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Strategic Management Guidelines : Top Management tools from Bain and Co.

I like Bain & Company, I had the chance to work with them as a client for several years in the 1980s. As one of the world’s leading business consulting firms they publish an annual review of top management tools. The latest report is out now.

Since launching the first survey of Management Tools & Trends in 1993, Bain and Company have tracked executive attitudes and behaviors through a wide range of economic cycles. In the current cycle, there is a profound fear the world has deteriorated forever. Executives are concerned the consumer spending levels won’t bounce back to pre recession levels anytime soon and revenue growth is the main challenge given the low growth economic environment.

The phase of cost containment, cost reduction, downsizing and outsourcing appears to be over with executives well prepared for the challenge of securing top line growth. For those who have survived the downturn, company positions have been strengthened and the future appears to be brighter.

Almost two thirds of executives believe they are emerging from the recession in a stronger competitive position with a greater emphasis on growth particularly overseas growth and international expansion.

Nearly all executives believe innovation is vital to their company’s success but few feel they have learned to harness its power effectively. Many executives have serious concerns about how their organizations gather customer insights and manage decision making. Many are beginning to experiment with social media.

Looking at the top ten chart, benchmarking remains in the top slot for 2008 and 2010. The guideline, find any metric and model it, whether balance sheet, profit and loss account, market share, segmentation, KSFs, key success factors, name that metric, manage and model it.

Strategic planning appears in second slot, having written up the Apple Case study from the iPod to the iPad as a classic example of strategic management, it is good to see the old favourites still in fashion. Most strat man is still locked in conventional 2D profile but borrowing techniques from the structural engineers, we have developed 5D models for strategic management which are very exciting.

Mission and value statements appear in the third slot. Some people are cynical about M and Vs but they are essential in committing any team or organisation to a common goal. Drafting is key. JFK’s call to action to “put a man on the moon”, was headlining but would have provided more comfort to families had it included something about “getting him back”.

CRM appears fourth in the list which is concerning when many executives struggle with how the process is managed. Outsourcing and supply syndication remain high on the list. The lessons from Apple so appropriate.

The balanced scorecard, from Kaplan and Norton, I never really understood to be other than an extension of benchmarking with a wider checklist. Segmentation appears at number ten. Far too low, it should be at the heard of any market profiling and strategic planning process.

Total quality management number three in the list in 1993 has slipped out of the top ten list altogether. So much for 6 sigma and the pioneering work of Deming and Juran. I well remember them all.

For those who want a quick collection of buzz words, the Bain Management Tools publication is a quick guide. For those who want to understand the key levers in strategic management it is an essential handbook. JKA

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The views expressed are my own and in no way reflect pro.manchester policy. In no way should the comments be considered as investment advice or guidelines or reflect political bias. UK Economics news and analysis : no politics, no dogma, no polemics, just facts. JKA is a visiting professor at MMU Business School, an economist and specialist in Corporate Strategy, educated at LSE, London Business School with a PhD from Manchester Metropolitan University.

My Apple crashed last week. Had a genius reset. It's a bit like suffering from amnesia and being offered a lobotomy.

 Hi All,  it's Saturday morning and a great time to catch up with a bit of admin and e-mails and so on. Last Saturday I was a little pre occupied, having had a systems crash on the MacBook Pro. As a close friend you recognise something is going wrong with your mate in the run up to the breakdown. Apps are slow to load, worse still they flicker and disappear, in and from, the Apps folder. Eventually, the system only partially loads, nothing happens and a trip to the Apple genius bar beckons.

"Yes there is something wrong," says the genius, "no, we don't know what it is" he asserts. The solution to reset the machine to year zero and wipe all existing apps, folders and documents from memory. It's a bit like suffering from amnesia and being offered a lobotomy. It hurts and requires substantial recovery. 

Back home, thanks to Time Machine and Mobile me, the system is restored but it takes several hours. Only later in following days, like recalling lost pieces after a house theft, you remember files that had eluded a diligent back up. 

That week had been busy with an early board meeting and a late night event on the Thursday as John Leach launched his High Growth Foundation. Friday I was invited to meet the Lords Speaker, Baroness Hayman as a guest of The Greater Manchester Chamber of Commerce. Got a nice bright red House of Lords mouse mat as a souvenir of a very pleasant and charming encounter.

Last week, the highlight was our annual dinner at the Hilton Hotel for five hundred. John Culshaw was the guest speaker, I was the MC. Some great photos on Facebook of the event. He even did an impression of me, which the crowd seemed to find hilarious. Didn't quite recognise it myself. But there you are.

Hope all is well with everyone, things in Manchester are great with a Monday tour of the city planned by Manchester United. City made the rounds last week. One of my more cerebral blog posts, 80 points to win the cup and 40 points to stay up, offered an economists view of the Barclays premiership. "It confirms my worst views of economists" said Michael Taylor of Insider Magazine, a key journalist and Blackburn supporter. I think he liked it. JKA

Each week I like to send a short note to family and friends. This is the note for the 28th May.

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The views expressed are my own and in no way reflect pro.manchester policy. In no way should the comments be considered as investment advice or guidelines or reflect political bias. UK Economics news and analysis : no politics, no dogma, no polemics, just facts. JKA is a visiting professor at MMU Business School, an economist and specialist in Corporate Strategy, educated at LSE, London Business School with a PhD from Manchester Metropolitan University.

Steve Jobs, the iPod and the BCG Growth Share Matrix

Why did Apple choose the iPod in 2001 and what had happened to Sony and the Walkman. Why hadn’t they made a move? These were the key questions which prompted my case study, Apple from the iPod to the iPad. The staggering revelation was that Apple had utilised classic tools of an analysis to identify the product opportunity. Better still at the launch of the iPod, Steve Jobs spoke in classic three dimensional strategic management analysis. The video clip used when presenting the case study tells all. “Why music”, says Jobs, “because it’s a huge market and no one has got the formula right”. It’s two dimensional SM with more to follow. Last week I was lecturing at Salford Business School - great fun.

In 1970, BCG the Boston Consulting Group developed the Growth Share Matrix. It was an two dimensional analytic for portfolio management which quickly became a classic in corporate strategy. Designed for conglomerates with an extensive portfolio of businesses, BCG classified businesses into dogs, cows, stars and question marks. 

Businesses with high market shares in low growth markets were identified as  cash “cows”. Low sector growth meant that demands for capital investment and working capital were low and the profit generated from a high market share could be “milked” within the organisation. Businesses in this quadrant threw off cash into the corporate coffers.

Businesses with high market shares in high growth markets were identified as “stars”. High growth led to demands for investment and working capital which could be met by extensive profit growth as a result of exploitation of market shares. Businesses in this quadrant produced sales and profit growth but demands for cash were high. Stars have a price and cash utilisation is the ticket.

Businesses with low market shares in low growth markets were unattractive generating little growth in sales and profits. They were classified as “dogs” and should be marked for disposal, to a home for dogs or to a milk farm for consolidation presumably.

Business with low market shares in high growth markets were slightly unknown. Growth in profits was usually present but free cash generation was low. An evaluation was required to see if the extension of market share was possible within the near term.

The Growth Share matrix was great. It offered pertinence and simplicity. It still remains valid for any portfolio analysis be it conglomerates or product group analysis. It is based on TWO DIMENSIONAL strategic management analysis, relative market share (RMS) and relative market attraction (RMA).

Two dimensional strategic management analysis captured the imagination. By adding a third dimension of relative financial strength (RFS), a fourth of time, (the economic cycle) and finally a fifth dimension of cash and debt management, (my) recent work on this subject has been able to move the agenda forward extensively.

In 2001 Apple wanted a consumer electronic product for the digital hub strategy. Many were screened in the process but the iPod and “music on the move” was the chosen strategy, it was an attractive market, competition was fragmented and Apple’s financial and brand strength could be brought into play. Three dimensional strategic management analysis evident and in action.

The Apple Case study From the iPod to the iPad can be located here as a free down load. 

*In 1975, Boston Consulting Group produced the report prepared for the Secretary of State for Industry the Strategy Alternatives for the British Motorcycle Industry. Market shares produced volume which led to lower costs along the experience curve. Market share was all. PIMS. “profit improvement through market share was the mantra”. More of this in a later post. 

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The views expressed are my own and in no way reflect pro.manchester policy. In no way should the comments be considered as investment advice or guidelines or reflect political bias. UK Economics news and analysis : no politics, no dogma, no polemics, just facts. JKA is a visiting professor at MMU Business School, an economist and specialist in Corporate Strategy, educated at LSE, London Business School with a PhD from Manchester Metropolitan University. Author of the Apple Case Study from the iPod to the iPad part of which is published in Johnson Scholes Whittington Exploring Strategy 9th edition 2010.