Working on the Margin to Improve Performance

May 2, 2023Copyrighted in its entirety, Innovative Learning Solutions,

Your strategy is probably fixed at this point

Shift your focus toward adjusting your tactics toimprove your performance

Things to Think About

1. Licensing technology2. Management of strategy3. Using the tools of management4. Improving resource productivity5. Borrowing money to improve opportunities6. Watching the balanced scorecard

Consider Licensing Technology From or To a Competitor

• New in brand design area• Multiply resources

– Sell technologies for 50% or more of what you paid– Buy technologies for 50% or less of the cost to develop them yourself

• Develop markets more quickly by being able to offer more satisfying features than you can afford

Invest in lead-free

casing

Licensing R&D

Design in new brand

Receive income

License R&D from

Team A

Receive casing/pay fee

TEAM A

TEAM B

Q4 Q5 Q6

Invest in lead-free

casing

Cross-Licensing R&D

Design in new brand

Receive battery/pa

y

Design in new brand

Receive casing/Pay Fee

TEAM A

TEAM BInvest in

new battery

License to B

License to A

Q4 Q5 Q6

Licensing Requires a DifferentKind of Competitive Thinking

• Negotiate to find a mutually beneficial opportunity• Compete or cooperate - strategic alliances with competitors• Game theory and prisoner’s dilemma

(if I do this and they do that, then …….?)

Management of Strategy

Discover the causes of performance shortfalls

Adapt to new opportunities and problems

Manage the future (take the initiative and expend resources

that will shape events and opportunities of the future)

Use the Tools of Managementto Discover SWOT

• Market feedback • Competitor analysis

• Employee productivity data• Manufacturing reports

• Accounting reports (financial statements)• Industry financial benchmarks (industry financial ratios)

• Profitability analysis

Competitor Benchmarks

Brand and ad designsPrices and sale priorities

Channel strategySales staffing

Ad placementsSearch engine marketing

Demand by brand by segment

Goals of Competitive Benchmarking

• Reverse engineer the strategy of each competitor• Determine who is a threat and who is not• Determine the strengths and weaknesses of the competition• Emulate good decisions• Predict the direction of your competitors’ moves • Adjust your strategy and tactics in reaction to your

competitors’ strengths and weaknesses and in anticipation of future moves

Improve Resource Productivity

• What is the elasticity or market response function of each decision?

• Where should the next 500,000 be spent?– More advertising– More sales people– Lower prices– More R&D– More sales outlets– More capacity– Better compensation

Improve Resource Productivity• How can we get more out of our current investments?

• Is it better to: – Move sales people in between sales outlets– Move sales people between market segments – Reallocate advertising– Introduce another brand to a target segment– Increase or decrease your price by 100– Increase price on one brand while decreasing it on another

Keep an Eye on the Balanced Scorecard

• Businesses use it to guide decision-making in order to insure that all important areas are managed effectively

• Think and manage multi-dimensionally

• Drill down to find sources of weaknesses and strengths

• Your business acumen will be judged by your cumulative performance of the last 4 quarters

Balanced Scorecard