Growth Strategies - Beat The Unbeatable

Growth Strategies Beat the Unbeatable
There, there it is againthe invisible hand of the marketplace giving us the finger.
1.562.860.8637 info@cpsphere.com www.cpSphere.com
ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS
cpSphere
Delivering Next Generation of Solutions
17215 Studebaker Rd. Suite 390 Cerritos, CA 90703 1.562.860.8637 1.562.860.8611 growth@cpSphere.com ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS www.cpSphere.com
Business is somewhat like Driving

Open Roads, Fast Traffic
does it matter if you are driving a new fast or an old modest car?
Just like driving, best business strategy is to be in an industry that is growing fast
Unfortunately most of us drive with the traffic

Congested Roads, Slow Traffic
does it matter if you are driving a new fast or an old modest car
Just like congested roads, we are in slow growing industries with many competitors.
In congested roads, how will you reach your destination quickly?

Be an aggressive driver and maneuver through the traffic Drive in the car pool Drive on the shoulder Drive in an ambulance or a police car Use a different route
OR
Use helicopter For our businesses we also need an helicopter strategy that make our competition irrelevant.
The best business strategy is to be in a fast growing industry!

Just like driving against the traffic.
Unfortunately, most of us are driving our business with the traffic. To beat the traffic and grow our businesses we need a Helicopter Strategy
What is your understanding of the growth strategy?

We believe Growth Strategies is about:
Increase Sales or Revenue Capture Market share Beat the competition Exploit the existing demand
Find the new Pot of Gold!

Size of the market pie is fixed

We have to snatch competitors share to increase our market?
How to capture the market share?
or
Low Price Differentiation
Low Cost Strategy
There could be only one price leader !
Low Cost Strategy

You might be able to capture the market share but it will erode your profit margins
Only way to make money with the Low Cost Strategy is by doing volume!
Differentiation Strategy
Differentiation means higher cost!
and/or
Customers Products
Differentiation Strategy Customer

Original Market By Region By Ethnicity By Gender By Age Etc. etc.
My The Spanish Region World Female 20 - 35 California Speaking MARKET
Higher the segmentation, smaller the market size

Differentiation Strategy Product

Quality Features Technology In todays world, there is no way to stop imitators.
Does your product innovation create buyer value?
Both Low Cost and Differentiation Strategies have their pro and cons but they dont completely fit the bill of the growth strategy because they are about war.
The real purpose of any growth strategy should be to create an uncontested market place and growth opportunities.
Where each strategy fits . . .

Low Price OR Differentiation Strategy
Low Price Strategy
Differentiation AND Low Price Strategy

Introduction
Growth
Maturity
Decline
Product Life Cycle

We Believe:
Any business with less than 1%of the market share is in Introduction state of life-cycle.
The best growth strategy for such businesses is Differentiation & Low cost
Pursuing Differentiation & Low Cost Strategy

Cost
Reduce Cost
Production Material Marketing Layoffs, etc.
Differentiate by

Product Features
Introducing new Product Features Customer Service, etc.
Product Innovation is offsetting Cost Reduction

Do you really know where to cut cost and where to improve buyer value?
Differentiation & Low Cost Strategy is about Value Innovation

Cost
Strategically reduce cost that results in more value for customers
Buyer Value
This is the corner stone of Helicopter Strategy
How ?
Conduct a detailed marketing research, highlighting Industry Conditions Competitive Situations Benchmark your operations Identify New Market Segments Define Detailed Budgets
Focus on the big picture, Not Numbers. . .

Strategy Canvas A Diagnostic and Communication Tool

How much industry invests in
High
Industry
Medium
Strategy Canvas is a structured way to define your Value Proposition

Price Factor 1 Factor 2 Factor 3 Factor 4 Factor 5
Low
Factors the industry competes on

Strategy Canvas Grocery Stores

High Low Medium
Industry
Price National Choice of Brands Package Size Store Space Friendly Staff Sales & Coupons Advertisement Proximity of Stores

Strategy Canvas What it Shows Company Caught In Fierce Competition

High Medium
Value curve converges with competitor. Companys strategy is to outdo the competitors
Price National Choice of Brands Package Size Store Space Friendly Staff Sales & Coupons
Low
Industry
You
Advertisement Proximity of Stores

Strategy Canvas What it Shows Over Delivering Without Payback

High Medium
You
Delivering high level across all factors. Do you have highest market share? If not, profitability will be extremely low
Price National Choice of Brands Package Size Store Space Friendly Staff Sales & Coupons Low
Industry
Advertisement
Proximity of Stores

Strategy Canvas What it Shows Incoherent Strategy

High Medium
There is no strategy, things are done on ad-hoc basis which individually make sense and keep everyone busy, but do not help company to standout against competitors
Low
Industry
You

Strategy Canvas What it Shows Strategic Contradiction

High Medium
Company is asking high price and offer bigger area, but offer few national brands, and low package sizes
Low
Industry
You

How the Strategy Canvas Looks for a Company that is pursuing Differentiation and Low Cost Strategy ?
Strategy Canvas Traders Joe

Low
Medium
High
Industry Trader Joes

Price National Choice of Brands Package Size Store Space Sales & Coupons Advertisement Fun/ Adventure
Proximity of Stores
Exclusive Int. Food
Friendly Staff

Trader Joes Strategy Canvas

Focus
Friendly Staff Exclusive International Food Fun place to shop
Divergence
Value Curve diverge from industry Standards
Compelling Tag Line

Fun Place to get Exotic Food!
This curve clearly shows where to cut cost that will deliver higher value for customers
We know how to create Strategy Canvas.

But
How to define a New Value Curve?
Four Action Framework Answer Four Simple Questions
1 2 3 4
Identify factors that you can eliminate Identify factors that you can reduce, well below the industry standard
Strategically Reduce Cost
Identify factors that you can increase well above industry standard
Identify new factors that do not exist in industry
Strategically Invest in
Strategy Canvas Traders Joe

Invest High Medium
Cut Cost Low
Industry Trader Joes

Price National Choice of Brands Package Size Store Space Sales & Coupons Advertisement Fun/ Adventure
Proximity of Stores
Exclusive Int. Food
Friendly Staff

Example: Our Client An Interior Design Firm

Industry Annual Revenue: $7.0b 11,000+ Interior Design firms, major Companies are units of big architectural firms Industry is extremely fragmented. Big 50 companies account for only 10% of the revenue. Product Sales contribute to 60% of Revenue, Design Fee 35% and Subcontracting 5% Gross Profit Margin is 35 40% Account Receivables are about 15% of gross assets Collection Period is 15 20 days Inventory is 5 10% of gross assets, and Inventory turn is about 10 times a year
Industry Landscape: Extremely Competitive and Fragmented Market with low barriers to entry
Strategy Canvas Interior Design Firm

High
High-end Industry
Medium
Low
Low-end Industry
Design Ideas
Price
Showroom
Workroom
Design Portfolio
Emotional Appeal
On Time Delivery
Workman ship
Traditional Approach Segment Market

Lets define the market segment e.g. Home owners, Builders, Other Architect firms
Cost-Payback tradeoff
Since we have limited resources, lets see where we can get best bank for the buck
Customize Offering to selected Market
Strategy Canvas Interior Design Firm

High Medium
Our Client
Low
High-end Industry
Low-end Industry
Design Ideas Price Design Portfolio Emotional Appeal On Time Delivery Brand
Media
Workman ship
Workroom
Showroom
Recommended Growth Strategy

Focus
Clear focus to create a nationwide brand that signifies their Style
Divergence Compelling Tagline

Leading Brand for celebrities that reach mass audience through retailers
Value Curve Validation The litmus test i.e.

Focus Divergence, and Compelling Tagline
What to Reduce, what to Add

Think About:
Non-Customers, and Alternatives
Reconstruct Industry Boundaries

Three Tier of Non-Customers

Tier 1: Soon to be non-customers They are on the edge of market, waiting to jump ship
e.g. Individual Home Owners
Customers
Market Market Market
Tier 2: Refusing non-customers They have consciously chosen against your market
e.g. corporate housing and hospitality industry
Tier 3: Unexplored non-customers who are in the market distant from yours
e.g. Retail Stores
What are the common needs among largest cross-section of customers

How to Fulfill the needs of Non-Customers Look Across Alternative Industries Strategic Group Within Industries Chain of Buyers Complementary Service Offering Functional and/or Emotional Appeal Time
Next Step
Identify Initiative
Does your product offer exceptional Buyer utility? Use Buyer Utility Map
Strategic Pricing
Set the price which is easily accessible to mass of buyers Use Pricing Corridor Tool
Align Operations
Set Target Profit Come up with Target Cost Streamline Cost Innovation
Adoption
Create a consensus Address adoption hurdles in actualizing the strategy Balance Scorecard
Operation Excellence
October 4th , 2007
Name of the game is Profit. Learn techniques for streamlining your operations that results in positive bottom line for your growing business.
Measuring Business Success

November 1st , 2007
It is a given fact; whatever you measure, it improves. Learn how to define an operating plan for your business and what to measure
Credits:
International Best Seller
CPSPHERE HELP YOU FOCUS & GROW
Results

Growth Strategies - Beat The Unbeatable

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Growth Strategies Beat the Unbeatable

1.562.860.8637 info@cpsphere.com www.cpSphere.com

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

1.562.860.8637 info@cpsphere.com www.cpSphere.com

Business is somewhat like Driving

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

Unfortunately most of us drive with the traffic

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

In congested roads, how will you reach your destination quickly?

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

The best business strategy is to be in a fast growing industry!

1.562.860.8637 info@cpsphere.com www.cpSphere.com

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

What is your understanding of the growth strategy?

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

We believe Growth Strategies is about:

Find the new Pot of Gold!

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

Size of the market pie is fixed

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

How to capture the market share?

1.562.860.8637 info@cpsphere.com www.cpSphere.com

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

Low Cost Strategy

There could be only one price leader !

1.562.860.8637 info@cpsphere.com www.cpSphere.com

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

Low Cost Strategy

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

Differentiation means higher cost!

1.562.860.8637 info@cpsphere.com www.cpSphere.com

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

1.562.860.8637 info@cpsphere.com www.cpSphere.com

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

Differentiation Strategy Customer

My The Spanish Region World Female 20 - 35 California Speaking MARKET

Higher the segmentation, smaller the market size

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

Differentiation Strategy Product

Does your product innovation create buyer value?

1.562.860.8637 info@cpsphere.com www.cpSphere.com

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

1.562.860.8637 info@cpsphere.com www.cpSphere.com

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

Where each strategy fits . . .

Low Price Strategy

Differentiation AND Low Price Strategy

Product Life Cycle

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

1.562.860.8637 info@cpsphere.com www.cpSphere.com

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

Pursuing Differentiation & Low Cost Strategy

Introducing new Product Features Customer Service, etc.

Product Innovation is offsetting Cost Reduction

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

Differentiation & Low Cost Strategy is about Value Innovation

Strategically reduce cost that results in more value for customers

This is the corner stone of Helicopter Strategy

1.562.860.8637 info@cpsphere.com www.cpSphere.com

ITS NOT STRATEGY THAT MATTERS ITS EXECUTION THAT COUNTS

Focus on the big picture, Not Numbers. . .