1. Dr. Kabaly P Subramanian
Faculty of Business Studies
Arab Open University

4.  SustainableVsTransient
 Sustainable :Creating a strong position and
defend it for extended periods of time
 GE, IKEA , Unilever,…
 Transient : Constantly start new strategic
initiatives building and exploiting many
competitive advantages at once.
 Milliken&Company (Chemicals), Cognizant
(IT), Brambles (logistics),…

5. 0
0.5
1
1.5
2
2.5
Launch Ramp up Exploit Reconfigure Disengage

6. Stage Nature People Comme
nts
Launch Identifies an
opportunity and
mobilize resources
to capitalize on it
Capable of generating
ideas, comfortable with
experimentation and iteration
Ramp up Business Idea
brought to scale
Capable of assembling right
resources, at the right time, at
the right quality and deliver
on the promise
Exploitation Captures profits
and share and
forces competitors
to react
Capable of analytical decision
making, M&A and efficiency
Tradition
al
compani
es have
plenty of
talent

7. Stage Nature People Comme
nts
Reconfigure Keep the
advantage fresh
Capable of radically rethinking
business models or resources
Disengagement Resources are
extracted and
reallocated
Candid ,tough minded and
can make emotionally difficult
decisions.

8.  Companies shore up an existing advantage
for as long as possible, until the pain becomes
so obvious that there is no choice.
 IBM,Nokia,Sony,Kodak,…

9.  I don’t buy my own company’s products or services.
 We are investing at the same or higher levels and not
getting better margins or growth in return.
 Customers are finding cheaper or simpler solutions to
be “good enough”.
 Competition is emerging from places we didn’t
expect.
 Customers are no longer excited about what we have
to offer.
 We are not considered a top place to work by the
people we’d like to hire.
 Some of our very best people are leaving
 Our stock is perpetually undervalued

10. Deeply embedded assumptions lead
companies into traps
1. The first mover trap
2. The Superiority trap
3. The Quality trap
4. The hostage-resources trap
5. The white-space trap
6. The empire building trap
7. The sporadic innovation trap

11.  Belief that first to market and owning assets
create a sustainable position.
 In some businesses like aircraft engines or
mining it may be true.
 But most industries a first mover advantage
doesn’t last.
 Example : Motorola , Ford,…

12.  Early-stage technology, process or product
won’t be as effective as something that’s
been honed and polished for years.
 Example : Kodak , Barnes and Noble

13.  Many businesses in exploit mode stick with a
level of quality higher than customers are
prepared to pay for.
 When a cheaper , simpler offer is good
enough, customers will abandon the
incumbent.
 Nokia

14.  Nokia developed a product that was
remarkably similar to today’s iPad in about
2004.
 Nokia never capitalize on this
groundbreaking innovation.
 Companies emphasis was on mass-market
phones, and resource allocation decisions
were made accordingly.

15.  When opportunities don’t fit their structure ,
firms often simply forgo them instead of
making the effort to reorganize.
 Foe instance a product manufacturer might
pass up potentially profitable moves into
services because they require coordination of
activities along a customer’s experience,
rather than by product line.

16.  Bureaucracy building and fierce defense of
status quo.
 It inhibits, experimentation, learning and risk
taking.
 It causes employees who like to do new
things to leave.

17.  Many companies do not have a system for
creating a pipeline of new advantages.
 Vulnerable to swings in the business cycle.

18. 1. Think about arenas, not industries
2. Set broad themes, and then people experiment
3. Adopt metrics that support entrepreneurial
growth
4. Focus on experiences and solutions to problems
5. Build strong relationships and networks
6. Avoid brutal restructuring : Learn healthy
disengagement
7. Get systematic about early-stage innovation
8. Experiment,iterate,learn

19.  Untraditional competitors take companies by
surprise.
 Google’s move into operating systems
 Wal-Mart into healthcare
 Arena : combination of a customer segment,
an offer, and a place in which that offer is
delivered.
 Customer’s jobs to be done.

20.  Interpretation of weak signals in the
environment to set broad themes.
 Within those themes , they free people to
experiment with different approaches and
business models.

21.  Conventional metrics can effectively kill off
innovation

22.  Many companies are so internally focused that
they are oblivious to the customer’s experience.
 Australia’s Brambles :
 Company realized that one of grocers’ biggest
cost was the labor required to shelve goods
delivered to their stores.
 Brambles designed a solution : plastic bins
 It has cut labor costs significantly
 Fruits and vegetables arrive in better shape
 This lead to substantial profits, appreciation and
growth.

24.  Evidence indicate that the most successful
and sought after employees are those with
the most robust networks.
 Infosys , for instance is choosy about which
customers it will serve , but it maintains a
97% retention rate.
 In GE, the senior leaders spend inordinate
amounts of time building and preserving
relationships with other firms.

25.  Netflix’s efforts to get out of the DVD
shipping business and into streaming movies
is an interesting lesson in the wrong way to
do.
 Two decisions that infuriated customers.
 Massive price increase across board and split
the DVD and streaming business.

26.  To have a process for filling your pipeline with
new ones.Your innovation process needs to
be carefully orchestrated.

27.  Planning new ventures with the same
approaches they use for more established
businesses.
 They need to focus on experimentation,
iteration and learning

28.  Difficult to handle the complexity
 Figure out some key directional guidelines
 Putting in place good processes for core activities
such as innovation
 Use their influence over a few crucial inflection points
to direct the flow of activities
 Initiates conversations that question, rather than
reinforce, status quo.
 Seeking contrasting opinions and honest
disagreement.
 Involving broader constituencies in strategy process
 Recognizing the need for speed
 Fast and rough vs slow and precise

29.  Defining where you want to compete
 How you intend to win
 How you are going to move form advantage
to advantage is critical

30. Case :Accor group of Hotels

32.  Eating facility
 ArchitecturalAesthetics
 Lounge appeal
 Room size
 24-hour reception
 Room furniture and amenities
 Bed quality
 Hygiene
 Silence
 Price

33. Which factors should be reduced
well below the industry standard
Which of the factors that the
industry takes for granted
should be eliminated?
Which factors should be raised
well above the industry’s
standard?
Which factors should be
created that the industry
has never offered
A new value

34. Eliminate Raise
Reduce Create

38.  Lesson : Challenge the Industry Standards

39.  Poverty, climate change, ageing population,
food and water security, education,…
 Solution : “INNOVATE”

41. Challenging the
Status Quo
Taking risks
Questioning
Observing
Networking
Experimenting
Associational
Thinking
Innovative
Business
Idea

42.  What is ?
 What caused?
 Why?
 Why not?
 What if?

43.  Observe customers
 Observe whatever strikes your fancy
 Observe with all your senses

44.  Tap outside experts
 Attend Idea networking events
 Form a personal networking group

45.  Take apart products, processes and ideas
 Test new ideas through pilots and prototypes
 Cross physical borders
 Cross intellectual borders

46.  Creativity is connecting things : Steve Jobs
 Connecting wildly different ideas,
objects,services,technologies,and disciplines
and dish up new and unusual innovations.
 Plastic appliances : casing for Mac
 Computer + Media Industry =
iTunes,iPod,iPhone,iPad,…

48.  Net Promoter score, a method of measuring
customers’ loyalty by sorting them into
promoters, passives and detractors.

49.  Loyal, passionate customers stay longer,
spend more, contribute suggestions and sing
your company’s praises to friends and
colleagues.
 That’s why loyalty correlates so strongly with
sustainable, profitable organic growth. On
average, an industry’s loyalty leader grows
more than twice as fast as its competitors.

50. Ideally, companies ask just two questions in
their surveys:
1. How likely is it that you would recommend us
(or this product or service) to a friend or
colleague? (On a zero-to-10 scale : least likely
-most likely)
2.What is the primary reason for your score?

52. A company’s Net Promoter Score indicates
whether it’s winning with customers.
 A company with a high Net Promoter Score
relative to key competitors usually grows
faster and more profitably.The competitive
advantage of having a higher percentage of
promoters than detractors is tough to beat.
Promoters defect at lower rates than other
customers.They also spend more over time
and cost less to serve.

53.  Companies that use NPS often create the right
products.That’s because they know their
customers better.They seek client feedback and
respond with products suited to customers’
needs. In The Ultimate Question 2.0, Fred
Riechheld and Rob Markey discussed how low
Net Promoter scores exposed design flaws in
Logitech’s MX 5000 keyboard and mouse.
Logitech listened to customer criticisms and
improved its next model.

54.  NPS leaders have the most powerful
marketing tool: positive word of mouth. All
the advertising in the world can’t overcome a
bad image spawned by customer detractors.
But when a company does right by its
customers, word spreads fast—and in most
companies, new customers generated
through referral expand purchases quickly
and tend to stay longer than new customers
generated through any other means.

55.  More companies cite their Net Promoter
Score as a sign of improvement in investor
presentations and earnings reports.

56.  TransientAdvantage : Rita Gunther McGrath
 Blue Ocean Strategy :W. Chan Kim and
Renée Mauborgne
 Innovators Dilemma : Clayton Christensen et
al.,
 Net promoter System : Fred Riechheld and
Rob Markey

57. Email : kabaly@aou.edu.om