SELECTED TOPICS IN
BUSINESS MANAGEMENT
2015 TUM Asia Course CD 5180
Part 3
Slide 1
Charles
Chow
Part 1:
Business
Efficacy
Business is
like War:
Part 2
New Normal
Business:
Part 3
Business
Champions:
Part 4
LEADERSHIP
MANAGEMENT ADMINSTRATION
Blue Ocean Strategy
SWOT Analysis
implementation
grid
business
plan
framework
2015 TUM Asia
Course CD 5180
Part 2, Slide 2
Charles Chow
APPLIED TO A BUSINESS
TRIZ
value
innovation
Slower economic growth consumption = growth >>> externalize costs (cheaper outsourcing)
Lower returns 99 cents stores / Walmart expensive
Higher unemployment (“employability”)
Job enlargement / flexiwork >>> productivity?
Persistent inflation (energy, food, water)
http://www.youtube.com/watch?v=DmpguwqCESE Professor John Mathis, Thunderbird School of Global Management, published 26 March 2012,
about 59 minutes, Uncertainty & Volatility – The New Normal?
http://www.youtube.com/watch?v=UisuQ800ZwE SMU Adjunct Professor Joergen Oestroem Moeller, published 9 August 2012,
about 32 minutes, Euro, US and China Debt
“NEW NORMAL” ECONOMY (after Lehman’s collapse, by fund manager Mohamed El-Erian
in The Economist, 1 Oct 2009)
Part 3, Slide 3
Charles Chow
2015 TUM Asia
Course CD 5180
KNOW (action)
UNKNOWN
KNOWNS (knowledge deficit,
i.e. available but not acquired
or assimilated yet)
UNKNOWN
UNKNOWNS (void :
don’t know that you don’t know)
KNOWN
KNOWNS (knowledge already registered
& acknowledged)
KNOWN
UNKNOWNS (planning assumptions,
tolerated ignorance like
non-negotiable constraints)
KNOWN (item)
YES
YES
NO
NO
Knowledge Matrix
Part 3, Slide 4
Charles Chow
2015 TUM Asia
Course CD 5180
UNKNOWN
KNOWNS
• CONGESTED
• CONFUSED
• CONTAINED
KNOWN
UNKNOWNS
KNOWN
UNKNOWNS
UNKNOWN
UNKNOWNS
Know Don’t Know Not Sure
Always there,
waiting to be named
< to be discovered > e.g. gravity
NO NAME
TO THE
UNKNOWN
< void >
Part 3, Slide 5
Charles Chow
2015 TUM Asia
Course CD 5180
Level of Confidence (Margin/Degree of Error)
0% 30% 60% 90% 100%
50% PERHAPS
POSSIBLE
LIKELY
PROBABLE for military
“Possible” for accountants
POSITIVE
Part 3, Slide 6
Charles Chow
2015 TUM Asia
Course CD 5180
Red OCEAN Blue OCEAN
Industry
Focus on Rivalry
Focus on Alternatives
Strategy
Position within Group
Position in Industry
Time Adjust to trends
Reshape trends (redefine buyers)
Head-to-Head
Competition
“Growth
Strategies”
Part 3, Slide 7
Charles Chow
2015 TUM Asia
Course CD 5180
ESSENCE of Blue Ocean Strategy
Unexplored Non-customers
Non-customers who consciously choose against present market
soon-to-be customers
present market space
Customers in present market
create uncontested
new market space
New-Value CONNECT
(how?)
“VALUE INNOVATION”
POTENTIAL CUSTOMERS
“make competition irrelevant” : not in the same market space
Part 3, Slide 8
Charles Chow
2015 TUM Asia
Course CD 5180
• Reconstruct boundaries
• Exploit differences now
• Compelling buying tagline
• Fishbowl management
• Tipping point leadership
• Engage, Explain, Expect clarity
Blue Ocean Strategy
Part 3, Slide 9
Charles Chow
2015 TUM Asia
Course CD 5180
• Reconstruct boundaries Cirque du Soleil blending of opera and
ballet with circus format while eliminating
animals in performance.
• Exploit differences now “Curves” exclusive health club for women.
• Compelling buying tagline ACS (Independent) “International
Baccalaureate Diploma” vs GCE “A”
Levels or Polytechnic in Singapore
ESSENCE of Blue Ocean Strategy
Part 3, Slide 10
Charles Chow
2015 TUM Asia
Course CD 5180
ESSENCE of Blue Ocean Strategy
• Fishbowl management Fortnightly review of crime statistics by
heads at New York Police Department -
clear roles, responsibilities and rewards.
• Tipping Point Leadership Leverage on influential, respected
personality (“endorsement”/branding).
• 3Es: Engage, Explain, Expect clarity Singapore’s Integrated Resorts – not just
gambling but remaking of Singapore.
Part 3, Slide 11
Charles Chow
2015 TUM Asia
Course CD 5180
STRATEGY CANVAS OF QB HOUSE
Price Extra services
other than
haircut
Range of hair
treatments
Hygiene Waiting time
High Performance
“air wash”
LOW
HIGH
QB House
Average Japanese
Barbershop
Part 3, Slide 12
Charles Chow
2015 TUM Asia
Course CD 5180
UNKNOWN KNOWNS
(e.g. past customers)
KNOWN KNOWNS
(e.g. customers now)
KNOWN UNKNOWNS
(e.g. non-customers now)
UNKNOWN UNKNOWNS
(e.g. future customers )
insight foresight
unlock new
demand
make competitor irrelevant
(VALUE INNOVATION?)
not better, but different
BASIS FOR BLUE OCEAN STRATEGY
Part 3, Slide 13
Charles Chow
2015 TUM Asia
Course CD 5180
CRITICISMS on Blue Ocean Strategy
1. Methodology is “descriptive” rather than “prescriptive”.
2. No control group. Examples selected to “tell a winning story”.
3. Success in the marketing of value innovation taken as given.
4. “Eliminate-Reduce-Raise-Create” Grid similar to TRIZ principles
5. Product innovation not differentiated from different product.
BOS published in 41 languages, sold over two million copies.
Best Business Book of 2005 Prize at Frankfurt Book Fair.
Since 2007, an INSEAD Blue Ocean Institute in Fontainbleau, France.
INSEAD founded in 1957, three months after the signing of Treaty of
Rome. Mission: To develop the next generation of trans-cultural leaders.
W. Chan Kim Renee Mauborgne
Part 3, Slide 14
Charles Chow
2015 TUM Asia
Course CD 5180
TRIZ TRIZ = teorija rezhenija izobretatelskih zadach (Russian)
= “The theory of solving inventor’s problems”
= “The theory of inventor’s problem-solving”
Genrich S. Altshuller (born 1926) = Father of TRIZ
The secret of inventiveness
is not inside the minds
but
in the logic of inventions
themselves.
Part 3, Slide 15
Charles Chow
2015 TUM Asia
Course CD 5180
LEVEL DEGREE OF INVENTIVENESS
PERCENTAGE OF SOLUTIONS
SOURCE OF KNOWLEDGE
I Apparent Solution
32% Personal knowledge
II Minor Improvement
45% Knowledge within company
III Major Improvement
18% Knowledge within industry
IV New Concept 4% Knowledge outside industry
V Discovery 1% All that is knowable
63%
Inventiveness has five levels:
Part 3, Slide 16
Charles Chow
2015 TUM Asia
Course CD 5180
VALUE INNOVATION
increase
decrease
eliminate create
LOCAL QUALITY
SEGMENTATION
EXTRACTION MERGING
NESTING (matrushkas) REPLACEMENT
TRANSFORMATION CURVATURE INCREASE
DIMENSION CHANGE
SELF SERVICE
VALUE
INTERMEDIARY DISPOSABLES
Part 3, Slide 17
Charles Chow
2015 TUM Asia
Course CD 5180
increase VALUE
LOCAL QUALITY
DIMENSION CHANGE
SELF SERVICE
horizontal
vert
ical
• holograms as 3-D pictures • IMAX in 3-dimensional movies • job enlargement
• kids area inside a restaurant • pencil with eraser • niche competence
• self-repair : contingency back-up • self-sustaining : cybernetics • self-renewal : life-long learning
Part 3, Slide 18
Charles Chow
2015 TUM Asia
Course CD 5180
eliminate VALUE
EXTRACTION
REPLACEMENT
TRANSFORMATION
• biodegradable screws in surgery • retrain instead of retrench • rebranding
• plastic instead of metal parts • routine low-risk functions • outsourcing
• remove wastage • delete redundancies • pruning : downsizing
Part 3, Slide 19
Charles Chow
2015 TUM Asia
Course CD 5180
decrease VALUE
SEGMENTATION
INTERMEDIARY
DISPOSABLES
• contain • isolate • tertiary specialization
• jigs to assist assembly • neutral party to negotiate • broker ~ trader
• protective clothing • showrooms/models • redundancy in team
Part 3, Slide 20
Charles Chow
2015 TUM Asia
Course CD 5180
create VALUE
MERGING
NESTING (matrushkas)
CURVATURE INCREASE
+ = • sofabed • walking stick and umbrella • synergy
• Fuller’s geodesic domes: no beams • rounding budget – buffer • rotate leadership (Flying Geese)
• double hull • Microsoft folders • Core Group : Command Centre
Part 3, Slide 21
Charles Chow
2015 TUM Asia
Course CD 5180
INCREASE
DECREASE
CREATE ELIMINATE
PRESERVE
same area, different shape (square to round)
same shape, different components (plastic instead of metal)
same component, different state (water and ice)
INHERENT
LIMITATION
A dog can be trained to
run faster, jump higher,
smell better, but a dog
can never talk
or laugh.
PRACTICAL
LIMITATION
Man can calculate time
taken to arrive at planet
Jupiter, but cannot
determine actual
arrival.
Part 3, Slide 22
Charles Chow
2015 TUM Asia
Course CD 5180
freeze GAS VAPOUR
SOLID ICE
WATER
(packaging, branding) LIQUID LIQUID
melt
<Evian, Perrier>
Part 3, Slide 23
Charles Chow
2015 TUM Asia
Course CD 5180
same
shape,
different
components
Attitude
Limitation
Action in
Inaction
same
area,
different shape
same
components,
different states
Part 3, Slide 24
Charles Chow
2015 TUM Asia
Course CD 5180
RESOURCES
Ripe – fully matured
(sufficient)
Ready – available appropriately
(sustainable)
OPPORTUNITY < “TRIGGER” >
o adversity
o award
RESOURCEFULNESS
Realistic – actual and substantial
(scalable)
Relevant – impactful and necessary
(significant)
“bounce back”
o recoil
o repel
Part 3, Slide 25
Charles Chow
2015 TUM Asia
Course CD 5180
ripe, not ready : drug retail
ready, not ripe : food franchise
relevant, not realistic :
car, no carpark
realistic, not relevant :
colour spectrum
Part 3, Slide 26
Charles Chow
2015 TUM Asia
Course CD 5180
TRIZ : Nine Windows :
Problem Space
PAST PRESENT FUTURE
SUB-
SYSTEM (components)
1 2 3
SYSTEM
4 5
(here & now) 6
SUPER-
SYSTEM (environment)
7 8 9
Part 3, Slide 27
Charles Chow
2015 TUM Asia
Course CD 5180
Problem Space : “Fire in a Home”
PAST (before a fire)
PRESENT (during a fire)
FUTURE (after a fire)
SUB-SYSTEM
(components)
Smokers in the house Frayed electrical cables
Exit barriers
Young children Infirm occupants
Death to pets and occupants
Injury to occupants
Loss of property
SYSTEM
(house)
Proximity of Combustibles Fire extinguishers
Fire now!
Water & fire damages
Removal of damages. Infrastructure replacements
SUPER-SYSTEM
(environment)
Near chemical factory Proximity to gas or oil ducts
Ventilation Cordoning area
Safety assessments Infrastructure destruction
Part 3, Slide 28
Charles Chow
2015 TUM Asia
Course CD 5180
Solution Space : “Fire in a Home”
PAST (preventive measures)
PRESENT (fire fighting)
FUTURE (resolve outcome)
SUB-SYSTEM
(components)
Frequent fire drills Check smoke alarms and evacuation routes
Use fire blankets & extinguishers
Hospital treatment for those affected
SYSTEM
(house)
Proximity of Combustibles Fire extinguishers
Fire in the home
Relocation while claims are sorted out
SUPER-SYSTEM
(environment)
Insurance contract
Inform fire brigade and neighbours
Submit insurance claims
Part 3, Slide 29
Charles Chow
2015 TUM Asia
Course CD 5180
COMPETITIVE
INTELLIGENCE
CHECKS &
CONTROLS
cybernetics = science of communication and control
Management Cybernetics (closed loop)
Part 3, Slide 30
Charles Chow
2015 TUM Asia
Course CD 5180
SWOT Analysis
Strengths
Weaknesses
Opportunities Threats
GROW TURN-
AROUND
DIVERSIFY DIVEST
EXTERNAL
INTERNAL
Part 3, Slide 31
Charles Chow
2015 TUM Asia
Course CD 5180
LIMITATIONs of SWOT
SWOT cannot show how to achieve competitive advantage
> e.g. how first-mover advantage can be a competitive strategy
Static assessment > able to identify actors but not the plot
Strengths may not lead to an advantage > e.g. recruit a pianist to join a gang of thugs; designer for low-cost product
Too narrow focus on the external environment > boundaries are not static, in business no long-term enemies
Overemphasis on single dimension > e.g. DELL on no-middlemen, focus on cost-cutting
Part 3, Slide 32
Charles Chow
2015 TUM Asia
Course CD 5180
SWOT Analysis
Strengths Weaknesses
Opportunities
Threats
GROW (“spread out”)
DIVERSIFY
TURN-
AROUND
DIVEST (“get out”)
scalable *
significant *
sustainable *
relatedness #
return rate #
resolve #
> people
> products
> processes
more of the same :
PRODUCTIVITY
more with less:
INNOVATION
more differently:
CREATIVITY
Part 3, Slide 33
Charles Chow
2015 TUM Asia
Course CD 5180
SALES/
PROFIT
TIME PRODUCT LIFE-CYCLE
Introduction
Growth
Mature
Decline
FASHIONABLE FAMOUS FAMILIAR FATIQUE
(OUTPUT)
Part 3, Slide 34
Charles Chow
2015 TUM Asia
Course CD 5180
Extended Product Life Cycle
O
U
T
P
U
T
re-invent
renew
review Hold-on?
Phase-out?
“obsolete”
(irrelevant)
TIME
Part 3, Slide 35
Charles Chow
2015 TUM Asia
Course CD 5180
LEATHER
FOOTWEAR
Leather belts,
handbags,
gloves, hats,
clothing, etc
Design
Service
Textile Fashion
Cluster Hiking
Boots
Ski
Boots
Synthetic
Footwear
Athletic
Footwear
Processed
Leather
Footwear
Machinery
Tanning
Equipment
Tanneries
Leather
Processing
Machineries
Plastic
Equipment
Footwear
CAD Injection
Molding
Molds
Models Ad
apte
d f
rom
Mic
hae
l E. P
ort
er:
“Clu
ste
rs a
nd
Co
mp
eti
tio
n,
New
Age
nd
as f
or
Co
mp
anie
s, G
ove
rnm
ents
an
d In
stit
uti
on
s”,
In: M
ich
ael E
. Po
rter
: “O
n C
om
pet
itio
n”,
Har
vard
Bu
sin
ess
Rev
iew
Bo
ok:
Bo
sto
n, M
A, 1
99
8, F
ig 7
-1, p
.20
0
ITALIAN FOOTWEAR & FASHION CLUSTER
Specialized
Machine Tools
Woodworking
Equipment
Part 3, Slide 36
Charles Chow
2015 TUM Asia
Course CD 5180
Forward/Backward
Growing of beans (organic)
Roasting
Packaging
Retail
Starbucks
Coffee
Franchising
Delivery Service
Hotels / Airlines
Mail Order
Transport
Storage
B
A
C
K
W
A
R
D
F
O
R
W
A
R
D
Part 3, Slide 37
Charles Chow
2015 TUM Asia
Course CD 5180
Advertising
Coffee
Spa
Process
Grow
Logistics: Store/Pack/Distribute
HORIZONTAL
Events/Sponsorships
FOREWARD
BACKWARD
VERTICAL
Coffee
Retail Coffee
Fertilizer (organic/
non-organic)
Coffee
Quality
Certification [“cupping”]
Coffee
in food
(crab)
Coffee
Confectionery
Mail Order
Part 3, Slide 38
Charles Chow
2015 TUM Asia
Course CD 5180
Vertical
Horizontal
Same business:
• increase market coverage
• decreases competition
• economies of scale
Downstream/Upstream activities (partial or full):
• access to valuable assets
• decrease transaction and coordination costs
• economies of scope
Tannery, Stadium, Training
Football, Helmets, Attire, Shoes
FOOTBALL
TEAM
Part 3, Slide 39
Charles Chow
2015 TUM Asia
Course CD 5180
Ansoff Matrix Igor Ansoff (1918-2002), “father of strategic management”.
Born in Russia, naturalized American, trained mathematician,
pioneered the product-market growth matrix:
Market
Penetration
Product
Development
present PRODUCTS new
present
MARKETS
new
Market
Development
Diversification
Sources: First published by Ansoff as “Strategies for Diversification”
in Harvard Business Review (1957); See also H. Igor Ansoff: Critical
Evaluations in Business and Management, edited by John Wood
and Michael C. Wood, London: Routledge (2007), Volume 1,
Chapter 4 (“A Model for Diversification”)
Part 3, Slide 40
Charles Chow
2015 TUM Asia
Course CD 5180
Existing Market, Existing Product (EE)
Market
Penetration
<increase outlets to capture traffic>
Existing Market, New Product (EN)
Product
Development
<shampoo + conditioner + “intensive repair”> [? repair 3 months of damage in just 3 minutes ?]
{Hair Spa : silky straight, full-body, bouncy}
New Market, Existing Product (NE)
Market
Development
<oily, dry, normal scalp> [“anti-dandruff”, “cooling itch control”]
New Market, New Product (NN)
Diversification
<“hair fall control”, “hair fall rescue”> [hair dye while shampoo]
Part 3, Slide 41
Charles Chow
2015 TUM Asia
Course CD 5180
Slow Down
PAUSE
REFLECT
less haste,
more speed
repetitive or
unique
Rowing Boat:
Coordination vital;
Extra power can actually
slow down boat.
hansei (relentless reflection)
Adapted from Jeffrey K. Liker: The Toyota Way, 14 Management Principles
from the World’s Greatest Manufacturer, McGraw-Hill: New York, 2004
Part 3, Slide 42
Charles Chow
2015 TUM Asia
Course CD 5180
CHOW’S IMPLEMENTATION GIRD
EMPOWER Need for Strategy
IMPORTANT
URGENT
No Yes
No
Yes
URGENT = Time-sensitive issues that need decision-making.
IMPORTANT = Influences that are significant to desired results.
Adapted from Stephen Covey, The 7 Habits of Highly Effective People,
(Fireside, New York, 1990), The Time Management Matrix, p. 151.
LEADERSHIP
Need for Clarity
Need for Culture
NETWORKING
Need for Structure
DELEGATE
Part 3, Slide 43
Charles Chow
2015 TUM Asia
Course CD 5180
Part 2:
Business
is like War
MODELS
SUMMARY
Part 3:
New Normal
Business
• Knowledge Matrix
• TRIZ Value Innovation
• TRIZ Nine Windows
• SWOT Analysis
• Ansoff Matrix
• Implementation Grid
• “New Normal”
• Blue Ocean Strategy
• Forward/Backward – Vertical/ Horizontal Integration
CONCEPTS
Part 3, Slide 44
Charles Chow
20145 TUM Asia
Course CD 5180