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Archive for the ‘Strategy’ Category

Sony on the Offense?

Sunday, January 10th, 2010

I’ve been a critic of Sony for quite a while. They’ve lost more races in attempting to remain a technology leader than they’ve won in recent years. Companies like Apple, Google and Samsung are a few of the companies that are transforming the technology-consumer experience. And in this race, Sony has mostly been mostly a follower, not a leader.

Today, an interesting interview by Charlie Rose with Chairman and CEO of Sony, Sir Howard Stringer was posted over Business Week, titled, Sir Howard Stringer, Why Sony is about  to snap back. The interview focuses on the emerging and dominant 3D technology assets Sony has develped and is now beginning to leverage into the broader marketplace. Stringer states:

This year we’re going to swamp the marketplace with innovation and new products, and we’re going to particularly focus on 3D because we have so many assets compared with anybody else—from cameras to projectors to 3D video games to TVs to Blu-ray—everything can be 3D with us. Size finally matters again, so that is an advantage we intend to demonstrate at CES.

The question before the marketplace is simple. Is 3D a really big idea with the potential for a really big footprint? If the answer is yes, then Sony will become a gamechanger. The potential to extend the 3D footprint is huge. It has the potential of being a disruptive technology. However, is the marketplace truly ready for 3D? An interesting perspective over at Endless Innovation ponders if 3D a big deal or not. Dominic Basulto states:

On the surface, it would appear that “3D TV” is poised to become the first breakout innovation hit of 2010. Dig a little deeper, though, and it’s not clear how innovative 3D technology really is. It could turn out to be a “Red Sox” technology - a technology destined to tantalize its fans for decades at a time without achieving its true potential.

Makes one ponder the ultimate impact and fate of 3D, and only time will tell.

Bottom Line: Sony is in a pivotal position. If they’re able to leverage their 3D technology assets, it changes everything. Sony is someone to watch again - maybe.

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Making the List & Checking it Twice

Saturday, October 31st, 2009

Christmas is less than 60-days away and Sears has already started to selectively sell their Black Friday specials. I therefore found it extremely interesting to read a Bloomberg article titled Wilbur Ross Sees Huge Commercial Real Estate Crash. While this title might not be that big of a surprise, his strategy when to reenter the market is interesting.

Dubbed the King of Bankruptcy by clients during his quarter century at the Rothschild investment bank, Ross entered the U.S. home mortgage business as an increasing number of borrowers quit making payments and profits sank in loan servicing.

“Our methodology is to make a great big list: What’s every thing we can think of that’s either wrong with the industry or that we just plain don’t like about it,” Ross said today.

“Then we start work on another list. If we had control of this industry, what would we do to fix each one of those problems?” he said. “Once we feel that there is a reasonable likelihood that the second chart kind of equals the first chart, that’s when we get ready to do something.”

So the question today is,

  • What lists are you working on today?
  • What don’t you like, and what do you like about the economy today?
  • What don’t you like and what do you like about the business you’re in?
  • Are you ready to invest or are you holding on to cash?
  • What would need to change or to alter your strategy?

These are just a few of the questions every business needs to ask today. What questions are you asking, or avoiding?

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You Have A Problem

Sunday, September 13th, 2009

Companies are shunned in the courtship dance all the time. Part of the time, it’s about positioning so as to extract more money for their shareholders. At other times, it’s about lack of fit or simply a lack of interest. It’s a high stakes game that is played out across the marketplace every day, and across all sized and types of business.

In recent weeks, the stories surrounding Kraft Foods unsolicited takeover offer of Cadbury PLX, the world’s second largest confectionary company is interesting, and telling. Cadbury’s Chairman Roger Carr said in a letter on Septermber 12 to Kraft’s CEO Irene Rosenfeld (posted on company’s website here ):

In my letter of 31st August, I informed you that the Board had rejected your unsolicited proposal on the grounds that it is unattractive and fundamentally undervalues Cadbury.  Under your proposal, Cadbury would be absorbed into Kraft’s low growth, conglomerate business model, an unappealing prospect which contrasts sharply with our strategy to be a pure play confectionery company… Your proposal is for Cadbury shareholders to exchange shares in a pure-play confectionery business for cash and shares in Kraft, a company with a considerably less focused business mix and historically lower growth…

The story around Cadbury, Kraft and other potential suitors is just beginning. However, Cadbury’s Chairman Roger Carr has just created a huge problem for Kraft by stating it was a low growth, conglomerate business model with considerably less focus. Now that has to hurt. So what can we surmise from this?

  1. Cadbury’s Roger Carr has little respect for Kraft Foods, nor Kraft’s CEO Irene Rosenfeld.
  2. Cadbury views itself as being in the drivers seat, and is willing to be highly vocal and transparent in the process.
  3. Cadbury’s Richard Carr must be respected and feared by Kraft going forward.

In my opinion, from this point forward, Kraft has a problem. First they have a huge credibility problem. After all being referred to as ”low growth” and “less focused” doesn’t add value in the marketplace. In fact, I expect the Kraft brand could lose significant value in the marketplace. Secondly, Kraft’s internal problems have just been magnified and they will begin to filter out into the marketplace. Yes, their silent problems will no longer be silent.

Bottom Line: Acquisitions are always tricky business, and more often than not, they underdeliver. In this case however, Kraft has just been delivered a Without Warning event that they didn’t see coming. Kraft in my opinion has been a challenged business for years, now their challenges have just become significantly greater as their silent problems will now be exposed.

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Do Silent Problems Impact Business Performance?

Sunday, August 9th, 2009

I read news articles with an eye for spotting silent problems, today is no different. I came across an article in the NY Times titled, “For Private Equity, A Very Public Disaster,” by Louise Story.

Still, if you peel back Mr. Johnson’s argument, you quickly find a story of an automaker that was already in peril by the time Cerberus came on the scene. For example, he says the body shop at his plant couldn’t produce Jeep frames fast enough to keep up with the paint and assembly lines. Instead of fixing the problem, he says, the factory paid the body shop workers overtime to come in Sundays to keep up…

Ms. Keller says that the company that Mr. Feinberg took over was already suffering from myriad problems: a bad cost structure, a limited product line and no pipeline of more diverse offerings. In short, she says, Cerberus had simply bought “a basket case.”

silent-problem-biz-performance

As the number of Silent Problems increase, business performance declines and vice-versa

Several years ago I discovered that a direct correlation between silent problems and business performance exists. Companies that deal with their potential and real silent problems quickly perform at a much higher level than companies that allow their silent problems to accumulate. The graphic illustrates this point. So naturally as an executive coach, I spend a disproportionate amount of time working with clients identifying, quantifying and finding solutions to silent problems. And when a solution is agreed upon, I work with them on an implementation strategy and the confidence to move forward. Not surprisingly, as these silent problems move off the plate, business performance naturally improves. So if you’re a business coach, a consultant, or a business leader, I encourage you to become educated on the silent problem phenomenon, because it will become a dynamic tool that produces fantastic results for you and your clients.

In a future blog, I’ll present why business performance and silent problems are directly tied to each other. But for now, I encourage you to look at the world around you and the clients you interface with, with an eye for identifying silent problems. It will change how you look at businesses and business performance.

Lastly, I will leave you with a quote from Anne Mulcahy, the 2008 CEO of the Year, and former CEO of Xerox. When she was promoted to CEO at Xerox, it was filled with a multitude of silent problems and Xerox’s business performance reflected it. Mulcahy went after those silent problems and turned Xerox around. Here is what she said,

If you have a tough decision to make, don’t wait, because it’s not going to get any easier. In fact, it’s only going to get tougher.

Bottom Line: A direct correlation between Silent Problems and business performance exists. A business will find it increasingly difficult to perform at a higher level if it doesn’t address and solve the problems it has been avoiding, neglecting or are going unnoticed.

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LA Museum Of Contemporary Art’s Silent Problem

Monday, July 6th, 2009

Silent problems can become a major disruption when they finally surface as a Without Warning Event. In fact, I’m convinced that silent problems are the No. 1 cause for business failure. If that isn’t a wake up call, it should be!

Today, I read a fascinating story over at Weekly Leader from December, 2008. It discusses the numerous challenges occurring over at the Los Angeles Museum of Contemporary Art. Here are but a few of the interesting silent problem sound bites from the article.

Leading a nonprofit organization is a very tricky endeavor. The ultimate authority rests with volunteer leadership who more often than not are successful, busy people who are not subject matter experts so they must rely heavily on paid staff. The nonprofit executive director often has one of the loneliest jobs in the world because they are responsible for leading staff and stakeholders in advancing the mission, yet they don’t have level of authority their business sector counterparts enjoy. While what we know is based on media, in MOCA’s case, it appears that the director was able to act as though he was the ultimate authority and in order for the museum to experience so many consecutive significant annual operating loses, the trustees were asleep at the wheel. In any case, a dysfunctional board can wreak havoc on an organization and strains between the executive and the board can make matters even worse. So appears to be the case at MOCA. ..  The MOCA story is one of failed leadership, executive and voluntary. Pure and simple.

Failed leadership has become the theme of too many organizations in recent years. These failures cross over non-profit and for-profit boundaries. No organization is exempt. Few leaders are protected. In the end, winners and losers are chosen in a Darwinian environment.

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Undervalued - Opportunity or Risk?

Tuesday, June 16th, 2009

Around the world, the term undervalued is gaining strength. There is undervalued equipment, buildings, and land. Buildings can be purchased for less than they cost to build just a few years ago. Businesses are for sale at “fire sale” prices. Today,” undervalued” is beginning to transform many industries.

Opportunity or Risk?

Of course, it depends. It’s somewhat analagous to going to a garage sale. “It’s only a bargain if you can truly need or can use it.” However, here is the fascinating part of the equation. “Undervalued” tends to be a greater opportunity, especially  for small to mid-sized businesses. Companies that are well run and have adequate capitalization can take advantage of destressed assets. But here is the bigger picture to think about, and it falls under the “Without Warning” umbrella.

If a company is able to purchase undervalued assets and put them to work, how does this change the competitive landscape? Can this become a competitive advantage?

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If Cheap Becomes Chic

Thursday, March 5th, 2009

This recession is different.  In recessions past, products and services positioned for the weathly were generally considered “recession proof”.  However this time around, the wealthy are also suffering.  Today, such industry stalwarts from Rolls Royce to Tiffany are experiencing a significant downtick in demand.   Yes, this is a Without Warning Event of significant magnitude.

What’s underway?

Obviously, significant quantities of wealth were wiped out by schemes like Madoff and Stanford.  Next, the financial sector, home to some of the best paid jobs in the world, has been hit hard, with well over 200,000 jobs lost.  Third and maybe most important, stocks have lost over 50% of their value, most of that within the last 6-months.  When you add these with other factors like housing into the equation,  it’s not surprising that the wealthy are also feeling the pain.

What does this mean in the bigger picture?

The question I’m asking today is whether this is a short term event, or a long term trend.  Is this a crucible moment, similar to the Great Depression, where consumers lose their appetite for the luxurious and retain their newfound mantra for the frugal?  Or is this a brief downtrend, a place where individuals will simply resume where the left off once the financial crisis subsides and economies regain their footing. 

Your thoughts…

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