STRATEGY: THE KEY TO SUCCESS

July 5, 2017 Dr. Yılmaz ARGÜDEN

Strategy is the difference between….

1

• Success and failure• Mediocrity and excellence• A great manager and average managers• Stumbling through life and moving ahead with purpose

Strategy is not planning.

2

• Mostly strategy is seen as an exercise to develop a planningdocument (actions with timeframes and assigned resources)

• Most of the strategic plans are budgets with words attached• Strategy is not planning, it is making an integrated set of choices

that position the firm to create sustainable advantage relative tocompetition and deliver superior financial returns

• Strategy is singular, only one strategy for a business, not a set ofstrategies

• Strategy directs you to identify which initiatives are importantand are likely to produce the results desired

• With such focus, planning is easy since the strategy enablescollective understanding on what is critical and what is not

Strategy is to focus with consistent choices.Strategy is to see distant things as if they were and close and to take a distanced view of close things. - Miyamoto Musashi

3

• Strategy is to prepare the future in order to be successful in the future• Strategy is to focus by making consistent choices on

«how to fulfill», «which» need of «whom», with «which» resources • Strategy is to decide «what not to do», as well as what to do

• The essence of Strategy is Choice

Pre-requisite for good strategy is honesty.The problem is not the problem, the problem is your attitude about the problem.

4

GOOD STRATEGY• Is honest in identifying the

challenges and the situation• Develops a cohesive

approach to overcome the challenges

• Focuses

BAD STRATEGY• Problems are glossed over• It is essentially wishful thinking• Urges achievement of a goal

but nothing else• Tries to meet conflicting goals

and ducks making hard chokes• Lost, confused, unsure, unclear,

perplexed, disoriented, bewildered

Good strategy from real life.World Heavyweight Championship Fight, Zaire, October 1974

5

Muhammed Ali Foreman

StatusFormer World

Champion

Defending World

Champion

SucessBase

Pass sucess was based

on being better

Present successbased on being

better

ConditionPast his peak in terms of being

betterAt his peak

Age 32 25

Situation

Making a comeback after years without competitive

fights

Getting better with each fight

Define with

Honesty

Ali defined his critical problem: No longer «float like a butterfly, sting like a bee» in a 15 rounds against a young opponent

Develop Strategy

An action plan to overcome his critical weakness: rope a dopeRope a dope: A technique in which the boxer assumes a

defensive stance against the ropes and absorbs an opponent's blows, hoping to exploit eventual tiredness or a mistake

Rope a dope: Any strategy where an apparently losing position is assumed in the hope of eventual victory

Result M.Ali wins by a knockout in Round 8, Foreman run out of steam

LessonEven the very best are eventually overtaken, if they are to

continue winning, they need a genuine strategy

Evolution of strategy.

6

• For its 2.500 years of history, strategy was one dimensional• Military leaders and statesmen were focused on avoiding wars

as fundamental military strategy• Business was focused on building entry barriers and monopolies

• In the past 50 years one dimensional structure disappeared• Strategy reached its prime• Many new ideas and solutions were spewed out• Concepts developed and then published• Strategy is now on the verge of reinventing itself

History of strategy (1/2)From the beginning to heydays (500 BC – 2000s)

7

The Art of War

Sun Tzu

500 BC 1834

On War

Carl von Clausewitz

1904

The History of the StandartOil Company

Ida Tarbell

1911

The Principles of Scientific

ManagementFrederick W.

Taylor

1968

Experience Curves and

Growth Share MatrixBruce

Henderson

1980 1985 1992 19961993

The Core Competence of

CorporationPrahalad and

Hammel

The Competitive Advantage

Michael Porter

The Balanced Scorecard

Kaplan and Norton

Reengineering The

CorporationMichael

Hammer and James Champy

Leading Change

John P. Kotter

BEGINNINGMONOPOLYSTRATEGIES

INDUSTRIALPROFICIENCY

STRATEGYHEYDAYS

Competitive Strategy Michael Porter

(*) ATKearney – History of Strategy

Leadership2009 - Start with Why Simon Sinek2011 - HBR’s 10 Must Reads

on Leadership Drucker, etc.2012 - The Strategist Cynthia Montgomery

No regret tactics2001 - Good to Great Jim Collins2002 - Lean Six Sigma Michael George2003 - The Loyalty Effect Frederick Reichheld2004 - The Toyota Way Jeffrey Liker

Slicing the strategic cake2001 - Profit from the Core Zook and Allen2005 - Blue Ocean Strategy Kim and Mauborgne2013 - Playing to Win Lafley and Martin

Agility2008 - Fast Strategy Doz and Kosonen2009 - The Upside of Turbulence Donald Sull

History of strategy (2/2)Era of strategic proliferation (2000s - …)

8

1994 - Hyper-competition Richard D’Aveni1994 - Creating Value in the

Multibusiness Company Alexander, Campbell, Goold1997 - The War For Talent Michaels, Handfield, Jones & Axelrod1997 - Cannibals with Forks Elkington2000 - Blown to Bits Evans and Wurster2001 - The Internet Bubble Perkins and Perkins2005 - The New Age of Innovation Prahalad and Krishnan2005 - The Wisdom of Crowds James Surowieki2005 - The World is Flat Friedman2008 - Wikinomics Tapscott and Williams2010 - Winning in Emerging Markets Khanna and Palepu2010 - The Big Short Michael Lewis2013 - Big Data Mayer, Schönberger and Cukier

2008-09 - Design Thinking and Change by Design Tim Brown2012 - Accelerate John Kotter2013 - The End of Competitive Advantage Rita Gunther MacGrath

Ersatz StrategiesMilestones

Overloads

(*) ATKearney – History of Strategy

Traditional: Match strategy to resources and capabilities. Strategic intent: Have ambitions beyond current resources and capabilities.

9

Once tiny Japanese companies

develop strategic intent to beat

their much larger US and

European rivals

Once tiny S. Korean companies

develop strategic intent to beat

their much larger Japanese rivals

Once tiny Chinese companies

develop strategic intent to beat

their much larger Asian rivals

1960s

1980s

2000s

Sony Mission Statement (1950): Become the company most known for changing the worldwide poor-quality image of Japanese products

Execution is as important as strategic thinking.A good plan violently executed now is better than a perfect plan executed next week. – George S. Patton A bad plan that is well executed will yield much better results than a good plan that is poorly executed. – Otto Von Bismark

10

• An effective process• Incorporate different functions•Acquire different perspectives•Consensus on decisions

• Knowledge based decisions (Current situation analysis)• Consistency of the leader• Creativity• Principles: Objective-tool compliance, clarity of focus, dynamism, and integrity

while

developi

ng

• Agility

• Deployment throughout the organization

• Systematic follow up and evaluation

• Updates on changing conditions

(Only weak plans do not require update and change)

while

executin

g

Tools of strategy

11

1960 1970 1990

• One of the first strategic tools

• Capture market opportunities via company strengths

• Lessen internal weaknesses to avoid risks

SWOTAnalysis

ScenarioAnalysis

• To test the unpredictable future with consistent scenarios

BCG Growth Matrix

• Many acquisitions but financial difficulties

• To identify areas to invest and divest

Value Chain

Analysis• Analysis on value

creation potential of each step in value chain

Five Force Industry Analysis

• Porter model• More sophisticated

version of SWOT forenvironment analysis

• Barriers to entry, competition, suppliers, customers and substitutes

PIMSAnalysis

• Harvard• Database on 600

business• Factors effecting

profit and effectivity level

• Sensitivity of ROI to market changes

GE Market Attractiveness

Matrix

• Growth rate and relative market share is not enough for investment

• Long term profitability

7SFramework

Value Based

Planning

• Financial based• To maximize

shareholder value

1980

BalancedScorecard

• Financial goals in not enough

• Balanced and related goals on; financial results, customers, processes and learning and development

Strategic Option

Analysis• A group of options

under uncertainty• Taking fundamental

decisions to executive strategy.

Economic Value Added

• Accounting based evaluations are not satisfactory

• Value added is calculated (including cost of capital)

Core Competence

Analysis

• 4 principles• Business processes• Cortical processes to strategic

competencies and continuously value creation to the customers

• Strategic investments• CEO is the responsible

• McKinsey• Strategic thought solely

is not enough• Strategy, Structure

Style, Systems, Staff, Skill, Shared Values

Porter’s Five Forces Model of Competition

12

DETERMINANTS of SUPPLIER POWER• Supplier concentration• Availability of substitute inputs• Importance of suppliers input to buyer• Suppliers product differentiation• Importance of industry to suppliers• Buyers switching cost to other input• Suppliers threat of forward integration• Buyers threat of backward integration

THREAT OF NEW ENTRANTS• Barriers to entry

• Economies of scale• Product differentiation• Capital requirements• Switching cost to buyers• Access to distribution channels• Government policies

• Incumbents' defense of market share• Industry growth rate

DETERMINANTS of BUYER POWER• Number of buyers relative to sellers• Product differentiation• Switching costs to use other product• Buyers profit margin• Buyers use of multiple sources• Buyers threat of backward integration• Sellers threat of forward integration• Importance of product to the buyer• Buyers volume

THREAT of SUBSTITUTE PRODUCTS• Relative price of substitute• Relative quality of substitute• Switching cots of buyers

COMPETITION EXISTING COMPANIES• Number of compettors• Relative size of competitors (balance)• Industry growth rate• Fixed cost vs. variable costs• Product differentiation• Capacity augmented in large increments

• Buyers switching cost• Diversity of competitors• Exit barriers

Example: Economies of scope

13

• Hired Michael Eisner. Eisner’s theory;• People will pay a premium price for extraordinary entertainment.

We have the necessary resources to create extraordinary entertainment. Let’s redeploy our resources in a different way and offer something extraordinary to people.

million USD 1984

Theme park operations 186

Consumer Products 53

Filmed Entertainment 2

Market Cap 2.000

1989 1994

787 Increased admission prices at theme parks

845 Focused on movie studios (character development)

28.000Diversified into television (ABC), hotels, retail stores, sport team, cruise line, publishing, consumer, products, licensing, etc.

Example: How to use core competencies

14

HONDA

Manufacturing capabilities Innovation culture

Lightweight, high revving reliable engines

Core competencies

Core products

Generators Marine Vehicles Yard Care

Personelwatercraft

Boats

Trucks

Automobiles

4 Wheel off-road

Motorcycles

Lawn movers

Snow blowers

(*) Knowledge strategies LLC

Examples: Blue ocean strategy

15

• In a decade became one of the largest and profitable business information provider• Until Bloomberg; Reuters, Dow Jones and Telerate dominated the industry• The industry focused on purchasers: IT managers - standardized systems - easier• Bloomberg focused on traders and analysts, not IT managers• Systems designed for traders; easy to use terminals, labeled keyboards, two monitors• Also focused to traders personal life - add information and purchasing services• The traders and analysts force IT managers to purchase Bloomberg terminals

• Insulin - diabetics - regulate the level of sugar - industry focus key influencers: doctors• Purer insulin - achieved in 1980s - exact copy of human insulin• Limited progress on purity - major parameter of competition• Novo Nordisk break away from the competition by focusing on patients

• Challenges in administering • NovoPen: First user-friendly insulin delivery solution - pen to inject insulin with ease• NovoLet: Pre-filled disposable insulin injection pen with a dosing system• Innovo: Integrated electronic memory and cartridge based delivery system

• Transformed the company from an insulin producer to a diabetes care company• Today, almost thirty years since its initial move, %70 percent of Novo’s total turnover

Example: Economies of scale

16

• The reduction of per-unit costs through an increase in production volume• Diminishing marginal cost, decrease in a firm's marginal costs of production

• Changes on a macroeconomic level (reduced borrowing costs, newinfrastructure, etc.)

• Improvements on a business-specific level• A firm can realize economies of scale, or diseconomies of scale, based on

variables outside of its control• BIC PEN

• A large scale production facility• Cost efficiency as fundamental approach, manufactures the cheapest pens• Aim to fulfill global pen demand• Discounted prices for promotional pens (for penetration)• The same strategy utilized for lighters

Example: Economies of speed

17

• SONY developed the Betamax video format which was of superior quality• Most broadcasting companies preferred to utilize Betamax standard in storing

their archives• SONY wanted to utilize this superior standard to sell more SONY devices to

customers• JVC came up with the VHS standard and chose to speed up its adoption by

licensing to other manufacturers and by reducing its price• This strategy resulted in faster and broader sales of VHS devices• Most new film releases chose the VHS standard at the initial releases due to a

larger consumer base that was established• Therefore, SONY lost the war with a superior quality product !!

Example: Winner takes it all

18

• A company (usually in quickly growing environment) should spend a lot of money today toachieve the top spot in market share, because they will likely keep that spot in the future• Being number one today - you will continue to be number one in the future• Customers like to continue to buy from the leading vendor• Less spending on advertising - become more profitable over time• Suppliers start giving you better deals in order to get sold on your service (environment)

• The classic example of someone “winner takes all” strategy is Amazon.com• Amazon is now 20+ years old - it was very unprofitable for half of that time• Critics: It was wasting money in a space (e-commerce) that had very few barriers to entry• Theory: Someone could start a website - sell a product on Amazon for less money - pressuring margins• Reality: Amazon’s strategy did pay off - they mastered the ability to have great logistics and

infrastructure for delivery - attracted virtually every good that could be sold under their umbrella• No competitor (on a scale that they operated) every really emerged, - they have so much valuable

data on their customers - it will be very difficult to knock them off anytime soon

• AirBNB / Zappos.com / BİM

Don’t make strategy harder than it needs to be.

19

• Strategy is at some

level about all

those

• A satisfactory

result can not be

achieved with

analysis alone, or

big picture alone,

or changes alone

• Work must be done

on all of them

Too much concentration on

the analysis: SWOT, business

(customer, competitor, etc.)

analysis, environment

analysis, financial evaluations, etc.

Strategy must be; conceptual,

future-oriented and broad.

Do not mix strategy

with tactics.

Strategy must be developed when

there is a need for a new direction or

before a change in the direction.

DON’T NOT NECESSARILY

Strategy must be defined by answering a few questions.Any intelligent fool can make things bigger and more complex… It takes a touch of genius and a lot of courage to move in the opposite direction. – Albert Einstein

20

• What are your basic aspirations for the organization and the goals that can show the progress?

• From the potential field available, where will you choose to play and not play?

• In the chosen place to play, how will you win against the competitors?

• What capabilities are necessary to develop and maintain to win in the chosen place?

• What management systems are necessary to develop and maintain the key capabilities?

Do not follow the list, just iterate.

21

• Answers must be consistent with one another and reinforce one another• From where to start?

• Starting at the top with mission/vision exercise : Difficult to create a solidaspiration without knowing «Where to Play» and «How to Win». Any mission orvision will do when you don’t thought «Where to Play» or «How to Win».

• Starting from «Where to Play» and «How to Win» : Without considering«aspirations and goals», you may end up with a strategy that is effective, but isn’tsomething you would actually want

• If you want to create a strategy, you have to iterate• Think about «aspirations and goals»• Then think about «where to play» and «how to win»»• Then back to «aspirations and goals» to check and modify• Then to «capabilities» and «management systems» to check whether it is doable• Then back up again to modify accordingly

The rate of change today is much different than in the past.The World Is Flat, Thomas Friedman (*)

22

• “Whenever civilization has gone through one of these disruptive, dislocatingtechnical revolutions—like Gutenberg’s introduction of the printing press—thewhole world has changed in profound ways”

• “….This flattening process is happening at warp speed and directly or indirectlytouching a lot more people on the planet at once. The faster and broader thistransition to a new era, the more likely is the potential of disruption.”

• “The businesses, institutions and nation states that are now facing theseinevitable, even predictable, changes but lack the leadership, flexibility andimagination to adapt—not because they are not smart or aware, but because thespeed of change is simply overwhelming them.”

• This rapid flattening is creating a new environment that called “VUCA”

The way to the goal will not be as smooth as planned.

23

PLAN

REALITY

Dimensions of VUCA environment.

24

How much do you know about the situation

How well can you

predict the outcome of

your actions

- +

+

COMPLEXITYMultiplicity of Key Decision Factors

VOLATILITYRate of Change

AMBIGUITYLack of Clarity on the

Ongoing Events

UNCERTAINTYUnclear About the

Present Situation and Future Outcomes

Management’s role in strategy changes as the business environment change.

25

• Management’s role is not only to organize work, but to direct passionand purpose

• Few strategies come from the top and that most emerge changes ourview of ‘strategizing’. The role of senior manager changes from ‘decidingwhat to do and finding someone else to do it’ to ‘coach, filter, enabler’. -Henry Mintzberg (Emergent Strategy)

• In an increasingly unstable and rapidly changing business world (VUCA)HR and talent management professionals need to change the focus andmethods of leadership development

How should leaders approach to VUCA environment?

26

Complexity counter with clarity Chaos comes swift and hard.

Leaders, who can quickly and clearly tune into all of the minutiae associated with the

chaos, can make better, more informed business decisions

Volatility counter with vision

Vision is even more vital in turbulent times. Leaders with a clear vision of where they

want their organizations to be in 3-5 years can better weather volatile environmental changes such as economic downturns or

new competition in their markets

Ambiguity counter with agilityThe ability to communicate across

the organization and to move quickly to apply solutions

Uncertainty counter with understandingLeaders must learn to look and listen

beyond their functional areas of expertise to make sense of the volatility and to lead with vision. This requires communication with all levels of employees in the organization, and to develop and demonstrate teamwork and

collaboration skills

(*) UNC – Developing Leaders in VUCA Environment

• You never actually win, but are always questing, gaining new skills andresources along the way and continually seeking the next challenge

• “Prediction and being 'right' will be less important than reacting quicklyand taking corrective action.” - Rita Gunther McGrath

• Uncertainty and need for adaptation is increasing• We must discard the fantasies of false certainty and learn to become less

wrong over time• Strategy must be updated through a Bayesian process where there are

no certainties—only probabilities—that evolve and change in real time

Strategy is a never ending game.In preparing for battle I have always found that plans are useless, but planning is indispensable. - Dwight D. Eisenhower

27

Annual strategy making or always on strategy.

28(*) BCG Analysis

NATURE

STRENGTH

S

CHALLENG

ES

• Builds on existing strategic

plans

• Provides broad coverage, keeps

full strategy in view

• Brings deep understanding of

individual issues

• Addresses disruptive events

• Consolidating decisions and

plans made throughout the year

• Aligning business unit strategies

• Treating individual issues

• Making decisions

• Driving implementation

• Not effective in preemptive issue

identification and resolution

• Does not allow for iterations

• If not applied systematically, can

result in a chaotic, piecemeal

strategy

ANNUAL STRATEGY MAKING

A process that sets the overall

strategic direction of the company

and aligns strategic shareholders

(functions)

ALWAYS-ON STRATEGY

A process to identify and resolve

issues and manage the

implementation of specific strategic

initiatives

What and where to decide.

29

• Minor decisions decentralized, major decisions centralized• However the centralized decisions vary according to the

parenting structure

Six major parenting structures and parental decision rights.

(*) BCG Analysis

Select key executivesApprove major …..

Set major ….. targets

Challenge ….. planningAnnual performance evaluation

Encourage …..

Set policies + processes

Drive ……

Monitor detailed plans + budgets

30

Parenting Type

Control Type

Hands-off

Owner

Financial

Sponsor

Family

Builder

Strategic

Guide

Functional

Leader

Hands-on

Manager

Board Financial Strategic + Fin. Strategic Functional Operational

Investments

Financial

Financial

Financial

Financial

Synergy

Financial+Strategic

Strategic

Sharing BestPractices

FunctionalDevelopments

Decisions

Improvement initiatives

Who will increase the value must be the fundamental selection criteria in parenting.

31(*) Ashridge portfolio display

Potential for the parent to add value to the business

Potential for value destruction

from misfit between needs of the business and

parent’s corporate management style

Role of the center is influenced by the portfolio structure.

32

Portfolio Type

Degree of PortfolioDiversity

Model of the Center

Degree of Intervention

Unrelated

High. Businesses have little in common

Performance managing center• Manages by

financial objectives• Select and

motivates senior managers

• Challenges business unit strategies

• Allocates resources

Diversified

Moderate. Businesses are loosely

related

Portfolio developing center• Identifies common

opportunities and potential for growth

• Develops platforms for collaboration

• Helps developing business unit strategies

• Drives strategic initiatives

Related

Low. Businesses are

related

Synergy driving center• Encourages the

exchange of best practices

• Facilities internal cooperation

• Develops common tools and systems for business units

• Creates shared strategic resources

Integrated

None. A single business or a cluster of closely

related businesses

Integrated center• Directly steers

operating units and businesses

• Globally coordinates operations and functions across regions, products and businesses

(*) BCG Analysis

Role of the center is to; give business support, improve operating capabilities and oversee.

33

BUSINESS SUPPORT

Corporate vision and strategy

Portfolio management and resource allocation

Performance management

Support for global expansion

Provide shared services

Synergy and knowledge sharing

Groupwide initiatives and projects

Brand support and portfolio development

Culture, leadership and HR

management

Guide and develop business

units

IMPROVE OPERATING CAPABILITIES

Governance and risk control

Internal Control

Audit

OVERSEE

The defined roles must be shaped by management styles which is also shaped by internal and external situation.

34

Strategic LeadershipOrientation

Control andAccountability

Human

Financial results

Operation

Corporate Culture and Values

Entrepreneurship and innovation

Team work

Competitive

Discipline and operational excellence

CompetencyDevelopment

Process based

Develop within

Attract the best

Outsource

RelationFocus

Business partners

Competitive

Customer and channel

Regulatory and controlling agencies

Visionary

Command chain

Participatory

Trends in strategy (1/4)

35

Prioritizing Short-Term Goals over Long-Term

Objectives

• Traditionally strategic plans - Long time horizons - 3 to 5 years• Advance of technology, widening competitive landscape, pressure on

margins – less weight to long term plans• Leaders : agility in mind - little room for long-term focus• Annual goals and planning vs. quarterly strategic targets• Quarterly planning = better pulse on business success + course-

correct strategy when necessary

Increased Focus on Mergers and

Acquisitions Activities

• More frequent M&A - current economic climate• Consolidation : a better cost structure to increase economies of scale• Venture capital is refocusing more on revenue numbers in valuation,

rather than user growth. Technology companies whose revenues do not match with desired valuations will shop their company to bigger players.

Trends in strategy (2/4)

36

Increased Focus on Technology Investments

• Business transition to the cloud - days of legacy systems and manual processes are closing

• Significant portion of strategic planning time to IT collaboration (functions technology upgrades)

• As more departments use software solutions to increase productivity, the creation of an integrated technology ecosystem

Increased Focus on the Mobile

Ecosystem

• Millennials larger percentage of the consumer market - companies altering marketing and operational processes to fit this generation’s buying behaviors

• 86% of millennials own a smartphone• Mobile search traffic eclipse desktop search traffic as of May 2015

(press release from Google)

Trends in strategy (3/4)

37

All Strategy will be Informed by

Data

• Big data is no longer a buzzword• Companies have access to data, all housed in different software

platform• Business Intelligence tools make sense of all the information.• Strategic planning will no longer rely on gut feeling or conjecture, but

rather will be backed by empirical data• Companies hiring more data scientists to help strategic planning

Trends in strategy (4/4)Biomimicry: Strategy lessons from nature and biology

38(*) BCG Analysis

• Redundancy: Duplication of elements may be inefficient, but can provide a bufferagainst the unexpected

• Heterogeneity: Different types of elements make it possible to react to unexpectedchange

• Modularity: Separate modules, loosely linked, can act like circuit breakers to helpprevent the collapse of system

• Adaptation: Rapid adjustment to new circumstances protects a system against negativeeffects of change

• Prudence: Downside scenarios can often be plausibly envisioned. Invest in simulationmodels and contingency plans

• Embeddedness: Most systems are embedded in larger systems. Reciprocity and mutualbenefit between different levels are essential for stability and continuity

Trends in strategy execution.

39(*) Twenty eighty strategy execution

40

Dr. ArgüdenARGE Danışmanlık/ConsultingArgüden Governance Academy

DrArguden.netARGE.comArgudenAcademy.org

Dr. ArgüdenARGE ConsultingArgüden Governance Academy

Thank you

Dr. Yılmaz Argüdenwww.arguden.net

Example: Blue ocean strategy.

42

• In a decade Bloomberg became one of the largest and most profitable business information providers• Until Bloomberg; Reuters, Dow Jones and Telerate dominated the industry• The industry focused on purchasers «IT managers» who valued standardized systems, which made their

lives easier.• Bloomberg saw that it was traders and analysts, not IT managers, who is important• So Bloomberg designed a system specifically to offer traders a leap in value, one with easy-to-use

terminals and keyboards labeled with familiar financial terms. The systems also have two flat-panelmonitors so that traders can see all the information they need at once and built-in analytic capabilitywith the press of a button

• With this shift in focus Bloomberg could also see the paradox of traders personal lives. They havetremendous income but work such long hours that they have little time to spend it. Bloomberg decidedto add information and purchasing services aimed at enhancing traders’ personal lives

• By shifting its focus upstream from purchasers to users, Bloomberg created a value curve that wasradically different from anything the industry had seen before. The traders and analysts wielded theirpower within their firms to force IT managers to purchase Bloomberg terminals

Example: Blue ocean strategy.

43

• Insulin is used by diabetics to regulate the level of sugar in their blood• Historically, the insulin industry focused its attention on the key influencers: doctors• The industry geared its efforts to produce purer insulin which had improved dramatically by 1980s• Novo had already created insulin that was a chemically exact copy of human insulin• Limited progress could be made further in purity of insulin - major parameter of competition• Novo Nordisk break away from the competition by focusing on patients

• Novo Nordisk found that insulin, which was supplied to in vials has challenges in administering• NovoPen: First user-friendly insulin delivery solution - removes the hassle and embarrassment of

administering insulin - Patients could take the pen with them and inject insulin with ease andconvenience without the complexity of syringes and needles

• NovoLet: Pre-filled disposable insulin injection pen with a dosing system• Innovo: Integrated electronic memory and cartridge based delivery system

• Transformed the company from an insulin producer to a diabetes care company• Today, almost thirty years since its initial move, Novo Nordisk remains the global leader in diabetes care,

with some 70 percent of its total turnover coming from this offering