Tag Archives: strategy

System Platform

Business platforms help us understand the condition of our business model, its requirements, characteristics, competitive edge.

  • S-V – Industry platform, where our enterprise competes using industry standard practices.
  • S-IV – Market platform, where our multiple systems integrate with market systems.
  • S-III – Single serial system platform, where we see the introduction of warranties as a competitive edge.
  • S-II – Process implementation platform (of someone else’s system, like a franchisee).
  • S-I – Product or service platform, where it’s all about the product.

Bob’s Burger was all about the product. Assuming Bob’s Burger is the best burger around, how do you beat Bob? You get more trucks, geographic expansion. And, geographic expansion (more trucks) comes with its own set of problems. The quality of the burger begins to suffer. Raw ingredients scream for a supply chain where there is none, several trucks run out of lettuce. One truck runs its griddle too hot, the burger tastes like shoe leather. Customers expecting Bob’s Truckburger to be as good as the original Bob’s Burger are disappointed. Worse, Bob is in no-man’s (no-person’s) land. Expansion costs money. The unit cost for more trucks and more people are driving up overhead. A little bit of success can create a whole lot of overhead. Bob is everywhere with his new trucks, and, he is struggling. Bob has plenty of revenue coming in, and, profitability is elusive.

How do you beat Bob’s Truckburgers? Move to the next level, the system level. Bob had trucks, but no system. Bob could have purchased a system from McDonalds, Burger King, Wendy’s. If Bob had, he would never run out of lettuce, because the supply chain would be a system with ordering min/max’s. The griddle in each truck would always be the same temperature, calibrated on a monthly basis. Every burger would always taste the same. This is scaling. Scaling requires a system. Scaling without a system is a disaster.

Outside the burger world, you will notice a business model with a system frequently offers a warranty, a promise. A warranty promise without a system is a disaster. A warranty promise with a system yields predictable results. And, for the first time, profitability emerges. If you want to improve your profit, improve your system.

Product Platform

From the Ask Tom mailbag –

Question:
You always talk about the five levels of management –

  • S-V – Business Unit President
  • S-IV – Integrator role
  • S-III – Single system manager
  • S-II – Coordinator, supervisor
  • S-I – Technician, production role

But my company is not that big. Do I have to have all these roles?

Response:
It depends. Depends on the size and complexity of your company. The five levels of management correspond to five different business platforms, any of which are perfectly acceptable as a business model. You can make money at any of these.

  • S-V – Industry platform, where our enterprise competes using industry standard practices.
  • S-IV – Market platform, where our multiple systems integrate with market systems.
  • S-III – Single serial system platform, where we see the introduction of warranties as a competitive edge.
  • S-II – Process implementation platform (of someone else’s system, like a franchisee).
  • S-I – Product or service, where it’s all about the product.

And any of these platforms are valid. Today, let’s start with S-I, product or service platform, where it’s all about the product. How many roles do you need?
Bob’s Burgers

The Long Game

I feel like we are in the dog days of summer. I was waiting for an inflection point. I thought when the NBA took the court, we would see a surge in excitement and enthusiasm. But ratings are down. I thought MLB would take the field and inspire some positive energy, but it appears the World Series (if we even get there) might be won by the team who has the least COVID contagion among their players. Back-to-school even looks like a mixed bag with local decisions prevailing between classroom, online and hybrid.

The stimulus delayed the inevitable contraction, but, I sense a walk-in-place, waiting for some break. Even a vaccine, emerging from clinical trials may not spell a demarcation toward certainty.

We all wait for something to happen. Panic reaction is over. Measured response is slowly working. We identified things we could control and focused our attention there. But, what to do next?

What will be your strategy? What will you base your strategy on? How wide is your range of what-ifs? If your what-ifs turn out to be wrong, how agile is your ability to pivot? When circumstances shift, how quickly do you recognize the move?

I know things in front of your face have your attention. But, what of the long game?

The Conceptual Game

“So, if you understand timespan as the metric for thinking about the bigger picture, if it is only a matter of context, how well do you understand the bigger picture for your company? You said you may not be able to articulate it, you just know that it’s there.”

“I think the bigger picture requires some translation,” Andrew replied. “I think, when you push beyond 3-4 years in the future, things become fuzzy. My CEO says she doesn’t believe in five year planning, waste of time.”

“Can I substitute a word for you. Can I substitute the word fuzzy with the word conceptual?” I asked.

Andrew repeated. “When you push beyond 3-4 years in the future, things become more conceptual.”

“And your CEO’s observation related to five year planning? Five year tactical planning is a waste of time, but what about five year conceptual planning.”

Andrew looked to the left, then up, as if something were written on the ceiling. “I remember buying a Zune MP3 player, you know, the one that Microsoft built. I thought it was cool. I thought it was the wave of the future. But, Microsoft was playing a tactical game. They thought they were building an MP3 player, and Zune was a market failure. But, Apple was playing the conceptual game. They weren’t building an MP3 player, they changed the music industry.”

React vs Respond

Most of us are good at reacting. The pandemic required it. And, we were good at it. We figured out fast what was necessary. What will stick? It is no longer enough to react to circumstances, we now have to respond.

Think carefully about your business and the accommodations you have made. Fingers crossed, we had hoped to relax back to January, but reality is clearer now. It is easy to find the trends. Which are impacting your business model?

Technology, geography, sensory substitutes, communication channels, I am curious to hear your stories. Most interested in hearing about the opportunities.

Death of the Third Place

Ventured into my first Starbucks since March. The parking lot was empty, signs on the floor for social distancing, but no customers to distance from. Two baristas behind the counter mentally wrestled with who was to take my order. Waiting, I looked around at the cordoned seating. Is this the death of the Third Place?

Most companies have managed to return to some threshold of spaced out (space between people) operations. Products are moving, services provided. But, what of the customer experience.

Starbucks built their business on the notion of the Third Place and caffeine. I am certain they could have been more efficient had they applied six sigma principles to the order taking and coffee preparation, but what would be the point? Starbucks was all about the Third Place between home and the office where time was NOT of the essence.

What has changed about your customer experience? “Yes, you can come to our office, but please text us when you arrive. Remain in your vehicle until we confirm by text that we are ready for you.”

What happens to the Third Place in your business model?

Agile

I let others conjecture the path of COVID-19, AND a couple of things are clearer. My focus is not on the pandemic, but your business-model-response to shifting circumstances.

  • The heat of summer in the northern hemisphere will reduce the ability of the virus to survive, creating a seasonal impact. This does not appear to be true.
  • There will be waves of contagion. I don’t know if we are in the second wave or the lingering impact of the first wave. Does it matter? There will be more waves.
  • Hope against hope, there will not be a vaccine until early next year.

Those business models that survive will be those who adapt to reality.

  • Find a market with a business need, set out to solve it.
  • Test the solution to be adequate and understand its value in the market.
  • Determine if the cost of the solution is less than the market value (profit).
  • Determine if the market is large enough (enough profitable transactions) to build a business.
  • Determine the next adaptation required to sustain the business model.

This begs the question of innovation and creativity. What is the agility of your organization?

Second Order Consequences

I got an email last night warning that the low-hanging fruit has been picked. The CARES Act is past, PPP applied for and received, people furloughed, cautious re-openings. We are very good at those tasks right in front of us.

Another friend of mine, Gideon Malherbe warns of the second order consequences. What are the longer lasting impacts of WFH, online services, digital relationships, telemedicine, distance learning, end-to-end system integration? More important, how can you plan for those things unseen? Worth a read.

Did COVID-19 Break Your Business (Model)

The most strategic decision you make is “What business are we in?”

Before you answer that question, there are two other questions –
Is there a market for that business?
Is the market big enough to sustain that business?

COVID-19 wants to break your business (model)
Is your business considered an essential business?

What else changed about your business model (forever)? Most of these issues are fixable, but you have to adapt.

  • Channels you use to market to customers. What are your customers currently paying attention to? What are your customers rejecting related to marketing messages?
  • Customer interface. Is the face-to-face interface currently not possible? If face-to-face is necessary, does that interrupt your business model? For you to succeed, what has to change?
  • Texture of the customer relationship. Is the relationship transactional? Are you a trusted advisor (thought leader)? Are you customer intimate? How does your business model create that relationship? Has COVID-19 interrupted that relationship? How will you adapt?
  • Value promise. What is your value promise? Has COVID-19 interrupted the way you deliver that promise? How will you adapt?
  • Price. As you adapt your ability to deliver that value promise, does it impact the price your customer is willing to pay for that value promise? Will you adapt your price? Will you find another way to maintain your price structure related to your value promise?
  • Resources. What resources do you need to fulfill your value promise? Are those resources still available in the volume you require? Has the price point changed for those resources? Do you have to bring some of those resources in-house? Are there internal capabilities that need to be out-sourced?

Has COVID-19 interrupted your business model? Is this only temporary or is this forever? Can you adapt in the short-term? Might you have to adapt in the long-term? How will you re-think your business model?

These permanent adaptations will seem clumsy at first, but permanent nonetheless. And the clumsiness will become practiced, and those among us who practice will become competent at a new way. And the new way will improve on par with the old way. And, we will wonder what took us so long to get over our resistance.

Wash Your Hands Again

After 9-11, the question emerged, how do we get back to work? Sure there was a lot of short term (and important) work in putting our lives (country) back together, but we soon emerged to a new normal. And we had to get back to work.

COVID-19 presents the same problem. While we are in the midst of hand-wringing, wondering what we can do short of washing our hands seven times before lunch, at some point we have to get back to work. There is no basketball, no hockey, no soccer, perhaps a three year old football game on ESPN. At some point we have to get back to work.

And, what does it look like when we get back to work. While we are thinking about washing our hands one more time, could we think about our first moves to the new normal. We have changed our routines. Handshakes become chicken wings to the toe tap to more distance greetings. Some things we have adapted will become permanent.

Those permanent adaptations will seem clumsy at first, just not the same, but permanent nonetheless. And the clumsiness will become practiced, and those among us who practice will become competent at a new way. And the new way will improve on par with the old way. And, we will wonder what took us so long to get over our resistance.

So, what are you thinking about as you wash your hands, again?