Strategy Execution – the quest continues…..

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Robert Kaplan and David Norton, the celebrated authors of the "balanced scorecard" have come out with a new book:  "The Execution Premium:
Linking Strategy to Operations for Competitive Advantage" and Robert Kaplan's interview appears here. Kaplan and Norton give excellent ideas about the mechanics of aligning strategy to operations. One particularly interesting idea is to add an "office of strategy management" which to me is a difficult one when companies are trying to reduce people. In any case, I am a big supporter of an old idea that Peters and Waterman came out with in excellent  companies in the eighties. That was a "bias for action". At the end of the day high flaunting strategy is not very useful if things don't get done. Well how do you executive strategy ? You break down directions to simple clear directives like the famous "being the low cost airline" for Southwest where decisions like replacing peanuts with a more expensive ceasar   salad can be vetoed simply on the grounds that they violate core strategy. Naturally, the guru of this genre of thinking is Ram Charan and here is a quick summary of related ideas. In any event, the the quest for execution continues…

How do you green the upstream supply chain ?

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Recently there is a great deal of discussion about sustainability and the importance of going green with the supply chain. For example, SCDigest has a great summary of the recent McKinsey report that mentions that 80% of the carbon footprint for many companies comes from the upstream supply chain. Also, there was a Zurich summit in February that tried to put arms around greening logistics and transportation.

The question  is, how do you action some of these genuine concerns in the running of your upstream supply chain? For starters, just asking suppliers by way of introducing a clause in RFP's would help, straight away. Many suppliers would tell you that small lot orders  on a part-truck basis or by urgent airfreight simply add to the carbon footprint. Similarly rationalizing secondary packaging could go a long way in both reducing cost and improving the environment. "Green metrics" very similar to calorific values of foods would make decisions easy to make. The IT industry is attempting to do this, more traditional businesses need to follow suit in obvious,somewhat routine subjects  like a defining a "Green" RFP clause, coming up with a "Green Transportation metric" and reviewing secondary packaging "green" options.

Green in Beijing 08-08-08

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The question of air quality at Beijing has assumed center stage as the Summer Olympics start in less than 10 days. Athletes are worried that the air quality will affect performance. Every fraction of a second counts for athletes at the Olympics and many athletes are planning to arrive hours before their events to avoid performance issues that may arise due to poor air quality. The Chinese authorities, on their part have closed  down air polluting factories and have taken millions of cars off the road and if necessary will take all cars off the road if necessary.

The focus on air pollution at the games will bring attention to air quality issues worldwide and that is a great thing. Some years ago New Delhi’s air was unbreathable and then the Delhi Transport Corporation decided to convert all buses to compressed natural gas (CNG) and things improved dramatically. Taxis, auto rickshaws and many cars also moved to natural gas or the more riskier liquid petroleum gas (LPG) partly because of  laws but mainly motivated by significant  lower costs.

I guess cities worldwide will take a cue from the Beijing situation as will industry. This is a good time to examine air pollution issues in whatever organization’s buy,produce or sell. Whatever reduction one can do will be good for business and the environment. A Win WIn !

Winning brings us back to Beijing and I am sure this will be a great Olympics as they open at 8.08 pm on 8-8-08 as this blog started counting about a year ago.

Supply chain and marketing changes for a slow economy

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Consumers in the US are making major changes in their behavior in the US market as the economy slows. In this article, I found the Nielsen number of store grocery brands growth vs branded products having significant implications for marketing and supply managers. Over the last year ending April store brands have grown in sales by 9.1% while branded products have grown by 3.9%. These numbers signal rather immediate actions that marketing managers and supply managers across every link of the supply chain will have to consider. Store brands have very low marketing expenses and simply launch generic products when significant local sales are observed in any branded product. Consider the OTC pharmaceutical shelves in a supermarket where the store brand for an off patent pharma product will have the same ingredients and mention “compare with X name brand” and place the store brand next to the “X” brand with off course a lower price. In good times consumers will buy branded products but these days consumers will tend to simply buy the store brand whenever possible. Brand marketers are cutting prices and offering deals to come nearer in price to the generic store brand in almost every category. These discounts coupled with cut marketing budgets is making marketing much more challenging

As demand slows down supply managers are being asked to help by trying to reduce input costs in every way possible, the market will simply not absorb costs. Innovative low cost options is something that every product category is looking for. So whether you are a marketing manager or a supply manager, you may have been already asked to cut costs and yet stay effective. If you have not been asked, don’t wait for a formal mandate, get to it and just ask your customer and supplier how you can cut cost and come up with innovative solutions like combining deliveries, investigate economic inventory financing options and any way you can do more with less. And try to do these now!

Will Budweiser change?

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The news that InBev has taken over Anheuser-Busch for $52 billion is a major event for both marketing and the supply chain.Although,initial reports suggest that the big benefit of the merger is the enormous brand power and marketing muscle  of “Bud” in the US market,it seems likely that the new management will review  some of the traditional advertising  that Budweiser has been known for.Also,a focus of the American entity will be to cut supply chain costs by $1.6 Billion.

College classrooms will suddenly find the enormous marketing teaching material developed around the “Budweiser” brand outdated. Marketing clubs routinely discuss the Superbowl ads, dominated by “Bud” and things may change there as well.Similarly the famous supply chain beer game will probably need some reworking.

In fact, the merger will throw up enormous opportunity and challenges,not only for the merged entity but entire armies of consultants,speakers,professors and students will suddenly have to take a fresh look at global alliances, in this case a merger, and it’s impact on something we assumed would never change viz. Budweiser and it’s larger than life dominance in the American psyche.

For starters, consider the InBev website’s brand section that asks you your country of residence and date of birth while the Anheuser-Busch website asks you if you are over 21 and simply assumes US residence. All this will start changing as “Bud” becomes truly global.Similarly, before making any marketing changes in a great marketing formula, the new A-B-InBev organization should sure tread carefully lest we have one more “New Coke.“

Installed base and its supply chain as P&L Center

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I had promised to read only fiction this summer and enjoyed John Grisham and Jhumpa Lahiri before lapsing to old habits of reading non fiction, for fun. Anyway I again  picked up “Execution – the discipline of getting things done” by Larry Bossidy and Ram Charan.

I am glad I did because the structure of big consulting,business school academia  and big businesses had me really puzzled for a while, because strategy,operations,marketing and supply chain are different vertical “silos.” Supply chain is clubbed with operations or in rare cases with distribution and logistics in marketing. For example, you can’t  easily find a partner in a big consulting firm who  is responsible for  both downstream distribution and  upstream supply.

In any case coming back to Larry and Ram’s book. Towards one of the later chapters they casually drop an example of how if you have an installed base ( be it aircraft supplied or the more modest office copier) the supply chain for the after-market should be seen as a P&L center for the future. They in fact do not use the term marketing at all. How insightful and integrative is that ? More on their HR views later …..

Global B2B strategy and 4th of July

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Last year this blog had wished readers a cheery 4th of July celebration and this year I do the same. This despite the media gloom of high gas prices,towns cutting fireworks and Starbucks closing stores I feel hopeful that we’ll see a new Global B2B approach emerging. Let me explain, gas and other cascading prices have gone up all over the world and India reports 11.63 % inflation and China inflation is about 7.7% with both countries saying that inflation is at a 12 year high. However, the internal boom in these countries might slow down, only slightly.

On the other hand I predict that B2B collaborations between American businesses and global suppliers and global marketing partners would rise. So what’s new ? Well the partnerships should rise between smaller businesses because telecom and Internet is being increasingly adopted at the small business level and businesses are opening up in thinking about global opportunities for both buying and selling.

Wishing everybody Happy 4th of July!

Small business,gas prices and the Internet

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Luckily for bigger organizations Internet adoption had come before the -$4/gallon gas prices. Since last year I was hearing about major organizations cutting empty office space because most people did knowledge work and preferred to work from home and come in for meetings. Yesterday the small Gloucester Township, New Jersey was reported to be considering closing municipal offices on Fridays to save 35000 $ in heating and cooling costs. I guess Gloucester City can manage most service activities from its website or at least get more applications on-line. Both citizens,employees and the town administrators would be happy so long as the town tax for next year is contained !

Small businesses, like your neighborhood plumber,on the other hand are extremely hard hit.Most rely on traditional advertising including painted vans (that move with gas) to spread their marketing message. A majority do not have websites and those that do -have no real system to keep track of inquires or sales leads and just can’t afford fancy customized back-end databases to provide customer service. However, this very large engine of  the American economy is realizing the potential of saving gas and costs  through transferring some of  its business functions on-line. A day may not be far when your plumber gives you a recorded message to fill up a web form with your job details or check progress on-line on an ongoing project!

Tim Russert and father’s day

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Book2006
Tim Russert’s sudden passing yesterday was a shock to his millions of fans. I was an avid watcher of NBC’s “Meet the Press” on Sunday mornings and will sorely miss him. But I am struck with the irony of his passing on father’s day weekend where he had made his own father “Big Russ” famous through his books on the topic. Thousands of readers wrote back to him with their own stories and his books added a new meaning to Father’s day. As an interviewer, he was highly prepared,pleasant but tough and explained politics in a manner that everyone got a better handle on issues including the folks being interviewed !

There are some really nice things to note about Tim Russert as a recent talk show on MSNBC suggested. Tim never forgot his humble roots and was constantly amazed at the progress he had made. He was an expert in politics but never let you feel that he was a “Pundit” and you were not. In fact his openness to listen and learn from  the “non-expert” probably added to his own expertise and fan following. Finally, as  Pat Buchanan was saying, at interviews and broadcasts Tim Russert went at issues taking neither a rightist nor leftist view, leaving the interviewed, audience and even rivals with the feeling that he was fair. Tim will be greatly missed.

More auto plants close as gas prices rise

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GM, Ford and Chrysler have announced plant closures in Wisconsin,Georgia,Virginia, Minnesota. These are not poor performing plants but highly efficient ones. It’s just that skyrocketing gas prices has made driving around difficult and driving around in gas guzzling SUV’s even more economically difficult and socially embarrassing.

But as Governor Jim Doyle mentioned if the plant is efficient and world class, is that not an advantage for the auto company? Small cars are booming and surely re-tooling the plants are possible? Why is it so difficult to change product mixes in the auto industry? I guess it is just that no one thought that “flexible” manufacturing was required in the days of low cost gas prices. This was a case of making contingency plans for the product life cycle for SUV’s .Now it’s just too costly to switch gears ( alas an auto metaphor) and many communities must suffer.