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Blue Ocean Strategy: How To Create Uncontested Market Space And Make The Competition Irrelevant
Blue Ocean Strategy: How To Create Uncontested Market Space And Make The Competition Irrelevant
by W. Chan Kim
Edition: Hardcover
Price: 14.00

93 of 104 people found the following review helpful
5.0 out of 5 stars Value Innovation - strategy book of the year 2005?, 10 Jan 2005
The authors have published many articles over the last decade on Value Innovation. This is their first book. It summarizes their extensive knowledge on out-of-the-box strategic thinking. I'm looking forward to reading it. This review is based on their article in Harvard Business Review, Oct 2004, on "Blue Ocean Strategy".
What is a BLUE OCEAN STRATEGY? The authors explain it by comparing it to a red ocean strategy (traditional strategic thinking):
1. DO NOT compete in existing market space. INSTEAD you should create uncontested market space.
2. DO NOT beat the competition. INSTEAD you should make the competition irrelevant.
3. DO NOT exploit existing demand. INSTEAD you should create and capture new demand.
4. DO NOT make the value/cost trade-off. INSTEAD you should break the value/cost trade-off.
5. DO NOT align the whole system of a company's activities with its strategic choice of differentiation or low cost. INSTEAD you should align the whole system of a company's activities in pursuit of both differentiation and low cost.
A red ocean strategy is based on traditional strategic thinking - e.g. Harvard's strategy guru Michael Porter - and is what the authors believe you should not do.
A blue ocean is created in the region where a company's actions favourably affect both its cost structure and it value proposition to buyers. Cost savings are made from eliminating and reducing the factors an industry competes on. Buyer value is lifted by raising and creating elements the industry has never offered. Over time, costs are reduced further as scale economies kick in, due to the high sales volumes that superior value generates.
Examples of key blue ocean creations include:
- Japanese fuel-efficient autos (mid-70s) and Chrysler minivan (1984)
- Apple personal computer (1978) and Dell's built-to-order computers (mid-1990s).
The INSEAD professors Kim and Mauborgne have written regularly on the subject of Value Innovation since 1997 in Harvard Business Review. Being a business development manager, their thought leadership on strategic innovation has inspired me tremendously over the years. Their articles have been standard texts for many MBA students for some time (e.g. "Value Innovation", "Creating New Market Space", "Charting your Company's Future"). I expect their first book to be just as dominant in any strategy library as Michael Porter's books (the guru behind the classic red ocean strategies).
The rating is based on their articles so far.
Peter Leerskov,
M.Sc. in International Business (Marketing & Management) and Graduate Diploma in E-business
Comment Comments (2) | Permalink | Most recent comment: Feb 26, 2010 9:41 AM GMT


The GE Work-Out: How to Implement GE's Revolutionary Method for Busting Bureaucracy & Attacking Organizational Proble: How to Implement GE's ... and Attacking Organizational Problems - Fast!
The GE Work-Out: How to Implement GE's Revolutionary Method for Busting Bureaucracy & Attacking Organizational Proble: How to Implement GE's ... and Attacking Organizational Problems - Fast!
by David Ulrich
Edition: Hardcover
Price: 20.99

1 of 1 people found the following review helpful
5.0 out of 5 stars Sound advice for delivering speed, simplicity, and solutions, 7 Jan 2005
'Work-Out' is the famous organizational process that General Electric, the greatest industrial firm in the world, used to bust bureaucracy - fast.
At its core, Work-Out is a simple, straightforward concept for cutting out bureaucracy and solving organizational problems - fast. Large groups of employees and managers - from different levels and functions of the organization - come together to address issues that they identify or that senior management has raised as concerns. In small teams, people challenge prevailing assumptions about "the way we've always done things" and come up with recommendations for dramatic improvements in organizational processes. The Work-Out teams present their recommendations to a senior manager in a "town meeting", where the manager engages the entire group in a dialogue about the recommendations and then makes yes-or-no decisions on the spot. Recommendations for changing the organization are assigned to "owners" who have volunteered to carry them out and follow through to get results. That's Work-Out in a nutshell.
Work-Out can be applied to almost any type of problem. It was first used at GE to harvest the low-hanging fruit of OVERGROWN BUREAUCRACY by getting unnecessary and unproductive work out of the organizational system - e.g. reduce meetings, reports, and approval levels. They asked what procedures didn't make sense? Where were they wasting time? What activities seemed to add little value? Some of the bureaucratic procedures were expense reimbursements, making travel arrangements, obtaining office supplies, updating personnel data, taking education courses, upgrading software, and more. But also in the core functions, bureaucracy was found: filling out forms for deals, preparing presentations for approval meetings, keeping track of customer data, obtaining approval for materials purchasing, overwhelming amounts of extra analysis to justify various investments or initiatives. Some of the results were e.g. that expense accounts did not need multiple approvals, people could purchase approved software without going through the IT department, and a pre-deal process was established to see if deals were worth pursuing before going through all the analytics.
Work-Out has been successfully adapted to any type of organization - public or private, commercial or non-profit, large or small. In all of these organizations, no matter what the issue, the process remains much the same.
1. Bring together the people from the organization who know the issues best
2. Challenge them to develop creative solutions
3. Decide on the solutions immediately in a public forum
4. Empower people to carry them out
Despite its massive impact on GE and other firms, Work-Out is not a snake oil or magic elixir. It is a simple set of concepts, tools, and experiences. When stripped to its essence, Work-Out allows people to get some obstacles out of the way so they can do their work better. In many firms, that alone would be a significant gain.
The real merit of this book is the practical approach. If you are - as I am - struggling with the challenges of continually keeping our organizations lean, then this book can help you. It contains many inspiring worksheets, action plans, tools, and hands-on case studies.
The authors of this book helped GE create Work-Out. So don't expect theoretical contributions. Only sound advice.
Co-author Dave Ulrich is one of my favourite HR experts. I can recommend many of his books, e.g. `Results-Based Leadership' and `Delivering Results'. To him, HR is about delivering business performance and organizational capabilities. Cause if you don't, you'll soon be out of business. The tricky part is balancing the soft and hard part of HR. Dave Ulrich has many good concepts to make that happen. This book is not a bad place to start, if you'd like to pick his brains...
Peter Leerskov,
M.Sc. in International Business (Marketing & Management) and Graduate Diploma in E-business


Managing with Dual Strategies: Mastering the Present - Preempting the Future
Managing with Dual Strategies: Mastering the Present - Preempting the Future
by Derek J. Abell
Edition: Hardcover

7 of 7 people found the following review helpful
5.0 out of 5 stars Dual planning modes: Today-for-Today and Today-for-Tomorrow, 20 Dec 2004
Derek Abell is an internationally recognized professor at the Swiss IMD business school. He has shown THOUGHT LEADERSHIP on strategy in books like Defining the Business (1980) and Strategic Market Planning (1979).
This book summarizes Abell's complete experience on strategic planning. And I promise you; he has a lot to offer!
This fall of 2004, a leading Danish business school still used this book as curricula for their MBA-level course on business development. I have many newer strategy books on my bookshelf, but I agree fully with their choice.
Abell's core idea is that TO SUSTAIN EXCELLENCE, COMPANIES NEED DUAL STRATEGIES - ONE FOR THE PRESENT AND ONE FOR THE FUTURE.
The distinction between a PRESENT ("today for today") and FUTURE ("today for tomorrow") orientation is not the usual short-term, long-term distinction - in which the short-term plan is simply a detailed operations and budgeting exercise made in the context of a hoped-for long-term market position. Present planning also requires strategy - a vision of how the firm has to operate now (given its competencies and target markets) and what the role of each key function will be. The long-term plan, by contrast, is built on a vision of the future - even more important, on a strategy for getting there.
Planning for today requires a clear, precise definition of the business - a delineation of target customer segments, customer functions, and the business approach to be taken; planning for tomorrow is concerned with how the business should be redefined for the future.
Planning for today focuses on shaping up the business to meet the needs of today's customers with excellence. It involves identifying factors that are critical to success and smothering them with attention; planning for tomorrow can entail reshaping the business to compete more effectively in the future.
Planning for today seeks to achieve compliance in the firm's functional activities with whatever definition of the business has been chosen; planning for tomorrow often involves bold moves away from existing ways of conducting the business.
Planning for today requires an organization that mirrors current business opportunities; planning for tomorrow may require reorganization for future challenges.
IN SHORT, PLANNING FOR TODAY IS ABOUT MANAGING CURRENT ACTIVITIES WITH EXCELLENCE; PLANNING FOR TOMORROW IS ABOUT MANAGING CHANGE.
I've read this book three times since it was published (okay, I may be somewhat slow). And each time, I add to my knowledge on working with strategy. Having worked very much with strategic management in practice over the last 15 years, I find it amazing that I cannot make more people read this book. But I won't give up. If you don't have time to read the full book, then consider reading Abell's article on the same subject in Sloan Management Review, spring 1999. However, the article doesn't include much on Abell's heavy toolbox presented in the book.
Peter Leerskov,
MSc in International Business (Marketing & Management) and Graduate Diploma in E-business


The First 90 Days: Critical Success Strategies for New Leaders at All Levels
The First 90 Days: Critical Success Strategies for New Leaders at All Levels
by Michael D Watkins
Edition: Hardcover

176 of 180 people found the following review helpful
5.0 out of 5 stars An antidote to sink or swim, 20 Dec 2004
This book is not just for managers at the executive level. It's also for you and me. It's for functional managers, project managers, and supervisors. The book targets new leaders at all levels that are making the transition from one rung of the ladder to the next.
If you have just been promoted to a new leadership position (or expect to be soon), then this book is for you.
The book outlines ten strategies that will shorten the time it takes you to reach what Watkins calls the breakeven point: the point at which your organization needs you as much as you need the job. Here they are ... the ten strategies:
1. PROMOTE YOUSELF. Make a mental break from your old job. Prepare to take charge in the new one. Don't assume that what has made you successful so far will continue to do so. The dangers of sticking with what you know, working hard at doing it, and failing miserably are very real.
2. ACCELERATE YOUR LEARNING. Climb the learning curve as fast as you can in your new organization. Understand markets, products, technologies, systems, and structures, as well as its culture and politics. It feels like drinking from a fire hose. So you have to be systematic and focused about deciding what you need to learn.
3. MATCH STRATEGY TO SITUATION. There are no universal rules for success in transitions. You need to diagnose the business situation accurately and clarify its challenges and opportunities. The author identifies four very different situations: launching a start-up, leading a turnaround, devising a realignment, and sustaining a high-performing unit. You need to know what your unique situation looks like before you develop your action plan.
4. SECURE EARLY WINS. Early victories build your credibility and create momentum. They create virtuous cycles that leverage organizational energy. In the first few weeks, you need to identify opportunities to build personal credibility. In the first 90 days, you need to identify ways to create value and improve business results.
5. NEGOTIATE SUCCESS. You need to figure out how to build a productive working relationship with your new boss and manage his or her expectations. No other relationship is more important. This means having a series of critical talks about the situation, expectations, style, resources, and your personal development. Crucially, it means developing and gaining consensus on your 90-day plan.
6. ACHIEVE ALIGNMENT. The higher you rise in an organization, the more you have to play the role of organizational architect. This means figuring out whether the organization's strategy is sound, bringing its structure into alignment with its strategy, and developing the systems and skills bases necessary to realize strategic intent.
7. BUILD YOUR TEAM. If you are inheriting a team, you will need to evaluate its members. Perhaps you need to restructure it to better meet demands of the situation. Your willingness to make tough early personnel calls and your capacity to select the right people for the right positions are among the most important drivers of success during your transition.
8. CREATE COALITIONS. Your success will depend on your ability to influence people outside your direct line of control. Supportive alliances, both internal and external, will be necessary to achieve your goals.
9. KEEP YOUR BALANCE. The risks of losing perspective, getting isolated, and making bad calls are ever present during transitions. The right advice-and-counsel network is an indispensable resource
10. EXPEDITE EVERYONE. Finally, you need to help everyone else - direct reports, bosses, and peers - accelerate their own transitions. The quicker you can get your new direct reports up to speed, the more you will help your own performance.
This book is not only relevant on the individual level. This transition process for new managers happens so often that it should be handled with more professionalism by (big) organizations. Whereas we as managers try to work actively with introduction programmes and training for new employees, then many managers must face their transition challenge alone. It shouldn't be like that. The "sink or swim" approach should be doomed.
Peter Leerskov,
MSc in International Business (Marketing & Management) and Graduate Diploma in E-business


The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market
The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market
by Michael Treacy
Edition: Paperback
Price: 9.99

14 of 14 people found the following review helpful
5.0 out of 5 stars A must-read for Customer Perspective in Balanced Scorecard, 26 Nov 2004
This book's concepts for strategic marketing management are so widely accepted that the popular Balanced Scorecard concept of Kaplan and Norton in 2001 decided to adopt the ideas for the "customer perspective".
The authors manage to take Michael Porter's two generic competitive strategies - Differentiation and Cost Leader - and elaborate on these to an extent never presented so elegantly before. In the process, they discover a third generic strategy - Customer Intimacy.
Thus, Treacy and Wiersema distinguish between focusing on the following value dimensions:
- Operational excellence (cost leadership / focus on supply chain management)
- Product leadership (innovation / focus on product lifecycle management)
- Customer Intimacy (service leadership /focus on customer relationship management)
These are the FOUR RULES that govern market leaders' actions:
Rule 1: Provide the best offering in the marketplace by excelling in a specific dimension of value
Rule 2: Maintain threshold standards on the other dimensions of value
Rule 3: Dominate your market by improving value year after year
Rule 4: Build a well-tuned operating model dedicated to delivering unmatched value
Expanding on the fourth rule - operating models - may the best long-term contribution of this book. The authors explain in detail and via case stories how the operating models differ for each of the three value propositions. In practice, I've learned that by explaining the operating models, many people can easier find themselves depicted than in the overall generic dimensions of cost, service or product leadership.
OPERATIONAL EXCELLENCE or Cost Leadership - Best total cost - operating model:
Key success factor: Formula!
Golden rule: Variety kills efficiency
Culture: Disciplined teamwork; Process focused; Conformance, "one size fits all" mindset
Organization: Centralized functions; high skills at the core of the organization
Core processes: Product delivery and basic service cycle; built on standard, no frills fixed assets
Management Systems: Command and control; Compensation fixed to cost and quality; transaction profitability tracking
Information Technology: Integrated, low-cost transaction systems; Mobile and remote technologies
PRODUCT LEADERSHIP - Best product - operating model:
Key success factor: Talent!
Golden rule: Cannibalize your success with breakthroughs
Culture: Concept, future driven; Experimentation, "out of the box" mindset; Attack, go for it, win
Organization: Ad-hoc, organic, and cellular; High skills abound in loose-knit structures
Core processes: Invention, Commercialisation; Market exploitation; Disjoint work procedures
Management Systems: Decisive, risk oriented; Reward individuals' innovation capacity; Product lifecycle profitability
Information Technology: Person-to-person communications systems; Technologies enabling cooperation and knowledge management
CUSTOMER INTIMACY - Best total solution - operating model:
Key success factor: Solution!
Golden rule: Solve the client's broader problem
Culture: Client and filed driven; Variation: "Have it your way" mindset
Organization: Entrepreneurial client teams; High skills in the field
Core processes: Client acquisition and development; Solution development; Flexible and responsive work procedures
Management Systems: Revenue and share-of-wallet driven; Rewards based in part on client feedback; Lifetime value of client
Information Technology: Customer databases linking internal and external information; Knowledge bases built around expertise
If you're interested in Customer Intimacy, you may want to add Wiersema's additional book on only this strategy to your shopping basket. I highly recommend both paperback books ... great value for money ;-)
Peter Leerskov,
MSc in International Business (Marketing & Management) and Graduate Diploma in E-business


Confronting Reality: Master the New Model for Success
Confronting Reality: Master the New Model for Success
by Larry Bossidy
Edition: Hardcover

12 of 12 people found the following review helpful
2.0 out of 5 stars Buy their bestseller EXECUTION instead, 26 Nov 2004
There are many good and new things in this book. Unfortunately, the good things aren't new, and the new things aren't good.
I have reviewed Charan and Bossidy's book on EXECUTION as well as Charan's book on PROFITABLE GROWTH. Both were great readings that asked us to confront reality in order to do what matters to get things right.
I've just read CONFRONTING REALITY. And I cannot help asking myself, why it was published at all? It doesn't add any new material compared to their marvellous bestseller; Execution. Instead this book spends most of its time telling case stories on the subject. I find too many of them too long and too boring. And the authors' focus on the vague concept of the business model is still a mystery to me. Why not build on strong concepts such as McKinsey's business system or Porter's value chain with proven track records. Please, confront reality!
My advice is that you buy Execution instead. It's much better. It has a clear concept, a stronger structure - and exactly the same highly important messages.
If you're a hardcore fan - like I am - of Charan and Bossidy's execution concept, you may just want to have this as an audio book for a long highway trip... that's how I managed to get through it.
Peter Leerskov,
MSc in International Business (Marketing & Management) and Graduate Diploma in E-business


Blown to Bits: How the New Economics of Information Transforms Strategy
Blown to Bits: How the New Economics of Information Transforms Strategy
by Philip Evans
Edition: Hardcover
Price: 16.09

4 of 4 people found the following review helpful
4.0 out of 5 stars A valuable e-business classic - but lacks an epilogue, 26 Nov 2004
This book is an important e-business classic. But despite the authors' clever recommendations, an epilogue is missing, as the Internet revolution they announced did not materialise. The Internet EVOLUTION, however, lives on.
Blown to Bits is about the consequences of the Internet for businesses.
The most important conclusion in the book is that the combination of increased bandwidth, global interconnected electronic network, faster computers and open standards are abolishing the requirements up to now of balancing information reach with information richness.
One example is the alternative media that a company can select when potential customers are targeted. Newspaper ads can reach a broad audience with a limited and static message. At the other end of the scale, a personal meeting with the customer gives the opportunity for deep, detailed and interactive information.
Businesses' supply chains include the same balancing act. When firms do business, the number of partners is inversely correlated to the richness in the information of the interchange.
The Internet removes this balancing act because you suddenly can reach many partners without compromising on the level of detail and complexity of the information (vast reach AND vast richness).
According to the authors, the consequence is that the value chain is blown to bits. They call it deconstruction, which happens when the things economy increasingly is separated from the information economy. "Information is the kit that binds the value chains and supply chains". But the kit is eroding. Information is no longer embedded in the physical units. The economy for physical things and the economy for information are fundamentally different. Unlike physical assets, information (an idea, illustration, checklist, article, etc.) can be reproduced costless infinitely. And where things are worn out, information remains their original form.
Blown to bits contains a wealth of well-described cases like newspapers, banks, car dealers, stock brokers, computer hardware and last not least Encyclopaedia Britannica. In addition, the book includes many interesting text boxes with questions the reader can use for further consideration.
In the bright light of hindsight!
Blown to bits was published in the roaring heydays of the dot-com wave ... and it shows. In 2001, two years after Blown to bits was published, the authors admitted their mistakes in an article for their employer, Boston Consulting Group. They summarised the evolution:
1) It is increasingly clear that the new economy is not displacing the old one. Instead the old is in the process of transforming itself from within.
2) The Internet is NOT proving to be a disruptive technology (i.e. characterised by eliminating the advantages for existing market players). Instead, incumbents are using it to challenge their own business models.
3) Information does not, in general, "want to be free"; instead, intellectual property rights are being extended.
This does not imply that the Internet won't change a lot. Nor can we all can return safely to the good old ways of doing business. Rather, it means that all incumbents have got a second chance to get e-business right.
This conclusion concurs with the view of strategy professor Michael Porter (quoted August 2001 in Business Week)
"We need to see the Internet as complementary to other things the company does rather than contradictory or cannibalistic. That was a really fundamental mistake that many people made. They assumed that this was a disruptive technology that existing companies could not embrace as efficiently as a new company coming in with a clean sheet of paper.
And Porter concludes: "The Internet as a family of technologies will have a very powerful effect on operational effectiveness. We'll see deeper integration among service, sales, logistics, manufacturing, and suppliers."
Peter Leerskov,
MSc in International Business (Marketing & Management) and Graduate Diploma in E-business


The Agenda: What Every Business Must Do to Dominate the Decade
The Agenda: What Every Business Must Do to Dominate the Decade
by Michael Hammer
Edition: Paperback

5.0 out of 5 stars The customer economy requires more than reenginering, 26 Nov 2004
Michael Hammer became a guru by coining the term reengineering and writing bestsellers on business processes. Reengineering was a revolutionary "big idea" that took businesses with storm in the early 1990s. A decade after his first publications, Hammer's book, "The Agenda", acknowledge that reengineering is no "silver bullet" ... it cannot stand alone. Modern management needs to use several business concepts simultaneously to thrive in the new customer economy, i.e. where supply exceeds demand (overcapacity), customers are sophisticated and informed buyers, and many products are becoming commoditised. With long-term trends like globalization and technology, there's no foreseeable end to the customer power that flows from it. So we better be prepared.
The nine building blocks of Hammer's "Agenda" address the ways in which firms are managed, organized, and operated:
1. MAKE YOURSELF EASY TO DO BUSINESS WITH (ETDBW). Take a long hard look at yourself ... from your customers' point of view...!, and then redesign how to work to save them time, money, and frustration.
2. ADD MORE VALUE FOR YOUR CUSTOMERS (MVA). To avoid the trap of commoditization, in which you fight for a minuscule margin against a horde of look-alike, you need to do more for your customers.
3. OBSESS ABOUT YOUR PROCESSES. Customers care only about results, and results come only from end-to-end processes. Manage them, improve them, appoint owners for them, and make everyone aware of them.
4. TURN CREATIVE WORK INTO PROCESS WORK. Innovation doesn't have to be chaotic. Bring the power of discipline and structure to sales, product development, and other creative work. Make success in these areas the result of design and management, not luck...
5. USE MEASUREMENT FOR IMPROVING, NOT ACCOUNTING. Most of your measurements are worthless; they tell you what has happened (sort of) but give you no clue as to what to do for the future. Create a model of your business that ties overall goals to things you control; measure the items that really make a difference; and embed measurement in a serious program of managed improvement.
6. LOOSEN UP YOUR ORGANIZATIONAL STRUCTURE. The days of the proudly independent manager running a sharply defined unit are over. Collaboration and teamwork are now as necessary in the executive suite as on the front lines. Teach your managers how to work together for the good of the enterprise rather than the stab each other in the back for narrow gain.
7. SELL THROUGH, NOT TO, YOUR DISTRIBUTION CHANNELS. Don't let your distribution channels blind you to your final customer, the one who pays everyone's salaries. Change distribution from a series of resellers into a community that works together to serve that final customer. Be ready to redefine the roles of everyone involved in order to achieve that end.
8. PUSH PAST YOUR BOUNDARIES IN PURSUIT OF EFFICIENCY. The last vestiges of overhead lurk, not deep in your company, but at its edges. Exploit the real power of the Internet to streamline the processes that connect you with customers and suppliers. Collaborate with everyone you can to drive out cost and overhead.
9. LOSE YOUR IDENTITY IN AN EXTENDED ENTERPRISE. Get past the idea of being a self-contained company that delivers a complete product. Get used to the notion that you can achieve something only when you virtually integrate with others. Focus on what you do best, get rid of the rest, and encourage others to do the same.
The first two agenda elements are concerned with customer management (ETDBW and MVA)- i.e. how to distinguish firms from look-alike rivals and how to create loyal customers. The third and fourth are about business processes - Hammer's old theme of reengineering. The fifth is about measurement systems and the sixth about the teamplayer role of the manager. The last three are about using modern technology such as the Internet to create value by linking firms with one another - instead of trying to optimize only within own your company's legal boundaries.
Hammer is concentrating on HOW not what. If you're focused on executing, then I think you'll like Hammer's agenda.
Peter Leerskov,
MSc in International Business (Marketing & Management) and Graduate Diploma in E-business


Marketing as Strategy: Understanding The CEO's Agenda for Driving Growth and Innovation
Marketing as Strategy: Understanding The CEO's Agenda for Driving Growth and Innovation
by Nirmalya Kumar
Edition: Hardcover
Price: 18.16

3 of 3 people found the following review helpful
5.0 out of 5 stars Marketing function: From the existing crisis to a new role, 18 Oct 2004
It is ironic that while still more firms increasingly talk about customer-focus and CRM, the marketing function is losing ground to other functions in the firm when it comes to driving broad organizational initiatives to create value for the customer.
One example is projects to obtain better handling of customer relations (CRM) that focus on coordinating everything that a firm does towards customers. The CRM philosophy in its nature transcends the traditional functional silos. As a minimum, it requires that sales, customer service, call centre, shipping, finance, and obviously marketing will have to cooperate to create the best total experience for the customer.
COMPANY-WIDE PERSPECTIVE
It demands a mindset that is strategic, company-wide and focused on the bottom-line. And it requires the participants' desire and capability to work with advanced IT systems. If marketing is to lead these extensive projects, it simply isn't enough to be a specialist in tactical issues, such as market research, creative ad campaigns, printed sales brochures, media plans, or web content management.
But the future for marketing is still bright, though. At least, this is the opinion of professor Kumar who now teaches at the London Business School - following eight years as marketing professor at the Swiss IMD MBA-school. His book is in reality a defence for marketing and targeted at the top management.
In the new future role, marketing leaders need to help the firm implement organizational change with a focus of creating value to the customer. This has always been the core theme of marketing. But to make a difference, marketing people need increasingly to:
> Focus less on own functional silo and more on broad and multi-disciplinary activities across the firm
> Focus less on short-term tactics and more on long-term, overall strategy
> Focus less on getting increasing marketing budgets and more on the firm's bottom-line
WHO-WHAT-HOW
The book manages to create a number of interesting ideas to increase the status of marketing. Central in Kumar's work is the 3V-model that covers the following terms: Valued Customer (who?), Value Proposition (what?), and Value Network (how?).
Kumar shows with a lot of illustrative graphics, interesting checklists, and well-described cases from the real world - e.g. EasyJet -, how his ideas can be converted into practice.
Instead of the 3V model's slightly academic terms, I recommend the three easy-to-understand questions: who, what, and how. That is "who to serve", "what to offer", and "how to produce and deliver".
Kumar urges us to move from superficial market segments to strategic segments, i.e. where the organization must design separate delivery systems (how?) in order to obtain success.
The marketing philosophy always starts externally at the customer (who?) and works backwards towards solutions (what?), and finally adapts the firm's delivery system (how?). But a strong trend during the last decade has been on the internal perspective on core competences, such as procurement or production. This method means that we start with own unique capabilities in the delivery system (how?), which then is translated into solutions (what?) and finally customers (who?). Radical innovation often is created this way, e.g. the "walkman". In practice of business development, we usually have to work in both directions. Marketing people will have to do the same.
By drawing your own "who-what-how" profile and do the same for your competitors, you'll often reach useful conclusions that are valuable for obtaining a real strategic differentiation. This could push to the strategic innovation with a company-wide perspective. This process could the marketing function lead.
QUALITY AWARD
I find Kumar's book readable, provocative and full of perspective. Marketing's grand old man, Philip Kotler, has written the preface and this serves a quality award, which it deserves. The two chapters on brand rationalisation and distribution channels, respectively, are both updated from the author's articles in Harvard Business Review, which again is a sign of quality.


Profitable Growth is Everyo
Profitable Growth is Everyo
by Ram Charan
Edition: Hardcover
Price: 18.75

15 of 15 people found the following review helpful
5.0 out of 5 stars Revenue growth must supplement a cost reduction agenda, 18 Oct 2004
Charan's credentials include co-authoring the bestseller "Execution". His writing is very much down-to-earth, no-nonsense, and straightforward. So when he says 10 tools for Monday morning, believe him! Here they are:
1. MAKE REVENUE GROWTH EVERYONE'S BUSINESS. Just like a cost reduction agenda may be a permanent theme in daily conversations and meetings in all departments, so should revenue growth be. And it's not just for the management, it's for all employees to think in this direction (just like we try with the cost reduction agenda).
2. HIT MANY SINGLES AND DOUBLES, NOT JUST HOME RUNS. While home runs provide the opportunity for a quantum leap, they are unpredictable and don't happen all the time. Singles and doubles, however, can happen every day of the year. This piece of advice may sound somewhat trivial. But for what it's worth, my experience from especially larger firms is that it may turn out to be the most important tool. Many big corporations tend to devote too much thinking into finding the big home run - and may give too little attention to the many small growth areas that short-term perhaps do not make an important contribution, but often keep the organization full of life and energy - and well-prepared for take-off...if the elusive home run should materialise.
3. SEEK GOOD GROWTH AND AVOID BAD GROWTH. Good growth not only increases revenues but improves profits, is sustainable over time, and does not use unacceptable levels of capital. It is also primarily organic (internally generated) and based on differentiated products and services that fill new or unmet needs, creating value for customers. Charan constantly challenges leaders that seek acquisitions as primary driver for revenue growth ... instead of organic growth.
4. DISPEL THE MYTHS THAT INHIBIT BOTH PEOPLE AND ORGANIZATIONS FROM GROWING. Confront excuses such as: "We are in a no-growth industry, and no one is growing"; "Customers are buying only on price"; or "The distributors are the ones in direct contact with retailers, and there's not much I can do."
5. TURN THE IDEA OF PRODUCTIVITY ON ITS HEAD BY INCREASING REVENUE PRODUCTIVITY. The old saw says, "We have to do more with less." The problem, though, is that the focus is usually on the "less" and the "more" rarely happens. Revenue productivity is a tool for getting that elusive "more" by actively and creatively searching for ideas for revenue growth without using a disproportionate amount of resources.
6. DEVELOP AND IMPLEMENT A GROWTH BUDGET. All companies have a budget. It is, however, astonishing how little detail about revenue and sources of revenue growth you can find there. Almost all of the lines in the budget are cost-related. Few, if any, identify resources explicitly earmarked for growth. The growth budget provides a foundation that will allow a company to increase revenues instead of just talking about it.
7. BEEF UP STRATEGIC MARKETING. One of the key missing links for generating revenue growth at most firms is strategic marketing. Most people visualize marketing as tactical tools such as advertising, promotion, and brand-building. Strategic marketing, on the other hand, takes place at a much earlier stage by identifying and precisely defining which customer segments to focus on. It analyzes how the end-user uses the product or service and what competitive advantage will be required to win the customer and at what price points. Charan is using the term "upstream marketing". But I find it a weird way of describing strategic marketing. So I changed it.
8. UNDERSTAND HOW TO DO EFFECTIVE CROSS-SELLING (or value/solutions selling). Cross-selling can be a significant source of revenue growth, but most companies approach it from exactly the wrong perspective. They start by saying, "What else can we sell to our existing customer base?" Instead of looking inside-out your organization, you need to look outside-in. Successful cross-selling starts by selecting a segment of customers and then working backward to define precisely the mix of products and services they need and creatively shaping a value proposition unique to them.
9. CREATE A SOCIAL ENGINE TO ACCELERATE REVENUE GROWTH. Every organization is a social system, the center of which is a way of thinking and acting that sets both day-to-day actions and the long-term agenda. When an organization has an explicit growth agenda understood by everyone, growth becomes a central focus--a social engine--during formal meetings as well as informal discussions. This tool is closely linked to tool no. 1.
10. OPERATIONALIZE INNOVATION BY CONVERTING IDEAS INTO REVENUE GROWTH. Innovation is not the private property of lone geniuses working apart from the mainstream of the business. In any company of reasonable size, innovation is a social process that requires collaboration and communication for idea generation, selecting those ideas for revenue growth that are to be funded, and shaping those ideas into product prototypes and launching them into the marketplace.
Those were the 10 tools. I find the conclusion to be that revenue growth must supplement a cost reduction agenda (though you may want to wait 6-9 months after the efficiency programme have been initiated before embarking on the growth theme). Too many firms focus narrowly on cost cuttings, but to survive long-term we need to have the growth engine to be running as well (singles and doubles are just fine!). Charan explains how to make it work in practice.
Peter Leerskov,
MSc in International Business (Marketing & Management) and Graduate Diploma in E-business


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