MBS608 From Strategy

to Operations
Week 4b
Presented by Mr Venkat SN
Thrive in Turbulent Markets
Sull D, “How to Thrive in Turbulent Markets “ Harvard Business Review ,
February 2009
Points to Ponder

 Why do firms fail?

 Change happens externally
 Internally they don’t accept it
because of past commitments
 What can firms do to avoid
failure?
Agile absorption
 So far everything seems to point
to one word: flexibility, Speed,
But how?
 One solution seems to be agile
absorption.
 The combination of agility and
absorption
Three ways to be agile

 Operational: within a focused business

model, consistently identify and seize
opportunities more quickly than rivals
 Portfolio: quickly shift resources out of
less-promising businesses and into more
attractive opportunities
 Strategic: identify and seize game-
changing opportunities when they arise
Operational Agility
 Within a focused business model consistently
identify and seize opportunities more quickly than
rivals do.
 Speed and Execution
 Shared real time market data that is detailed and
reliable
 A small number of corporate priorities to focus
efforts
 Clear performance goals for teams and individuals
 Mechanism to hold people accountable and to
reward them
Spot the
elements of
Operational
Agility here
 Portfolio Agility

 Quickly shift resources out of less-promising

businesses and into more attractive opportunities
 A diversified portfolio of independent units
(Samsung)
 A cadre of general managers who can be transferred
across units
 Central corporate control over key resources, such as
talent and cash (Search Samsung Mega Investments)
 Structured process for decreasing investment or
selling off units
Strategic Agility
Identify and seize game changing
opportunities when they arise
 A strong balance sheet and a large
war chest to finance big bets
 A governance structure that permits
companies to seize opportunities
more quickly than rivals do
 Long term perspective from owners
and executives
 Absorption

Buffering
Taking short term punishment
 War Chest
of Cash
Low Fixed Diversified
Costs cash flows
Tangible
resources
Intangible
Vast size resources
Protected
core market
Customer Powerful
lock-in patron

Excess Staff

Some sources of absorption tend to kill agility while other allow a

firm to weather a wide range of threats without necessarily
impeding its ability to seize opportunities
 Agile Absorption

Strike the right balance!

 Managers should similarly view agility and

absorption as complements, with the balance
shifting as circumstances change.
 Managers should examine sources of
absorption carefully to keep good fats and trim
bad fats
Agile Absorption

 Managers should actively manage

trade-off between agility and
absorption
 Breaking a large company into multiple,
independent profit-and-loss units
 A great approach to combine all three types
of agility with high levels of absorption
 Potentially carries high costs as well
Agile Absorption

 Managers should maintain a culture

of agility
 Organizations tend to lose culture of agility
as they grow their absorptive capacity
 Need to maintain a strict focus on the
handful of values they deem critical to
agility
 The right balance varies from industry to
industry
 The Quest for Resilience
Hamel G, “Quest for Resilience”, Harvard Business Review, September
2003
What is resilience?

What is resilience?
 The ability of a substance or object to
spring back into shape; elasticity
 The capacity to recover quickly from
difficulties; toughness
Quotes
from Article

 “Today,
getting
different is
the
imperative”.
“ It’s the
challenge
facing Coca-
Cola …”
 How different
is it for Coca-
Cola?
 What’s Iconic
about Coke?
See image 
 Can you think of coke in a different
colour?
How about this?

Coca-Cola Clear launches in Japan

12-Jun-2018 By Rachel Arthur

Coca-Cola Japan has launched a

transparent drink called Coca-Cola Clear,
which hits shelves nationwide this week.
https://www.beveragedaily.com/Article/20
18/06/12/Coca-Cola-Clear-launches-in-
Japan
How different is it –
Wendy’s Then and Now
Wendy’s Hints At
Launching Vegan
Burgers
American fast food restaurant chain
Wendy's could soon launch a vegan
burger. The company's CEO confirmed
it will explore plant-based food options.

During the company’s 2019 second-

quarter earnings call last August,
Wendy’s CEO Todd Penegor revealed
that the chain intends on entering the
plant-based food scene.
https://www.livekindly.co/wendys-
hints-launching-vegan-burgers/
Updated October 6, 2019
 What is resilience?
Organizational resilience?
 The ability to dynamically reinvent business
models and strategies as circumstances change
 Not about responding to a onetime crisis or
rebounding from a setback
 It’s about continuously anticipating and adjusting
to deep, secular trends that can permanently
impair the earning power of a core business.
 It’s about having the capacity to change before
the case of changing becomes desperately
obvious.

Organizations are now more than ever in need of resilience!

Why Am I talking about
Grandma’s Cookware
firm?
Corning – A short history

1972 - Hurricane Agnes causes severe flooding,

https://www.encyclopedia.com/social-sciences-and-
law/economics-business-and-labor/businesses-and-
costing the firm $20 million.
1980s - Corning wins patent infringement
lawsuits against ITT and others.
1995 - Dow Corning declares bankruptcy due to
lawsuits over breast implants.
2000 - Firm posts record sales as the world's

occupations/corning-inc
leading producer of fiber-optic cable.
2001 - Fiber-optic sales plunge; company lays off
half of workforce, closes plants.
2005 - leading supplier of glass for flat-screen
TVs, firm returns to profitability

Have you heard of this?...

Corning Gorilla Glass
Remember!

No Corning, No iPhone, No Touch Phone!

Corning - That is resilience!

The ability to dynamically reinvent

business models and strategies as
circumstances change
It’s about continuously
anticipating and adjusting to deep,
secular trends ...
It’s about having the capacity to
change before the case of changing
becomes desperately obvious.
Zero Trauma
Trauma: a shock.
Turnaround: the recovery from the shock.
What’s wrong with this picture?
The turnaround was necessary because of previous
failures to adapt

The aspiration: zero trauma

A strategy that is forever morphing to meet emerging
opportunities and trends
The goal is an organization that is constantly making its
future rather than defending its past
A strategy that
is forever
morphing to
meet emerging Launched
in 2007
opportunities
and trends
The goal is an
organization
that is
constantly
making its
future rather
than defending
its past

Adapted from “Market Based Management” – Roger

Best
Four challenges to resilience
The cognitive challenge
• Companies often deny or are not willing to consider how
those changes are likely to affect its current business

The strategic challenge

• Companies often face difficulties in creating many new
options as compelling alternatives to dying strategies

The political challenge

• Companies often fail to divert resources (both financial
and human capital) from yesterday’s products and
programs to tomorrow’s

The ideological challenge

• Few companies question the doctrine of optimization
Conquering Denial

 Denial puts the work of renewal on

hold
 Organizations must reduce the time it
takes to go from “that can’t be true”
to “we must face the world as it is”
Conquering Denial
 Make a habit of visiting the places
where change happens
 Filter out the filters
 Accept the inevitability of strategy
decay
 No strategy works forever
 An honest and accurate review of
strategy decay is a powerful antidote
to denial
 Conquering Denial

 Honest review of Strategy

 Replication: Is our strategy losing its
distinctiveness
 Supplantation: Is our strategy in danger of being
suspended?
 Exhaustion: Is our strategy reaching the point of
exhaustion?
 Evisceration: Is increasing customer power
eviscerating our margins
Valuing Variety
 Resilience depends on Variety
 The range of strategic alternatives your company is
exploring is significantly narrower than the breadth of
change in the environment, your business is going to
be a victim of turbulence
 The importance of broad-based, small-scale strategic
experimentation, can never be over-emphasized
 The funnel-shaped process of moving projects from
idea to successful product determines that only with
variety companies are more likely to create
alternatives to dying strategies
Liberating Resources

 Resource reallocation process

 Institutions falter when they invest too much
in “what is” and too little in “what could be”
 Why do managers typically resist reallocating
resources to new initiative?
 Their power tend to correlate directly with the
resources they control: to lose resources is to lose
stature and influences
 Reward system is designed in a way that solely depend
on the performance of their own unit or program
Liberating Resources

 Avoid overinvesting in the status quo

 Avoid reallocation rigidity
 Minimize the propensity to overfund
legacy strategies
 To be resilient, need to design the
allocation process in a way that promote
free flow of both capital and talent to
support new initiatives
Liberating human resources at DBS

 2+2 – Assistant Vice

Presidents and below can apply
for another role within the bank
after 2 years and if accepted,
their supervisors have to
release them within two
months
 3+3 – Vice Presidents and
above can apply for another
role within the bank after 3
years and if accepted by their
supervisors they must be
released within three months
Embracing Paradox
 Break away from solely emphasize on
operational optimization: Do more, better,
faster and cheaper!
 An accelerating pace of change demands an
accelerating pace of strategic evolution.
 Companies should care more about resilience
 Embrace the inherent paradox between the
relentless pursuit of efficiency and the restless
exploration of new strategic options
Illustration
 The current accelerating pace of change in
 In Music business, in Airlines industry, in Heath
care sector etc.
 The challenges these changes have thrown up
all cannot be addressed by optimisation alone.
The company has to change strategically how it
does its business.
 Healthcare examples –
 GE Ultrasound
 Arvind Healthcare - Low cost Cataract
Operations
 Narayan Hrdayalaya (Heart hospitals) – low cost
heart operations
Key to success lies in:

 Sensing the environment

 Generating options
 Realigning resources faster
than its rivals
In-class discussion
4 Challenges + Conquering Denial
 The article “The Quest for Resilience” in challenges to address,
says –
 Company “must be deeply conscious of what’s changing
and perpetually willing to consider how those changes are
likely to affect its current success.”
 In conquering denial, it says “… how much time have you spent
thinking through the second and third-order
consequences …”
 Now a days there is so much discussion about self-driving
electric cars being the future.
 Let us briefly think through how that can change / impact the
future of various businesses.
 “a likely ultimate scenario is that in the long term ‘mobility as a
service’ (MaaS) will evolve to provide seamless door-to-door
conveyance…”

 (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6164975/pdf/ijerph-15-01876.pdf)
Autonomous, Battery Powered
Electric Cars
how changes are likely to affect current
business – Class Discussion
Thinking through the second and
third-order consequences
Some points to ponder.

 What’s the fundamental difference

between the petrol/diesel powered cars
and battery powered cars?
 (Hint ? Think of Engines)
 What’s the implication of that?
 For petrol/diesel cars
 For battery powered cars
How are the car engines
different?
 An internal combustion engine is actually a “four-stroke
engine” that utilizes four distinct piston strokes (intake,
compression, power, and exhaust) to complete one
operating cycle.
 So much movement, moving parts, in the engine itself!
Then there are other moving parts.
 Unlike a traditional fuel-powered car, an electric car
doesn't contain hundreds of moving parts.
 Less movement, less moving parts, less wear and
tear.
 The electric cars also won’t have a spark plug or a
carburettor. Switching on an electric motor is similar to
turning on a light bulb.
 What’s the Business Impact of
engine difference

What is What will

What is the
the be
distinguishing
implication reduced
feature of an
of that because
electric car?
ability? of that?

 Hint: Less movement, less moving parts, less wear

and tear. (What’s the implication of this?)
 Next, if it is an autonomous electric car?
 Business Impact of engine
difference
 Autonomous electric cars would be low maintenance and
there won’t be a need to get them repaired often or visit
the mechanic for every small wear and tear.
 “Analysts at UBS Group AG concluded that the battery-
powered Chevrolet Golf doesn’t require any maintenance for
the first 150,000 miles, as compared with servicing every
10,000 miles for a Volkswagen Golf.
 And lesser collisions also mean fewer requirements for
garages and mechanics.”

Less breakages  longer replacement cycle?

Or craze for newer models? Like mobile phones! (Unintended
consequence)

https://www.geospatialworld.net/blogs/6-ways-autonomous-
vehicles-impact-lives/
Business Impact of Less Human Error

Nearly 1.3 million people die in car crashes every year

Most of these fatalities occur solely due to negligence, rash
driving, being under the influence of alcohol, or other human
errors. 

Less need
Less for
Less
humans emergency
Accidents
hurt medical
services

Business Impact on …?
 Consequent Business Impact on …

Ambulances!!
Accident Related
Less
related legal
property
medical services 
damage 
services in Less need
hospital

Business Impact on …?
 Impact on Car Insurance Business

Nearly 1.3 million people die in car crashes every year

Most of these fatalities occur solely due to negligence, rash
driving, being under the influence of alcohol, or other human
errors. 

 Car insurance is a multi-billion dollar business.

 What will be impact on insurance business?
 Companies like Google, Mercedes, and Volvo have already
begun self-insuring the products they make.
 Would fleet owners also self-insure or go to insurance
companies?
 Will car-insurance become a B2B business? Smaller / Bigger?
 Fleet Cars vs Personally owned cars

Fleet Cars dominate Personal cars

the future dominate the future
 Cars parked for over 90% of
 More time on the road for time
each Fleet Cars per day.
(Efficiency drive)  Lot of parking lots (like now)
 More Tyre usage 
 More tyre sales

• Less need for Parking lots


• More land for other use

• Impact on Land Prices?
 Less drivers; who else may loose
jobs?

 Less refuelling, Less demand for re-charging (?) 

 Less gas station / charging stations 
 Impact on convenience stores 
 Impact on products sold there? 
 Example – Tobacco sales are significant there.

What are the other Socio-economic impacts of self-

driving vehicles?
Some points to ponder.
 What’s the fundamental difference between the
petrol/diesel powered cars and battery powered cars?
 (Hint ? Think of Engines)
 What’s the implication of that? Business implications –
 Consider the entire lifecycle of a car. What will change?
 Which business products and services that we use during the usage
lifecyle will be affected?
 Autonomous / self driving Cars – The obvious difference? What’re
the implications?
 What all will change in the way we use cars?
 What’re the business impacts of those implications?
 Which business are impacted? Think of those directly impacted,
and those impacted indirectly
 What would be the human / societal impact? Positive, Negative?
 Did you know there are the five
levels of autonomous cars?

https://www.geospatialworld.net/blogs/five-levels-of-
Tesla’s Autopilot

A8′s AI
Traffic Jam Audi A8
Pilot takes We are not yet there
care of

autonomous-cars/
ignition,
steering
control,
acceleration
and braking
in slow-
moving traffic
at up to
60km/h on
roads.
Slide Headline

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