4 Simple Questions That Can Re-vitalise Growth for Your Cash Cow

Every organisation that has seen some success has some form of a cash cow, which continues to grow and provide the fuel necessary for the organisation to invest in new products or services, which can bring in the next level of growth for the organisation.

It is also inevitable that at some point in time the growth in the cash cow would slow down. If by that time, the organisation doesn’t already have another product/service that can take the place of the cash cow, then the organisation is in troubled waters, when it comes to continuing to grow.

The general response, in this scenarios is for the leaders to do one of the following:

  • Spend more money in advertising the cash cow, assuming that by spending more money (in the form of advertisement or offers), they will be able to continue the growth in the cash cow for some more time.
  • Go out to acquire a product that can provide the growth for the organisation. Unfortunately, most such acquisitions don’t pan out well for the acquiring companies.
  • Start an innovation project with the intention of creating the next high growth product internally.

Unfortunately, almost all of these efforts, while may work for a short term, will eventually come back to a stalled growth.

In their book “The Power of Little Ideas“, David Robertson shares his perspectives on how answering 4 simple (but extremely difficult questions) can solve this dilema. 

The questions are as below:

  1. What is the key product?
  2. What is your promise for the key product?
  3. How will you innovate around the key product to satisfy the promise?
  4. How will you deliver the innovations?

He goes on to share how organisations as diverse as GoPro, Apple, Disney, SAP, Lego, CarMax and others found answers to their growth by finding answers to these questions and how they can lead any organisation to create a set of complimentary solutions that not only help continue the growth but can also lead to significant competitive advantage as your product strategy is no longer uni-dimensional but becomes multi-dimensional.

He also goes on to share some of the mines that organisations would need to be careful of when engaged in this approach and shares how to do so.

Conclusion:

In conclusion, I think that most of what David shares in his book, is applicable to any organisation which has seen good success in a product category and wants to cement their growth and presence in their category. What is great about this approach is that this doesn’t require the organisation to bet their entire organisation or strategy on a new, untested product or service but find growth through existing, well tested products or services.

If you are tasked with growing an existing product or service that is showing signs of slowing down, do take some time and read the book – “The Power of Little Ideas” by David Robertson. He has a lot of insights that will benefit you in finding growth again.

Is Organizational Velocity the Ultimate Competitive advantage?

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I have noticed that all large organizations that fail, have one thing in common: They fail because they are not able to change how they run their business fast enough with the changing business environment.

Until last century, the change in the environment was slow and took a long time to take root – so, organizations had the crucial element of time on their side and could re-invent themselves to stay relevant or die a long & painful death.

The convergence of internet, mobile, and a change in the demographic of the consumer has meant that organizations today don’t have the luxury of time on their side.

In order to stay relevant, they need to learn to build velocity in all aspects of their business.

Build Velocity in developing new products or rethinking (or killing) products that are not being adopted; Velocity in their communications (both internal and external); Velocity in their sales and marketing process.

And most importantly, they need to build velocity in their ability to make & implement decisions.

Gone are the days when organizations could afford to let information flow from bottom to the top management and then wait for the top management to take decisions, which are then cascaded down to the execution layer of the organization.

Today, organizations need to be built or designed for velocity. Traditional structures will need to be re-invented and new organizational structures thought of.

Traditional pyramid structures need to be replaced with newer organizational structures. One such structure that i proposed in an blog post earlier is that of a concentric circles with the customer being at the center of the organization.

 

When you combine this new organization model and add the concept of “Commander’s Intent”, you get the foundations of a high velocity organization.

Commanders Intent is a single page document that is created in the military that lays down the primary intent of the military exercise so that even if there is one soldier standing, he knows what is expected out of him. The commander’s intent is the vision that the leader has for the organization and its journey in time.

When you have an empowered front line staff, energetic and supportive middle managers and a leader with a clear vision, you lay down the foundations for a high velocity organization.

I know that this is not easy to implement, but for some organizations, which are on the brink of extinction, this could be their last strike. For example, large brick and mortar retailers who are currently facing challenges of slowing business spurred by growing online commerce, could use this model to bring life back in their stores. The key is that, all the three components need to be there for this strategy to work – Commanders Intent, Empowered, Engaged & Involved front-line staff, supportive management structure.

Organizations that are able to put this in practice can build sustainable competitive advantage as they will not only respond to their changing environment much faster than their competitors and at the same time continue to move towards their vision. Also, the people who are responding to the changing environment are the people who actually understand this first hand and can also figure out what could be done to counter these changes in the business environment.

These are my thoughts. What do you think? How easy or difficult do you think implementing this new organization design is and if this will indeed provide velocity in decision-making?

Shift from Competing Organizations to Competing Networks

In the past few years, I have started seeing a definite trend that is shaping up and one that can have an immense impact on all of us and how we do business.

There is more competition between networks of organizations competing with each other rather than individual organizations competing.

This was prevalent in the B2B space in the IT industry, where software vendors would team up with hardware vendors and implementation partners and go to market together. They win the deal together or lose the deal together to a different network.

Airlines around the world always had these networks (star alliance and partnerships with hotels and car rentals, etc).

Now, you could see this trend in a lot of other industries and in B2C space as well. This is evident with the number of co-innovation or open innovation programs that are being run in every industry.

P&G runs a program called Connect + Develop which has already delivered some block-buster products for them.

Apple could not have been as successful as it has been without having the strong network of app developers and content producers for their devices. Apple also depends on the various vendors from whom it sources its hardware parts from. What happens if one of its supplier fails to deliver its commitment? So it is for Google’s mobile platform. Microsoft is struggling because of their weak network.

Google even tried its attempt at cross brand promotion with their association with Nestle (Android Kit-Kat)

This alludes to the fact that it is no longer sufficient to increase your operational metrics but to start re-imagining how you  could create a seamless network that when comes together is much stronger than each one of them individually could be.

This requires us to re-think about how we are organized and how decision making happens within organizations. This also calls for a highly empowered front-line staff (sales, service and support) that is able to read the market forces and decide the best partners to work with in a particular market for a particular product category and has the power to take the decision without having to go through a long process of approvals.  

What would make this trend even more interesting is if some of these organizations are able to seemlessly share information about common customers.

Imagine if you book an airline, a hotel and a rental car. You provide your information once to the airline and not have to bother about it at all, as the airline shares your information to the hotel and the rental car seemlessly, so that they know exactly who you are and what your preferences are and the loyalty programs are inter-connected to all these service providers and the right points are automatically credited to your account immediately and seemlessly.

Imagine if you go to a grocery store and pick items that you need and find that there are some items that are not available or the brands that you need are not available. You inform the same to the billing clerk and he adds them to your purchase and the items that are missing are delivered to you at your home same day or next day depending on when you place the order, courtesy of the network (the retailer has a connect with their supplier, who ships the item with a shipper like fedex and the package is delivered).

In such a future, it is not enough to partner on a need basis and only to sell something. It is crucial that the flow of information is seem-less through the network.

Organizations that are able to achieve this seem-less information sharing first and are able to execute on them will have a big first mover advantage. This kind of capabilities are very difficult to replicate, which in turn means that the entire network now has an enviable and sustainable competitive advantage.

Now, couple this with the diminishing importance of branding as Itamar & Emanuel argue in their HBR post and you now have the recipe for small, nimble players being able to compete and win against big monolithic organizations. There is one such network already functioning, in the highly competitive automotive manufacturing industry.

These are my thoughts. What do you think? How difficult is it for organizations to be able to create such a network and thereby competitive advantage? Do you agree that this could be a possibility in the next couple of years?

Please share your thoughts so that we can continue our discussion.

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PS: Some very interesting posts that I have read about this topic are here.