ800ZwE SMU Adjunct Professor Joergen Oestroem Moeller, published 9 August 2012,

about 32 minutes, Euro, US and China Debt

“NEW NORMAL” ECONOMY (after Lehman’s collapse, by fund manager Mohamed El-Erian

in The Economist, 1 Oct 2009)

Part 3, Slide 3

Charles Chow

2015 TUM Asia

Course CD 5180

KNOW (action)

UNKNOWN

KNOWNS (knowledge deficit,

i.e. available but not acquired

or assimilated yet)

UNKNOWN

UNKNOWNS (void :

don’t know that you don’t know)

KNOWN

KNOWNS (knowledge already registered

& acknowledged)

KNOWN

UNKNOWNS (planning assumptions,

tolerated ignorance like

non-negotiable constraints)

KNOWN (item)

YES

YES

NO

NO

Knowledge Matrix

Part 3, Slide 4

Charles Chow

2015 TUM Asia

Course CD 5180

UNKNOWN

KNOWNS

• CONGESTED

• CONFUSED

• CONTAINED

KNOWN

UNKNOWNS

KNOWN

UNKNOWNS

UNKNOWN

UNKNOWNS

Know Don’t Know Not Sure

Always there,

waiting to be named

< to be discovered > e.g. gravity

NO NAME

TO THE

UNKNOWN

< void >

Part 3, Slide 5

Charles Chow

2015 TUM Asia

Course CD 5180

Level of Confidence (Margin/Degree of Error)

0% 30% 60% 90% 100%

50% PERHAPS

POSSIBLE

LIKELY

PROBABLE for military

“Possible” for accountants

POSITIVE

Part 3, Slide 6

Charles Chow

2015 TUM Asia

Course CD 5180

Red OCEAN Blue OCEAN

Industry

Focus on Rivalry

Focus on Alternatives

Strategy

Position within Group

Position in Industry

Time Adjust to trends

Reshape trends (redefine buyers)

Head-to-Head

Competition

“Growth

Strategies”

Part 3, Slide 7

Charles Chow

2015 TUM Asia

Course CD 5180

ESSENCE of Blue Ocean Strategy

Unexplored Non-customers

Non-customers who consciously choose against present market

soon-to-be customers

present market space

Customers in present market

create uncontested

new market space

New-Value CONNECT

(how?)

“VALUE INNOVATION”

POTENTIAL CUSTOMERS

“make competition irrelevant” : not in the same market space

Part 3, Slide 8

Charles Chow

2015 TUM Asia

Course CD 5180

• Reconstruct boundaries

• Exploit differences now

• Compelling buying tagline

• Fishbowl management

• Tipping point leadership

• Engage, Explain, Expect clarity

Blue Ocean Strategy

Part 3, Slide 9

Charles Chow

2015 TUM Asia

Course CD 5180

• Reconstruct boundaries Cirque du Soleil blending of opera and

ballet with circus format while eliminating

animals in performance.

• Exploit differences now “Curves” exclusive health club for women.

• Compelling buying tagline ACS (Independent) “International

Baccalaureate Diploma” vs GCE “A”

Levels or Polytechnic in Singapore

ESSENCE of Blue Ocean Strategy

Part 3, Slide 10

Charles Chow

2015 TUM Asia

Course CD 5180

ESSENCE of Blue Ocean Strategy

• Fishbowl management Fortnightly review of crime statistics by

heads at New York Police Department -

clear roles, responsibilities and rewards.

• Tipping Point Leadership Leverage on influential, respected

personality (“endorsement”/branding).

• 3Es: Engage, Explain, Expect clarity Singapore’s Integrated Resorts – not just

gambling but remaking of Singapore.

Part 3, Slide 11

Charles Chow

2015 TUM Asia

Course CD 5180

STRATEGY CANVAS OF QB HOUSE

Price Extra services

other than

haircut

Range of hair

treatments

Hygiene Waiting time

High Performance

“air wash”

LOW

HIGH

QB House

Average Japanese

Barbershop

Part 3, Slide 12

Charles Chow

2015 TUM Asia

Course CD 5180

UNKNOWN KNOWNS

(e.g. past customers)

KNOWN KNOWNS

(e.g. customers now)

KNOWN UNKNOWNS

(e.g. non-customers now)

UNKNOWN UNKNOWNS

(e.g. future customers )

insight foresight

unlock new

demand

make competitor irrelevant

(VALUE INNOVATION?)

not better, but different

BASIS FOR BLUE OCEAN STRATEGY

Part 3, Slide 13

Charles Chow

2015 TUM Asia

Course CD 5180

CRITICISMS on Blue Ocean Strategy

1. Methodology is “descriptive” rather than “prescriptive”.

2. No control group. Examples selected to “tell a winning story”.

3. Success in the marketing of value innovation taken as given.

4. “Eliminate-Reduce-Raise-Create” Grid similar to TRIZ principles

5. Product innovation not differentiated from different product.

BOS published in 41 languages, sold over two million copies.

Best Business Book of 2005 Prize at Frankfurt Book Fair.

Since 2007, an INSEAD Blue Ocean Institute in Fontainbleau, France.

INSEAD founded in 1957, three months after the signing of Treaty of

Rome. Mission: To develop the next generation of trans-cultural leaders.

W. Chan Kim Renee Mauborgne

Part 3, Slide 14

Charles Chow

2015 TUM Asia

Course CD 5180

TRIZ TRIZ = teorija rezhenija izobretatelskih zadach (Russian)

= “The theory of solving inventor’s problems”

= “The theory of inventor’s problem-solving”

Genrich S. Altshuller (born 1926) = Father of TRIZ

The secret of inventiveness

is not inside the minds

but

in the logic of inventions

themselves.

Part 3, Slide 15

Charles Chow

2015 TUM Asia

Course CD 5180

LEVEL DEGREE OF INVENTIVENESS

PERCENTAGE OF SOLUTIONS

SOURCE OF KNOWLEDGE

I Apparent Solution

32% Personal knowledge

II Minor Improvement

45% Knowledge within company

III Major Improvement

18% Knowledge within industry

IV New Concept 4% Knowledge outside industry

V Discovery 1% All that is knowable

63%

Inventiveness has five levels:

Part 3, Slide 16

Charles Chow

2015 TUM Asia

Course CD 5180

VALUE INNOVATION

increase

decrease

eliminate create

LOCAL QUALITY

SEGMENTATION

EXTRACTION MERGING

NESTING (matrushkas) REPLACEMENT

TRANSFORMATION CURVATURE INCREASE

DIMENSION CHANGE

SELF SERVICE

VALUE

INTERMEDIARY DISPOSABLES

Part 3, Slide 17

Charles Chow

2015 TUM Asia

Course CD 5180

increase VALUE

LOCAL QUALITY

DIMENSION CHANGE

SELF SERVICE

horizontal

vert

ical

• holograms as 3-D pictures • IMAX in 3-dimensional movies • job enlargement

• kids area inside a restaurant • pencil with eraser • niche competence

• self-repair : contingency back-up • self-sustaining : cybernetics • self-renewal : life-long learning

Part 3, Slide 18

Charles Chow

2015 TUM Asia

Course CD 5180

eliminate VALUE

EXTRACTION

REPLACEMENT

TRANSFORMATION

• biodegradable screws in surgery • retrain instead of retrench • rebranding

• plastic instead of metal parts • routine low-risk functions • outsourcing

• remove wastage • delete redundancies • pruning : downsizing

Part 3, Slide 19

Charles Chow

2015 TUM Asia

Course CD 5180

decrease VALUE

SEGMENTATION

INTERMEDIARY

DISPOSABLES

• contain • isolate • tertiary specialization

• jigs to assist assembly • neutral party to negotiate • broker ~ trader

• protective clothing • showrooms/models • redundancy in team

Part 3, Slide 20

Charles Chow

2015 TUM Asia

Course CD 5180

create VALUE

MERGING

NESTING (matrushkas)

CURVATURE INCREASE

+ = • sofabed • walking stick and umbrella • synergy

• Fuller’s geodesic domes: no beams • rounding budget – buffer • rotate leadership (Flying Geese)

• double hull • Microsoft folders • Core Group : Command Centre

Part 3, Slide 21

Charles Chow

2015 TUM Asia

Course CD 5180

INCREASE

DECREASE

CREATE ELIMINATE

PRESERVE

same area, different shape (square to round)

same shape, different components (plastic instead of metal)

same component, different state (water and ice)

INHERENT

LIMITATION

A dog can be trained to

run faster, jump higher,

smell better, but a dog

can never talk

or laugh.

PRACTICAL

LIMITATION

Man can calculate time

taken to arrive at planet

Jupiter, but cannot

determine actual

arrival.

Part 3, Slide 22

Charles Chow

2015 TUM Asia

Course CD 5180

freeze GAS VAPOUR

SOLID ICE

WATER

(packaging, branding) LIQUID LIQUID

melt

<Evian, Perrier>

Part 3, Slide 23

Charles Chow

2015 TUM Asia

Course CD 5180

same

shape,

different

components

Attitude

Limitation

Action in

Inaction

same

area,

different shape

same

components,

different states

Part 3, Slide 24

Charles Chow

2015 TUM Asia

Course CD 5180

RESOURCES

Ripe – fully matured

(sufficient)

Ready – available appropriately

(sustainable)

OPPORTUNITY < “TRIGGER” >

o adversity

o award

RESOURCEFULNESS

Realistic – actual and substantial

(scalable)

Relevant – impactful and necessary

(significant)

“bounce back”

o recoil

o repel

Part 3, Slide 25

Charles Chow

2015 TUM Asia

Course CD 5180

ripe, not ready : drug retail

ready, not ripe : food franchise

relevant, not realistic :

car, no carpark

realistic, not relevant :

colour spectrum

Part 3, Slide 26

Charles Chow

2015 TUM Asia

Course CD 5180

TRIZ : Nine Windows :

Problem Space

PAST PRESENT FUTURE

SUB-

SYSTEM (components)

1 2 3

SYSTEM

4 5

(here & now) 6

SUPER-

SYSTEM (environment)

7 8 9

Part 3, Slide 27

Charles Chow

2015 TUM Asia

Course CD 5180

Problem Space : “Fire in a Home”

PAST (before a fire)

PRESENT (during a fire)

FUTURE (after a fire)

SUB-SYSTEM

(components)

Smokers in the house Frayed electrical cables

Exit barriers

Young children Infirm occupants

Death to pets and occupants

Injury to occupants

Loss of property

SYSTEM

(house)

Proximity of Combustibles Fire extinguishers

Fire now!

Water & fire damages

Removal of damages. Infrastructure replacements

SUPER-SYSTEM

(environment)

Near chemical factory Proximity to gas or oil ducts

Ventilation Cordoning area

Safety assessments Infrastructure destruction

Part 3, Slide 28

Charles Chow

2015 TUM Asia

Course CD 5180

Solution Space : “Fire in a Home”

PAST (preventive measures)

PRESENT (fire fighting)

FUTURE (resolve outcome)

SUB-SYSTEM

(components)

Frequent fire drills Check smoke alarms and evacuation routes

Use fire blankets & extinguishers

Hospital treatment for those affected

SYSTEM

(house)

Proximity of Combustibles Fire extinguishers

Fire in the home

Relocation while claims are sorted out

SUPER-SYSTEM

(environment)

Insurance contract

Inform fire brigade and neighbours

Submit insurance claims

Part 3, Slide 29

Charles Chow

2015 TUM Asia

Course CD 5180

COMPETITIVE

INTELLIGENCE

CHECKS &

CONTROLS

cybernetics = science of communication and control

Management Cybernetics (closed loop)

Part 3, Slide 30

Charles Chow

2015 TUM Asia

Course CD 5180

SWOT Analysis

Strengths

Weaknesses

Opportunities Threats

GROW TURN-

AROUND

DIVERSIFY DIVEST

EXTERNAL

INTERNAL

Part 3, Slide 31

Charles Chow

2015 TUM Asia

Course CD 5180

LIMITATIONs of SWOT

SWOT cannot show how to achieve competitive advantage

> e.g. how first-mover advantage can be a competitive strategy

Static assessment > able to identify actors but not the plot

Strengths may not lead to an advantage > e.g. recruit a pianist to join a gang of thugs; designer for low-cost product

Too narrow focus on the external environment > boundaries are not static, in business no long-term enemies

Overemphasis on single dimension > e.g. DELL on no-middlemen, focus on cost-cutting

Part 3, Slide 32

Charles Chow

2015 TUM Asia

Course CD 5180

SWOT Analysis

Strengths Weaknesses

Opportunities

Threats

GROW (“spread out”)

DIVERSIFY

TURN-

AROUND

DIVEST (“get out”)

scalable *

significant *

sustainable *

relatedness #

return rate #

resolve #

> people

> products

> processes

more of the same :

PRODUCTIVITY

more with less:

INNOVATION

more differently:

CREATIVITY

Part 3, Slide 33

Charles Chow

2015 TUM Asia

Course CD 5180

SALES/

PROFIT

TIME PRODUCT LIFE-CYCLE

Introduction

Growth

Mature

Decline

FASHIONABLE FAMOUS FAMILIAR FATIQUE

(OUTPUT)

Part 3, Slide 34

Charles Chow

2015 TUM Asia

Course CD 5180

Extended Product Life Cycle

O

U

T

P

U

T

re-invent

renew

review Hold-on?

Phase-out?

“obsolete”

(irrelevant)

TIME

Part 3, Slide 35

Charles Chow

2015 TUM Asia

Course CD 5180

LEATHER

FOOTWEAR

Leather belts,

handbags,

gloves, hats,

clothing, etc

Design

Service

Textile Fashion

Cluster Hiking

Boots

Ski

Boots

Synthetic

Footwear

Athletic

Footwear

Processed

Leather

Footwear

Machinery

Tanning

Equipment

Tanneries

Leather

Processing

Machineries

Plastic

Equipment

Footwear

CAD Injection

Molding

Molds

Models Ad

apte

d f

rom

Mic

hae

l E. P

ort

er:

“Clu

ste

rs a

nd

Co

mp

eti

tio

n,

New

Age

nd

as f

or

Co

mp

anie

s, G

ove

rnm

ents

an

d In

stit

uti

on

s”,

In: M

ich

ael E

. Po

rter

: “O

n C

om

pet

itio

n”,

Har

vard

Bu

sin

ess

Rev

iew

Bo

ok:

Bo

sto

n, M

A, 1

99

8, F

ig 7

-1, p

.20

0

ITALIAN FOOTWEAR & FASHION CLUSTER

Specialized

Machine Tools

Woodworking

Equipment

Part 3, Slide 36

Charles Chow

2015 TUM Asia

Course CD 5180

Forward/Backward

Growing of beans (organic)

Roasting

Packaging

Retail

Starbucks

Coffee

Franchising

Delivery Service

Hotels / Airlines

Mail Order

Transport

Storage

B

A

C

K

W

A

R

D

F

O

R

W

A

R

D

Part 3, Slide 37

Charles Chow

2015 TUM Asia

Course CD 5180

Advertising

Coffee

Spa

Process

Grow

Logistics: Store/Pack/Distribute

HORIZONTAL

Events/Sponsorships

FOREWARD

BACKWARD

VERTICAL

Coffee

Retail Coffee

Fertilizer (organic/

non-organic)

Coffee

Quality

Certification [“cupping”]

Coffee

in food

(crab)

Coffee

Confectionery

Mail Order

Part 3, Slide 38

Charles Chow

2015 TUM Asia

Course CD 5180

Vertical

Horizontal

Same business:

• increase market coverage

• decreases competition

• economies of scale

Downstream/Upstream activities (partial or full):

• access to valuable assets

• decrease transaction and coordination costs

• economies of scope

Tannery, Stadium, Training

Football, Helmets, Attire, Shoes

FOOTBALL

TEAM

Part 3, Slide 39

Charles Chow

2015 TUM Asia

Course CD 5180

Ansoff Matrix Igor Ansoff (1918-2002), “father of strategic management”.

Born in Russia, naturalized American, trained mathematician,

pioneered the product-market growth matrix:

Market

Penetration

Product

Development

present PRODUCTS new

present

MARKETS

new

Market

Development

Diversification

Sources: First published by Ansoff as “Strategies for Diversification”

in Harvard Business Review (1957); See also H. Igor Ansoff: Critical

Evaluations in Business and Management, edited by John Wood

and Michael C. Wood, London: Routledge (2007), Volume 1,

Chapter 4 (“A Model for Diversification”)

Part 3, Slide 40

Charles Chow

2015 TUM Asia

Course CD 5180

Existing Market, Existing Product (EE)

Market

Penetration

<increase outlets to capture traffic>

Existing Market, New Product (EN)

Product

Development

<shampoo + conditioner + “intensive repair”> [? repair 3 months of damage in just 3 minutes ?]

{Hair Spa : silky straight, full-body, bouncy}

New Market, Existing Product (NE)

Market

Development

<oily, dry, normal scalp> [“anti-dandruff”, “cooling itch control”]

New Market, New Product (NN)

Diversification

<“hair fall control”, “hair fall rescue”> [hair dye while shampoo]

Part 3, Slide 41

Charles Chow

2015 TUM Asia

Course CD 5180

Slow Down

PAUSE

REFLECT

less haste,

more speed

repetitive or

unique

Rowing Boat:

Coordination vital;

Extra power can actually

slow down boat.

hansei (relentless reflection)

Adapted from Jeffrey K. Liker: The Toyota Way, 14 Management Principles

from the World’s Greatest Manufacturer, McGraw-Hill: New York, 2004

Part 3, Slide 42

Charles Chow

2015 TUM Asia

Course CD 5180

CHOW’S IMPLEMENTATION GIRD

EMPOWER Need for Strategy

IMPORTANT

URGENT

No Yes

No

Yes

URGENT = Time-sensitive issues that need decision-making.

IMPORTANT = Influences that are significant to desired results.

Adapted from Stephen Covey, The 7 Habits of Highly Effective People,

(Fireside, New York, 1990), The Time Management Matrix, p. 151.

LEADERSHIP

Need for Clarity

Need for Culture

NETWORKING

Need for Structure

DELEGATE

Part 3, Slide 43

Charles Chow

2015 TUM Asia

Course CD 5180

Part 2:

Business

is like War

MODELS

SUMMARY

Part 3:

New Normal

Business

• Knowledge Matrix

• TRIZ Value Innovation

• TRIZ Nine Windows

• SWOT Analysis

• Ansoff Matrix

• Implementation Grid

• “New Normal”

• Blue Ocean Strategy

• Forward/Backward – Vertical/ Horizontal Integration

CONCEPTS

Part 3, Slide 44

Charles Chow

20145 TUM Asia

Course CD 5180