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Corporate Strategy

Businesses have constantly changed over the years, primarily driven by technology. But the pace of change in the last few years has been exceptional. EY is one such which has constantly braved the storms and emerged with new ideas of its own. Due to the company’s presence in over 150 odd countries across more than 170 years, it was able to disrupt from within. There are times when the technology will make the first move followed by the corporate culture as has happened in the field of talent recruitment where so many companies are now preferring the gig workers. EY has itself created a platform called Gig Now to somehow increase its present ratio of part-time/freelance workers from a mere six percent to five times the figure. But to prepare for the future, solid groundwork needs to be done now. Companies must invest on corporate training programmes that will fix the culture at the company to take advantage of future technological innovations.

Source:https://www.ey.com/en_gl/workforce/are-new-technologies-changing-culture-or-should-culture-change-t

Uploaded Date:15 September 2018

Cannibalizing one’s own product has become a common trend, albeit often unsuccessfully in the digital era. The thinking goes that if one does not cannibalize one’s own, a competitor will soon end up disrupting. This is easier said than done, as capabilities to scale are built over many years. Also, it is extremely difficult to transition from one industry to another, otherwise makers of horse-drawn carriages would end up as the auto-makers. That is where the Saudi Aramco’s latest business innovation is a rather counterintuitive, but possibly shrewd method of protecting one’s turf. They have invested in research, to help engines run more efficiently on oil. This means that lesser of Aramco’s produce i.e. oil would be used. But this is a smart ploy as every year we see more number of electricity-driven cars and buses hit the road. There is increasing pressure to make more use of renewable energy. So, this development if successful will ensure that people will continue to use oil well into the future, albeit a bit less than at the present rate.

Source:https://www.strategy-business.com/blog/A-Counterintuitive-Way-to-Shape-Demand?gko=fe7a4

Uploaded Date:15 September 2018

Most businesses crave to know what their competitors are thinking and planning ahead. Traditionally, strategy analysts have used financial models to predict competitors’ moves. But now due to the enormous data storagegoing on, more specific, pinpointed insights can be eked out. One can make use of NLP (Natural Language Processing) for the same. Unstructured textual data can be really difficult to engage with, so some form of encoding is required to get the right results. Cognitive maps are the latest fad, with deep insights. Cognitive biases and the mental models that people apply are also important to be understood. AI or NLP can even be used to detect patters a simple data warehousing will not display. Google is already using such tools in a big way, while Facebook plans to make a grand entry.

Source:http://knowledge.wharton.upenn.edu/article/natural-language-processing/

Uploaded Date:13 September 2018

A major strategic dilemma companies used to face was whether to produce all the sub-components of a final product themselves or outsource these parts. Now the older decision-making process has become outdated due to several competing factors. The TCO (Total Cost of Ownership) model is getting obsolete. So, experts have identified a more holistic approach titled coherent capability make-or-buy framework. This framework has a few inherent questions that need to be posed right away, beginning with understanding the impacts of the business innovations and technologies currently. Another is identifying the existing as well as potential competitors or even disruptors in the near future. The third question is about markets and which of the existing markets will remain lucrative in the future. It also looks at product categories whether already prominent or still at the drawing board. The company need also evaluate its product line to see whether there exist any that will be a market leader soon. All kinds of disruptions are evaluated here. This includes commercial, technological and product disruptions.

Source:https://www.strategyand.pwc.com/reports/new-make-or-buy-question

Uploaded Date:13 September 2018

In spite of having completed about a decade since the economic crisis, most banks in Europe are still struggling to reach their pre-crisis returns. For this recovery a mechanism has been identified by banking experts known as Fit for Growth. It is a mechanism where the banks remain an integral central platform, but its operations are modular. Key processes such as trading, marketing, business analytics, procurement or even some finance functions may now be safely outsourced. This reduces the overheads for the banks. Of course, such outsourcing is always liable to certain risks but the rewards far outweigh them. A major strategic driver for banks’ long-term sustainability will be their ability to build scalable, flexible models to keep up with enormous market changes. All such strategic decisions can be divided into four categories, beginning with the unique “differentiating capabilities”. Another is “table stakes” which are the basics needed, followed by “lights on” that are the daily operations. The last of these is “not required” which as the name suggests is simply are artefacts no longer needed, so must be replaced.

Source:https://www.strategyand.pwc.com/reports/building-modular-bank

Uploaded Date:13 September 2018

The definition of a CEO is set to undergo, unofficially if not on paper. This is because of the era of the all-knowing leader who barks instructions for others to execute is on the run. Instead, the new CEO will be more of a Chief Enablement Officer. One of the critical roles he/she will need to perform will be to reduce uncertainty. This will be possible when priorities are well defined in the corporate strategy itself and the organizational structure is streamlined towards this end goal. The language to be used for communication need be simple with transparent practices promoted at all levels. Another task with the new CEO will be to remove organizational barriers by increasing cross-functional collaboration. Employees need be provided with the right level of autonomy, so they may work on creative functions as well. Challenging assignments need be given, while at the same time ensuring a supportive atmosphere. There must be frequent management training sessions so that the employees may get educated on the newer technologies as well as other skills required at work. The CEO has to have a grip on the business, but at the same time must also be in touch with the outside world, so that external insights may be picked up. A really important intangible actthey need to be good at is to be the role model for all to see.

Source:https://knowledge.insead.edu/leadership-organisations/ceos-should-be-chief-enablement-officers-9056

Uploaded Date:11 September 2018

Business leaders may find it increasingly risky and unnecessary to transform their businesses when things are going right. The costs of such efforts may also have an unfavourable impact on their decision-making. However, after BCG’s study encompassing hundreds of such transformation efforts between the years 2010 and 2014 took effect, it was realized that pre-emptive transformation is the best way to forge ahead. This kind of change gets embedded right from the level of the corporate strategy itself, so the efforts are more concerted towards effecting long-term change, rather than anything reactive. For most industries this is true, with the greatest per capita impact generating for material followed by consumer staples and discretionary. The one industry where the effect is the opposite is financial services. There also exist some secondary benefits of opting for this strategy such as reduction in the average costs, and a change in leadership to people more proactive. For effecting such transformation success, companies must have above-average spending on R&D, restructuring costs and capital expenditure, plus a long-term strategic orientation. A sense of urgency needs to be curated for this while constantly watching out for any early-warning signals. The talent recruitment team must work towards creating a leadership structure which has such transformative personnel. This will help control the narrative. The right approaches to change need to be selected away from traditional, project-management methods.

Source:https://www.bcg.com/publications/2018/preemptive-transformation-fix-it-before-it-breaks.aspx?linkId=55688388&redir=true

Uploaded Date:11 September 2018

The agile philosophy of management emerged in the early years of this century in the software industry. It emerged as a counter-point to the then-dominant hierarchical model dominated by the Board and CEO. Such a model was entirely driven by the corporate strategy drafted from the very top, with its sole mission being to maximize returns for the shareholders alone. However, this strategy soon ran its course, as it was realized that such an approach hindered other key aspects of the business such as innovation and research. Being customer-centric is a key dogma of the evolved agile method that has now come to dominate. It is a term being used liberally across management training sessions for the top leadership. And that is why Boards and CEOs will have a rough time as increasingly people are challenging their complete authority. To cite an example, the CEO tenure length is gradually reducing. Under such circumstances, directors need to play a cautious game, without giving in liberally to any stakeholder group.

Source:https://knowledge.insead.edu/blog/insead-blog/agile-boards-of-directors-a-fad-or-the-future-9961

Uploaded Date:01 September 2018

Zero-Based Budgeting (ZBB) has long existed, but now it has been revisited. It is a system that allows companies to align their resources along the corporate strategy drafted. It also helps in building a tiered cost structure. The five critical components of such a structure are transparency, process, governance, initiatives and the mind-set. One of the reasons for this renaissance in the ZBB has been the fact that a lot of corporate resources have been lying idle over many years. Technology and telecommunications is one industry which is already using ZBB to the hilt. This figure is slightly lower for the retail and consumer goods sector. Same goes for healthcare and pharma. Most financial services firms too have confirmed that they will soon be doing so. As of now transportation and utilities are making less use of ZBB, but many have confirmed to be on the path of implementing the same.

Source:https://www.mckinsey.com/business-functions/operations/our-insights/zero-based-budgeting-revisited-why-this-time-is-different?cid=podcast-soc-twi-mip-mck-oth-1808&kui=KiARSS3345csZPYKCpgVIw

Uploaded Date:01 September 2018

Complex capital projects routinely go over-budget and behind schedule. A study on such projects priced above a billion dollars found that projects were on average late by a full year and almost a third over-budget from what was planned in the corporate strategy. The right blend of technologies, financing models and leadership skills is the art required to execute project delivery. All these tools and management practices can be clubbed under PVI (project value improvement). This ensures smooth flow of work from inception to the FEED (front end engineering design). This PVI integration can save trillions of dollars worldwide. Business consulting giant McKinsey has predicted the value of US$ 77 billion to be the global capital spending between the years 2018 and 2023. To help the PVI integration during this time, three major targets need be taken up, beginning with reduction in the initial capital requirement. Then, the project timeline needs to be ramped up. The life-cycle cash flows too need to be maximized. PVI began in the 1950s simply as value engineering before progressing to SGP (Stage Gate Process) in the 1990s. A PVI wheel has been suggested by McKinsey which would include management system, technical system, mind-sets and behaviours.

Source:https://www.mckinsey.com/industries/capital-projects-and-infrastructure/our-insights/capital-project-value-improvement-in-the-21st-century-trillions-of-dollars-in-the-offing?cid=other-eml-alt-mip-mck-oth-1808&hlkid=04343a7d0aa44d92ae4934d9954eb7eb&hctky=2657824&hdpid=4efbfdc4-f88f-4238-8f9a-5a8a560b5192

Uploaded Date:27 August 2018

Finance and HR are two areas which often seem to be at odds with each other. Yet, if one probes deeper, one can notice that Profits and People matters are intertwined. An example of these two proactively collaborating was found at McGraw-Hill Companies. Up until 2011, the company had two distinct divisions. One worked on education so catered to students and educators. The other dealt with businesses, providing financial and business intelligence using its analytical tools. Some group companies such as S&P, CRISIL and Platts continued to prosper while deliberately some were sold off. The latter included Businessweek which went to Bloomberg, as well as the company’s broadcasting, education and publishing divisions. The purpose of talent management is not merely to aid the people, but in fact to hone them in a way that it brings business value. In that way, at McGraw-Hill the policies of the two came together.

Source:https://www.strategy-business.com/article/Finance-and-HR-The-Executive-Partnership-That-Transformed-a-Company?gko=bcdab

Uploaded Date:18 August 2018

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