Walmart Changes its Tune!

I have said this often, “When a company changes its tune, it’s time to question their stated competitive advantage”.

You may have seen the new Walmart commercial with a tall, skinny, poor rapper guy reassuring you that Walmart will price match.  The first time I saw the commercial I thought, “What?”   Walmart has changed its tune from “We’re Rolling Back the Prices…” to:  “We will Price Match”...  Price Match?

Think about it, over time your competitors can learn your business and as they grow they will inevitably erode that which was your competitive advantage (Cost Leadership).  For example, HP slowly learned of Dell’s strategy (Differentiate) and was able to copy it; a few short years later, Dell is hardly in focus, hardly different.

For this holiday season Walmart’s tune has changed to “We will price match… guaranteed!”  And with that I wonder:  “Who has the lowest price now?”  Walmart’s strategy was to be a “Cost Leader” and they were untouchable for the last decade but like Dell, has another retailer amassed the buying power to rival Walmart, say, Target?  When your margins are in the low single-digits you must have the top-line growth – the dominant number that said, when the top-line growth is being threatened I then turn to their single-digit earnings ratio and can only predict that it is looking ugly for an investor going forward.

Merry Christmas... I will be shopping somewhere else!

Is your organization exhibiting the Dilbert Phenomenon? Employ these 3 skills and watch your organization become limitless.

Is there a disconnection between organizational rhetoric and reality?  If so, then your “people” are exhibiting the Dilbert Phenomenon.  The popular comic strip by Scott Adams continually shows organizations that their employees do not necessarily buy the corporate idioms.   This creates a culture of second guessing and cubicle chatter, “Why?” you wonder, because smart contributing employees are being dismissed by the leader’s actions.  This may be unintentional or it could very well be intentional as he/she drives the annual operating plan forward - - watch your toes as this leader is driving the plan and nothing else!

Leaders do need to communicate the vision and reinforce to all that employees are the most important asset the organization has, so why the cynicism?  Well, I suspect that some of the basics have been forgotten so let’s do these three things in order.

ü  Listen	ü  Learn	ü  Lead

Listen, Learn and Lead sounds so simple, and it is, but its success requires time and a lot of it.  Today, more and more employees feel like they are not being heard and for the most part they are not (check out “iManage”, issue #021).  As a leader, sometimes we do not want to hear it, then have to deal with it.  Listening is the hardest thing for leaders to do because it detracts us from so many other pressing duties.  A part of your day should be spent listening - Listening to employees and listening to customers – period.  This level of engagement can only help earnings!

Next, ask yourself “What have I learned?”   Here to, we fail to appreciate what has been said because we are not listening and the result is nothing changes.  Wow, nothing like listening only to let your actions say “dismiss” as you simply carry on.  When you listen effectively you will hear common themes…. This is the learning.

I wonder:

• Does someone have an idea?   That could also be a great idea….
• When I hear, “Why do we do it this way?”  A process problem may exist…
• A customer has an issue?  And a similar concern has been raised by 50 other customers.  This is particularly interesting as we have all heard these words from a service provider "..This call maybe recorded for training purposes."  AND, lets not forget, to see if service & support problems exist.
• I cannot do any more, I am overloaded - yet as the leader you "ya but" or says "I am swamped too" - - What does that mean?  This action confirms that the individual does not matter.

This is where you learn and you in turn lead by making the changes.  When Listen, Learn and Lead become apart of your skillset you will see an increase in the value of your intangible assets; as employees with "oomph" is an organization that is now limitless.  Listen – Learn - - then Lead.

Try it and watch your organization change and become truly high performing. 

The Importance of Marketing @ RIM

Yes, I have been watching RIM continue to slide since my post "Grim on RIM" a while back.    In the pre-market this morning Bloomberg highlighted that "RIM continues to disappoint investors with weak financials and no new product since last year."

"Last Year", I thought!

RIM is down 18% and I am curious as to WHY their marketing department is not responding; in any way?

Think about it, Steve Jobbs is a brilliant marketer and he actively promotes his brand, his vision and his products; the same cannot be said for RIM.  This is a mistake companies make far too often and here are 7 things to remember:

1.  Awareness is Key.  Never take your Brand or your market share for granted.

2.  It is not so much the product but the Brand; meaning the consumer can forgive a faulty product.

3.  Keep the Promise.  Is every action helping to keep the promise to the consumer?

4.  People like People - get someone out front marketing the complete package.  Remember the "Dell Dude"; their stock never did as well as when that guy was marketing for them.

5.  Forget about the Money - Getting "rich" is wonderful but it can also mean that you create other interests; as is the case with owners of RIM.

6.  Create an "Innovation Pipeline" that has the consumer talking and anticipating.  These departments: Marketing and Research & Development are not talking enough.

7.  Over communicate and own the message.  When I open my MAC there is the "iCloud" message waiting......

Rhonda

Value and Diversification, How to Maximize

When you think about diversification of your business, I often suggest a 'Related Diversification' approach to creating this type of strategy.  There can be diversification that reduces value, neutralizes value and creates value.  I am interested in the creation of value in a related diversification strategy.  There is also the 'Cost Leader' strategy but those who know me know that does not interest me.  There are risks associated with a cost leader strategy, and that the corporate focus is on cost reduction, cost reduction.... goodness, it is hard to create value, value that the customers are willing to pay for when you are in constant "s q u e e z i n g" mode.  There is also a 'Differentiation' strategy which is really a nonstandarized, unique product/service offering.  I like an organization that can differentiate because to me they are innovators and they are constantly listening to the consumer and responding!  Sorry- - I digressed.... let’s get back to related diversification.

So, first thing:  Economies of Scope, not "scale", you ask?  Nop, Scope.  What activities and or resources can be shared?  That is the question to answer.  I have a client who is looking to diversify the business, in doing so we need to ensure we answer the first question or there is little to point going further because there is likely to be only value-neutral or worse, value reduced as the result.  Related diversification can mean multiple product markets and or industries (Hitt, Ireland and Hoskin).  Doing this will lead to a better use of assets and people; hence "value creation".  Assets could include an inventory management system or a delivery system or office space/storage facility, or heavy equipment etc.  I am suggesting you look at economies of scope as you diversify as this will lead to value creation.

Secondly the transference of one's core competency can thwart competition - - I like that.  Let’s look at this in two ways.  First, there is a time and cost advantage which is critical in aiding your time-to-market, leaving your competitors trailing.  The patents and intellectual property, brand recognition and the up and downstream activities can be linked.  Secondly, the intangible resources you may have will make it very difficult for your competitors to copy; this represents an immediate competitive advantage.  A side note, that outsourcing too much can reduce this.   In the last 20 years, the push was to "outsource", great but your IP just went along with it when you deemed it "non-core".  Think about how much outsourcing is needed, I don't think GM makes cars anymore.....  they are brand managers more so. 

There are organizations today that are not creating value by using a Related Diversification Strategy (Hsu & Wang, 2008. A model for interorganizational knowledge sharing. Journal of Global Information Management).

The Atmosphere in which Knowledge is Best Shared

At this time of year, mid April, my students are about to graduate and I am about to be sad.  The learning atmosphere that I create will cease until September, at which time I will start again. In the last year I made a concerted effort to create an atmosphere that facilitated a deeper learning and the constant sharing of knowledge.  This resulted in more learning time -- not 'class time'. 

I have to thank Heather for she reminded me about the importance of "atmosphere"; yes for another topic all together but it came from her nonetheless. 

That thought leads to me write about how leaders create an atmosphere that facilitates knowledge transfer, fun and a sense of reciprocity - - internal value creation.  Organizations are about to hire these grads who think differently and who are far more engaged then we think.  Organizations today are scrambling to create such environments that create internal and external value. 

My principle of 3:  Relationships, Knowledge-transfer, and Empowered People.  If an organization wants to enhance their positioning they need to have these three fundamental things going on every day.  So lets talk about the importance of an atmosphere that enables 'Knowledge Transfer' .

I learn from my students, my clients and colleagues every day and so do they learn from each other.  I knew of a leader who removed all the office doors in an effort to open up communication and the process of knowledge-transfer began.  I was rarely in my office, I wanted to be where ideas were created, where customers were located and where value was being delivered.  Today, on college campus, I am rarely at my desk....  I like to be in my classroom, sometimes "hanging out", class is never over for me because I love to learn and share knowledge. Organizations need to do the same, they need to allow for 'hang time' - idea generation happens all the time but if the organization is task-focused when do we innovate and learn from each other?  Please tell me it is not at the "company retreat".   Think first about your atmosphere, is it right or what needs to change?

The atmosphere must accommodate for how people are to share and learn from each other.  A competitive advantage often lies within, and the organization's collective capacity increases when the atmosphere is right. 

Rhonda

Operational Excellence, Customer Intimacy, Product/Service Leadership

Pick TWO

Draw these into a triangle and circle two:  Product leadership and Operational Excellence, let’s take these 2; what company looks like this?  It is an organization that is looking for the big infrastructure (communications) buyer and then to capture as many individuals within that organization, for example Microsoft.  The individual is not the main focus in the transaction.  Annoyed at times? Yes, Oh well!  And yet our organization buys the product each time there is a version change, and hence they are strong product leaders.

Take Customer Intimacy and Product/Service Leadership; Well, this is not Microsoft!  Here, this organization is seeking to gain us one-by-one, focusing not on the internal workings of the company (process, process, process) but on the customer and that customers' needs.  By the way, Leaders of a company like this are highly experienced business people.  How about National Car Rental, they let the busy business traveler walk past the counter, pick a car of their choosing and drive out, with the check-out taking less than one minute.  I love National because their service is focused on "busy business traveler"!   Customer Intimacy is all about getting to know what it is your customer wants and then delivering.  I can tell you that when 2 or 3 flights arrived around the same time, most travelers are waiting for the bag and thinking .... "get my bag, and hot-foot-it to the rental counter", believing they may out-pace 3 slow walkers for sure.

I hated standing at a long counter, waiting to be given a car....   Gee, "Thanks, my Grandpa's car will be just fine!"  But I love the National way and how they put the customer in charge.

An organization cannot be all things to all people, so ask your customer, or potential customer, what they want, pick a strategy and stay on the road.


 

Defend and Extend the Offering

Most business graduates, leaders and marketing gurus have long understood Henderson's BCG Matrix (Dogs & Star Chart).  We also know that products have a life cycle and hence companies continually innovate and change so as to keep the product and current technologies at the forefront.  But what is company's attitude like internally?

It has been my experience that an organization with "Cash Cows" (low growth, high market share) tend to "defend" their position against competitors and it is the defensive behaviour, that is enabling your competitors to understand your business, in both the upstream and downstream activities.  Staying defensive, you are focused are margins... and each year, quarter-by-quarter you start to see pricing pressure.  So you dig in to defend your position by changing and innovating in very safe, low investment environment as you try to maintain your margin and market share. 

Margins are a "result".... NOT the focus.  Your customers are the focus.   Get out there and listen to your customers and be a little aggressive and begin to "extend"....not defensive.

Rhonda  

Grim on RIM as they stayed on "Easy street"

In the early morning on Friday, March 25, 2011 I watched the pre-market sell-off RIM shares - - it wasn't pretty.  For the last 2 years I have used RIM, along with other giants in this space, as examples in my Global Market Strategy Course and how these big companies slowly find themselves on what Geoffrey A. Moore (Inside the Tornado & Crossing the Chasm) calls "Main Street" and I call "Easy Street".  "Easy" in the sense that RIM has long enjoyed their market dominance and continued to better the Blackberry device while others innovated around their core competency creating more mobile products, and dare I say "Apps".

If a company chooses to stay on Easy Street they risk losing their product dominance and should perhaps look to evolve to a services based organization, BUT that is not RIM.  Now they are playing catch-up; RIM playing catch-up?  This will require more R&D and much more marketing dollars if they are to regain their positioning; this will likely impact earnings.... to the downside. 

Some pundits said on Friday morning that RIM was "oversold" as the stock fell more than $6/share.  I do not believe markets (buyers) are wrong.  I buy a stock for its future return to me.  My question to ponder is:  "Has RIM entered the "commodity" space because mobile smart devices are now expected and their competitors are many, hence the price fluctuation to the downside or will their PlayBook be the answer?

Innovate, Innovate and Innovate some more...

Rhonda

Get a Strategy!

For years I have contemplated "blogging" and the notion of tossing my verbiage out there.  Well, here goes, my unfiltered opinion regarding business and strategy!

If you are a "not-for-profit" organization I say: "start rethinking how you connect with your customer", "Start thinking and strategizing like a for-profit entity" - - Wake Up!

Enjoy.

Rhonda