Linda Curry, from HP in Sonoma County, suggested that people fill whatever
void the jottings may have left with their own work. I suggested that she
go for it, and she has.
I took your challenge and visited the corporate
planning page to get some book buzz. I chose 2 books,
Coopetition and Hypercompetition. What follows is a
review of the Coopetition book. If you think your
readers would appreciate it, I'll do another write up
of the Hypercompetition when I'm done with it.
I chose these topics because I think that HP's
response to competition will be what makes or breaks
us. We are large enough now that we can survive a
direct hit without immediately losing everything. We
are also small enough at the division level to
leverage resources and run fast if opportunity is not
overlooked. Our transition from the company
forefathers to the engineering company of the 90's is
not without personnel and personal challenges. We have
to continue to be good at what HP does best..ENGINEER
SOLUTIONS.
Hope this isn't just more turkey!
Linda
The review is what's below the line. If you think
there is any copyright infringement by depicting the
Value Net, please just delete the figure.
__________________________________________________
All competition and no cooperation makes a business
unhealthy. Coopetition is the major premise of a book
by Adam Brandenburger and Barry Nalebuff which
discusses modern business management theory by using
fundamentals of game theory. By reviewing the PARTS of
any business challenge, anyone can perform a better
analysis of their business and potentially change the
rules of the game to their business advantage.
PARTS stands for Players, Added Value, Rules, Tactics
and Scope. By reviewing these influences on any
business and its Value Net, anyone from the production
operator to the CEO can come up with alternatives to
invigorate their business. The Value Net challenges the
traditional linear business models by showing
interrelationships among the various components.
Essentially the company has competitors, who are those
who make the same products that customers will value
more than your products, and complementors, who are
those that make a product that customers use with your
product and value the combined experience more than just
your product used alone. Cutthroat competition does just
that to both business competing. By focusing on winning
over your competitor and not focusing on winning with
your customers, the end game is a net loss of profit and
efficiency as the market becomes narrowed by the
competitive zeal. It gets harder and harder to make any
incremental improvement in revenue generation.
With the Value Net being a circular, interrelated model,
the obvious polarity is eliminated and the model has no
axis that does not impact the business vitality either
in a horizontal or vertical path. Indeed, the model is
most like a seesaw where going to the competitor aspect
is helpful until all the weight is researching and
competing, then the weight has to shift to the
complementors, because the most effective way to
undermine a competitor is to identify and partner with
your complementor.
It's like beans and rice, either one is a staple by
itself; however, together the nutrition is more complete
and the eating experience is more enjoyable. If you are
in the Beans or Rice business, you have competitors that
also sell beans or rice. However, the moment you team up
with your counterpart so that now the customer wants your
beans to go with Brand X rice, you and your rice
complementor are making more sales.
Likewise with your customers and suppliers, you will make
more sales when the customers can anticipate getting their
product in a timely manner, but some where in the deal is
the fine line between a good sales for you and good
business for your supplier. The trick with suppliers and
customers is to balance the need for a solid, affordable
supply with your internal balance sheet. Having lots of
inventory may be healthy for all the customers you wish
you had, but it will undermine your business health if you
commit resources to strategy without adequate market
research. Say you plan to sell 50 units. You buy materials
for 50 units. You pay workers to make 50 units. You store
50 units in the warehouse for your customers.
But what if, back at the planning stage, the marketing
department does some pretty thorough research to show that
the market is pretty saturated and that you will probably
only be able to sell 20, IF you sell hard. Similarly if
you can only produce 20 but the market demand is for 50,
you need to be doing something to distinguish the buying
experience for customer so that they will wait for your
product. Better yet, make them so convinced they WANT to
wait for your product. Or have a real time order
fulfillment plan that is constantly ebbing and flow with
the demand. Most customers will not wait long before
researching other options.
One of the most important learnings I got from this book
was the need to anticipate what your customers will do
with your product. Some of the biggest business success
stories have happened to entrepreneurs that took an
ordinary product and used it for an extraordinary
purpose. Paying attention to what your customers want is
important, but noting what they need is critical. Find a
way to fulfill their need in a way that makes you their
partner and you have a loyal, repeat customer base. And
that is the stuff, successful business people drool over.