“Outside-In” strategies – how putting ‘Customers first’ shapes the CxOs planning

When it comes to strategy planning, many companies usually tend to put forth steps based on what they can do with the resources they have internally. Companies which have been existence for quite a while, especially tend to develop a culture of their own and some “core” competencies. The management then starts formulating strategies on how to replicate the earlier success, or how to do things based on what is available internally. This is usually called the “inside-out” strategy.

While this may be practical in a few scenarios, this approach sometimes constrains the company from keeping up with competition during tough times. Going usually gets tough when competition intensifies and the market is getting more fragmented, or when the market by itself is shrinking – like during recessionary periods.

When it comes to developing growth or turn-around strategies or surviving tough times, “outside-in” strategies tend to be more relevant and yield better results. There’s been a lot of research in this space and most recently, Wharton marketing Professor George Day and Christine Moorman from the Fuqua School of Business at Duke University describe this approach in their new book called “Strategy from the Outside In: Profiting from Customer Value”.

 

One example that I personally liked and would like to discuss about is the example of McDonalds turnaround.

In 2003 McD’s had its worst period in the entire 52 year history. McDonald’s reported its first-ever quarterly loss in Q-4 ’02 and its stock price hit a low of $12 by mid-March of 2003. Operations were seriously affected and franchisees were losing money. Worse still, CEO Jack Greenberg, had just been fired by the board.

Usually, there is a solid co-relation between market orientation and profitability. So by carefully evaluating the results of research and survey, McDonald’s was able to pin-point that its strategies were not focussed on where the problems were.

The main focus at that time had been on adding more and more outlets – almost like one every 4.5 hrs round the world! More time and effort was being spent on real estate rather than the customers’s issues. While at the same time, menu was getting uninteresting, service was not up to expectations, customer satisfaction levels going down.

“We had lost our focus. We had taken our eyes off the fries.”

McDonald’s CEO James Skinner, in Business Week, Feb 07

Soon McDonald’s started applying all this research info into carefully formulated strategies which yielded tremendous results. They ensured that they’d slow the rate of new stores opening, and rather focus on growing sales within each outlet. Very soon almost 40% of the outlets were open 24hrs up from just 0.5%.

The product devlopment process had also been improved to ensure attractiveness to customers and not just for the profitability or ease of preparation. This was a key step, because as part of the survey one feedback was that many mothers would bring their kids along and buy them lunch, but they themselves wouldnt be eating anything the outlet because they didnt find anything quite interesting on the menu!

The “outside-in” – focus helped turn the company around, and by 2006 the net income had quadrpled to $3.5billion and stock price zoomed to $45. The market share also grew to almost 3 times more than the nearest competitors (Burger King or Wendy’s).

With the rise of digital media and social marketing, there has been a tremendous proliferation in the number of channels by which customers are being reached out. And markets are also splintering, which makes it more important to look at things from ‘outside in’.

Essentially, market forecasting is a highly time bound activity, but as market places are too dynamic in today’s world, it is important to see patterns outside and react swiftly.

Is Microsoft buying Adobe – Why or rather Why NOT ?

For the last few days there has been lot of buzz and rumors about Microsoft getting in talks to buy Adobe.

Just to clear the air, there was indeed a meeting at Adobe’s offices which lasted about an hour – Microsoft’s Chief Steve Ballmer met his counterpart at Adobe Shantanu Narayen and NY Times also reported it. However, the meeting by itself was a hushed up one and there has been no formal press announcement YET from any of these companies.

Though much of the news floating around is all about speculation – ifs and how’s.

Anyhow, just getting into background of these 2 companies, both of them have been around for quite a while and throughout the internet era. Both are almost household names and they come together on the PC (Adobe Apps on Windows) and yet compete against some common rivals (Google & Apple)

One of the main attractions for Microsoft is Adobe Flash, which powers majority of online videos and games on the web. And Microsoft also kind of competes with Flash with its Silverlight platform.

Adobe just got dumped by Apple when it launched its latest iPAD sans Flash. Besides, Microsoft and Apple have been rivals for decades now. So when you share a common enemy then you kind of become partners!!

Microsoft’s been struggling to really get its bearings in the Mobile space. It’s just tried to make a comeback by announcing its Windows Phone 7. While Apple’s gesture could jeopardize the future of Flash on PDAs and Phones, Microsoft could just help right there.
Besides there is the huge Apps market. Microsoft could benefit from the Photoshop market share of Adobe. And there potential similarities in Microsoft’s silverlight and Adobe’s Flash and Flex development platform. And there’s the huge PDF market.

Well for one, both these companies were dominant not long back when Apple or Google were not so influential. But things have changed with Google dominating the platform (Android) space and Apple emerging rapidly in the devices space (iPhone, iPAD etc.)
So in order to fend off common rivals, Microsoft sure could be quite interested. All the chatter however has done quite a lot of good to Adobe’s valuation, and sent its stock price higher by over 11% and raising its overall market cap to $14+ billion.

For Microsoft there are so many other priorities to address – IE browser share, search market share, role in the social networking space etc. So it will be quite interesting to see the events unfold from here.

The value proposition of clean and renewable energy?

Most of us already know what clean and renewable energy actually means – generating energy from the forces of nature like Wind, Water, Sun, instead of digging harder for rapidly depleting earth resources (coal/oil).

But more than the prospect of depletion, one of the key issues with use of fossil fuels is that it is quite inneficient in the generation of usable energy. When gasoline is used to run automobiles, most of the energy gets disssipated as heat.

While its quite the contrary with vehicles that un on electrcity, where almost 80% of the energy is used for motion and just the remaining as a thermal loss.

A study conducted recently by a couple of Californian researchers suggests that the world energy demand by itself can be cut down by 30% if we switched over from fossil fuels, by merely doing away with inefficiencies in the production and usage.

And renewable sources like Wind and Solar have enough capacity (individually) to support 5 to 10 times the world’s needs not only now but well into the future.

From a technical challenge point of view, the key would be getting the grids and transmission lines in place to keep supplying power to the destinations and balancing the production and consumption.

But researchers opine that it would take more than just technology and simple logic, as energy is a segment that has deep political connections dominated by lobbyists. But as a civilization if we want to move towards a cleaner, greener, healthier world with a reduced carbon foot-print, clean energy is the way to go.

Analyzing the success of Endhiran – Robot

Endhiran – Robot, starring the greatest superstar of Indian Cinema – Rajini Kanth, and directed by Shankar has been the most expensive Indian film ever made till date.

It has truly carved a name for itself in the history of Indian cinema by breaking several records and being a trend setter. A lot of hard work and careful planning has gone into the making and marketing of the movie. Am trying to list down a few of those points here in this post. 

Many would know that the movie has consumed a massive budget – close to 160+ crores to make it. To begin with this movie was being produced by Ayngaran which subsequently sold out the rights to Sun Pictures. This was a defining moment for the movie’s fate, because not only did this bring in the money power, but it also brought in the tremendous muscle that Sun and its network wield in the southern state (TamilNadu).

Its quite well known that a movie’s success is predominantly determined by the hype and buzz. Sun left no stone unturned to ensure this. There was a massive mega-event music launch show in Malaysia which was telecast on the Sun Network. That by itself raised the expectation levels of Rajini’s fans worldwide.

Following which the music of the movie was launched on iTunes and it recorded the maximum downloads for an Indian movie while fetching revenues legally.
The next part of the marketing economics was the distribution and launch planning. About 2250 prints were prepared for world-wide distribution.
In entire Tamilnadu, there were just 2 other movies that were running since the launch of Endhiran and just a couple of shows. That meant that, whichever theatre or whichever show you walked into, there was Endhiran playing. This was also marketed heavily in the adjoining southern states of Karnataka and Andhra. The hindi versions were also simultaneously released for other parts of India.

From a pure math perspective at the rate of 4 shows for 2150 prints, with an average audience base of 150, and average ticket price of 200, this alone works out to 25crores per day! Now if we take out 100 of those 2250 prints as worldwide releases and calculate the returns on them using currency conversions, they work out to much more.
The movie has been running full for more than 10 days in a row and the theatres are still buzzing. So easily some 350-400 crores would be made in just about 10-15 days of running.

Comedian Vivek said during the music launch that this movie would be like 10 Diwalis put together – he even called this RoboWali and why not? Its been a true fire cracker.
One of the other key aspects that the makers got right was the protection of digital rights. Usually this tends to be an achilles heel as the piracy eats into the plans and movies get distributed very easily on filesharing sites.

Endhiran’s overseas rights were owned by a professional entity – FICUS entertainment (www.ficusmovies.com). And for the overall digital rights, they are protected by the Anti Piracy Group. APG has said clearly that it would pursue legal action as per DMCA rules against individuals/websites who distributes pirated links/sharing files/torrent files of Endhiran / Robot / Robo.

Interestingly though links appeared for some parts of the movie or songs, those were detected and broken very quickly. What was even heartening was the Rajini’s fans themselves were posting messages on social networks referring to such links and asking the site owners to remove them. Social responsbility!!!

Truly this has been a landmark movie in every way – made, managed and marketed very professionally to perfection. As some one said, the earlier movie of Rajini, Sivaji was BOSS – but this one Endhiran is MASS !!! Go Endhiran, Go Rajini!!!

Why is IE share dipping continuously – ?

According to recent market survey reports by Net Applications and Stat Counter, all’s not going too well for the IE browser over the last few years.

From an impregnable 67% (2/3rd) market share, IE seems to be on a gradual slide and currently down to just about north of 50%. There are some variations in the numbers put up by these two companies, but not more than a few percentage points.

One of the key contributing factors has been the landmark ruling by European Commission earlier this March, 2010 – which forces Microsoft to provide users with the option of choosing the browser of choice on their PCs instead of defaulting to IE. This was hailed by many rivals as a welcome decision that puts the control of lives back into the hands of the users. Currently IE holds just about 40%+ marketshare in the EU region.

The key gainer has been Google Chrome which has soared now into the double digits (> 11%), and overtaken Safari and second only to Mozilla. Interestingly, Chrome had just over 2% share a couple of years back. As the fight intensifies, Microsoft has been trying to buck the trend by releasing the latest version of the browser IE-9.

However IE-9 is still only in Beta, and besides it has to grapple with the fact that it only runs on Windows-7 which in turn commands a much lower market share. So tough times for Microsoft on the browser wars.

Personally, I’ve been very comfortable with Chrome for its simplicity, light weightedness and ease of use. I’ve found IE sluggish right from starting up, to opening pages and even in shutting down. Besides the list of questions that pop up are just endless. And it just seems to be so connected to other key services in the O.S making the system as a whole slugggish at times.

That said, it feels good be part of the worldwide trend – Go Chrome!

What’s ailing Nokia marketshare in India?

Nokia’s market share has been on a down slope in the last couple of years. Its actually quite significant considering its dropped from about 2/3 to close to half (from 64% to 52%) in just 2 years!

Well in India Nokia did have a stong hold for quite a while and it was quite “cool” to own a Nokia phone – both affordable and reliable. Besides a good service network and resale value.

One of the key reasons is the change in the competitive landscape. The number of local players just went up from handful to 28 in these 2 years. Its no surprise that the relatively smaller players (Karbon, Spice and Micromax) have been making a splash by sponsoring big ticket events like the IPL. Their marketshare has gone up to 30% +.

But inspite of all the nibbling into marketshare etc., India is still quite a big market ~ 108 million handsets sold in the current year.

However, what’s really going on with Nokia’s strategy? On one side its really experimenting by releasing too many handsets in the hope that one or some could emerge to be an iPhone killer.

Some say Nokia might have got it wrong with its digital marketing strategy and some others opine that their smartphones aren’t really that great. One of the key factors for success of smartphones is also the open platform on which many 3^rd party applications can thrive upon.

Nokia however strongly contends some of the numbers published by IDC. For Nokia it is just a minor loss of marketshare and not the position as such as the leader in the handsets space. Anyhow, its wait and watch now for how things will head

Cisco CRS-3 – futuristic? Game Changer?

Last week Cisco announced a high-speed router CRS-3 that can handle data speeds upto 322 Terabits per second. To explain this using analogies, there were comparisons to:

• how the entire collection of Library of Congress could be downloaded in a second, or
• how all the people of China could make a simultaneous video call or
• how every motion picture ever created could be streamed in a just few minutes.

Sounds really wow! But where Cisco wants to go with this router is unified delivery of Internet and Cloud services – next generation of unified networking. The router comes with data center intelligence which is the core of Cisco’s Data Center Services System (DCSS), which helps in more efficient routing of traffic between data centers and providing best path to content.

Today, traffic no longer moves plainly from users into the network and then outwards. There is an explosive growth of user-generated content and Internet video, and distribution mechanisms. All kinds of content providers, from the smallest to the large media houses are competing for viewership and multi-directional distribution.

This is where DCSS steps in and bundles together 2 important concepts:

• Network Positioning System (NPS)
• Cloud VPN (CVPN)

Just to give a quick idea of NPS, a big challenge in  cloud data access is moving content using the shortest path or in other words locating the target service in close proximity.

NPS essentially acts like a GPS where it is able to accurately position services within the shared network infrastructure.

It  differs from traditional routing, by computing the shortest path to the source from multiple destinations thereby making the routing more contextualized. It does this by aggregating network information from layer 3 to 7 and can span multiple autonomous systems including MPLS VPNs. This is a very powerful concept when we think of locating closest resources like files, videos, applications, other services etc.

And just as services are available over the cloud, the distribution of the services over shared infrastructure is also equally important.

As cloud resources are being accessed on demand, these access patterns could go through sudden surges resulting in online data transfer gridlocks.  Imagine traffic moving around a city where multiple Olympic sports events are being hosted.

Network Positioning and Cloud VPNs

Cloud VPNs help in making the overall distribution infrastructure more efficient by allowing elastic capacity in the IP network to which the data centers or cloud services are connected.

This eliminates the need for pre-provisioned bandwidth capacity. At the same time security, QoS, and multicast benefits of regular IP/MPLS network are also available. Service providers can tune their networks to handle dynamic, flash traffic patterns with Cloud VPN connectivity.

Considering the overall package of the CRS-3, it seems like Cisco is seriously looking at a seed and harvest strategy for the next generation of internet. They are certainly in the seed stage now. AT & T has already been trialling out this router for a 100 Gigabit backbone network distribution.

Green Home power – sunlight, water, technology

Renewable energy buzz got a big boost recently when a group of researchers from Massachussets Institute of Technology (MIT) demonstrated generation of electricity from water using solar light.

The underlying principle is very similar to Photosynthesis, something that plants have been doing for millions of years. Plants can use solar energy to split the water molecules and store energy. The researchers have come really close to doing just that.

Storing Solar energy has been like the holy-grail of renewable energy research for many years. This breakthrough could now foster an era where water can be split into its component gases – Hydrogen (H) and Oxygen (O2) using a catalyst. Later the Oxygen and Hydrogen can be used in a fuel-cell to create carbon free electricity. This could power homes and/or even cars in the future.

Studies say that every hour, Sun bombards the earth with energy enough to sustain our planet’s energy needs for an entire year. If (or rather when) this technique becomes wide-spread the expectation is that homes have their own power-stations in the form of solar-panels and be able to cut down on energy costs through a green process.

For developing economies like India, this could be a big boon where there’s abundant sunshine throughout the year – provided the government also helps and rolls this out  in a cost-effective manner.

Landing Pages – bang for the buck

I suppose everyone’s quite familiar with landing pages. But just to clear things up, its the page that first shows up when you click on an ad that you see on some websites.  Typically the search term or the ad takes the clicker into this page.

So this being the first thing any user sees / interacts with before interacting with you/company, its highly imperative that you present the best possible face. Else, all the SEO stuff is going to get wasted and not result in the buzz or sales that you wanted and spent all the money on.

The first essential thing is relevance. If you don’t the content that’s relevant to what got the user to this page, then they’re going to lose interest very quickly. Remember the attention span is very very little online and its the first few glances that make the difference between an average and a popular, cool site. And there are tens of millions of pages out there and you have managed to get the user to look at your page. So grab your chance and make the point quickly.

One of the key things is the headline. These are very important because this tells the user instantaneously that he/she is at the right place for having clicked on that inbound link. Banners or bullet points also make this quite clear.

Next most important thing is how you transition from the headline to the first few sentences of you paragraph. If there’s very little connectivity or if the headline was just a gimmick and content didn’t match, then your visitors are going to get frustrated quite soon.

The next thing to focus is readability. This is extremely important and people spend hours and hours of research on this. But just for a quick example, here are some screen shots of how Amazon did some tweaks to their website and made the important content quite easy to read.

Amazon Page Earlier

Recent Amazon Page

Ofcourse then once you have your visitor going through your stuff, its time for action! You need to quick transition this into a win. So if its a product sale, then it has to be very visible and be available in very few clicks or even better on the same page. You should use action verbs that will prompt the user towards what you really wanted them to do, and quickly!

Finally, for tracking and analysis purposes, tag each available link to see which ones are most used. This is especially useful for e-commerce sites that use a multi-stage conversion process to generate sales, and may include tracking each segment or page to see where viewers are lost.

Leadership – art of thinking through

Just continuing on my thoughts about leadership, I was just recently reading a book by Michael Malboussin – Think twice Harnessing the Power of Counterintuition. What I really liked about the book is about the common traps that leaders fall into in trying to make decisions that matter.

When it really comes down to things that matter, people have to think through and maybe quite a few times. One of the pitfalls to be avoided is to curtail the urge to act before weighing everything. Sometimes a sense of superiority complex kicks-in that takes away some of the rationalism in leaders. They kind of get into the “too big to fail” attitude. This in turn tends to affect the quality of the decisions taken.

Another key point which I liked was about how people tend to behave differently under stress. What stress does is to take away some of the long-term rationalism and tends to push into thinking more short-term, just to get out of a “situation”.

For example, at a CXO level, just because of a certain trend going on, decisions taken with just the next quarter in mind could have dangerous implications.

Leaders at the top, sometimes tend to make use of disproportionately large amount resources in order to execute their vision. Just because they know that people can’t say “no”, they tend to get their way with decisions they make. The effects usually surface only a little later in many cases.

I’ll continue to scribble my thoughts on leadership. But the one point I keep stressing is that, as sensible people, leaders should work out a mental checklist using various learnings, and be putting that to use as they execute their actions. (atleast as much as possible)