Webinar Slides - Innovation and Portfolio Management

On July 29th, 2008 No World Borders presented a Webinar presenting ways to continue innovating even in a challenging economy.  Using techniques such as portfolio management provide a systematic method to make budget decisions, allocating a portion for innovation.  In a challenging economy in the U.S., these methods should be combined to enable companies to continue creating value while making adjustments to respond to the environment.

Presenters: Paul Sloane, Sue Fisher; Host: Mike Arrigo

Please click on the image below to view the slides from the July 29th Webinar: Learning (from History) to love recessions: Deciding What to Cut and What to Keep.

View SlideShare presentation (tags: fisher sue mike arrigo)

Innovation - Visionaries Think Differently

Learing to Love Recessions - Deciding What to Cut and What to Keep

No matter what label you put on the current state of the economy, companies are looking for ideas to help their business cope with reduced sales and challenging capital markets.

As we publish this blog, the number one Google sponsored link for the search term "recession" is a link to a Book of Revelation based forecast for the end of the world. This is sobering, but so misguided. Recessions can be difficult, stressful, and they can lead to the "end times" for some companies. But companies who thrive in tough times do so by "loving" recessions as an opportunity to position them selves for accelerated growth as the economy rebounds. Time and time again, companies who have increased shareholder value spring to leadership positions during recessions, differentiating themselves from survivors by thriving in new market conditions.

• Flexibility - Their management teams strive for balance sheet and operational flexibility, spend cash strategically but aggressively on acquisitions, and improve their processes to position them to absorb acquisitions more efficiently. Enabling process improvement may require some tough decisions about retiring and replacing (or, integrating) legacy systems using service oriented architectures and mash up tools.

• Talent - Innovative leaders realize that in difficult economic times, good people can be easier to recruit and use recessions as an opportunity to upgrade their talent pool, performing assessments of their existing teams and making important decisions about staff capability and cost.

• Innovation - Importantly, they also use techniques such as open innovation, gathering valuable customer data from social networks and other sources. Successful companies innovate to create product and service diversify into adjacent markets and new geographies.

• Invest in what is measurable - They shift marketing dollars online to more measurable techniques to reach customers and develop sales leads such as eMarketing / mail, analytics, eNewsletters, webinars, streaming video combined with other methods for measurement, etc.

• They balance innovation and strategic projects with disciplines such as IT portfolio management, which help them decide what to keep - or invest in - and what to cut. This creates opportunities and tensions within corporate boardrooms and line management. Innovation can create real value, but portfolio management may if not used properly kill innovation as companies seek to address short-term cash or profit and loss challenges. Companies who cut too deeply loose capability they need as the market improves.

• Some companies emerge from a recession stronger and more highly valued than they were before the economy took an unpleasant turn for the worst.

By making strategic choices that sometimes defy conventional wisdom, they increase their stock market valuations relative to those of their former peers and thus gain more power to shape their industries.

Connected World - Did you Know?

Jump Starting Innovation - P&G Updates a Tired Brand

When P&G's new CEO took the helm, his observation was that the company was innovating, but not successfully executing to develop compitetive advantage. Below is a video from Businessweek.com with information on CEO A.G. Lafley's approach and his new book.



When Procter & Gamble acquired hair-care company Clairol in 2001, it inherited a floundering shampoo brand. By 2004, Herbal Essences, at the time nearly 35 years old and a mass-market hair-care brand for women, was in a "long-term decline," reports Chairman and CEO A.G. Lafley. Marketed to all women (or at least those who wash their hair), the line had gone stale, with little distinction from the many competitors it shared on the drugstore shelf.

Jump-Starting Innovation

To find the right new, smaller target market for the brand, P&G turned to an immersion program for P&G managers to jump-start innovation. There, the team came up with a new target audience for the brand—Generation Y. "In the case of Gen Y, there really wasn't another hair-care brand that was really meeting their needs," says Lafley. "The question was: 'Can Herbal do it?'"

P&G bet yes. They redesigned the packaging of the product to "fit" this more tailored market: The shampoo and conditioner bottles are curved so that they literally fit together on the shelf. The nesting shape not only helped Herbal Essences stand out from others on the shelf but also encouraged more young women to buy both products, driving up conditioner sales.

To appeal to Millennials, the team also updated the language on the packaging. The ho-hum "dandruff" reference gave way to "no flaking away." Names for different hair styles were changed to more youthful phrases such as "totally twisted" or "drama clean." "We totally reframed the proposition," says Lafley. While P&G doesn't break out sales figures on specific products, the company reported in a conference call soon after the shampoo was relaunched that the brand was growing again, with sales growth rates in the high single digits.

3G iPhone Pricing Plans - Apple Subsidies and Carrier Deals

Apple's stock is increasing on news of preliminary details for pricing plans. Speculation is that Apple may be receiving $300 to $500 per unit from carriers but this is still anyone's guess.

Here is a video from the Wall Street Journal:

Harvard Study Refutes Long Tail Theory

Two years ago a book was published that stated the Internet would turn inventory management and planning around. No-longer constrained by bricks and mortar, consumer consumption of goods would change. The internet brings about a new consequence: consumption patterns will change, and “hits” will shift to “misses.” Misses according to the book, “The Long Tail Theory” would become more profitable.

Now a new study that derived data from web sites says it isn’t so. The most popular items online are just as important than they are offline. The study was based on selected video and music eCommerce web sites.

Harvard associate professor Anita Elberse has penned a long article for the Harvard Business Review that used data from Rhapsody and Australian DVD-by-mail distributor Quickflix to demonstrate that rather than the Internet enabling a "long tail" of niche media which publishers should embrace, the blockbuster strategy is still what pays dividends for content producers. In other words, Elberse argues that media is still a hits business, and that the Internet is not necessarily the democratizing force The Long Tail author Chris Anderson says it is. Anderson says that Elberse's analysis isn't wrong, per se, just that they disagree on exactly what the "head" and "tail" mean. Except that Elberse worked with Anderson on researching his book, so one imagines the Wired magazine editor explained it thoroughly. Funny, it's as though two different people analyzing the same data have come to entirely different conclusions about the "truth."

Here is a video from the Wall Street Journal:

Rupert Murdoch on Politics and the Presidential Election

Is Murdoch manipulating the media via his ownership of The Post which recently endorsed Obama?  Is this what's next for the Wall Street Journal? As print media and traditional print media's web sites get aggregated, the independent voice of the Internet will be more important.  

Significance to our viewers: 1) This year's election will have the most globalized coverage U.S. election in history, with unprecedented print and video coverage online.  How will this impact our election process  going forward?  2) Electronic fund raising meets electronic media.  News, editorial opinion, pay per click information, and fundraising will converge in carefully segmented but unarguably integrated ways.  3) Start your own tally of WSJ Opinion posts and articles that endorse Obama vs. McCain.   See if the scale is balanced.

Tata Buys Auto Makers Jaguar & Range Rover: What Does it Mean?

Detroit - After years of struggling to make money with these two companies, Ford has sold them to Tata for $2.3 Billion. The sale to Tata changes the company's visibility on a global scale. The key strategy for them has been to grow as a global manufacturer via acquisition. The transaction helps them compete globally and increases their ability to sell into the U.S. market, and it increases their ability to learn and capitalize on lean manufacturing which is already strong in Jaguar plants. Chinese manufacturers have been unable to make such a large purchase, so this also increases India's market share vs. other major emerging economies.

Just over sixty years have passed since India became an independent nation (see related BBC news post), leaving behind its status as a British Colony. Ironically, today one of India's leading companies is purchasing two of the best-known British brand names. The sale of Jaguar this week to Indian car maker Tata has prompted some to question what this means for the motoring brand's rich associations with all things British. The concern, however, ignores the fact that for almost 20 years the pouncing big cat motif has been under the stewardship of American owners, Ford. The new parent is a huge Indian conglomerate aptly named Tata, the word for daddy or father in a string of languages including Latin, Serbo-Croat, Polish and Zulu. The Nano, acknowledged as the cheapest car in the world at about $2,500, is very different from the high-end brands they purchased. The acquisition of luxury brands helps growth because these brands tend to be more insulated from market fluctuations.

A very British Brand

BBC news noted that some in the UK are concerned over the potential loss of British identity with the acquisitions, but Tata stated that they are committed to retain and enhance their British identity. "Think of James Bond and you think of Jaguar. Think of 60s London gangsters and you think of Jaguar. Recollect Inspector Morse - Jaguar..." - branding expert Jonathan Gabay sums up why one of Britain's best known brands is so inseparable from the country of its origin.

Ford

What about the impact on Ford and it's strategy? First, Tata is not expected to become a full-line manufacturer, but this helps Ford strategically. Partnerships may come more from OEMs than private equity firms in the future.

Second, is Tata getting value or cast offs from Ford? Ford has already done much of the heavy lifting for Tata and has broken down some of the organizational barriers in these companies to optimize them. Cultural differences between Tata, Jaguar, and Range Rover may be an issue, however Tata's global roots may make it easier for them to own and maximize these companies than for Ford. For Ford, the luxury brands have been a bit of a distraction. Now Ford can focus, but this also means, "no excuses." Ford is not abandoning the luxury market as they still own Volvo and Lincoln. There has also been some talk of taking the Lincoln brand global.

Future Success, Innovation

The $20 Billion plus company is truly an industrial company with momentum and capital. It has a good record in terms of acquisitions - Tetley Tea was a successful acquisition, and Tata has helped the company achieve profitable growth. Under the company's leadership, Ratan Tata successfully managed through some difficult times. “But it hasn't been a smooth ride for Ratan Tata. When he became the chairman in 1991, he was seen as a pushover by the group companies' CEOs, who lorded over their entities.

He had to battle it out with these men, who treated their companies as their fiefdoms. So, the new chairman eased out CEOs like Rusi Mody (of Tata Steel) and Ajit Kerkar (Indian Hotels). Ratan revamped the operations of Tata Steel and made it one of the lowest-cost producers in the world. He made the critics eat their own words, when he launched India's first indigenous car, Indica, which turned around Tata Motors' fortunes.

Transformation, Business Strategies

As the group entered the 21st Century, Ratan Tata was obsessed with four critical issues. The first was to globalize his group's operations, where he has succeeded to a certain extent.

The second was to safeguard his companies against possible hostile takeovers after the London-based Indian, Lakshmi Mittal, purchased the Luxembourg-based Arcelor early in 2006 to become the world's largest steelmaker, and announced his ambitious plans in India.

So, to thwart any threats, Tata decided to up his stakes in most of the group companies. Ratan Tata's most important concern, however, was to protect his top lines and bottom lines in the face of ever-increasing competition from domestic and global players.

To achieve this objective, he had no option but to become aggressive, a quality that helped him in other areas. Today, the group, which was seen as risk-averse and cautious, has no qualms about taking on competitors publicly - be it in areas of policy-making, products launched or marketing tactics.” – BBC News

Significance to our readers:

1. First, increasing globalization requires increased efficiency in coordinating global teams. See our related post here.
2. No World Borders automotive consulting team is experienced in maximizing the performance in both automotive and other organizations. Our team's experience in firms such as Toyota, Honda, Kawasaki and others enables us to provide immediate value. Our certified Lean Manufacturing management consulting professionals and IT practice leadership has helped many firms achieve their IT, solution, and business goals. Best practices experience in ITIL, CMMI, ISO, and Lean have helped our team provide value to firms in over 200 engagements in this market.