enterpreneaural strategies-peter drucker

Enterpreneaural strategies- Peter F. Drucker

enterpreneaural strategies 1- Being ’ Fustest with the Mostest’ 2- ’Hitting them where they Ain’t’ 3- Finding and Occupying a specialized ’

ecological niche’ 4- changing the economic characteristics of a

product, a market, or an industry.

Drucker’s legacy Not mutually exclusive Not always sharply differentiated Each has pre-requisites Each require specific bnehavior Each has its own limitations Each carries risk

1- Being ’ Fustest with the Mostest’ strategy The enerpreneaur aims at

leadership Does not aim at creating a big

business: This strategy is unforgiving- head or

tail Highly rewarding Examples:

Example:1-Hoffman- the world’s largest and most profitable pharmacutical at switzerland. Aquisition of vitamins patents despite scietists doubts for its success2-Du-pont’s creation of Plastic Industry3-3M4- Johanson & Johanson’s Pruducts at Mother care-II Swords clifton.

Example:5- LUMS, IBA6- AGUH,

Pre-Requisites

Requires thuoght and careful analysis

Requires an Ambitious aim

Extreme concentration of effort-one clear cut goal

Retain a Leadership position

Continue. Reasech budget must be higher after the

innovation Find new users Make the product obsolete before a

competetor can do it-----Intel Inside Systematically Cut the price of his own

prduct- e.g. Intel, e.g. Invention of dynamite and the dynamite cartel---decrease in prices day by day---increase in demand----stoping the competetors to enter.

Drawbacks of this strategy 0.5 prbability of success, a head or tail There is only success or failure It fits only in small minority of innovations,

only useful for major innovations

Crux-when rest of the world believe that the product wont be successful and one still stick to its production and marketing with a hope that it would get reward.

2: Hit them where they Ain’t It consists of two strategies:

Creative Imitation & Entrepreneurial Judo

i) Creative Imitation: to make improvement & have leadership position in the product and innovation already done by some one else.

Continue.. The creative innovator exploits the

success of others, it does not invent a product or service but only perfects and positions it.

Looks at the product from the view point of the customer.

Creative imitation is not innovation it is proper positioning of the product in the market.

Continue.. E.g. IBM

Building a high-speed calculating machine for astronomical calculation in early thirties

Few years later designed a computer for same purpose at Harvard.

After world war-II, a real computer with memory and programming

Before going public, IBM adopted the design of ENIAC- with multipurpose business applications

Crux- The creative imitation strategy

waits until somebody else has established the new, but only ‘approximately’. And within a short time it satisfy the customers wants and takes the leadership position.

ZAR-Aamad Scheme by HBL in early nineties.

Continue… IBM as creative imitator with Personal

Computer, which was basically the idea of ‘ Apple’s ’ but ‘the Apple’ failed to understand its success although their innovation was successful.

The idea of digital watch by “the Swiss” but taken over by “Seiko-Japan” by adopting semi-conductors– a perfect example of creative imitation.

Pre-requisites: It starts with the markets rather than

the products and with customers rather than with producers.

It requires a rapidly growing market- P.C

It satisfies the demand already created rather than creating new demand.

Risks Involved in creative Imitation: The risk of misreading the trend of

the market. ‘Risk vs Reward’ could be on

adverse side. The Risk of being too clever:

Brief Comparison

Being Fustest with the Mostests and Creative Imitation

Ecological Niche strategy

Aims at industry leadership It aims at controlling rather than leadership

Focuses at large industry/market

Focus at monopoly in a small area

These are Competitive strategies

Irrespective of competition

Adopters become big/visible names

The adopters remain anonymous

3- Ecological Niches There are three Ecological Niche

Strategies:

i) the TOLL-GATE Strategyii) the SPECIALITY SKILL Strategyiii) the SPECIALITY MARKET Strategy

i) The TOLL-GATE Strategy

A company is said to have a toll-gate position producing small products being used in the production process of large/core products. Its used for small markets where competition is irrelevant.

Examples: Siddique Sons Tin plate Ltd.-

Windhur Baluchistan: Making cans and containers for packaging of

cooking oil, fruits, foods, vegetables, sea foods, beverages, lubricant oil and other edible stuff etc.

Their products are also used in quality packaging of tea, cookies, sweets, dates, gift boxes, paints, aerosol cans, juices, beverages, dairy products, food cans, fuel & air filters and many more.

Major Clients…. Coca Cola Lipton H.o.M Nestle Sultan cooking Oil ICI Dulux Many more…

e.g.02 Development of “enzyme” by

Alcon Co. for elimination of one feature of the standard surgical operation for senile cataracts.

Requirements for toll-gate The product has to be essential to a

process. The risk of not using it- the risk of

using an eye in case of Alcon Co.’s Enzyme, must be greater than the cost of the product.

The market be limited, small and allowing no room for the competitors.

Risks and Limitations of toll-gate. Growth is less after the niche has been

occupied. The demand is dependent upon the

demand of the process or product to which the toll-gate product furnishes an ingredient.

It can obsolete in case an alternative emerges helping to satisfy the same end use.

ii) the SPECIALITY SKILL Strategy

Strategy is used for controlling position rather than leadership by Manufacturers of car parts for Suzuki, Indus, Nissan, Honda etc.

E.g’s.

Seat Belts Seat Covers Door Rubbers Monograms/logos Ready heater Denso Air Conditioner, Delco-self starter, Bosh-electric

system etc.

Requirements To attain a specialty niche requires

something new, a new market, a new industry or a new major trend

It requires a skill that is unique and different

Skill improvement-an ongoing activity

Limitations No right-no left……just one

direction. Dependency on some one else. Specialty to cease being a

specialty.

iii) the SPECIALITY MARKET Strategy

This strategy is based on specialized knowledge of a market whereas the previous strategy was based on a product or service.

E.g. Travelers cheques Having same requirements and

same risks involved as with the specialty skill strategy.

4- Changing Values and Characteristics The strategy aims at innovation itself. The purpose is to “create a customer”

which is the common element in these strategies, which are given as:

i) By creating utility;

ii) By pricing

Continue…

iii) By adaptation to the customer’s social and economic reality;

iv) By delivering what represents true value to the customers.

i) Creating Customer Utility;

Comparison of old PAKISTAN POST Office-DAAK KHANA System with the services of TCS, OCS, Leopards etc.

Why do we prefer private courier companies now?

Is price matter in lieu of quality based reliable speedy service?

Continue.. Private courier companies created

utility, they addressed the customer need for a postal service in professional way.

No technology involved, just focus on cutomer need desired

ii) Pricing

Comparison of straight edge razor “Ustra” at a local Barber Shop with Gillette Blue-II Razor

Comparison of Carbon Paper with Photo Copier Machine

The contribution of pricing in these product’s success.

Continue.. Value to customers vs cost to

suppliers.

iii) By adaptation to the customer’s social and economic reality;

Steam turbines vs piston driven steam engines, the former are complex, requires a high degree of engineering in their design and skill for installation.

Think of installing a Molding Machine out side Karachi and consider the replacement of “Die” for each Plastic Item you are going to produce of this machine?

iv) By delivering what represents true value to the customers.

Think one step ahead of the “strategy of accepting the customer’s reality”.

Think again from customer’s point of view, whether you need a product or you need a solution to your problem.