Stop Thrashing Your Suppliers: Focus on value and profits, not just cost, in the sourcing process

Because external spending is the largest cost center for most companies, many firms have done the obvious things to cut costs in procurement, such as renegotiating contracts with suppliers and consolidating big-volume purchases. But these tactics, which focus on one-time supplier price reductions, cannot drive long-term performance gains.

Managers need an approach that allows them to realize and sustain high returns on their investment in improving … [ Read more ]

A Quick Guide to Strategic Planning Success

Strategic planning should not be a once- or twice-yearly event disconnected from running the business. Only by erasing the distinction between strategy and daily execution can companies reliably craft and execute a winning plan. Executives looking to make their strategic planning more strategic can quickly refer to these ten best practices.

Portfolio redesign: Mapping value growth in complex portfolios

As companies have grown in size and complexity, delivering sustained superior performance has become increasingly challenging. Today’s large corporations compete across multiple product and service markets, value chains, and geographies – each of which is experiencing major shifts in economics and opportunities.

The typical approaches to charting portfolio strategy are no longer adequate. Neither the “hands-off” financial manager focusing on the numbers nor the synergy manager … [ Read more ]

Putting an End to Ad Hoc Pricing

Pricing may well be the weakest link in the value chain. It has such potential to accelerate revenue and profit growth, yet it is so clearly under-managed at consumer and business-to-business companies alike. There are opportunities for improvement in five areas of pricing strategy.

Just in Case: Balancing risk and return in global supply chains

As you push deeper into uncharted supply chain territories, managing risk becomes critical. Executing the supply-to-market strategy and tactics that best support your business requires investment in new forms of internal analysis and a willingness to make decisions that fly in the face of organizational precedent.

Krishnakumar (KK) Davey, Paul Markowitz, and Nagi Jonnalagadda

Many sales and marketing managers continue to have faith that price cuts can “fix” problems such as undifferentiated products or an obscure brand image. Their faith is misplaced. Price decreases are easy to implement–especially compared to changes in product attributes or customer service, for instance–but extremely difficult to reverse. It often takes years, to bring a price back to its original level. What’s most regrettable … [ Read more ]

Adrian Slywotzky, Peter Baumgartner, Larry Alberts, and Hanna Moukanas

By business design, we mean the fingerprint of the (hopefully) unique way a company does business–which customers it chooses to serve, which unique value proposition it offers to customers, which profit models it employs, which scope of activities it engages in, which forms of strategic control it develops to protect profits and customer relationships, and which organizational architecture it uses to implement these decisions.

Adrian Slywotzky, Peter Baumgartner, Larry Alberts, and Hanna Moukanas

Globalization will tend to make strong business designs stronger (through global sourcing, selling, and science). It will make weak business designs weaker (through more competition, reduced differentiation, and a greater disconnect from customers). And it will create more no-profit zones for companies and even entire industries.

No Nasty Surprises: Anticipating the hidden risks of outsourcing

As more companies move to outsource services currently performed in-house, they’ll likely encounter a slew of risks, some of which become clear only when something goes badly wrong. Managers will have to mitigate these risks in order to reap the substantial benefits that outsourcing provides.

Brand Investment Traps

Brands have become increasingly fragile and difficult to sustain. Failure to invest in the right mix of activities at the right time risks eroding the brand. On the other hand, those companies that anticipate and avoid the common investment traps can reap superior growth in brand value over a long period of time.

CEO Evaluations That Work: Building a valuable relationship between CEOs and their boards

CEOs today find themselves subject to unprecedented scrutiny and concern. That’s not cause for lament, however. Regular, rigorous evaluation by the board of directors is a healthy part of corporate life. But the evaluation must have teeth, with meaningful performance dimensions and metrics as well as a feedback process that uses the board’s time efficiently.

Selling for Profit: Redesigning the sales effort to jumpstart growth

One of the most accessible and potent levers for growth is optimizing the sales effort by targeting the right customers with the right offers and giving the sales force the time and tools that will raise productivity. The key is to solve customers’ most pressing needs rather than simply trying to sell more products.

Five principles can guide managers in optimizing their sales efforts:
* Make … [ Read more ]

Economics’ Gift to Marketing

Most new products fail and most high-volume marketing campaigns generate slim returns. Companies trip up when they try to estimate customer demand through weak market research, extrapolation from the past, or plain instinct. Fortunately, the science of discrete choice modeling is a powerful antidote to ignorance. It allows companies to estimate demand and know exactly how and why customers will make decisions, minimizing the business … [ Read more ]

Setting the Agenda: Finding the right drivers of value growth

The task of the strategist has gotten more difficult. Opportunities are more dynamic and shorter-lived. The palette of strategic options has grown more complex. And the traditional pillars of strategy, such as scale and market share, have lost their ability to reliably support long-term value growth.

In this world of shifting profit zones, Wall Street’s expectation of sustained growth represents one of the few constants. Yet, … [ Read more ]