Operations
“Business Wisdom” is a contribution by Mr. Anil Laud, former MD of Siemens. He has several years of experience in the corporate world and wanted to share his experience and learnings with Professionals. Keep visiting this area regularly for the new articles.
Portfolio of offerings
In drawing the Portfolio of Offerings, the evolution sequence is very important.
Are you offering a Packaged Product or a Solution?
Establishing a market need is very important. Go to Market strategy should be precisely defined well before the Development / Manufacture.
Make / buy decision should be taken well in time, considering the Time to Market conditions.
Development (in case of Make) is as important as the S&M strategy and must work closely together.
Some of the issues involved are – to identify the USP. Aim for a transition from ‘Red Ocean’ to ‘Blue Ocean strategy’.
The old Chinese saying goes – It doesn’t matter if the cat is white or black. It is good as long as it catches the mice. So let us not belabor the point whether you are moving up or down the value chain, as long as your Business is profitable. Only difference is at the top end you have a better opportunity to create value, sustain it and hence retain high margins.
January 1995, London. A large multinational wished to put more stress on its global IT business, gave birth to a dedicated division as its global IT entrepreneur. Company’s slogan – either be amongst the top 2 in the chosen field or shut the business down. In line with the slogan, the Division decided that instead of being just a Central European player it had to be a global one. It acquired a company in the USA – the biggest IT market in the world. Set up a Business Outsourcing Unit in UK and opened businesses in several other countries – all to ensure an impressive Top line.
The Business did not achieve the desired profits let alone the cash flow and in spite of many measures to restrict the bleeding, it was totally restructured and merged with other smaller global IT units of the parent company in January 2007.
Process Orientation
View the Business as set of Processes – Critical and non-Critical. Improvement in conducting a business is closely connected to Maturity and Optimization of Processes.
Taking a leaf from the Software Development business, the stages in Process maturity are –
Stage 1 – One off; Stage 2 – Repeatable; Stage 3 – Defined;
Stage 4 – Optimized and Stage 5 – Managed.
The first step in attaining Process Maturity is to put a Measurement System in place. ‘What can not be measured, can not be improved’.
Once you reach Stage 2, one could apply for a Testimonial (ISO standard in India). The next step is to form a Process Group (PG). Depending on the size of the business, one could set up PG within each important Function or across the Company. The job of the PG is to define in quantitive terms each Process. This is important before the Optimization (popularly known as Business Transformation – BT) is attempted.
The BT must lead to better Business success, which is measured; otherwise it’s an unnecessary business overhead.