Gennaro Cuofano's Blog, page 93
September 15, 2022
Strategy vs. Operations
Strategies are roadmaps that outline a company’s vision for the future and how supporting goals and objectives will be achieved. Operations, on the other hand, define how each department within a company plans to carry out the strategy on a weekly, monthly, or quarterly basis.
Understanding strategy and operationsTo understand the relationship between strategy and operations, we like to think of each as an outboard motor on a boat.
When both motors are operating efficiently, the boat moves forward purposefully and in a straight line. When only one motor is running, however, the boat veers to one side, completes a circle, and ends up where it started.
When a business focuses on operation and ignores strategy, its longevity is compromised.
When operations are sacrificed for strategy, the business does not understand its operational capacity – or what it can produce in a given amount of time.
This results in a strategic plan without any real substance since leaders do not understand the needs of customers or the wider industry.
Operations are important since many employees are involved in the day-to-day running of the business and can provide valuable information about what actually works.
Put another way, the business can leverage its operations staff to create value that drives sales and meets business objectives at the same time.
This also ensures that the business secures an adequate ROI on operation activities that can be resource-intensive.
Strategy is also important for another reason. It defines how operations are performed and, in an ideal world, secures the company a newfound competitive advantage.
This makes strategy a vital tool in creating and sustaining success that is aligned with overarching goals and objectives.
Strategy vs. operations exampleWith Microsoft and Amazon dominant in the cloud computing sector, IBM executives knew they needed to do something radical to compete.
In response, IBM acquired Red Hat in a landmark deal worth $34 billion that was ultimately driven by a growth strategy to become the leading hybrid multi-cloud provider.
While the deal was made public in 2018, IBM executives were no doubt discussing it many months or years beforehand.
This was particularly important for a deal as complex as the acquisition of Red Hat, which necessitated that every IBM department was evaluated and redefined to ensure it supported the company’s growth strategy.
The sales department, for example, would likely review processes, metrics, content, and tools post-acquisition and then adjust operations to enable sales teams to increase revenue.
The customer service department would also undertake a similar review to determine what changes were necessary to ensure customer success and loyalty.
Key takeaways:Strategies are roadmaps that outline a company’s vision for the future and how supporting goals and objectives will be achieved. Operations define how each department plans to carry out the strategy on a weekly, monthly, or quarterly basis.When a business focuses on operation and ignores strategy, its longevity is compromised. When operations are sacrificed for strategy, the business does not understand its market, customers, or growth potential.IBM’s deal to acquire Red Hat was in line with the company’s growth strategy to create a new market in cloud computing. At the departmental level, the deal necessitated that various operations be altered to support the strategy post-acquisition.Key Components of a Business Model
Your UVP is the exclusive feature or benefit you offer to your customers. It could be anything at all. If you offer a service, it could be “100% pay after satisfaction”. It could be a time factor offers. Say you provide a service that reviews CV. Your UVP could be “Get a revamped résumé in 24 hours”. This makes you stand out from every other person offering that service, as your unique offering is the ability to deliver in 24 hours. Your slogan could also be your UVP, as it automatically gives your audience what to expect from you. 
The cost structure is one of the building blocks of a business model. It represents how companies spend most of their resources to keep generating demand for their products and services. The cost structure together with revenue streams, help assess the operational scalability of an organization.
A pricing strategy or model helps companies find the pricing formula in fits with their business models. Thus aligning the customer needs with the product type while trying to enable profitability for the company. A good pricing strategy aligns the customer with the company’s long-term financial sustainability to build a solid business model. 
In corporate finance, the financial structure is how corporations finance their assets (usually either through debt or equity). For the sake of reverse engineering businesses, we want to look at three critical elements to determine the model used to sustain its assets: cost structure, profitability, and cash flow generation. 
Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward. 
A distribution channel is the set of steps it takes for a product to get in the hands of the key customer or consumer. Distribution channels can be direct or indirect. Distribution can also be physical or digital, depending on the kind of business and industry.
A marketing channel represents the set of activities necessary to create a distribution for a product and make sure that the product is delivered in the hands of the right people and that the potential customer is satisfied with it. The marketing channel also needs to be aligned with the brand message of the company.Other related business frameworks:
AIDA ModelAnsoff MatrixBusiness AnalysisBusiness Model CanvasBusiness Strategy FrameworksBlue Ocean StrategyBCG MatrixPorter’s Five ForcesVRIO FrameworkAdditional resources:
Business ModelsBusiness StrategyDistribution ChannelsGo-To-Market StrategyMarketing StrategyMarket SegmentationNiche MarketingThe post Strategy vs. Operations appeared first on FourWeekMBA.
Plan vs. strategy
A strategy determines what an organization needs to do to meet business objectives. A plan outlines how the strategy will be executed. It may take the form of an outline, scheme, program, blueprint, or layout.
Understanding strategiesAt the most fundamental level, strategies determine how a business will achieve its goals.
The best strategies are robust, flexible, and adaptable when circumstances change. Effective strategies allow the business to build critical momentum and secure a competitive advantage.
Strategies are often prepared when collaboration, innovation, and creativity are of the utmost importance.
They tend to facilitate healthy debate from both sides of the argument and clarify how a company will further its mission and vision.
Some of the key components of a good strategy include:
Asking the right questions.Learning lessons from the past.Future predictions.Committing to change.Evolving when necessary.Determining how to integrate, andAnalyzing potential pathways.Note that every company should have an overarching strategy and not a set of strategies, plural.
Strategy encompasses a set of choices that determine where the company wants to be, how it intends to get there, and the skills, expertise, and systems that will allow it to win.
Tesla’s ambitions to become the most compelling car company in the world and accelerate the shift toward affordable, sustainable vehicles have been supported by one strategy.
The company entered the EV market at the premium end and is progressively reaching more price-conscious consumers via higher unit volume and lower prices.
Understanding plansPlans dictate how certain goals are achieved and tend to be final. In other words, an unsuccessful plan is more likely to be scrapped and a new plan devised.
Since plans are more difficult to adjust, they tend to take longer to develop because organizations work harder to ensure every detail is correct.
Most plans include detailed information on the following:
The tasks and activities that need to be executed.Roles and responsibilities.A task and activity schedule, andClarification on how the strategy can be performed on time and within budget. This incorporates risk, quality, resource, stakeholder, change, and financial management, among other disciplines.Plans are useful when efficiency and timelines are important. They provide a coherent framework that enables the organization to move in the same direction and establish certain milestones that must be met along the way.
Plans also eliminate false confidence at the organizational level and increase transparency at the employee level as they leave no room for assumptions.
Various types of plans can support different parts of the strategy. These include financial, tactical, contingency, succession, and operational plans.
Key takeaways:A strategy determines what an organization needs to do to meet business objectives, while plans clarify how the strategy will be carried out.The best business strategies are robust, flexible, and adaptable when circumstances change. They are prepared when collaboration, innovation, and creativity are of the utmost importance.Plans dictate how certain goals are achieved and are more concrete in nature. Unlike a strategy that can be adjusted over time, plans need to be correct from the outset and if unsuccessful, it is better to move to Plan B than make alterations to Plan A.Key Components of a Business ModelYour UVP is the exclusive feature or benefit you offer to your customers. It could be anything at all. If you offer a service, it could be “100% pay after satisfaction”. It could be a time factor offers. Say you provide a service that reviews CV. Your UVP could be “Get a revamped résumé in 24 hours”. This makes you stand out from every other person offering that service, as your unique offering is the ability to deliver in 24 hours. Your slogan could also be your UVP, as it automatically gives your audience what to expect from you. The cost structure is one of the building blocks of a business model. It represents how companies spend most of their resources to keep generating demand for their products and services. The cost structure together with revenue streams, help assess the operational scalability of an organization.A pricing strategy or model helps companies find the pricing formula in fits with their business models. Thus aligning the customer needs with the product type while trying to enable profitability for the company. A good pricing strategy aligns the customer with the company’s long-term financial sustainability to build a solid business model. In corporate finance, the financial structure is how corporations finance their assets (usually either through debt or equity). For the sake of reverse engineering businesses, we want to look at three critical elements to determine the model used to sustain its assets: cost structure, profitability, and cash flow generation. Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward. A distribution channel is the set of steps it takes for a product to get in the hands of the key customer or consumer. Distribution channels can be direct or indirect. Distribution can also be physical or digital, depending on the kind of business and industry.A marketing channel represents the set of activities necessary to create a distribution for a product and make sure that the product is delivered in the hands of the right people and that the potential customer is satisfied with it. The marketing channel also needs to be aligned with the brand message of the company.Other related business frameworks:
AIDA ModelAnsoff MatrixBusiness AnalysisBusiness Model CanvasBusiness Strategy FrameworksBlue Ocean StrategyBCG MatrixPorter’s Five ForcesVRIO FrameworkAdditional resources:
Business ModelsBusiness StrategyDistribution ChannelsGo-To-Market StrategyMarketing StrategyMarket SegmentationNiche MarketingThe post Plan vs. strategy appeared first on FourWeekMBA.
Strategy vs. Tactics
Organizations create strategies to define overarching goals and how they intend to reach them. Tactics describe the individual steps and actions that allow the strategy to be carried out.
Understanding the relationship between strategy and tacticsStrategy and tactics are military terms that have now made their way into business and professional contexts.
With that said, consider a quote from the Chinese military treatise The Art of War by Sun Tzu: “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”
From the above, we can surmise that strategy and tactics work to reinforce each other when used in unison.
Companies develop strategies to define their long-term goals and how they intend to fulfill their vision or mission.
Tactics are the often smaller, more sequential steps that the business must perform on the way to realizing its strategy.
Some planners call them initiatives, but whatever the name, tactics usually incorporate best practices, resources, or concrete plans.
To further differentiate between strategy and tactics and how they may interact, consider the following statements:
Strategy is a long-term vision based on extensive research, while tactics concern more immediate, short-term actions. If a marketing strategy aims to improve social media engagement, one tactic may involve responding to every user comment. Strategies can be altered to reflect external conditions, despite assurances to the contrary. But a better way to increase the success of a strategy is to alter the tactics instead.Strategy and tactics must be aligned to ensure the company is acting in accordance with its core values. There must be organization-wide awareness of what the company is doing, why it is doing it, and how (the tactics).Strategy and tactics will never cover everything. Finite resources must be directed to the initiatives that will allow the company to achieve its goals in the most efficient manner.Examples of strategy and tacticsLet’s conclude by taking a look at two examples of strategy and tactics in hypothetical real-world scenarios.
EducationIn the first example, we have a school that is looking to improve its standardized test scores across every year level.
StrategyTo implement the smart education system in classrooms and connect and engage with the next generation of students via technology.
TacticsPurchase interactive displays, interactive whiteboards, and teacher training software.Onboard teachers to the technology and provide professional development for teachers to improve their delivery skills. Local governmentLocal government, like all tiers of government, should be built on the cornerstones of responsiveness and accountability.
Here is the strategy and tactics for a government that wants to increase its transparency among ratepayers.
StrategyTo meet transparency-based goals, government representatives convene and decide that a broader strategy emphasizing two-way communication is ideal.
This will enable the government to better understand ratepayer concerns, keep them informed of any developments, and provide clarity on where rates are spent.
TacticsCreate a local government dashboard where constituent members can stay abreast of the government’s latest projects and keep it accountable.Create a marketing plan that outlines how ratepayers can communicate or interact with the government. The Hinchinbrook Shire Council, for example, developed a marketing plan that promoted council-owned services to create awareness in the community. These services, where locals can interact with council representatives, include art galleries, hireable venues, museums, and libraries.Key takeaways:Organizations create strategies to define overarching goals and how they intend to reach them, while tactics describe the individual steps and actions that determine how the strategy will be accomplished.Strategy is a long-term vision based on extensive research, while tactics concern more immediate, short-term actions. While strategies can be altered to reflect external conditions, it tends to be easier and more cost-effective to alter the tactics within a strategy instead.A school that wants to improve student test scores may develop a strategy that calls for smart technology implementation in classrooms. Tactics that support this strategy include teacher training, professional development, and the purchasing of interactive displays and whiteboards.Key Components of a Business ModelYour UVP is the exclusive feature or benefit you offer to your customers. It could be anything at all. If you offer a service, it could be “100% pay after satisfaction”. It could be a time factor offers. Say you provide a service that reviews CV. Your UVP could be “Get a revamped résumé in 24 hours”. This makes you stand out from every other person offering that service, as your unique offering is the ability to deliver in 24 hours. Your slogan could also be your UVP, as it automatically gives your audience what to expect from you. The cost structure is one of the building blocks of a business model. It represents how companies spend most of their resources to keep generating demand for their products and services. The cost structure together with revenue streams, help assess the operational scalability of an organization.A pricing strategy or model helps companies find the pricing formula in fits with their business models. Thus aligning the customer needs with the product type while trying to enable profitability for the company. A good pricing strategy aligns the customer with the company’s long-term financial sustainability to build a solid business model. In corporate finance, the financial structure is how corporations finance their assets (usually either through debt or equity). For the sake of reverse engineering businesses, we want to look at three critical elements to determine the model used to sustain its assets: cost structure, profitability, and cash flow generation. Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward. A distribution channel is the set of steps it takes for a product to get in the hands of the key customer or consumer. Distribution channels can be direct or indirect. Distribution can also be physical or digital, depending on the kind of business and industry.A marketing channel represents the set of activities necessary to create a distribution for a product and make sure that the product is delivered in the hands of the right people and that the potential customer is satisfied with it. The marketing channel also needs to be aligned with the brand message of the company.Other related business frameworks:
AIDA ModelAnsoff MatrixBusiness AnalysisBusiness Model CanvasBusiness Strategy FrameworksBlue Ocean StrategyBCG MatrixPorter’s Five ForcesVRIO FrameworkAdditional resources:
Business ModelsBusiness StrategyDistribution ChannelsGo-To-Market StrategyMarketing StrategyMarket SegmentationNiche MarketingThe post Strategy vs. Tactics appeared first on FourWeekMBA.
Paired Comparison Analysis In A Nutshell
A paired comparison analysis is used to rate or rank options where evaluation criteria are subjective by nature. The analysis is particularly useful when there is a lack of clear priorities or objective data to base decisions on. A paired comparison analysis evaluates a range of options by comparing them against each other.
Understanding a paired comparison analysisPaired comparison analyses can be used in a variety of scenarios. One business may use them to settle on the required skills or qualifications for a new position. Another may use the analysis to ask consumers to review a new product or service.
The method is very effective and inexpensive to run. By showing the relative importance of different options, a business can identify the most pressing problem to solve or highlight the most beneficial solution.
Conducting a paired comparison analysisConducting a paired comparison analysis is a relatively simple affair.
A team should first be assembled and then follow these steps:
Identify the options to be evaluated and assign a letter to each. For example, a coffee roasting business looking to expand may identify options such as expansion into overseas markets, improving customer service, and improving the quality of the beans.Then, create a matrix with options occupying row and column headings. Cells in the matrix that compare options with themselves should be greyed out. Duplicate comparisons between options should also be greyed out.In the remaining cells, compare each row option with the corresponding column option. In each cell, the team must place the letter of the option they deem more important. Then, they must score the difference in importance using a scoring system. Many teams choose to use a 0 (no difference) to 3 (major difference) system. Add up all the option values and convert each score into a percentage of the total. The coffee roasting business may determine that overseas markets (Option A) received the highest score, followed closely by improving bean quality (Option C). Improving customer service (Option B) was not seen as important, potentially because it was already more than satisfactory.Depending on the level of detail required, the business may choose to undertake further analyses by comparing the positive aspects of certain options against each other.Limitations to the paired comparison analysisWhile the paired comparison analysis removes the subjectivity from decision making, it does not incorporate statistical inferences. In other words, teams have no means of discovering whether the differences between option pairs are statistically significant.
Inevitably, there will also be disagreement on which of the compared options is more important. Since there are only two choices, the paired comparison analysis leaves little room for interpretation in the degree of importance for team members. This has the potential to stifle collaboration and comprise the integrity of the results.
Key takeawaysA paired comparison analysis objectively ranks a range of options by comparing them against each other.A paired comparison analysis is cheap, effective, and simple to administer. It can be used in any situation where a business needs to identify the best decision among a list of potential scenarios.A paired comparison analysis does not allow teams to make any statistical inferences about their results. The binary measure of option importance has the potential to decrease collaboration and impact on results integrity.Connected Analysis Frameworks
The Cynefin Framework gives context to decision making and problem-solving by providing context and guiding an appropriate response. The five domains of the Cynefin Framework comprise obvious, complicated, complex, chaotic domains and disorder if a domain has not been determined at all. 
A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.
The SWOT analysis is commonly used as a strategic planning tool in business. However, it is also well suited for personal use in addressing a specific goal or problem. A personal SWOT analysis helps individuals identify their strengths, weaknesses, opportunities, and threats.
The Pareto Analysis is a statistical analysis used in business decision making that identifies a certain number of input factors that have the greatest impact on income. It is based on the similarly named Pareto Principle, which states that 80% of the effect of something can be attributed to just 20% of the drivers.Failure Mode And Effects Analysis
A failure mode and effects analysis (FMEA) is a structured approach to identifying design failures in a product or process. Developed in the 1950s, the failure mode and effects analysis is one the earliest methodologies of its kind. It enables organizations to anticipate a range of potential failures during the design stage. 
A Blindspot Analysis is a means of unearthing incorrect or outdated assumptions that can harm decision making in an organization. The term “blindspot analysis” was first coined by American economist Michael Porter. Porter argued that in business, outdated ideas or strategies had the potential to stifle modern ideas and prevent them from succeeding. Furthermore, decisions a business thought were made with care caused projects to fail because major factors had not been duly considered.
A comparable company analysis is a process that enables the identification of similar organizations to be used as a comparison to understand the business and financial performance of the target company. To find comparables you can look at two key profiles: the business and financial profile. From the comparable company analysis it is possible to understand the competitive landscape of the target organization.
A cost-benefit analysis is a process a business can use to analyze decisions according to the costs associated with making that decision. For a cost analysis to be effective it’s important to articulate the project in the simplest terms possible, identify the costs, determine the benefits of project implementation, assess the alternatives.
Agile Business Analysis (AgileBA) is certification in the form of guidance and training for business analysts seeking to work in agile environments. To support this shift, AgileBA also helps the business analyst relate Agile projects to a wider organizational mission or strategy. To ensure that analysts have the necessary skills and expertise, AgileBA certification was developed.
A SOAR analysis is a technique that helps businesses at a strategic planning level to:Focus on what they are doing right.Determine which skills could be enhanced.Understand the desires and motivations of their stakeholders.
The STEEPLE analysis is a variation of the STEEP analysis. Where the step analysis comprises socio-cultural, technological, economic, environmental/ecological, and political factors as the base of the analysis. The STEEPLE analysis adds other two factors such as Legal and Ethical. 
The PESTEL analysis is a framework that can help marketers assess whether macro-economic factors are affecting an organization. This is a critical step that helps organizations identify potential threats and weaknesses that can be used in other frameworks such as SWOT or to gain a broader and better understanding of the overall marketing environment.
A DESTEP analysis is a framework used by businesses to understand their external environment and the issues which may impact them. The DESTEP analysis is an extension of the popular PEST analysis created by Harvard Business School professor Francis J. Aguilar. The DESTEP analysis groups external factors into six categories: demographic, economic, socio-cultural, technological, ecological, and political.
A paired comparison analysis is used to rate or rank options where evaluation criteria are subjective by nature. The analysis is particularly useful when there is a lack of clear priorities or objective data to base decisions on. A paired comparison analysis evaluates a range of options by comparing them against each other.Related Strategy Concepts: Go-To-Market Strategy, Marketing Strategy, Business Models, Tech Business Models, Jobs-To-Be Done, Design Thinking, Lean Startup Canvas, Value Chain, Value Proposition Canvas, Balanced Scorecard, Business Model Canvas, SWOT Analysis, Growth Hacking, Bundling, Unbundling, Bootstrapping, Venture Capital, Porter’s Five Forces, Porter’s Generic Strategies, Porter’s Five Forces, PESTEL Analysis, SWOT, Porter’s Diamond Model, Ansoff, Technology Adoption Curve, TOWS, SOAR, Balanced Scorecard, OKR, Agile Methodology, Value Proposition, VTDF Framework, BCG Matrix, GE McKinsey Matrix, Kotter’s 8-Step Change Model
Main Guides:
Business ModelsBusiness StrategyBusiness DevelopmentDistribution ChannelsMarketing StrategyPlatform Business ModelsNetwork EffectsMain Case Studies:
Amazon Business ModelApple Mission StatementNike Mission Statement Amazon Mission StatementApple DistributionThe post Paired Comparison Analysis In A Nutshell appeared first on FourWeekMBA.
September 14, 2022
Outsourcing vs. Offshoring
Outsourcing is used by companies to contract specific tasks or processes out to a third party.
Offshoring, on the other hand, is the process of moving tasks or processes overseas that were once performed in-house.
In truth, there are a few different outsourcing strategies and offshoring is one of them.
Both practices are similar in that the work is assigned to a third party that operates externally.
Both also increase productivity, reduce costs, and provide access to specialist labor or knowledge.
Despite these similarities, there do exist a few differences. These are explained below.
Understanding OutsourcingIn essence, outsourcing refers to the practice of contracting work out to individuals (freelancers) or companies in another country.
These entities are not considered part of the organization and usually have the freedom to work as they please under the proviso that deadlines are met and adequate results are produced.
Outsourcing benefitsIn a 2020 global survey on why companies outsource, Deloitte found that the following reasons were most popular:
Cost reduction (70% of respondents). Hiring in-house specialists increase overheads.Flexibility (40%). This pertains to shorter, more flexible contracts and the commoditization of services.Speed to market (20%). This is influenced by the microservice architecture which enables the continuous deployment of complex applications.Access to tools and processes (15%), andAgility (15%).Outsourcing risksCompanies are sometimes forced to share proprietary information with third parties during their relationship.
To minimize the chances of theft, prior due diligence on a contractor is vital.
There may also be communication issues that arise from differences in time zone, culture, or language.
Understanding offshoringOffshoring is perhaps a more substantial initiative where crucial business processes or operations are moved to another country.
Unlike outsourcing, where work is performed by external entities, offshoring operations remain under the control of the company.
Offshoring benefitsMany companies use offshoring to reduce manufacturing costs, but there are other important benefits such as:
Less stringent rules and regulations – with fewer impediments to production, the company can increase revenue and profit.Incentives – some countries offer incentives to companies willing to establish a presence there. In the wake of COVID-19, India and some countries in Europe and Africa are offering various tax deductions, subsidies, and cash grants to lure foreign investment.Offshoring risksThe risks of offshoring are similar to those that are present in outsourcing – particularly if either operation is conducted in a vastly different culture or region.
Organizations that move core operations overseas sometimes suffer reputational damage as employees lose their jobs in the domestic market.
They can also be subject to various geopolitical risks, with labor unions in the United States actively lobbying Congress against offshoring.
Other states in the USA are considering legislation to avoid working with firms that offshore to developing countries with cheap labor.
Key takeaways:Outsourcing is used by companies to contract specific tasks or processes out to a third party. Offshoring is the process of moving tasks or processes overseas that were once performed in-house.Offshoring is one of a few different forms of outsourcing, which means they share similarities. Both involve work assigned to a third party that operates externally and both share similar cost reduction benefits.The key difference between offshoring and outsourcing is that in the former, operations remain under the control of the company in question. Offshoring also tends to be used for core operations such as manufacturing, while outsourcing is popular for smaller tasks and services that help a business remain flexible and agile.Connected Business Concepts
In business, vertical integration means a whole supply chain of the company is controlled and owned by the organization. Thus, making it possible to control each step through customers. in the digital world, vertical integration happens when a company can control the primary access points to acquire data from consumers.
Backward chaining, also called backward integration, describes a process where a company expands to fulfill roles previously held by other businesses further up the supply chain. It is a form of vertical integration where a company owns or controls its suppliers, distributors, or retail locations.
The supply chain is the set of steps between the sourcing, manufacturing, distribution of a product up to the steps it takes to reach the final customer. It’s the set of step it takes to bring a product from raw material (for physical products) to final customers and how companies manage those processes.
A classic supply chain moves from upstream to downstream, where the raw material is transformed into products, moved through logistics and distribution to final customers. A data supply chain moves in the opposite direction. The raw data is “sourced” from the customer/user. As it moves downstream, it gets processed and refined by proprietary algorithms and stored in data centers. Horizontal vs. Vertical Integration
Horizontal integration refers to the process of increasing market shares or expanding by integrating at the same level of the supply chain, and within the same industry. Vertical integration happens when a company takes control of more parts of the supply chain, thus covering more parts of it.
According to the book, Unlocking The Value Chain, Harvard professor Thales Teixeira identified three waves of disruption (unbundling, disintermediation, and decoupling). Decoupling is the third wave (2006-still ongoing) where companies break apart the customer value chain to deliver part of the value, without bearing the costs to sustain the whole value chain.
When entering the market, as a startup you can use different approaches. Some of them can be based on the product, distribution, or value. A product approach takes existing alternatives and it offers only the most valuable part of that product. A distribution approach cuts out intermediaries from the market. A value approach offers only the most valuable part of the experience.
Disintermediation is the process in which intermediaries are removed from the supply chain, so that the middlemen who get cut out, make the market overall more accessible and transparent to the final customers. Therefore, in theory, the supply chain gets more efficient and, all in all, can produce products that customers want.
Reintermediation consists in the process of introducing again an intermediary that had previously been cut out from the supply chain. Or perhaps by creating a new intermediary that once didn’t exist. Usually, as a market is redefined, old players get cut out, and new players within the supply chain are born as a result.
Scientific Management Theory was created by Frederick Winslow Taylor in 1911 as a means of encouraging industrial companies to switch to mass production. With a background in mechanical engineering, he applied engineering principles to workplace productivity on the factory floor. Scientific Management Theory seeks to find the most efficient way of performing a job in the workplace.
Poka-yoke is a Japanese quality control technique developed by former Toyota engineer Shigeo Shingo. Translated as “mistake-proofing”, poka-yoke aims to prevent defects in the manufacturing process that are the result of human error. Poka-yoke is a lean manufacturing technique that ensures that the right conditions exist before a step in the process is executed. This makes it a preventative form of quality control since errors are detected and then rectified before they occur.
A Gemba Walk is a fundamental component of lean management. It describes the personal observation of work to learn more about it. Gemba is a Japanese word that loosely translates as “the real place”, or in business, “the place where value is created”. The Gemba Walk as a concept was created by Taiichi Ohno, the father of the Toyota Production System of lean manufacturing. Ohno wanted to encourage management executives to leave their offices and see where the real work happened. This, he hoped, would build relationships between employees with vastly different skillsets and build trust.
Product discovery is a critical part of agile methodologies, as its aim is to ensure that products customers love are built. Product discovery involves learning through a raft of methods, including design thinking, lean start-up, and A/B testing to name a few. Dual Track Agile is an agile methodology containing two separate tracks: the “discovery” track and the “delivery” track.
Scaled Agile Lean Development (ScALeD) helps businesses discover a balanced approach to agile transition and scaling questions. The ScALed approach helps businesses successfully respond to change. Inspired by a combination of lean and agile values, ScALed is practitioner-based and can be completed through various agile frameworks and practices.
Kanban is a lean manufacturing framework first developed by Toyota in the late 1940s. The Kanban framework is a means of visualizing work as it moves through identifying potential bottlenecks. It does that through a process called just-in-time (JIT) manufacturing to optimize engineering processes, speed up manufacturing products, and improve the go-to-market strategy.
The Toyota Production System (TPS) is an early form of lean manufacturing created by auto-manufacturer Toyota. Created by the Toyota Motor Corporation in the 1940s and 50s, the Toyota Production System seeks to manufacture vehicles ordered by customers most quickly and efficiently possible.
Six Sigma is a data-driven approach and methodology for eliminating errors or defects in a product, service, or process. Six Sigma was developed by Motorola as a management approach based on quality fundamentals in the early 1980s. A decade later, it was popularized by General Electric who estimated that the methodology saved them $12 billion in the first five years of operation.Read Also: Vertical Integration, Horizontal Integration, Supply Chain,
Read More:
Supply ChainHorizontal IntegrationVertical IntegrationAI Supply ChainsDistribution ChannelsTypes of Business Models You Need to KnowBusiness Strategy: Definition, Examples, And Case StudiesMarketing Strategy: Definition, Types, And ExamplesPlatform Business Models In A NutshellNetwork Effects In A NutshellGross Margin In A NutshellThe post Outsourcing vs. Offshoring appeared first on FourWeekMBA.
What Is The Organizational Structure of McDonald’s? McDonald’s Organizational Structure
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.
Understanding the McDonald’s organizational structureThe current organizational structure of McDonald’s was implemented by incoming CEO Steve Easterbrook in 2015. Easterbrook reorganized business units, cut costs, and sold more restaurants to franchisees to make the fast-food chain modern and progressive.
This structure was then refined to comprise of three divisions or business segments:
United States (US) – headed by McDonald’s USA president Joe Erlinger. This is the most important division of McDonald’s since a significant portion of company revenue comes from this region.International operated markets (IOM) – a division encompassing wholly-owned markets and countries such as Australia, Russia, Spain, the United Kingdom, Canada, France, Germany, and Italy. International developmental licensed markets (IDL) – the IDL division covers all remaining McDonald’s markets and corporate activities. There are more than 80 different markets in which the company has licensed its franchise rights.Note that the IOM and IDL divisions are headed by Ian Borden. Both Erlinger and Borden report to current President and CEO Chris Kempczinski under a hierarchical leadership structure which we will analyze in the next section.
McDonald’s leadership structureMcDonald’s hierarchical leadership structure means there are multiple levels of management between the managers of individual stores and the CEO Chris Kempczinski. In other words, directives are passed from the CEO down the hierarchy to vice presidents, regional managers, restaurant managers, franchise owners, and other personnel.
Under the corporate banner, there are various executive vice presidents, senior vice presidents, and other staff in the following disciplines:
Global impact.Strategic alignment.Office of the CEO.Digital customer engagement.Marketing.Finance.IT.Restaurant development and solutions.Customers.Supply chains.RegionalThere are also senior vice presidents in the regional divisions we mentioned in the previous section. For the IOM division, there are two positions:
Chief Marketing Officer and Corporate Vice President, andCorporate Senior Vice President.There is also a Senior Vice President for IDL markets and a Senior Vice President and Chief People Officer for international markets more broadly.
FunctionalMcDonald’s also operates six functional groups, with each group headed by either a senior vice president or vice president. These groups are:
Learning and Development.Compliance.Communications.Technology.Accounting.Diversity, Equity & Inclusion.Key takeaways:McDonald’s has a predominant divisional organizational structure where each division is assigned operational responsibilities and strategic objectives. The current organizational structure of McDonald’s was implemented by CEO Steve Easterbrook in 2015. Primarily, this structure consists of three divisions based on geographical location: the United States, international operated markets (IOM), an international developmental licensed locations, which comprise licensed franchises in over 80 markets.McDonald’s also employs a hierarchical leadership structure where a raft of senior and executive vice presidents report to the CEO. In addition to leading regional divisions, these individuals also head various corporate and functional groups such as Global Impact, Strategic Alignment, and Diversity, Equity & Inclusion.Related To McDonald’s
Franchising is a business model where the owner (franchisor) of a product, service, or method utilizes the distribution services of an affiliated dealer (franchisee). Usually, the franchisee pays a royalty to the franchisor to be using the brand, process, and product. And the franchisor instead supports the franchisee in starting up the activity and providing a set of services as part of the franchising agreement. Franchising models can be heavy-franchised, heavy-chained, or hybrid (franchained).McDonald’s Heavy Franchised Business Model
McDonald’s is a heavy-franchised business model. In 2021, over 56% of the total revenues came from franchised restaurants. The long-term goal of the company is to transition toward 95% of franchised restaurants (in 2020 franchised restaurants were 93% of the total). The company generated over $23 billion in revenues in 2021, of which $9.78 billion from owned restaurants and $13 billion from franchised restaurants. 
Starbucks is a multinational coffee chain headquartered in Seattle, Washington. It was founded by Jerry Baldwin, Zev Siegl, and Gordon Bowker in 1971. From a single and very humble bean roasting store in Pike Place Market, the company is now a global giant operating almost 33,000 stores around the world. This large global footprint obviously increases the competition for Starbucks in many different markets. The coffee industry itself is also highly competitive, with established players including McDonald’s and Dunkin’ Donuts. Read Next: Organizational Structure.
Read Also: McDonald’s Heavy Franchised Business Model, Who Owns McDonald’s?, McDonald’s PESTEL Analysis, McDonald’s SWOT analysis, What Is A Franchising Business Model?, McDonald’s Speedee System, History Of McDonald’s.
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Business ModelsBusiness StrategyBusiness DevelopmentDigital Business ModelsDistribution ChannelsMarketing StrategyPlatform Business ModelsRevenue ModelsTech Business ModelsOrganizational Structure Case StudiesAirbnb Organizational Structure
Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other. 
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.Facebook Organizational Structure
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).Google Organizational Structure
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization. Tesla Organizational Structure
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy. McDonald’s Organizational Structure
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions. Walmart Organizational Structure
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.Microsoft Organizational Structure
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management. The post What Is The Organizational Structure of McDonald’s? McDonald’s Organizational Structure appeared first on FourWeekMBA.
September 13, 2022
Constructive Controversy In A Nutshell
Constructive controversy is a theory arguing that controversial discussions create a good starting point for understanding complex problems. A constructive controversy discussion is performed by following six steps: organize information and derive conclusions; presenting and advocating decisions; being challenged by opposing views; conceptual conflict and uncertainty; epistemic curiosity and perspective-taking; and reconceptualization, synthesis, and integration.
Understanding constructive controversyDecision making is an inherently controversial practice because disagreement and conflict are inevitable. Controversy arises because people make decisions based on perspectives, experiences, and rationale that are unique to them.
Constructive controversy is a deliberative discussion method. It endeavors to solve problems through the identification and resolution of constructive conflicts among team members. Constructive controversy differs from debating, which is a competitive process where one opinion wins at the expense of all others.
Instead of suppressing a difference of opinion or alternative solutions, the model encourages individuals to consider the rationale behind opposing views. Each group member is encouraged to validate their reasoning while seeking to accommodate the reasoning of others.
Ultimately, this approach results in creative solutions and high group morale. Individuals also develop higher self-esteem because of an ability to successfully navigate conflict.
Implementing a constructive controversy discussionA constructive controversy discussion is performed by following six steps:
Step 1 – Organise information and derive conclusions.During this initial phase, everyone formulates a conclusion based on their current (but usually limited) perspective. While each person has confidence in their unique perspective, high-quality decision-making results when alternatives are properly evaluated.
Step 2 – Presenting and advocating decisionsWhen an individual presents the rationale behind their conclusion, they engage in high-level reasoning strategies. This deepens their understanding of the problem or decision. It also helps the individual defend their position against the position of someone else.
The continual and somewhat cyclical process of advocating and defending a position reinforces high-level reasoning. Over time, greater amounts of information are fed into the decision making process.
Step 3 – Being challenged by opposing viewsIn a constructive controversy, group members critically analyze one another’s positions to discern strengths and weaknesses.
Opposing positions encourage individuals to research information not currently known to them. This helps them appreciate opposing positions which may indeed be advocated after further research.
Step 4 – Conceptual conflict and uncertaintyWhen an individual has their position criticized or challenged by information that is incompatible with their views, uncertainty develops.
Step 5 – Epistemic curiosity and perspective-takingUncertainty can be unpleasant, but it stimulates epistemic curiosity – or the desire to obtain new knowledge to stimulate intellectual interest.
In turn, this strengthens the reasoning process and makes individual positions more robust. At this stage, there may still be disagreement within the group and any opposition should be dealt with intellectually and cooperatively.
Each individual must have a desire to look at an issue from multiple perspectives and consider facts in different ways.
Step 6 – Reconceptualization, synthesis, and integrationEach member of the group has now presented their best case solution. However, teams following the constructive controversy process should avoid simply choosing one solution from the list
Instead, the goal is to synthesize (integrate) different ideas and facts into a single, unifying solution. Synthesis means viewing the issue from a variety of perspectives and generating several means of applying the evidence in practice.
This requires probabilistic thinking, which favors high-level reasoning under some degree of uncertainty. This is in stark contrast to dualistic thinking, which advocates notions of right and wrong and authority that should not be challenged
Key takeaways:Constructive controversy argues that constructive differences of opinion provide a solid foundation for tackling complex problems.Constructive controversy encourages individuals to consider and validate the rationale behind opposing views. Group morale then increases as each individual develops creative thinking and conflict management skills.Constructive controversy is described in six steps. Each helps the individual progress from blind confidence in their ideas to a collaborative, high-level form of reasoning and better decision making.Main Free Guides:
Business ModelsBusiness StrategyBusiness DevelopmentDigital Business ModelsDistribution ChannelsMarketing StrategyPlatform Business ModelsTech Business ModelConnected Analysis FrameworksThe Cynefin Framework gives context to decision making and problem-solving by providing context and guiding an appropriate response. The five domains of the Cynefin Framework comprise obvious, complicated, complex, chaotic domains and disorder if a domain has not been determined at all. A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.The SWOT analysis is commonly used as a strategic planning tool in business. However, it is also well suited for personal use in addressing a specific goal or problem. A personal SWOT analysis helps individuals identify their strengths, weaknesses, opportunities, and threats.The Pareto Analysis is a statistical analysis used in business decision making that identifies a certain number of input factors that have the greatest impact on income. It is based on the similarly named Pareto Principle, which states that 80% of the effect of something can be attributed to just 20% of the drivers.Failure Mode And Effects Analysis
A failure mode and effects analysis (FMEA) is a structured approach to identifying design failures in a product or process. Developed in the 1950s, the failure mode and effects analysis is one the earliest methodologies of its kind. It enables organizations to anticipate a range of potential failures during the design stage. A Blindspot Analysis is a means of unearthing incorrect or outdated assumptions that can harm decision making in an organization. The term “blindspot analysis” was first coined by American economist Michael Porter. Porter argued that in business, outdated ideas or strategies had the potential to stifle modern ideas and prevent them from succeeding. Furthermore, decisions a business thought were made with care caused projects to fail because major factors had not been duly considered.A comparable company analysis is a process that enables the identification of similar organizations to be used as a comparison to understand the business and financial performance of the target company. To find comparables you can look at two key profiles: the business and financial profile. From the comparable company analysis it is possible to understand the competitive landscape of the target organization.A cost-benefit analysis is a process a business can use to analyze decisions according to the costs associated with making that decision. For a cost analysis to be effective it’s important to articulate the project in the simplest terms possible, identify the costs, determine the benefits of project implementation, assess the alternatives.Agile Business Analysis (AgileBA) is certification in the form of guidance and training for business analysts seeking to work in agile environments. To support this shift, AgileBA also helps the business analyst relate Agile projects to a wider organizational mission or strategy. To ensure that analysts have the necessary skills and expertise, AgileBA certification was developed.A SOAR analysis is a technique that helps businesses at a strategic planning level to:Focus on what they are doing right.Determine which skills could be enhanced.Understand the desires and motivations of their stakeholders.The STEEPLE analysis is a variation of the STEEP analysis. Where the step analysis comprises socio-cultural, technological, economic, environmental/ecological, and political factors as the base of the analysis. The STEEPLE analysis adds other two factors such as Legal and Ethical. The PESTEL analysis is a framework that can help marketers assess whether macro-economic factors are affecting an organization. This is a critical step that helps organizations identify potential threats and weaknesses that can be used in other frameworks such as SWOT or to gain a broader and better understanding of the overall marketing environment.A DESTEP analysis is a framework used by businesses to understand their external environment and the issues which may impact them. The DESTEP analysis is an extension of the popular PEST analysis created by Harvard Business School professor Francis J. Aguilar. The DESTEP analysis groups external factors into six categories: demographic, economic, socio-cultural, technological, ecological, and political.A paired comparison analysis is used to rate or rank options where evaluation criteria are subjective by nature. The analysis is particularly useful when there is a lack of clear priorities or objective data to base decisions on. A paired comparison analysis evaluates a range of options by comparing them against each other.Related Strategy Concepts: Go-To-Market Strategy, Marketing Strategy, Business Models, Tech Business Models, Jobs-To-Be Done, Design Thinking, Lean Startup Canvas, Value Chain, Value Proposition Canvas, Balanced Scorecard, Business Model Canvas, SWOT Analysis, Growth Hacking, Bundling, Unbundling, Bootstrapping, Venture Capital, Porter’s Five Forces, Porter’s Generic Strategies, Porter’s Five Forces, PESTEL Analysis, SWOT, Porter’s Diamond Model, Ansoff, Technology Adoption Curve, TOWS, SOAR, Balanced Scorecard, OKR, Agile Methodology, Value Proposition, VTDF Framework, BCG Matrix, GE McKinsey Matrix, Kotter’s 8-Step Change Model.
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TDODAR Decision Model In A Nutshell
The TDODAR decision model helps an individual make good decisions in emergencies or any scenario with a high degree of uncertainty. TDODAR is an acronym of the six sequential steps that every practitioner must follow, comprising: time, diagnosis, options, decide, act/assign, review.
Understanding the TDODAR decision modelThe TDODAR decision model is traditionally associated with the aviation industry.
During a flight, pilots are required to make informed decisions in what is a very high-stakes environment. But decision making can be influenced by many factors, including stress, spatial disorientation, or simply a lack of experience or knowledge. Pilots use the methodical nature of the TDODAR model to consider all options before ultimately deciding on a course of action.
The model also has applications in most other industries, particularly if a clear plan of action is not immediately apparent. This helps businesses avoid making rushed or incorrect decisions that are not in their best interests.
The TDODAR decision model processTDODAR is an acronym of the six sequential steps that every practitioner must follow.
Following is a look at each of the steps:
T (Time) – how much time is available to make the decision? It’s important to be thorough on this initial step because it will affect how the following steps are performed. Every person who is involved in a decision should be aware of time constraints.D (Diagnosis) – to accurately diagnose the problem and its causes, gather data, and consult a wide range of relevant expertise. The 5 Whys technique can be used for moderately difficult problems. For complex problems, try the Cause and Effect Analysis. Avoid confirmation bias and be on the lookout for groupthink, where people in a group choose not to voice their concerns to facilitate group consensus.O (Options) – in terms of solving the problem, what are the options? Some options are more feasible and intuitive than others. But when a solution is not immediately apparent, it is helpful to brainstorm ideas.D (Decide) – given the information gleaned in the first three steps, a senior individual must make the most sensible decision. In high-pressure situations, it is wise to include others in the decision-making process to avoid judgment errors and biases.A (Act/Assign) – who will act on the solution? Once this has been determined, roles and responsibilities must be assigned. During a commercial flight, the pilot and first-officer share responsibilities but have clearly defined roles. In a business scenario, a decision-maker may act on the solution or delegate responsibility to subordinates.R (Review) – in the final step, the efficacy of the solution must be analyzed. Has it solved the problem? Have the desired results materialized? If the problem becomes recurrent or worsens over time then decision-makers must reassess previously discarded solutions. In some cases, they may have to perform a new TDODAR analysis.TDODAR decision model best practicesUse these best practices to get the most out of the TDODAR decision model:
Consider whether the problem has a high level of uncertainty or time pressure before beginning. If the problem cannot satisfy either of these criteria, then the effectiveness of the model is limited.Run through each step sequentially – resist the urge to complete more than one at a time.Be concise when stating thoughts and facts, particularly if time is at a premium.Collaboration with others can be beneficial if there is time to do so. The discussion should always remain objective and free of emotion or personal agendas. If there is a disagreement on the choice of solution, move forward with the most conservative option.Key takeaways:The TDODAR decision model facilitates good decision making in emergencies or similar high-stress, time-sensitive situations.The TDODAR decision model is based on a sequential six-step process that defines the TDODAR acronym: time, diagnosis, options, decide, act, and review.Using the TDODAR decision model effectively means ensuring the problem has a high degree of associated uncertainty. Decision teams should also be concise and avoid subjectivity creeping into discussions.Other Decision-Making FrameworksThe Cynefin Framework gives context to decision making and problem-solving by providing context and guiding an appropriate response. The five domains of the Cynefin Framework comprise obvious, complicated, complex, chaotic domains and disorder if a domain has not been determined at all. A SWOT Analysis is a framework used for evaluating the business’s Strengths, Weaknesses, Opportunities, and Threats. It can aid in identifying the problematic areas of your business so that you can maximize your opportunities. It will also alert you to the challenges your organization might face in the future.The Pareto Analysis is a statistical analysis used in business decision making that identifies a certain number of input factors that have the greatest impact on income. It is based on the similarly named Pareto Principle, which states that 80% of the effect of something can be attributed to just 20% of the drivers.Failure Mode And Effects Analysis
A failure mode and effects analysis (FMEA) is a structured approach to identifying design failures in a product or process. Developed in the 1950s, the failure mode and effects analysis is one the earliest methodologies of its kind. It enables organizations to anticipate a range of potential failures during the design stage. A Blindspot Analysis is a means of unearthing incorrect or outdated assumptions that can harm decision making in an organization. The term “blindspot analysis” was first coined by American economist Michael Porter. Porter argued that in business, outdated ideas or strategies had the potential to stifle modern ideas and prevent them from succeeding. Furthermore, decisions a business thought were made with care caused projects to fail because major factors had not been duly considered.
A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.
In the 1970s, Bruce D. Henderson, founder of the Boston Consulting Group, came up with The Product Portfolio (aka BCG Matrix, or Growth-share Matrix), which would look at a successful business product portfolio based on potential growth and market shares. It divided products into four main categories: cash cows, pets (dogs), question marks, and stars.
First proposed by accounting academic Robert Kaplan, the balanced scorecard is a management system that allows an organization to focus on big-picture strategic goals. The four perspectives of the balanced scorecard include financial, customer, business process, and organizational capacity. From there, according to the balanced scorecard, it’s possible to have a holistic view of the business.
Businesses use scenario planning to make assumptions on future events and how their respective business environments may change in response to those future events. Therefore, scenario planning identifies specific uncertainties – or different realities and how they might affect future business operations. Scenario planning attempts at better strategic decision making by avoiding two pitfalls: underprediction, and overprediction.Other related business frameworks:
AIDA ModelAnsoff MatrixBusiness AnalysisBusiness Model CanvasBusiness Strategy FrameworksMain Free Guides:
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Artificial Intelligence Vs. Machine Learning
Generalized AI consists of devices or systems that can handle all sorts of tasks on their own. The extension of generalized AI eventually led to the development of Machine learning. As an extension to AI, Machine Learning (ML) analyzes a series of computer algorithms to create a program that automates actions. Without explicitly programming actions, systems can learn and improve the overall experience. It explores large sets of data to find common patterns and formulate analytical models through learning.
Artificial Intelligence Vs Machine LearningArtificial intelligence and machine learning emerged over recent years and are interchangeable. As part of the advancements in computer science, these technologies have integrated into intelligent systems. Although closely similar to one another, AI and ML are still considered two different concepts in various cases.
Overall, artificial intelligence and machine learning are not being advanced to replace human intelligence. Instead, tech and business leverage these technologies to support modern breakthroughs.
Artificial intelligence (AI) is a computer science field that establishes a computer system in close resemblance to human intelligence. Instead of programming codes that execute an action, they make use of algorithms to work.
AI devices and systems are designed primarily to perform intelligently. To better understand how AI works, here are groups that classify under this system:
Generalized Artificial IntelligenceGeneralized AI consists of devices or systems that can handle all sorts of tasks on their own. The extension of generalized AI eventually led to the development of Machine learning.
Applied Artificial IntelligenceApplied AI automates specific actions upon collecting, analyzing, and gaining insights through data. It is utilized to trade stocks and shares or maneuver an autonomous vehicle and is commonly found in AI systems and devices.
As an extension to AI, Machine Learning (ML) analyzes a series of computer algorithms to create a program that automates actions. Without explicitly programming actions, systems can learn and improve the overall experience. It explores large sets of data to find common patterns and formulate analytical models through learning.
For instance, augmenting a machine learning program into a reasonable amount of data of x-ray pictures can create a system that automates the analysis of x-ray. The program utilizes the descriptions of various x-ray pictures to develop an analytical model for it. After finding common patterns within a considerable dataset, the program would also define differences through comparable indications. The previous data is its basis for comprehending new x-ray images that get entered into the system. The AI breakthrough became one of the most recent in the healthcare system, used to achieve human-level performance for x-ray segmentation.
Increasing Demand for Skills in AI and ML in the Labor MarketRecent reports have revealed the increasing demand for skills in AI and ML in the labor market today. In light of digitization, businesses leverage artificial intelligence to improve their operations and services. Experts found that these technical skills are most likely in demand in finance, marketing, and tech industries.
When COVID-19 struck the world, the economy was dramatically affected as well. The rates of unemployment spiked, but careers in AI remained steadfast amidst the crisis. When this revelation was made public, it pushed a majority of businesses to leverage AI into digital transformation and adaptation.
Leveraging AI and ML for Business GrowthEmerging businesses utilize artificial Intelligence and Machine Learning toward growth. From design automated assistants, employee management systems to applying deep learning to establish new products, these technologies contributed to our society’s progression.
Healthcare, finance, and many other businesses leveraged the potential of AI and ML to drive their business goals. These systems offer innovative solutions that automate crucial decisions, personalize marketing, and push them towards digital transformation. Ultimately, AI and ML provide an opportunity for digital entrepreneurs to establish effective and innovative business strategies.
The application of AI and ML became the forefront of industry leaders that provide faster, smarter, and more cost-effective products. Apart from products, these systems have also improved digital marketing practices. Extensive data analytics help entrepreneurs obtain valuable insight into their customers. As a result, they can curate their marketing strategies according to their target audience. The result was a higher response value and, more importantly, a significant competitive edge against their direct competitors.
Produce Relevant and Quality ContentThe application of artificial intelligence and machine learning allows businesses to produce relevant and quality content. When it comes to e-commerce and digitization, SEO and web traffic are vital. It is essential for brands to gain traction and online presence to be able to be recognized. With AI and ML, businesses can design their content to become more responsive and immersive to their target audience. For example, a growing number of brands utilize customer queries to produce content. They create content that answers the most commonly asked questions to engage with their audience.
Even search engines are powered by artificial intelligence now. Google, Bing, and other search engines utilize AI to accommodate searcher intent. Deep learning algorithms play a fundamental role in ranking search results. Through machine learning, factors like topic relevance, reader-friendliness, and authenticity get analyzed to display quality content.
As a result, more brands acknowledge the importance of producing relevant and quality content to achieve better rankings. It predominantly affects how the audiences address your content along with your products and services. Therefore, digital entrepreneurs apply machine learning to gather information and predict product trends. The opportunity to implement this technology allowed them to anticipate the approach that can likely drive their desired outcomes.
Offer Personalized Experiences that are Unique to UsersAI and ML interventions help digital entrepreneurs improve the overall customer experience. These technologies can improve engagement, extend retention, personalize user experience, and, most of all, boost revenue. Search engine optimization (SEO), a prominent AI application has dominated the world of digital marketing.
Apart from contributing to increasing web traffic, SEO offers personalized experiences that are unique to users. Algorithms set a unique, customized experience for users that interact with the brand. User individuality yields a unique treatment to every customer. With the use of AI and ML, brands can accommodate the preferences of their audience. Utilizing SEO is also significantly cheaper while offering long-term benefits to businesses of any sort. Thus, companies can find cost-effective solutions suitable to the unique situations of their target market.
Generate Automated Responses Through Deep LearningA majority of businesses utilize AI and ML to improve their business operations. These interventions transform how products get produced, marketed, and displayed. Artificial Intelligence now handles a large portion of marketing campaigns too. With the use of algorithms and advanced analytics, entrepreneurs optimize strategies that can yield the best results. These campaigns get tailored depending on the geographical, demographical, and socioeconomic factors of their audiences. On top of that, customer behaviors are anticipated and predicted through a massive set of data.
To put everything in perspective, AI and ML play a fundamental role in optimizing major business decisions. These systems can facilitate valuable interaction through machine learning from the patterns collected from data. With these patterns, AI performs segmentation to differentiate every user and their projected experience. Thus, each customer that visits the e-commerce website is examined thoroughly before the chatbot generates a response. The algorithm allows automated responses that are tailored based on user preferences. Not only can it improve the customer experience but also streamlines lead generation.
Analysis of data is lucrative in AI and ML, which allows them to get to know us better. Volumes of user data create patterns and trends that generate our preferences and predict our needs. Additionally, AI and ML open opportunities to improve business marketing strategies.
Read Next: Business Engineer, Business Designer.
Connected Business Frameworks
AIOps is the application of artificial intelligence to IT operations. It has become particularly useful for modern IT management in hybridized, distributed, and dynamic environments. AIOps has become a key operational component of modern digital-based organizations, built around software and algorithms. 
Machine Learning Ops (MLOps) describes a suite of best practices that successfully help a business run artificial intelligence. It consists of the skills, workflows, and processes to create, run, and maintain machine learning models to help various operational processes within organizations. 
The business intelligence models have transitioned to continuous intelligence, where dynamic technology infrastructure is coupled with continuous deployment and delivery to provide continuous intelligence. In short, the software offered in the cloud will integrate with the company’s data, leveraging on AI/ML to provide answers in real-time to current issues the organization might be experiencing. 
That is a process that requires a continuous feedback loop to develop a valuable product and build a viable business model. Continuous innovation is a mindset where products and services are designed and delivered to tune them around the customers’ problems and not the technical solution of its founders.Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward. 
A tech business model is made of four main components: value model (value propositions, mission, vision), technological model (R&D management), distribution model (sales and marketing organizational structure), and financial model (revenue modeling, cost structure, profitability and cash generation/management). Those elements coming together can serve as the basis to build a solid tech business model.Main Guides:
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Startup Methodologies
Marc Andreessen defined Product/market fit as “being in a good market with a product that can satisfy that market.” According to Andreessen, that is a moment when a product or service has its place in the market, thus enabling traction for the company offering that product or service.The Minimal Viable Product (MVP) 
A leaner MVP is the evolution of the MPV approach. Where the market risk is validated before anything elseLean Methodology
The lean methodology is a continuous process of product development to meet customers’ needs. It was in part borrowed by the auto industry and its roots are found in the Toyota Production System, which was heavily influenced by Henry Ford’s assembly line system. The lean methodology is, therefore, an evolution from lean manufacturing, based on continuous improvement. Kanban
Kanban is a lean manufacturing framework first developed by Toyota in the late 1940s. The Kanban framework is a means of visualizing work as it moves through identifying potential bottlenecks. It does that through a process called just-in-time (JIT) manufacturing to optimize engineering processes, speed up manufacturing products, and improve the go-to-market strategy. Blue OceanA blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.5 Whys
The 5 Whys method is an interrogative problem-solving technique that seeks to understand cause-and-effect relationships. At its core, the technique is used to identify the root cause of a problem by asking the question of why five times. This might unlock new ways to think about a problem and therefore devise a creative solution to solve it. Pirate Funnel
Venture capitalist, Dave McClure, coined the acronym AARRR which is a simplified model that enables to understand what metrics and channels to look at, at each stage for the users’ path toward becoming customers and referrers of a brand. Growth Hacking
A north star metric (NSM) is any metric a company focuses on to achieve growth. A north star metric is usually a key component of an effective growth hacking strategy, as it simplifies the whole strategy, making it simpler to execute at high speed. Usually, when picking up a North Start Metric, it’s critical to avoid vanity metrics (those who do not really impact the business) and instead find a metric that really matters for the business growth. FourWeekMBA Business ToolboxA tech business model is made of four main components: value model (value propositions, mission, vision), technological model (R&D management), distribution model (sales and marketing organizational structure), and financial model (revenue modeling, cost structure, profitability and cash generation/management). Those elements coming together can serve as the basis to build a solid tech business model.
A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.
In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility. 
In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.
Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.
A transitional business model is used by companies to enter a market (usually a niche) to gain initial traction and prove the idea is sound. The transitional business model helps the company secure the needed capital while having a reality check. It helps shape the long-term vision and a scalable business model.
The minimum viable audience (MVA) represents the smallest possible audience that can sustain your business as you get it started from a microniche (the smallest subset of a market). The main aspect of the MVA is to zoom into existing markets to find those people which needs are unmet by existing players.
Business scaling is the process of transformation of a business as the product is validated by wider and wider market segments. Business scaling is about creating traction for a product that fits a small market segment. As the product is validated it becomes critical to build a viable business model. And as the product is offered at wider and wider market segments, it’s important to align product, business model, and organizational design, to enable wider and wider scale.
The market expansion consists in providing a product or service to a broader portion of an existing market or perhaps expanding that market. Or yet, market expansions can be about creating a whole new market. At each step, as a result, a company scales together with the market covered.
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).
In the FourWeekMBA Revenue Streams Matrix, revenue streams are classified according to the kind of interactions the business has with its key customers. The first dimension is the “Frequency” of interaction with the key customer. As the second dimension, there is the “Ownership” of the interaction with the key customer.
Revenue model patterns are a way for companies to monetize their business models. A revenue model pattern is a crucial building block of a business model because it informs how the company will generate short-term financial resources to invest back into the business. Thus, the way a company makes money will also influence its overall business model.
A pricing strategy or model helps companies find the pricing formula in fit with their business models. Thus aligning the customer needs with the product type while trying to enable profitability for the company. A good pricing strategy aligns the customer with the company’s long term financial sustainability to build a solid business model.Main Free Guides:
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