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Business Strategy — ‘Stuck-in-the-Middle’ or ‘Build-in-the-Middle': Bridging the Gap or Dead End Proposition…

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Business Strategy–‘Stuck-in-the-Middle’ or ‘Build-in-the Middle': Many business implement a ‘build-in-the-middle’ strategy, which tries to balance the key strategic elements of; competitive differentiation, product-service price, market focus… in order to build a sustainable, profitable business… However, according to Michael Porter classic book ‘Competitive Strategy'; he hypothesis that a business can secure a sustainable competitive advantage by adopting and executing only ‘one’ of three generic strategies, namely; cost leadership, differentiation, niche focus… and, when a business attempts to adopts more than one or a combination of these three strategies, then the business becomes ‘stuck in the middle’, which is a losing proposition… According to Robert F Bruner; a single-minded focus on ‘cost’ or ‘differentiation’ or ‘focus’… may be tomorrow’s business graveyard… Customers, markets, competition… are not static and business must be flexible, nimble, creative, innovative… to survive, grow, prosper… But, Porter says that business, which are ‘stuck in the middle’ have no clear business strategy, and are at serious risk… He stresses the idea that practising more than one strategy loses focus, and hence a clear direction for the future business trajectory cannot be established… However, D. Miller– questions the notion of being ‘caught in the middle’. He claims that there is a viable middle ground between strategies. Many companies, for example, have entered a market as a niche player and gradually expanded… According to Baden-Fuller and Stopford; most successful companies are the ones that can resolve what they call ‘the dilemma of opposites’… According to Davis; research has shown evidence of successful firms practicing a ‘hybrid strategy’… business employing a hybrid business strategy (e.g., low-cost and differentiation) outperform the ones adopting one generic strategy…

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According to Michael Porter in his book– Competitive Strategy: The business that fails to develop its strategy in one of the directions; cost leadership, differentiation, niche focus…  is a business  that is ‘stuck in the middle’ and is in an extremely poor strategic situation and is almost guaranteed low profitability… Businesses that are truly differentiated can fend off the competition because they are perceived as having a unique product-service, they are more likely to earn superior margins, and are virtually ‘competitive proof’… Porter’s strategy is embarrassingly simple– just pick one these strategies and align with it… According to John Kay; it’s true that a company that fails to develop its strategy in at least one of these three directions (i.e., a business that is stuck in the middle) is in an extremely poor strategic situation but the notion that business cannot pursue both cost reduction and product differentiation is clearly false… According to Anthony Fensom; being in the middle isn’t bad position provided that you offer value… business strategy can be driven by many objectives; ranging from gaining new customers, market share, improving turnover… or just generally supporting product positioning… and, being stuck in the middle can be a good place, at times– if the price is right…

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There is ample research on business strategy that suggests that the ‘middle’ is to be avoided for fear of being ‘stuck’ in it… According to Bob Bruner; problem is not the ‘middle’… but allowing the business to get ‘stuck’ at all– is the real issue… How the problem is being perceived has big implications for taking action, for example; some business experts argue that the ‘middle’ may not be all that bad since it provides the opportunity to test and discover possible new segments of ‘demand’… After all, demand can be defined well beyond just– cost and differentiation, for example; convenience, style, location… Then, there is the pesky problem that consumer demand keeps changing over time, which necessitates constant experimentation to discover new or evolving demand… Today’s single-minded focus on cost or differentiation may be tomorrow’s business graveyard; customers, competition, markets… are not static they are continually ‘changing’ and business is continually ‘jockeying for position’… But, being ‘stuck’ in a bad business without a viable exit strategy is a business waiting to fail… According to Stealers Wheel; ‘stuck in the middle’ is like being caught between clowns and jokers, they may be weak competitors, and thus may present a great opportunity for business to better serve their market, create value… and accelerate business growth… When this is true, then the middle is bad…

In the article Stuck In The Middle by Paul Simister writes: Effectively being stuck in the middle comes from trying to compromise– and it creates ‘muddle'; muddle is bad, muddle confuses customers– they don’t really know what you stand for or what to expect from you… muddle confuses employees– they don’t understand the priorities, and it affects work performance.. A stuck in the middle position happens when a business designed to be low-cost starts adding little extra frills, which don’t add a corresponding amount to the customer value– that’s when business suffers additional cost, but customers don’t get additional value… Or, when a differentiated business comes under pressure on price, perhaps due to a market disruption from new technology or a low-priced competitor, and in reaction the business starts cutting costs in areas which damages their advantage… If you think the business is stuck in the middle – or heading in that direction – then you must critically review business strategy and implement the appropriate adjustments… That means– you must decide what the business is, and what it isn’t… You must decide who the business customers are, and who they aren’t… You must decide what the business is selling, and what it’s not… Strategy is about making wise choices, and then having the courage, conviction to follow through– it’s commit to turning words, ideas… into action…

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In the article Oh, Professor Porter, Whatever Did You Do? by John Kay writes: One of the most famous propositions in business strategy is Michael Porter’s injunction not to be ‘stuck in the middle’… According to Porter; the worst strategic error is to be stuck in the middle, or to try simultaneously to pursue all the strategies. This is a recipe for strategic mediocrity and low performance, because pursuing all these strategies simultaneously means that a business unable to achieve any, due to the inherent contradictions… The trouble with Porter’s proposition is that– it’s just not true… Many successful businesses are stuck in the middle… to them ‘stuck in the middle’ means offering– medium cost, medium quality… in fact, they do slightly better than the clearly focused choices of high-cost, high-quality… or low-cost, low-quality… So perhaps Porter’s ‘don’t be stuck in the middle’ means– not that you must choose one or the other strategy, but if you don’t– you will fail… Perhaps then all that ‘don’t be stuck in the middle’ really means is that– it’s good to be good at something

In the article Stuck In The Middle? Take Flexible Approach by Bob Bruner writes: The problem is not the middle; it’s allowing the business to get stuck at all… The ‘middle’ seems to be what every executive wants to avoid these days. And perhaps for good reason. There is ample research on business strategy that suggests the middle is to be avoided for fear of being ‘stuck’ in it. The conventional view is to see the ‘middle’ as a no-win situation. I see things slightly differently; the problem is not the middle it’s allowing the business to get stuck at all… Being ‘stuck’ is one of the worst situations for business without a viable exit strategy, for example; think of manufacture operations that are obsolete and face exit costs that can ruin the economics of a business as it approaches its end… Or, minority investor who is stuck in an under-performing private firm looking to exit and investment-securities are illiquid… Or, an airline stuck with an aging fleet of airplanes, uneconomic union contracts, landing rights that don’t fit the more profitable segments of demand… Or, retailers stuck with stores in neighborhoods with the wrong demographic trends… Or, technology company stuck with commitment to obsolete technology… There are many of examples of ‘stuckness’ situations, whereby management makes inflexible commitments to what they think could be sustainable and attractive business strategy… when, in fact, these ‘difficult-to-reversible’ strategic decisions and commitments– exposes the business to potentially catastrophic consequences…

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The challenge for business leadership is not to avoid the middle, but rather to develop flexibility– such as a sensible Plan B– if the competitive situation turn against you. The middle is bad if you are stuck in some important way, for example; the inability to respond appropriate under new competitive conditions… It’s not particularly difficult to think of companies that are neither cost leaders nor differentiators that produce sub-par returns on invested capital, but many have historically ‘muddled’ along for years with incoherent strategies… However, the days of muddling along without a clear strategy are numbered… According to Porter; a company’s failure to make a choice between cost leadership and differentiation essentially implies that the company is stuck in the middle. There is no competitive advantage for a company that is stuck in the middle and the result is often poor financial performance… However, there is disagreement among scholars on this aspect of the analysis…

According to John Kay and D. Miller; cite empirical examples of successful companies like Toyota and Benetton, which have adopted more than one generic strategy. Both these companies used the generic strategies of differentiation and low-cost simultaneously, which led to the success of the companies... In contrast, according to Tim Friesner; Yahoo has been stuck in the middle for number of year… and future for the business is looking less and less certain. Google occupies the search and online advertising position, and Microsoft has negated its problem in the search space, with the successful development of Bing. It looks like Yahoo has remained loyal to its long serving strategists, at a time when it really needed fresh ideas. This is an example of not moving with the times in a very fast-moving and dynamic tech sector… Michael Porter has noted that strategy is as much about executives deciding what a firm is ‘not going to do’ as it’s about deciding what the business ‘is going to do‘… In many cases, business is ‘stuck in the middle’ not because executives fail to arrive at a well-defined business strategy but because businesses are simply out-maneuvered by rivals… According to Joseph Schumpeter, great economist; described the competitive turbulence of capitalism as the ‘gale of creative destruction’… being stuck in a bad business without a viable exit strategy– is a business waiting to fail…

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Grow the Business thru Charitable Giving–Rethink Business of Charities: Companies and Charities Forging New Partnerships

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Charities and giving– charitable giving– is a big business. Every year charitable and non-profit organizations solicit companies in the hope of obtaining much-needed funding to accomplish their missions that help the less fortunate. Many businesses are willing to give, but are often confused as to which charities might be best for them. According to Michele Cuthbert; a successful match can lead to a fulfilling partnership and helping others, while a mismatch may lead to disaster. Businesses can build stronger relationships with their communities through their charitable endeavors that help less fortunate while helping themselves to more growth and bigger profits. Giving to charities is a way to both brand your business and assist those in need. It helps to create respect for your business as a company that is doing good in society and so encourage more people to purchase your products and services by making them feel that they are doing something for charity by supporting your business… The legal definition of charitable organization (and charities) varies according to the country, and in some instances the region of the country in which the charitable organization operates; the regulation, tax treatment, and the way in which local laws affects charitable organizations also varies. For example, in U.S. a charitable organization is an organization that is organized and operated for purposes that are beneficial to the public interest, however, distinctions are made between different types of charity organizations: Every U.S. and foreign charity that qualifies as tax-exempt under Section 501(c)(3) of the Internal Revenue Code (IRC) is considered a private foundation, unless it demonstrates to the Internal Revenue Service (IRS) that it falls into another category. In general, any organization that’s not a private foundation (i.e., it qualifies as something else) is usually a public charity, as described in Section 509(a) of the IRC. In addition, a private foundation usually derives its principal fund from an individual, family, corporation or some other single source and, more often than not, is a grant-maker and does not solicit funds from the public. In contrast, a foundation or public charity generally receives grants from individuals, government and private foundations and although some public charities engage in grant-making activities, most conduct direct service or other tax-exempt activities… Overall, charities are good for business and the obvious main reason– to incorporate charitable giving into your business is that– it’s good to give back to the less fortunate in the community. Also, a second reason to think charitably is that it’s very important to your bottom-line: Customers patronize companies that are doing something for the greater good of the community… and having a charitable component is a business differentiator… and a reason that some customers choose one company over another… According to Jeneen Todd; I wanted my business to be in the public eye as a business that’s reaching out to the community… marketing my business with charitable events is a fairly inexpensive way to reach out to a large number of potential customers, while still helping others…

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Quick Facts About Charitable Giving and Nonprofits in U.S.:

  • Nonprofit Organizations: There are 1,537,465 tax-exempt  organizations, including: 955,817 public charities, 97,792 private foundations, 483,856 other types of nonprofit organizations, including chambers of commerce, fraternal organizations and civic leagues. In 2010, nonprofits accounted for 9.2% of all wages and salaries paid in U. S. Nonprofit share of U.S. GDP was 5.5% in 2012. There are an estimated 323,754 congregations (churches) in June 2013.
  • Public Charity Finances: In 2011, public charities reported over $1.59 trillion in total revenues and $1.49 trillion in total expenses. Of the revenue: 22% came from contributions, gifts and government grants. 72% came from program service revenues, which include government fees and contracts. 6% came from other sources… Public charities reported $2.87 trillion in total assets in 2011.
  • Volunteering and Charitable Giving: Approximately 26.5% of Americans over the age of 16 volunteered through or for an organization between September 2009 and September 2012. This proportion has remained relatively constant since 2003 after a slight increase from 27.4% to 28.8% in 2003. Charitable contributions by individuals, foundations, bequests, and corporations reached $298.42 billion in 2011, an increase of 0.9% from the revised 2010 estimates and after adjusting for inflation. Of these charitable contributions: Religious organizations received the largest share, with 32% of total estimated contributions. Educational institutions received the second largest percentage, with 13% of total estimated contributions. Human service organizations accounted for 12% of total estimated contributions in 2010, the third largest share. Individuals gave $217.79 billion in 2011, about the same as in 2010.
  • Foundation Giving: Foundations gave $46.9 billion in 2011, up 2.2% from 2010. Of total foundation giving in 2010: 71% came from independent foundations. 9% came from community foundations. 11% came from corporate foundations. 9% came from operating foundations.

In the article Charitable Giving Is Good for Your Business by Lee Polevoi on writes: Donating to worthy causes can benefit the givers as much as the receivers. When it’s done strategically, charitable giving is good for business– and we’re not just talking about potential tax deductions… While the organization appreciates your donation (financial or otherwise) you can also promote your charitable activities to build good will in the community, enhance customer loyalty, heighten brand awareness, and yes, even increase sales. Giving to a worthy cause makes good business sense. Make the practice part of your overall business strategy, and you’ll quickly see it’s a win-win situation… However, finding the right charity for your business can be difficult; here are three simple rules of thumb that can help:

  • Pick a cause that you believe in: This helps elevate your involvement from something you feel you should do– to something you truly enjoy doing.
  • Look for a local charity: Knowing that you’re helping your own community can make your involvement more meaningful, especially if it also enhances the well-being of family and friends.
  • Find a cause that relates to your business: If you run a sporting goods store, why not sponsor a kids’ soccer league or Little League team? Support a charity that affects and influences your target market.

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In the article Why Aligning Your Business With Charity is Important by Jane Greece writes: Aligning your business with charity can be a little difficult to understand, but companies who have aligned with charities are seeing the big picture. There are business benefits for doing the charitable projects even in developed and underdeveloped countries: This is called strategic philanthropy… Most importantly, aligning business with charities, lays some of the foundation for future markets. People will come to associate the business as the good guy, and this matters a lot to some people… If good works matter to them, then good sales for the business follows… Thus, aligning your business with charity or cause can do a lot of great things, and that’s what makes it important. Doing this type of strategic marketing has many benefits; for example; First, it adds another element to your business’ character. Second, aligning business with charity can attract positive publicity to your business. Third, strategic philanthropy can elicit new ideas to improve or enhance your products and services. And fourth, doing charity would give more meaning to the business… Nothing beats the feeling of feeling good, and  aligning your business with charities is being wise with the business and also being responsible, socially…

Many savvy companies are affiliating themselves with charities to market their businesses. Not only is it a primary means for developing a powerful network, but also it helps others in the process. According to David Frey; people like to associate themselves with businesses that support causes, which help disadvantaged people in a meaningful way. And, don’t think that charities are oblivious to your motivations. Most charities today understand your secondary purpose for participating in charities and are experienced at helping business receive a return on their charitable investments… From a business standpoint, look for charities that will give you meaningful exposure to a large number of influential people… Linking your name with the charitable cause is an important part of charitable marketing. Even if you are participating in a charity for altruistic reasons, there’s no reason why you should not benefit from the resulting positive exposure… Charities like businesses are interested in building their membership base… Partnering with your charity to market to a niche will bring new customers to the business and new members to the charity… Taking the idea of charity partnerships a bit further, you may consider establishing a full-time commercial venture with your charity. Both parties would provide specific resources to run the venture. For example, you could provide the financial funding and the charity could provide the staff, expertise and equipment… Although there are a lot of legal and tax issues to address with this strategy, many such ventures are being established with success… Most corporations enter the philanthropic arena to achieve specific business objectives through a program of good deeds… however, an increasing body of scholarship shows that corporate giving programs actually can generate increased sales and revenues, especially for firms that market directly to consumers… According to Carlson; corporations represent a vital portion of total charitable giving… it’s important that the strategic priorities of both charities and companies are aligned in order to have an effective partnership… For example, a grocery-store chain partnering with food pantries, instead of other types of nonprofits… or a financial services company that supports school math education… According to Gregg Carlson, Chairman of the Giving USA Foundation; we have started to see a sustained recovery in corporate giving, and the outlook for business in philanthropy is very positive…

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The Power of Big Idea Thinking: Think Smarter, Faster, Create Value– Driving Imagination Beyond Abstraction

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The Big Idea is the only thing with the ability to attract enough people around a new concept when real change is needed in an organization… ~Winfried Schoepf– Big ideas guide us to put our brain to work… ~Rodrigo Borgia– The big idea is of little importance without effective implementation.. you can have the biggest idea in the world but if you don’t make it personal… the idea will go nowhere...~ Matt Crichton

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A Big Idea is a way of seeing connections, not just another piece of knowledge… A true idea doesn’t end thought, it activates it. It has the power to raise questions and generate learning… That little extra makes the difference between ordinary and extraordinary. According to Grant Wiggins; a big idea is a way of seeing better and working smarter, not just a vague notion or another piece of knowledge. It is more like a lens for looking; more like a theme than the details of a narrative; more like an active strategy than a specific skill. It is a theory, not a detail. When an idea is ‘big’ it helps us make sense of things, and when an idea is not ‘big’ it merely categorizes a lot of content, e.g., change, relationships, global… certainly these encompass an enormous amount of knowledge and understanding, but these concepts don’t contain much insight or direction beyond their definition… In short: Think of ‘big’ as ‘powerful’; not a large abstract category. It’s a ‘powerful idea’ vs. ‘mere abstraction’. The ‘idea’ is the easy part, but the real test of visionary leadership is the execution of an idea and its impact on business… According to Seth Godin; ideas are easy, doing stuff is hard, and the more often you create and share ideas, the better you get at it. The process of manipulating and ultimately spreading ideas improves both the quality and the quantity of what you create… History is littered with inventors who had ‘great’ ideas, but kept them quiet and then poorly executed them. Also, history is lit up with do-ers who took ideas that were floating around in the ether and actually made something happen. In fact, just about every successful venture is based on an unoriginal idea, beautifully executed. So, if you’ve got ideas, let them go… The big idea can be game-changing, and it means taking risks, bucking trends, and making innovation the priority– and, all while keeping your team fully engaged…

In the article Why Your Business Needs a Big Idea by Carmine Gallo writes: As business focus on simply surviving; what’s lost is the Big Idea. Your business needs a moon shot goal that will fuel its journey for the next decade and inspire your employees, your partners, and you. In my work, I hear plenty of small goals for the next year– but few moon shots, e.g., ‘we hope to avoid layoffs’ is not a moon shot. Face it: A goal to increase sales by 2% next year isn’t going to inspire your team. Your employees want to know how you’re going to change the world. A big idea has a better chance of becoming relevant if it contains three components when articulated to its intended audience, namely; boldness, specificity, and consistency:

  • A big idea is bold: Great visions inspire: I do believe there is such a thing as dreaming the dream of a grand vision… Great entrepreneurs are focused on today, but the most innovative have a road map of where they will be tomorrow.
  • A big idea is specific: President Kennedy set a deadline to reach the moon, which contributed a lot to its success. An ambiguous idea such as becoming the ‘best-of-breed solution provider’ means very little. It’s not inspiring. Nor does it give employees a specific goal to reach.
  • A big idea is consistent: A big idea that’s not communicated consistently and frequently stands little chance of sparking action in others…

In the article Big Idea by Michael Masterson writes:  You will never win fame and fortune unless you invent a Big Idea. It takes a big idea to attract the attention of consumers and get them to buy your product. Unless your advertising contains a Big Idea, it will pass like a ship in the night. Big ideas come from the unconscious: This is true– in art, science, and advertising… But the unconscious has to be well-informed, or the idea will be irrelevant. Stuff your conscious mind with information, then un-hook your rational thought process… But, how do you recognize the Big Idea: Just ask yourself these five questions: Did it make me gasp when I first saw/heard it? Do I wish I had thought of it myself? Is it unique? Does it fit the strategy to perfection? Could it be used for many years? A big idea is instantly comprehended as; important, exciting, beneficial, and will last for a long time. That is a mouthful, so let’s break it down:

  • Big idea is important: Important to the customer
  • Big idea is exciting: Exciting to the customer
  • Big idea is beneficial: Benefiting to the customer.
  • Big idea leads to an inevitable conclusion: The big idea must be fundamentally simple: Easy to grasp, easy to see how it solves problems or delivers on stated promises…

In the article Big Ideas, Trends, Predictions–2013 by David Mielach writes: Media outlet ‘BusinessNewsDaily’ asked business owners, entrepreneurs, experts… to predict the most popular ‘Big’ trends in 2013. Here’s what they had to say:

  • Companies will focus on being remarkable: Becoming  remarkable has never been as important! It’s more important than ever for business to intensely focus on what it is that they are better at than any other competitor…
  • Crowdfund investing will grow: There is nothing bigger for some business than the ability to raise capital via crowdfunding; crowdfund investing will be an important option for entrepreneurs seeking to tap into new sources of capital to fund their business venture…
  • Mobile video consumption will continue to explode: It will surpass 50% of all mobile traffic. Those looking to develop their mobile presence, without having a mobile video strategy, will lose customers and market share…
  • Use of sensors will grow: Expect to see third-party payers and health care systems moving more aggressively to improve outcomes through the use of technology, such as; electronic monitored packaging, microchips embedded in pills, wearable sensors…
  • Social media will continue its evolution: Social media must have a two-way conversation tool with customers. Using three  important things: Listen before you speak… Understand what customers are saying about you… Develop relevant types of conversations that appeal to customers…
  • Content marketing will grow: Content marketing will rise to be the primary emphasis for brands wishing to increase; awareness, engagement, drive traffic… Move past the infographic fad to an era of truly entertaining and useful content.
  • Mobile shopping gets optimized: It’s now a business necessity for business retailers to provide mobile shoppers with an optimized mobile store that meets their unique shopping needs…
  • Personalization will grow: Technology converges to allow fast, inexpensive and convenient personalization of almost anything… allowing consumers to express themselves and their  individuality in ways never thought possible before…
  • Mobile-centric products will increase: Tech companies are realizing that mobile-centric products are not just an after-thought, but a necessity… we’ll see more technology companies opting for mobile business models. Some may even see the traditional Web as unnecessary.
  • Social media needs to show ROI: KPI (Key Performance Metrics) are most important: Everyone wants to know how  their campaigns are helping contribute to the company’s bottom line. Activity is not enough– its business outcomes that count.
  • Big data injects information science into relationship selling: While many companies leverage internal data to aid their selling efforts, companies will take it to the next level by  combining internal data with external data to make stronger predictions about which customers and prospects are most likely to buy, why, how much…

A Big Idea is formulated in a person’s imagination-mind; and, the human imagination is one of the world’s greatest forces. All of our world’s greatest achievements were once just thoughts-ideas in the mind of a person who dared to dream… According to Ed Mylett; creative imagination is the first step to action… when we are creatively imagining something, we are actually causing it to come alive. However, deep in our consciousness lies the force of ‘conformity’, i.e., do it as it’s always been done… The person caught in this destructive cycle never does anything– Big or worthwhile… Some say that the opposite of bravery is not cowardice; but ‘conformity’… According to ‘pakhandipandit’; mediocrity is one of the biggest hurdles… the problem is not that– ‘we aim too high and miss, but we aim too low and hit’… The problem is when we say some thing is– ‘big’, ‘unachievable’, ‘impossible’… we make our minds believe that we our incapable of doing those things, and thus we never do… Fear of failure is another reason which stops us from thinking Big. When we think about something really ‘worthy and difficult’ to achieve, we quickly come to conclusion that we will ‘fail’… But, this should not be where the story ends, for example; ‘fail is not failure, until you quit’. The reason for not reaching goals is not that we make an attempt for something near-to-impossible and fail, but the reason is we failed because we ‘quit’– without trying it again for the second, third, forth… time. I am saying that when you dream ‘Big’ you get an internal force which pushes you to make that first small step, which is usually the most difficult one– then, it’s a matter of persistence… The option is clear: Big Idea Thinking means: Be phenomenal or Be forgotten!

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Global Innovation Barometer–2013: Unconventional Strategy Unlocks New Drivers for Innovation– Pushing Comfort Zones

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Innovation rules are changing, globally, and companies must reinvent their strategy in order to stay competitive, drive growth and contribute meaningfully to the economy… For innovation to flourish, you must embrace a new innovation paradigm that promotes collaboration between all players– big, small, public, and private– fosters creativity, and emphasizes solutions that meet local needs…

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One-in-three business leaders are concerned over their ability to maintain a competitive edge in a faster paced, more global and resource-constrained environment. There is increasing anxiety over– what, how, when… to innovate as competition accelerates… Business executives continue to value innovation as a strategic priority; An emerging ‘innovation vertigo’– an uneasiness with the changing dynamics of today’s business landscape and uncertainty over the best path forward– is challenging leaders to think differently about how they can achieve growth. Many executives, however, seem to be embracing this complexity by exploring new and sometimes unexpected opportunities to innovate… According to Beth Comstock, General Electric (GE); business change has become constant and leaders are responding by betting big on more unconventional approaches to innovation to unlock growth… exploring different markets, partnership structures and business models – all in the pursuit of uncovering new ways to better serve customers… The key points in the ‘Global Innovation Barometer Report, 2013’ are:

  • Protectionist Policies.
  • Business Model Innovation.
  • Collaborative Innovation.
  • Government Policies.
  • Workforce Preparedness.

The Global Innovation Barometer Report, 2013: Now in its third year, the survey is commissioned by General Electric (GE) and conducted by StrategyOne. It includes interviews with more than 3,000 executives in 25 countries and explored the issues of how business leaders around the world view innovation and how those perceptions are influencing business strategies in an increasingly complex and global environment… It examines what factors business believe to be drivers and deterrents of innovation and analyzes specific approaches and policies that enable innovation and drive growth. A top line summary:

  • Protectionist Policies: Many  executives appear torn about how to best respond to the changing business environment. In efforts to mitigate perceived risks to their business and local economies, many are responding by adopting protectionist tendencies; 71% of executives reported that their government should prioritize promotion of domestic innovation rather than imported, while 71% reported that their governments should actually open markets further and promote imported innovation and investment. Paradoxically, there was a 53% overlap between these two opposing views. Executives in Mexico (80%), India (56%) and Brazil (50%) were most likely to advocate both open and closed market policies as a means to better innovation. 
  • Business Model Innovation: While incremental and product innovation have, historically, been main drivers of growth for companies; business model innovation is gaining momentum as a route to success. Innovation of a new business model may offer business a less risky and resource-intense path to better understand and reach customers over traditional methods…
  • Collaboration Innovation: Collaboration between businesses is emerging as a means to surpass competitors and generate revenue, particularly in emerging markets. However, despite the global acknowledgement of the power of partnerships; the lack of effective IP protection, trust, talent poaching– pose important barriers to action…
  • Government Policies: Global business leaders are concerned with policies affecting innovation and calling policymakers to create more stable, supportive policies to help enable better innovation in markets and across borders. Business executives perceive safeguarding the business interests– knowledge, IP, talent, removing policy barriers, over-regulation… as key to allowing innovation to flourish…
  • Workforce Preparation: Talent is consistently identified as a critical concern for innovation leaders across the globe; as the creativity and technical prowess of workforce is seen as key to unlocking innovation potential. Concerns about workforce preparedness (i.e., education…) and access to talent (i.e., cross-border mobility, retention, poaching…) abound, as companies are seeking to match the right job with the right people and line up the right skill sets to meet tomorrow’s economic needs, today…

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In the article Innovation Barometer: How Collaboration Breeds Advantage by Ideas Lab Staff writes: The smaller the world becomes; the greater are the possibilities for growth and collaboration… Those most experienced at partnership are among the most successful: Germany, China, Brazil and Sweden. Where 87% of the more than 3,000 executives, in the survey, were confident that their firms could be more innovative and successful if they collaborated or partnered with other businesses… The reasons to collaborate are clear: accessing new technologies and new markets: Executives in China (41%), South Africa (38%) and Mexico (37%) expect to report revenue and profit from their partnerships and continued growth… The biggest dissuaders are lack of confidentiality-intellectual property (IP) (64%), trust (47%) and a fear of having their talent poached (45%)… Talent has been consistently identified as a critical concern for innovation leaders and fears of having trained, skillful and successfully innovative staff leave are a serious deterrent for more innovation and collaboration. At the same time, 41% of the business leaders surveyed said they believe restrictions on access to foreign talent are increasing and those restrictions negatively impact businesses’ ability to innovate…

In the article Barriers To Innovation, And How To Break Through by Janie Curtis writes: One of the interesting statistics of this study was that over 50% of U.S. executives believe that new innovation models or processes are needed in order to accelerate the rate of introduction of market-changing ideas. However, I would make the observation that innovation processes in many Fortune 500 companies are thorough, but perhaps not exactly inspiring. When it comes to steps within the process and checks and balances that are in place to make sure that sub-standard ideas don’t move forward, there is a great deal of rigor. However, there is often a lack of rigor around the need to engender a level of inspiration and creativity that would enable members of the innovation team to launch new products, which are more than tweaked facsimiles on what is already on the market. Frequently, the idea-generation part of the process doesn’t go beyond getting a group of smart people in the room with a pad and starting to put ideas up on the wall. This can work very well for generating those marginal adjustments on the existing category reality, but often does not provide enough fodder for real leaps of imagination. Still another interesting barrier to innovation can be the– oh so popular ‘consumer insight’…I don’t think that the person who first invented bottled water, went to the consumer and asked whether they would like their tap water in plastic bottles so that they could pay a dollar or two for the privilege… Marketers-innovators in medium-to-large companies have come to a point where they don’t dare to trust their own instincts anymore; if the research doesn’t say it is a good idea, it isn’t a good idea. However, experience would indicate that in order to keep the door-open to paradigm changing innovation ideas, you must marry the need of process rigor with the ability to make the occasional leap of faith. The third barrier to significant innovation can be a weak brand or positioning strategy. We have all heard how difficult it is these days to come up with an insight that leads to the ownership of a consumer benefit that is truly different from the competition. This seems to have become the case; whether benefits are very direct and rational (e.g., better performance…), or more on the emotional end of the spectrum (e.g., improving quality of people’s lives…). It has undoubtedly become harder, but luckily– not impossible: If the strategy behind brand represents real market differentiation, and consumer inspiration and relevance… then, the chances of the innovation ideas that emanate from it; will be revolutionary, and increase dramatically…

Efficiency versus Innovation: According to Rowan Gibson; when the economic barometer is pointing upward, all the talk in company boardrooms is about growth, innovation and value creation. When the global economy lingers in the doldrums, corporate strategy shifts inexorably back to the safe haven of operational efficiency. Now you might argue that this reaction is both inevitable and understandable, and I would accept that at some level. But remember this: something far deeper and more significant than these periodic upswings and downswings is the fact that we are now in a new kind of economic era. An era in which fanatical cost-cutting, downsizing, lean Six-Sigma, mergers-acquisitions, supply chain management, off shoring or outsourcing are no longer the basis for competitive advantage. Companies all over the world are becoming increasingly worried about their ability to innovate and compete in the fast-changing technology world… However, one person’s alarm can be another one’s opportunity. Many executives seem to be embracing the new complexity by exploring new and sometimes unexpected ways to innovate. For example, a growing number of respondents, 52%, believe that development of new business models will contribute the most to their company’s future performance. Some 87% were confident that their firm could be more successful at innovating through partnership and collaboration, and 68% of respondents report already having developed or improved a product in partnership with others. Other companies are moving beyond product and incremental innovation to developing innovative business plans that offer a less risky and resource-intense way to open new markets… It seems that business leaders, globally, are being pushed outside their comfort zones with an uneasiness about the pace of change and confusion over best path forward… The feel of ‘vertigo’ can go beyond the usual symptoms of light-headedness and dizziness and is possibly far more than a chronic lack of solutions, which begins to creep into their psyche as their worlds are spinning out of their control… the whole economic system is still out of balance, and according to the survey; having ‘innovation vertigo’ may be part of a bigger malaise…

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Building-Managing a Business without Borders– Borderless Global Business: World is Flat… Baloney, Borderless is Myth

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Borderless business–‘world is flat’: Three primary changes at the dawn of the 21st century are the keys to the changing world. One, addition of China, India, the former Soviet Union and other countries with a combined population of 3 billion to the global world economy… Second, technological changes such as the Internet that have made distance less of a factor. Third, shift from hierarchical, vertical power structures in business and government to democratic, diffuse ones in which it is easier for individuals to make their own destinies. This triple convergence– new players, new playing field, new processes and habits for horizontal collaboration – are the most important forces shaping global economies and politics in the early 21st century… ~Tom Friedman

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Borderless business: Building and managing a value system that emphasizes seeing and thinking globally is the bottom-line price of admission to today’s borderless economy. On a political map, boundaries between countries are as clear as ever. But on a competitive map, map showing the real flows of financial and industrial activity, those boundaries have largely disappeared. Eaten away by persistent and ever speedier flow of information. According to Kenichi Ohmae; today people everywhere are more able to get information they want directly from all corners of the world. They can see for themselves– tastes and preferences in other countries, styles of clothing now in fashion, sports, lifestyles… Major changes in communications and information technology, rapid progress in transportation, active international institutions, trade agreements, commitments to globalization… have resulted in significant economic-financial interconnection between nations and markets, which in effect creates ‘borderless world’. Capital investment, technology, information– do not have nationalities anymore; they flow, essentially, freely in-out through national borders… A recent study by ‘Hackett Group’– involving nearly 200 executives representing companies in U.S., Europe, Asia-Pacific– found that most companies fully realize that growth is no longer limited by physical borders… the globalization of business functions is, in part, driving the increasing need for knowledge about– customers, suppliers, employees, operations… Certainly, globalization has detractors, but for today’s business leaders, the issue is not to debate the merits of globalization but to learn how to thrive in the global marketplace.  The winners in this ‘new normal’ for business won’t be those with the biggest offices or the most radical architecture, but those that keep a firm eye on the bottom line, while remaining open to the possibilities of new business and organizational structures underpinned by managed technologies…

In the article Borderless Business: Pros and Cons by Steve Purdy writes: Conducting business is becoming increasingly more global as technology, mobility and revenue opportunities in emerging markets are tempting enterprises to expand into new markets in order to reach new customers. While the world continues to face well-documented economic challenges, from austerity measures in Europe, to the sluggish recovery in the U.S., and from inflation concerns in Asia to geopolitical instability in the Middle East, going global can deliver a new avenue for prosperity– despite the current climate. According to HSBC; world trade is predicted to grow by 86% in the next 15 years as global markets boost their demand for traded goods. The global economy presents immense opportunities for investment and commerce, and with the right focus and commitment, businesses can succeed in the global marketplace… Selecting a new market for a business operation requires balanced consideration of many factors, including; personnel, costs, legal and regulatory concerns… New technology underpins regulatory best practice around the world, and as emerging markets improve their technological infrastructure they are increasingly becoming revenue opportunity markets for the global business community.  In addition to a local market presence and strong technology platform; a critical key driver fuelling globalization is the top-tier talent pool that can be found in developed and emerging markets. A flexible work strategy, which gives workers access to a professional workplace when needed, has been shown to increase productivity and work-life balance. A recent World Bank Report found that more countries are implemented business reforms to make it easier for overseas firms to trade with them… Emerging markets in Africa and Asia showed particular improvement in terms of business regulations, construction permits and easing the administrative burden of tax compliance. Being able to deal with the local legal and regulatory red tape should be top priority when a business is looking to expand into a particular market. Businesses should be looking for transparent and predictable legal and regulatory rules that are conducive for businesses. Reductions in corporate income tax for certain markets have helped increase ability to attract business from foreign countries. Businesses without borders are reshaping the global economy…

In the article Globaloney–Myth of Borderless Economy by Ian Fletcher writes: We live in a borderless global economy, and to dispute this is to risk being considered, not simply wrong, but ignorant. Yet this widely held belief does not survive serious examination when we get down to the hard numbers… The world economy remains what it has been for a very long time: a thin crust of genuinely global economy (more visible than its true size due to its concentration in media, finance, technology, and luxury goods) over a network of regionally linked national economies, over vast sectors of every economy that are not internationally traded at all… On present trends, it will remain roughly this way for the rest of our lives. The nation-state is a long way from being economically irrelevant. Most fundamentally, it remains relevant to people because most people still live in the nation where they were born, which means that their economic fortunes depend upon wage and consumption levels within that one society… Capital is a similar story: Capital cares very much about where it lives, frequently for the same reasons people do. (e.g., few people wish to live or invest in Zimbabwe; many people wish to live and invest in California)… Although liquid financial capital can flash around the world in the blink of an eye, this is only a fraction (under 10%) of any developed nation’s capital stock. Even most non-human capital resides in things like real estate, infrastructure and types of financial capital that don’t flow overseas, or don’t flow very much at all. As a result, the output produced is still largely tied to particular nations. So although capital mobility causes big problems of its own, it is nowhere near big enough to abolish the nation-state as an economic unit. Will it do so one day? Unlikely. ‘Inevitable globalization’ is a catch phrase that doesn’t accurately describe current trade, economic or political reality…

In the article Challenge of Change in Borderless World by John Psarouthakis writes: Fifty years ago the U.S. with 27% of world’s gross domestic product (GDP) was the world’s economic power. The ‘poor’ countries of the world, such as; India, China… were barely making 4% of the world’s GDP each. Now let’s jump ahead in today’s world. Let’s look at the state of the economies about 50 years later and see what changed: The U.S. portion of the world’s GDP has dropped to 22%, whereas ‘poor’ countries of 50 years ago are growing at a rate, such that, in another 20 years or so, their economies will surpass those of the U.S., Western Europe, and Japan together. However, companies, today, still run business using traditional models that are no longer effective in the rapidly changing and high-uncertainty global marketplaces. For example; traditional business planning is based on ‘world of high-certainty’ and achieving specific business performance goals, numbers… In contrast, today’s marketplace reality is ‘world of high-uncertainty’ where there simply isn’t enough accurate information-knowledge to predict, with any degree of certainty, what business performance goals, numbers… might be achievable. While further insisting that management stick to the traditional rigid business plan with expectation that the business will– make numbers, deliver earnings… However, this can be dangerous commitment to a potentially flawed business strategy with unrealistic goals when underlying business logic-strategy may have shifted. An argument that is central to modern business thinking is the need to use different disciplines when operating in an environment where there are many more uncertainties-assumptions– than there is knowledge. Then, one must think ‘out of the box’. In such a world, forget about a short-lived, often meaningless ‘competitive advantage’… it’s a concept built for  20th century. In 21st century, there is nothing more asymmetrical– more disruptive, more revolutionary, or more innovative– than the world-changing power of an ‘idea’. Where are the ideas in your organization? The breath of impact of today’s rapid change including; sophistication of communications, greatly broadens the number of people, globally, who know something about and will be affected by new ideas. As a result, we are closely interrelated with and more interdependent on other people than ever before. Therefore, each of us, whatever our role, must be more aware of other people, globally, as we initiate and adopt change…

Let us imagine, a borderless world: A world where borderless means: People can move from one place to the other without Visas. Goods and services can be bought and sold without import/export duties. Education is free (at least basic education). People would be free to do what they want to do (lawfully)… According to Pravin Koshti; the leading economic ‘-isms’ and many spiritual/religious ‘-isms’ have been trying to do that for years. The economic ‘-ism’ are capitalism and socialism: Socialists want it by making a world a single big society where everyone is working for the society… Capitalists are trying to do it through single-minded profiteering… But until now, the results are mixed at best. USSR (Russia) failed, and is becoming more capitalistic, China is becoming more capitalistic, U.S. is walking on the way to become more socialistic… But, is there a middle path where these ‘-isms’ can work together: Some people think– yes, and other say– impossible. But ‘what if’ the world was unified in different ways: For example;  ‘what if’ we really become an educated world, without politics, without divisions, without borders… and removed egos, greed… would that facilitate a kinder and gentler– borderless world?

 

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Understand Business Cycle– Upward-Boom, Downward-Bust– Economic Movements-Shifts: Critical for Good Decision-Making

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Business cycle is a fundamental, and yet elusive concept in macro-economics… it’s a pattern of economic booms-and-busts– economy-wide trends– that can have significant impact on businesses… The term business cycle (or economic cycle) refers to economy-wide fluctuations in production, trade… and economic activity, in general, over several months or years…

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The business cycle is the upward-and-downward movement of GDP (gross domestic product) with periods of expansions-contractions in the level of economic activities (i.e., business fluctuations) centered around its long term growth trend. The fluctuations typically involve shifts, over time, between periods of relatively rapid economic growth (expansion or boom), and periods of relative stagnation or decline (contraction or recession). The basic definition of the business cycle was developed by Arthur F. Burns and Wesley C. Mitchell in their book ‘Measuring Business Cycles’: Business cycles are a type of fluctuation found in the aggregate economic activity of nations that organize their work mainly in business enterprises: a cycle consists of expansions occurring at about the same time in many economic activities, followed by similarly general recessions, contractions and revivals, which merge into the expansion phase of the next cycle. Another definition by Parkin and Bade says; the business cycle is periodic, but irregular up-and-down movements in economic activity measured by fluctuations in real GDP and other macroeconomic variables. A business cycle is not a regular, predictable or repeating phenomenon like swing of the pendulum of a clock. Its timing is random and, large degree, unpredictable. However, many experts say that the term business cycle is misleading– ‘cycle’ implies that there is some regularity in timing and duration of upswings and downswings in economic activity–and most economists prefer the term ‘short-run economic fluctuations’ instead of business cycle

In the article What Is a Business Cycle– Why Is It Important? by Gregory Hamel writes: The rise and fall of economic conditions are part of the business cycle. Business planning usually revolves around decisions related to specific markets in which a company operates, but economy-wide trends can have significant impact on businesses. The business cycle is a pattern of economic booms-and-busts exhibited in the modern economy. Understanding business cycle is important because it affects– sales, profitability… and they ultimately determine whether a business succeeds-fails. Business cycles have four phases: booms, downturns, recessions, and recoveries. During booms; economic output increases quickly and businesses tend to prosper. Eventually, a booming economy reaches a peak point where economic growth rates start to fall, leading to an economic downturn. Downturns lead to periods of economic stagnation or decline called recessions. Also, the point at which economic growth rates begin to increase again is called the trough of the business cycle; a period of economic recovery follows the trough and leads back into an economic boom. The business cycle can have major effect on total level of employment in the economy: During periods of economic growth-prosperity, employment tends to be high because businesses need more workers to meet demand and expand their companies. Whereas, economic downturns-recessions are characterized by cuts in worker hours, cuts in worker pay, rising unemployment… Also, business cycle can have significant influence on consumer demand: High levels of unemployment and under-employment mean consumers have less money to spend on products and services and that can lead to lower sales… Overcoming economic downturns-recessions is one of the biggest challenges for sustaining business: During economic recovery-boom, conditions are ripe for businesses to enter markets, but during downturns-recessions the result can be the failure of many weak businesses. Surviving sluggish business cycle typically revolves around cutting costs, improving efficiency, drawing on resources saved during periods of prosperity.

In the article Economic Business Cycle Indicators by Shane Hall writes: Business cycles are difficult to predict but certain indicators can provide signals to corporate leaders, investors, economists, government officials… about the onset-progress of business cycles. The ‘Conference Board’, global business research association, identifies three main classes of business cycle indicators, based on timing: leading, lagging and coincident indicators. The Conference Board website states that all the indicators are designed to predict– peaks-troughs of business cycles in several nations-regions around the world including; U.S., Britain, Australia, China, Japan, Euro area of Europe, Germany, France, Mexico… Leading indicators are measures of economic activity in which shifts may predict the onset of a business cycle. For examples, leading indicators include; average weekly work hours in manufacture, factory orders for goods, housing permits… Increases-decreases in these measures could signal beginning of a business cycle. The ‘Conference Board’ reports that leading indicators receive the most attention because of their tendency to shift in advance of business cycles. Other leading indicators include; index of consumer expectations, average weekly claims for unemployment insurance, interest rate spread… If leading indicators signal the onset of business cycles, lagging indicators confirm these trends. Lagging indicators consist of measures that change after an economy has entered a period of fluctuation. Lagging indicators include; average length of unemployment, labor cost per unit of manufacturing output, prime rate, consumer price index, commercial lending activity… Because lagging indicators change direction after the economy enters a business cycle, they are sometimes dismissed as unimportant. The Conference Board points out, however, that lagging indicators are costs of doing business, and can provide valuable insight into structural issues of an economy. Coincident indicators consist of aggregate measures of economic activity that change as business cycle progresses. Therefore, according to the ‘Conference Board'; these indicators help define business cycles, and examples of coincident indicators include; personal income levels, industrial production, unemployment… Although leading indicators receive the most attention, the ‘Conference Board’ emphasizes the importance of all three classes of indicators when observing business cycles. Leading indicators are most meaning, when they are included as part of a framework that includes coincident and lagging indicators that help define and describe fluctuations in economic activity…

In the article 4 Phases of Business Cycle in Economics by Gaurav Akrani writes: Business cycle (or trade cycle) is divided into four phases:

  • Prosperity Phase: Expansion-Boom-Upswing of economy. When there is an expansion of output, income, employment, prices and profits, there is also a rise in the standard of living. The features of Prosperity are: High level of output and trade. High level of effective demand. High level of income and employment. Rising interest rates. Inflation. Large expansion of bank credit. Overall business optimism… There is an upswing in the economic activity and economy reaches its Peak.
  • Recession Phase: The turning point from Prosperity to Depression is termed as Recession Phase. During a Recession  period, the economic activities slow down. There is a steady decline in the output, income, employment, prices and profits. Business loses confidence and become pessimistic… reduces investment, business expansion stops, stock market falls. Typically, an increase in unemployment that causes a sharp decline in income and aggregate demand. Recession, generally, lasts for a short period.
  • Depression Phase: There is a continuous decrease of output, employment, income, prices, profits, and fall in standard of living… The features of Depression are: Fall in volume of output and trade. Fall in income and rise in unemployment. Decline in consumption and demand. Fall in interest rate. Deflation. Contraction of bank credit…The aggregate economic activity is at the lowest, causing a decline in prices and profits until the economy reaches its Trough (low point).
  • Recovery Phase: The turning point from Depression to Expansion is termed as Recovery or Revival Phase. During the period of revival or recovery, there are expansions and rise in economic activities. Steady rise in output, employment, income, prices and profits. Business gains confidence and optimistic… increases investments, banks expand credit, business expansion takes place, increase in employment, production, income and aggregate demand, prices and profits start rising,  and business expands. Revival slowly emerges into Prosperity, and business cycle is repeated.

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The ‘media’ often likes to refer to the business cycle model, since it can use terms, such as; ‘boom’ and ‘bust’. It’s a model that can communicate several important pieces of information about a nation’s economy. Basically, the business cycle is a graph which shows the level of real GDP over time. The ‘vertical axis’ shows– level of GDP, and ‘horizontal axis’ shows– time frame. A typical nation’s business cycle will most likely look like a wave, showing how GDP ‘rises and falls’ over time. Assuming that a country is achieving economic growth over the long-term, the business cycle’s ‘line of best fit’ or ‘trend line’ will slope upwards, indicating that over the span of years or decades, a nation’s economy will produce more output. But over shorter periods of time, output may fluctuate, as the economy experiences those ‘boom’ and ‘busts’ that the media is so fond of. According to Jim Riley; the business cycle is crucial for businesses because it directly affects demand for products. Every business is affected by the stage of the business cycle, but some businesses are more vulnerable to change than others. For example, a business that relies on consumer spending for its revenues will find that demand is closely related to movements in GDP. During a boom, such businesses should enjoy strong demand for their products… But during a slump, a business can suffer a sharp drop in demand… Businesses whose fortunes are closely linked to the ‘rate of economic growth’ are referred to as ‘cyclical’ businesses. By contrast, however, some businesses actually benefit from an economic downturn. If their products are perceived by customers as representing good value or it’s a cheaper alternative, then consumers are likely to switch. According to Noah Smith; modern business cycle models used by mainstream macro-economists are, for the post part, not actually models of cycles. When we think of a ‘cycle’, most of us think of something like a wave– it’s a harmonic motion such as; snapping rope or whip, ocean waves, bouncing ball… also, it may be natural to think of business cycles in this same way. When a recession comes on the heels of boom or economic bust– we can easily conclude that booms cause busts. However, very few macro-economists think like this! And very few macro-economic models actually have this property. In modern macro-economic models, since ‘cycles’ are nothing like waves. A ‘boom’ does not make a ‘bust’ more likely, or vice versa. Modern macro-economic models assume that what may looks like ‘cycle’ is actually ‘trend’… Some economists argue that the business cycle is an essential part of an economy. Even downturns have their role to play– they tends to ‘shakeup’ the economy and weed-out weak firms– creating greater incentives to cut costs and more efficiency. However, this view is controversial and other economists argue that in recession, even ‘good’ firms can fail– leading to permanent loss of productive capacity…

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Scenario Planning– Thinking Future-Uncertainity-Unexpected: Strategic Playbook-Plans to Navigate Tomorrow and Beyond…

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Scenario planning is discipline for discovering the entrepreneurial power of creative foresight in contexts of accelerated change, greater complexity, and genuine uncertainty. ~Pierre Wack… In preparing for battle, I have always found that plans are useless, but planning is indispensable. ~Dwight D. Eisenhower…

Scenario Planning, in simple terms, is a strategic planning method expressly developed to test the viability of alternative strategies… a process that stimulates imaginative, creative thinking to better prepare an organization for the future. To flourish in today’s volatile business environment, decision-makers must have vision to evaluate what may lie ahead and identify the best course of action. Scenario planning allow organizations not only to avoid dead-ends but, more important; ensure equilibrium in off-balance economy, think through change, choose the way forward with quicker, more complete, accurate decision-making for success. According to Caspar van Rijnbach; scenario thinking is not primarily about planning, it’s about learning (that’s why I refer to scenario thinking instead of scenario planning). It’s about teams working together, discussing, sharing… It’s about connecting with experts that are able to provide insights about economic, social-political trends, raising questions and provoking insights. Also, it helps to mitigate the dogmatic ‘true view’ group thinking by the management team… Instead, it instills a fresh strategic thinking awareness for creating new innovative insights… According to Kay Sargent and Peyton Pond; through scenario planning, a firm’s stance is proactive-optimistic, yet also defensive and even preemptive. Scenario planning takes into account the many forces driving change in the current business environment… According to Rob Willey; scenario planning is described as a way of rehearsing the future to avoid surprises by breaking through the ‘illusion of certainty’. However, unlike traditional strategic planning, which assumes that there is usually just one best answer to strategic question; whereas, scenario planning entertains multiple possibilities. Also, unlike contingency planning that normally focuses on a single uncertainty, scenario planning investigates several simultaneously. According to Ross Dawson; the greater the uncertainty, the greater the value of scenario planning– and, in most industries today uncertainty is increasing. In fact, engendering scenario thinking among executives is far more important than scenario planning itself; however, scenario planning is often the best route to that outcome. According to Global Business Network; scenarios are not predictions; rather, they are plausible accounts of how relevant external forces might interact and evolve in future. In scenario planning, typically, organizations create three-four scenarios that capture a range of possibilities; examines the opportunities and threats that each may bring; then makes short- and long-term strategic decisions based on these analyses. Although scenario planning has gained much adherence in industry, its subjective and heuristic nature leaves many academics uncomfortable, for example: How to know what are the right scenarios? How to go from scenarios to decisions? Furthermore, significant misconceptions remain about its intent and claim… but, to take the scenarios too literally as though they are static beacons that map out fixed future is a mistake. However, scenario planning is an important tool for examining uncertainties, framing perceptions, collective learning… In actuality the aim is to bind the future, in a flexible way– such that it permits learning and adjustments as the future unfolds…

In the article Secret Of Successful Scenario Planning by David Niles writes: In business, as in life, real outcomes often don’t follow the averages. Yet much of corporate strategy is planned as if they always did. Far too many companies make strategic planning a routine exercise. They take last year’s budgets and results, and assume some modest variation from last year’s mean (average). By relying on simple variations on the mean, companies effectively homogenize data and miss crucial key information. When you average-out the customers’ demand, you lose sight of the customers’ key decision thresholds. For example; Which ones will buy tomorrow and why? What does that say about their changing needs? Similarly, when thinking about competition, you just can’t model where the competitors were last year; in terms of pricing, service… You must discern where they’ll be in future… These ideas may not sound revolutionary, but very few businesses show discipline to create scenarios and measure probabilities for unexpected market changes. However when you do, you can better evaluate possible outcomes, probabilities, underlying drivers… and greatly improve the company’s ability to see around corners and prepare for the future.

In the article How to Build Scenarios by Lawrence Wilkinson writes: Scenarios are specifically constructed stories about the future, each one modeling a distinct, plausible world in which we might someday have to live and work. Yet, the purpose of scenario planning is not to pinpoint future events but to highlight large-scale forces that push the future in different directions. It’s about making these forces visible, so that if they do happen, the planner will at least recognize them. It’s about helping make better decisions today. This all sounds rather esoteric, but according to Peter Schwartz; scenario making isn’t rocket science… scenario planning begins by identifying the focal issues or decision factors… Ultimately, the power of scenario planning helps us understand the uncertainties that lie before us and what they might mean… It helps us ‘rehearse’ our responses to those possible futures… it helps us spot them as they begin to unfold.

In the article Ways to Apply Scenario Planning by Paul Schoemaker writes: Whenever you face high uncertainty, you need to be creative as you navigate uncharted waters. But you also need a prepared mind. Many organizations use scenario planning to test robustness of their current strategic plans against a wide range of alternative scenarios. Its equivalent of putting an airplane wing in a wind tunnel to see at what point it fails as pressure builds up. Stress-testing helps companies minimize potential negative consequences and be better positioned to seize opportunities. Companies on the move often use scenario analysis to expand their geographic footprint, explore adjacent markets, invest in new technologies, reach beyond their industry boundaries… considering a wider range of futures that might bring new opportunities… However, don’t think of scenario planning as just a corporate activity conducted by futurists and staff people. Savvy organizations translate and adapt the scenarios to multiple management levels to connect with those managing functional and business strategies… Agility requires that your strategic intent is flexibly combined with actions that will make your strategy happen, which requires adaptive leadership as well as a good strategic radar… sharing views, discussing trade-offs and building support for key strategic initiatives. Use scenarios to explain strategic choices and build support inside the company, and well beyond.

Planning is all about getting to where you want to go, while scenarios are about getting there on the best available road. Making decisions based on prior events can be dangerous and counterproductive for thriving-surviving in these uncertain times. Scenario planning answers: ‘What if’ questions– that involve important issues and large external influences. Unlike strategic planning that postulates single anticipated future, scenario planning looks at alternative versions of the future without trying to predict it. The goal is to work laterally and consider unexpected surprises that undo most extrapolations… According to King Whitney; we all adapt to change in a variety of ways. The most detrimental is getting stuck in the past. It’s easy to fall into the trap of running your business while looking in the ‘rear-view mirror’... However, despite the growing popularity of scenario planning a number of misconceptions remain, for example; all too often, scenario approaches deteriorate into little more than a conventional forecasting effort that involves assigning explicit probabilities to potential outcomes. Or, at the other extreme, scenario planning devolves into loosely grounded futurist musings with little if any relevance to current circumstances. Another common mistake is casting scenario planning as an abstract exercise that may provide value in the distant future but has little or no practical application for immediate decision-making. But, on the contrary, scenario planning provides leaders with a better understanding of the world and the macro drivers of change that are at work…

The art of scenario-based strategic planning is to connect the world of ‘what ifs’ with down-to-earth decision-making process. Necessarily, that suggests the requirement to translate 50,000-foot concepts into clear-compelling implications for markets, companies… If done effectively– creative, rigorous manner with engaged, open-minded stakeholders– scenario planning is an invaluable tool for gaining immediate impact and longer-term advantage… According to Peter Drucker; most common source of mistakes in management decisions is emphasis on finding the ‘right answer rather than right question’. This highlights one of the challenges that business leaders face; an overriding desire for greater certainty and precision at time when certainty and precision are increasingly elusive. In practice, as we know, the future is never certain: Consider, for example, the long list of ‘unknown unknowns’… According to Michael Litchfield; the value that a properly executed scenario planning exercise delivers is not to predict best or most likely future, but to uncover wide range of possible situations and develop range of associated strategic responses. Perhaps even more valuable, however, is the development of a sense of risk awareness and disaster readiness within an organization… However, despite widespread use of scenario planning there are those who criticize the method, and mostly challenge the subjective nature of the process, and inability to quantitatively measure its effectiveness… According to Pierre Wack; the future is no longer stable; it’s a moving target. No single ‘right’ projection can be deduced from past behavior. The better approach is to accept uncertainty and try to understand it, and make it part of our reasoning. Uncertainty today is not an occasional, temporary deviation from a reasonable predictability; it’s a basic structural feature of the business environment. The methods used to think-plan about the future must be appropriate for a changed business environment. Scenarios planning starts by dividing our knowledge into two broad domains: (1) things we believe we know something about, and (2) elements we consider uncertain or unknowable… The art of scenario planning lies in blending the ‘known and unknown’ into a limited number of consistent views of the future that span a very wide range of possibilities. The real value of scenario planning is that it allows policy-makers the opportunity to ‘rehearse the future’ and, in this sense scenario planning is much about– the journey as the destination.

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Pandemic Crisis and Business Continuity: Management Planning and Preparedness– Critical…Waste of Time…

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Pandemic crisis: The goal is to get through it– meaning stay alive. Staying alive requires planning even for an event that many think is unlikely; but it’s happened and it will probably happen again… so, it’s important to be prepared…

A pandemic is an epidemic of infectious disease that spreads through human populations across a large region, continents, worldwide… Throughout history there have been several  pandemics, such as; smallpox, tuberculosis… Recent pandemics include; HIV, H1N1… However, disease or condition is not pandemic merely because it’s widespread or kills many people– it must also be infectious. For instance, cancer is responsible for many deaths, but is not pandemic because it’s not infectious or contagious. According to Dr Keiji Fukuda; an easy way to think about pandemic is to say: a pandemic is a global outbreak. Global outbreak means that we see both– spread of the agent and disease activities in addition to the spread of the virus. For example; HIV spread to U.S. and much of the rest of the world beginning around 1969. According to projections by U.N.; HIV, the virus that causes AIDS, is currently pandemic, with infection rates as high as 25% in southern and eastern Africa, and its death toll in Africa may reach 90–100 million by 2025. AIDS could kill 31 million people in India and 18 million in China by 2025… Then, there was the ‘Great Influenza Pandemic’ of 1918-1919; global disaster that was caused by a novel and deadly strain of avian influenza virus; and responsible for millions of deaths. In contrast to 1918, today we know what causes influenza (virus) and how it’s transmitted, and we know how to produce vaccines, though it takes time to manufacture and administer them. Current models of possible impact of a flu epidemic in U.S. suggest that between 15% and 35% of the population would be affected and 100,000 to 200,000 would die (medium-level case). Rates of infection and mortality would probably be similar in other developed economies. In poorer countries impact would be greater. The World Health Organization predicts– 2 million to 7.5 million deaths worldwide. Political and economic effects would be severe… All companies, especially energy and communications, have responsibility to be prepared and continue their operations in crisis. Planning for pandemic crisis can also help prepare businesses for other emergencies, such as; natural disaster, terrorist attack… The potential impact on business can be significant; quarter-or-more of working population would have to take days-off because of sickness or caring for sick family member. Some businesses are more important for economic stability and community well-being than others; food stores, banking services, medical supply delivery… Each pandemic is different and the impact on businesses and overall populations will only be known and fully understood as pandemic evolves– but, business must be prepared…

In the article The Economic Cost of a Flu Pandemic by Mike Moffatt writes:  A few times each decade the world is gripped by fears of pandemic, such as; the H5N1 bird flu of 2006 and the H1N1 swine flu of 2009. During each outbreak there are legitimate fears that the outbreak may morph into a flu pandemic of the likes not seen in the Western world since 1918-1919. Needless to say the possibility of pandemic that could cause loss of hundreds of thousands of lives is bound to get people’s attention… Disease control researchers tend to talk about ‘when’ the flu pandemic might hit, not just ‘if’. Beyond terrible cost in human life, economies would take a severe hit, hurting the livelihood of billions. According to Milan Brahmbhatt, World Bank; most immediate economic impacts of pandemic might arise not from actual death or sickness but from the uncoordinated efforts of private individuals to avoid becoming infected. This at least was experience during SARS, when people tried to avoid infection by minimizing face-to-face interactions, which resulted in severe demand shortage in business services sectors, such as; tourism, transportation, retail sales, hotels, restaurants… Also, severe supply shortage due to workplace employee absenteeism, disruption of production processes and shifts to more costly procedures. This led to an immediate economic loss of perhaps 2% of East Asian regional GDP in second quarter of 2003, even though only about 800 people ultimately died from SARS. Note: 2% loss of global GDP during global influenza pandemic would represent around $200 billion in just one-quarter (or $800 billion over a whole year)…

In the article Businesses Must Prepare for Pandemic Outbreak by Scott Mugno writes: Pandemics are inevitable and businesses must be prepared by developing continuity plans… Pandemics will happen and have happened regularly throughout history. For examples; the 1918 Spanish flu, responsible for 40 to 50 million deaths worldwide and 675,000 deaths in U.S.; the 1957 Asian flu that caused one-to-four million deaths, 70,000 in U.S.; and the 1968 Hong Kong flu responsible for one-to-four million deaths, 34,000 within U.S. Not to mention increasing cases of avian bird flu developing worldwide. It’s necessary for businesses to have a continuity plan in place before the next major pandemic outbreak. The key is for businesses and public to stay informed… and take precautions… The message from U.S. government is; given magnitude of a severe pandemic influenza; individuals, families, businesses and local and state governments must prepare for pandemic and not count on federal government for significant portion of support and relief: Stay informed and communicate, communicate, communicate… The economic and human impact of pandemic is costly. According to ‘Trust for America’s Health’ Analysis; pandemic could cost U.S. economy about 5.5% decline in annual GDP…

In the article Business Plan for Pandemic by David Brown writes: In a recent survey, more than half of U.S. companies think there will be a global flu epidemic in near future. Two-thirds think it will seriously disrupt their operations, as well as, foment social unrest. But two-thirds also say they aren’t prepared. One-third of executives surveyed say nobody in their organization has been appointed to plan for pandemic; another one-quarter couldn’t or wouldn’t answer the question. According to Tommy G. Thompson; corporations are looking at this like deer in headlights, they don’t know which way to go… they are hoping it’s not going to hit them. Pandemic influenza is latest imponderable facing businesses, a form of unwanted globalization that threatens life and health of even smallest companies in the most literal way. Several surveys show that small but growing number of companies is convinced– as are many epidemiologists– that global flu outbreak is inevitable. But, how ready is the business world? For example; governments don’t require companies to have pandemic response plans and most ‘boards of directors’ doubt that they are even necessary. According to Thompson; only one-in-five U.S. companies are in good position, in terms of having a plan and being able to react effectively– and even those will need continual update and improvements. Current models based on seasonal influenza and three 20th-century flu pandemics; suggest that new and highly contagious virus strain would spread across U.S. in about five weeks. At least one-third of the population is likely to become ill with peak absenteeism about 40% of the workforce. Depending on strain’s virulence, 900,000 to 10 million people might be hospitalized, and 200,000 to 2 million might die. Given this scenario, companies should expect that a pandemic will kill some employees, temporarily cripple workforces, sow confusion and fear, and force people to make harrowing decisions between allegiances to work or family. Communication will be difficult; threaten supply chains, interrupting production of goods, delivery of services…  Experts say that operational decisions are most important and will have greatest impact, for example: Who can work at home? Who needs IT upgrades in advance to make that possible? Who needs to come in? What lines of production or service can be shut down without jeopardizing entire enterprise? Who are designated back-ups for key management positions? Here are few pandemic planning tips for business preparation:

  • Crisis management plan tailored to pandemic.
  • Plan for alternative workforce in event that large portion of workforce is impacted by pandemic. Estimates are for potential absenteeism rates of 10 to 25%, with larger rates in metropolitan areas.
  • Emotional impact of such events as death and potential of death on workforce families, as well as, the workforce in general.
  • Contingency plan for reduced production or services based on reduction of customer demand, labor force, raw materials, energy resources… needed for operation.
  • Work cooperatively with other companies for  critical business services.
  • Tele-working, telecommuting, videoconferencing and part-time shifts.
  • Capacity of Internet connectivity and information security protection.
  • Customer engagement plan and outreach programs.

Businesses that are not prepared could suffer devastating financial and human losses. As predicted by some business and health experts, a severe influenza pandemic could cause the demise of two-of-five businesses. Of three that survive, one will close within two years. It’s the self-interest of all businesses to take measures to insure their survival in the event of a crisis. Business has responsibility to provide safe work environment and precautions to protect the health of its employees, customers, or other visitors, under all situations. Failure may not only result in financial and human losses, but also potential lawsuits from those who are harmed. Publicly-held companies have either, implied or explicit obligation to see that business continuity plans are in place that will insure viability of the business, and protect the interests of stakeholders. Most major industries have specific regulatory bodies with strict laws that require protection, including; banking, health care, insurance, securities, telecommunications… According to I.M.F.; potential disruptions to trade and payment systems could expose financially vulnerable firms to possible bankruptcy. Many business-specific precautions must be taken, in advance, to minimize devastating effects of pandemic. As with any catastrophe, contingency plans must be in place and continually reviewed and updated to insure that they stay current. The plan must address how to keep the business functioning at an acceptable level during the crisis, considering that as much as forty percent of the work force could be affected. A pandemic could last for months at a time and come in several waves… When it comes to pandemic, we’re all in this together. Sick pigs and sick people… a virus in Mexico… an infection in New Zealand– in globalize world, microbial threats that seem far away can be on doorstep in hours. According to CDC; as a global community, we are only as strong as our weakest link, and if we want to prevent the next pandemic– or at least survive it– we all, and especially business, need to plan for it…

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Rethink and Reinvigorate Marketing for 2013: Maximize Impact– Paradigmatic Shift in Marketing Strategy… Market Trends–2013

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Marketing: It’s the people who figure out how to work simply in the present, rather than the people who mastered the complexities of the past, who get to say what happens in the future. ~Clay Shikry

Competitive marketing means staying ahead of the curve. In the wild world of marketing, the last mile is the most critical and often the most overlooked. Global brands will spend millions on traditional advertising and related marketing infrastructure, but spend little or nothing on making a smooth handoff to sales. The marketing world is constantly shifting and changing, and to stay ahead of the game, you need to be on top of – if not ahead of – the latest marketing trends. Sure, the methods you use are worth continuing, but you need to keep your eye on the ball…  According to Chris Marentis; based on current data and trends, 2013 should see innovation, expansion, automation, and refinement across the entire marketing industry, including; delivery mechanism, cross-channel marketing, email marketing, mobile marketing and social media marketing… According to Sid Shah; 2013  will be an eventful year for digital marketing, for example; mobile traffic will continue to sharply rise; cross-channel and cross-device measurement will be paramount; marketing will become even more granular; marketers will understand true value of social. According to Vishal Sankhla; social outreach and analysis are important components for making marketing campaigns successful, and should garner just as much time and preparation as traditional campaigns. As more social sites emerge– further fragmenting the landscape– using the right technology to locate, monitor, analyze, and engage audiences will make or break marketing programs…

According to Audrey Howes; 2013 will be a year marked by quickly changing marketing landscape, for example; mobile will surpass desktop, visualization will reign supreme, personalization will become even more important, and local marketing will be the new, old thing… According to Rob Eleveld; 2013 will be the year of content marketing, mobile usage, and email marketing. Marketers will look for greater efficiencies and utilization of multi-channel tracking and reporting for integrated channel campaigns to deliver real-time results at a lower cost… Lines between traditional media and new content formats will continue to blur as journalists and bloggers will be distinguished by the content they create and their influencer reach… In search of optimization, more companies will move select sales responsibilities ‘up-funnel’ including; CRM operations, lead and opportunity qualification– into the marketing department… According to Richard Hanna, Andrew Rohm, and Victoria Crittenden; marketing can no longer be about solely– capturing attention via reach; instead, marketers must focus on both; capturing and continuing attention via engagement. This calls for a blend of both traditional and social media, which requires new approaches to media strategy– media that does not simply replace traditional media, but rather expand media choices so as to capture– reach, intimacy, and engagement. Social networks aren’t about web sites: They’re about experiences. The ever-changing and evolving marketing best practice continues to show that the right mix and blend of traditional and new media is the best approach to branding… The parallel worlds of marketing— blogs, podcasts, e-marketing, mobile, text and social media platforms…– provide an overwhelmed variety of choices and challenges for the year ahead…

In the article Social Media Strategy: Marketers Need to Revisit for 2013 by Tricia1000 writes: In 2013 social media marketers need to reflect more on current social networking practices in terms of– value, grabbing attention, and future prospective… It’s interesting to note how fast new social media sites are being adopted, but just as interesting is how many of them eventually disappear. The keys for 2013 marketing priority must include; rethinking current social media networking practice and how social media networks can better meet the needs of their customers… A social media strategy for 2013 should focus on at least these three aspects:

  • Value: People visit social media sites to gain something from the experience. This can be to socialize with online friends, getting the latest news and resources playing games, to name but a few. By providing value to its customers; the business reinforces brand and creates loyalty.
  • Attention-grabbing: The social media network must also grab and keep the attention of its users. A social media site must offer something different to its users so it can continue to grow.
  • Future prospective: It’s important to sustain the business’ presence on a particular social media network. A social media site must be relevant to the business’ target audience, both today and planned strategy for the future.

In the article Digital Trends You Need to Embrace by Kent Lewis writes: Digital marketing trends that no marketer can afford to ignore include; social media, video, search engines, mobile, and marketing automation. Key strategies and trends are:

  • Evangelizing your brand via social media marketing: The current thinking regarding how your business should interact with customers via social media is already becoming outdated. The old mode of one person, one voice does not offer the depth and breadth of a multi-faceted approach which involves all employees. I recommend turning social roles upside down, focusing on integrating social media throughout your organization, driven by a social media evangelist. In the evangelist model, the role is that of chief brand officer/ CMO/ editor-in-chief/ director all wrapped into one.
  • Maximizing your media via video marketing and YouTube: Video provides the ultimate storytelling medium; if a picture is worth a thousand words, then how many words is a 30-second video at 30 frames per second worth? According to eMarketer; U.S. online video advertising spending will grow 52.1% to $2.16 billion in 2011, before reaching $7.11 billion in 2015. In terms of social media platforms for video, YouTube is the 800 pound gorilla and the second most popular search engine by volume. A few YouTube stats: 60 hours of video are uploaded every minute, over 4 billion videos are viewed per day, U.S. consumers exposed to a YouTube homepage ad are 437% more likely to engage in a key brand activity on the same day than those unexposed, and 70% of YouTube traffic comes from outside the U.S. As such, you cannot afford not to create your own channel. To be truly effective, a YouTube channel should contain videos for all four stages of the sales cycle: awareness,  interest, intent, and purchase..,
  • Penguin-proofing your search engine optimization efforts: Over the past two years, Google has made a series of updates to  its algorithm, collectively known as Panda and Penguin. Most business owners felt the impact of penalization immediately, but it is important to confirm that your  poor-quality content and suspect inbound links. To solve the problems, once identified, simply reverse or de-optimize  the elements and resubmit to Google once you have 100% confidence the website is clean.
  • Mobilizing your marketing: Marketers have scrambled the past year or two in order to find a solution to the mobile challenge. After years of hypothesis, mobile is finally upon us, and there are a variety of elements to consider when developing a mobile marketing strategy. Before you get started, however, conduct the necessary research up front to minimize your investment and maximize your ROI. Don’t forget to develop KPIs, embed necessary analytics, and start small with limited testing before committing significant resources. The three key mobile strategies: mobile-friendly websites, mobile ads, and SMS and email messaging.
  • Automating your marketing: A marketing automation platform helps develop and analyze marketing campaigns and understand prospects and customers. While core functionality focus on automating marketing campaign development, management, and reporting, these platforms also offer critical lead management capabilities, including; lead scoring and nurturing.

Marketing leaders are asking questions about how to effectively attract, influence, and retain customers in this age of increasing media options and decreasing customer attention spans. According to Shelley West; four topics we hear most often include: Omni-Channel Customer Experience: How do I create a seamless experience that is relevant and engaging across channels – including; digital, social, traditional media, and bricks and mortar? Integration of Tech and Marketing: How do I effectively leverage and integrate the new technology available today, such as; customers listening tools, marketing automation, and ROMI attribution? Understanding the Customer Journey: How do customers travel the path to purchase in this age of digital, social, and mobile and where are the points of drag along the way? Marketing Talent for the Future: What skills and capabilities do I need to hire for and develop to ensure our function is properly equipped to deal with the rapid pace of change in the marketplace? When taken together, these questions paint a picture of world in which the only constant is change: New technology, media options, new customer segments – all of which need to be identified, understood, worked into a marketing plan, and executed expertly. Certainly it was easier when all marketing leaders had to do was chose which of four big networks to run advertisements and then calculate the GRP. But we are finding that ‘big is making way for small’, reach for depth, and mass for personal. And that means many marketers need to rethink things all together…

According to SmartMediaTips; 2012 really was the year of the social network. Pinterest has become the third biggest social network in the U.S.; Twitter surpassed 140 million users by its birthday; and Facebook brought Instagram for a cool $1 billion. Everyone from B2B right through to B2C has embraced these social media powerhouses, and rightly so. Search engines are starting to place more relevancy on socially generated content. So if you’re not getting social – you should be. In 2013, your online marketing strategy will rely heavily on social sharing and content generation. To be seen as an industry expert, your social media presence will become more important, and networking will drive more traffic to your site…  A recent study reported that worldwide tablet traffic will far exceed mobile traffic in 2013. New wave of ‘mini tablets’ hitting the market means– tablet strategy– making sure your websites are properly built for devices, and tailoring your marketing to the users… Marketing must implement effective strategies that target these audiences. The web is changing and marketing must lead the change… Integrated marketing is nothing new; we have been combining our marketing strategies for years. But in 2013, digital marketing will play a bigger role when combined with more traditional campaigns. For example, networking events have been a strong tactic for many years. But next year, we will begin to see a rise of the digital event. Webinars are commonplace and easy-effective way for reaching out to customers and peers all over the world. In terms of your marketing strategies, this is one trend you should be keeping an eye on. Participating in digital meetings, Twitter chats, and Google+ Hangouts will become the new way of communication with customers… According to Kate Freeman; probably the biggest error brands have made as they venture into mobile is that they think mobile is the same thing they’re doing for the website, just down to a 4-inch form. Mobile is an entirely different medium… Marketing on mobile devices must be– timely, personal, contextually relevant (people expect their phone to be customized to them), in order to work…  Marketing must get smarter– listen, learn, understand– who, why, what, where, how much… Now, take a step back, and get to know the customers… they are different, global, personal…

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Management by Fuzzy: Decision-Making in Environments of Ambiguity, Uncertainty– Tough Decisions with Fuzzy Logic

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In the world of fuzzy logic, two statements can be both true– even though they contradict each other.

Humans have a remarkable capability to reason and make decisions in an environment of uncertainty, imprecision, incompleteness… of information. Fuzzy logic is a form of multi-valued logic or probabilistic logic; it deals with reasoning that is approximate, rather than fixed and exact. Fuzzy logic was developed by Lotfi A. Zadeh, in 1965, and it’s been applied to many fields, e.g.; control theory, artificial intelligence, decision-making… and, also to business management decision-making, which involves tough decisions with limited information that’s usually– vague, uncertain… There are many misconceptions about fuzzy logic: To begin; fuzzy logic is not fuzzy. In large measure, fuzzy logic is precise, and it’s much closer to the way the human brain actually works. To better understand fuzzy logic ideas let’s relate its principles to human reasoning, for example; the statement– ‘today is sunny’– in reality might be 100% true, if there are no clouds; 80% true, if there are a few clouds; 50% true, if it’s hazy; 0% true, if it’s raining…in the example, the fuzzy logic would actually represent these multiple conditions, whereas in traditional solutions, it’s either; true or false (i.e., its sunny or it’s not). It’s also used in some spell checkers for suggesting a list of probable words to replace a misspelled one, whereas in traditional solutions, it’s either; right or wrong (i.e., its spelled right or it’s not). Often knowledge used in discussing and making strategic decisions is expressed in terms of; rules of thumb, management principles, business rules ... Many experts suggest these types of rules are actually fuzzy rules that can be combined, using fuzzy logic, into a knowledge system that recognizes more than just simple; ‘true and false’ values. In the examples; fuzzy logic represented the multiple ‘degrees of a condition’, which in reality represents most management decision-making, and these are exactly the situations when a fuzzy logic based decision process can be most effective…

In the article To Get Better Decisions, Get a Little Fuzzy by Bob Frisch writes: It’s easy to equate– crisp, clear, black-and-white decisions with good decisions. I’ve seen this classic model of decision-making dominate companies in practically all industries and corporate cultures. But, as often as not, this drive toward clarity and closure — and the need for precision that accompanies it — leads senior management teams to waste time and make meaningless decisions. Often, it’s better to be fuzzy, to deliberately introduce imprecision into your team’s decision-making process. For example, an executive team charged with creating a high-level timeline for launching various strategic initiatives or determining whether a specific resource should be deployed would spend innumerable hours debating which ‘ones’ will be launched, immediately, and which ‘ones’ later this quarter, or which ‘ones’ two quarters from now versus next year, or even which in 60 versus 90 versus 120 days. The fact is; it doesn’t really much matter. Once reality of implementation intrudes on even the best-laid plans; decisions made by the senior management team often become more like suggestions anyway. A few years ago, one of the senior management groups I work with tried something different: Fuzzy logic.  It’s a branch of mathematics concerned with deliberately introducing imprecision into decision science. For example; washing machines, were being programmed to heat water to ‘warm’ without a specific temperature being assigned to that concept — ‘warm’ was simply the state of being hotter than cold and colder than hot. So, we decided to try a similar approach using fuzzy logic in management decisions. Rather than just putting initiatives into many specific time buckets, I asked the senior management team to make one decision, namely: Was their initiative something that would start ‘now’ (i.e., immediately — tomorrow morning 9 a.m.) or was it something that would start ‘later’ (simply defined as ‘not now’)? This made executives uncomfortable, so we introduced a third bucket, namely– ‘soon’ — defined as; ‘later than now but sooner than later’. Suddenly, the task of assigning initiatives to timeframes became dramatically simpler. The challenge of determining whether something was 30, 60, 90, or 120 days out was transformed into a much more manageable and meaningful discussion: Was their initiative something we are going to do ‘now or not’? If it’s not going to happen ‘now’, should it happen ‘soon’? That’s the discussion the CEO wanted to have, and the energy of the conversation was refocused into a much more productive channel. We soon extended this notion of fuzzy decisions not just to time, but to importance. Rather than rank each initiative in an ordered single list, as we had been doing for years, we began assigning the initiatives to priority buckets, e.g., ‘must do’, ‘should do’, and ‘nice to do’. The approach changed the task from judging the relative merits of each initiative against each other one to clustering projects with similar importance together. Since it eliminates both; problems of drawing artificially fine distinctions, on the one hand, and trying to compare apples to oranges, on the other. By using this simplified approach it enabled the team to have a truly meaningful conversation about the relative strategic urgency, rather than the relative merits, of the various initiatives. Of course when we began, few sponsors were willing to categorize their initiatives, as either; ‘later’ or ‘nice to do’. So, most projects were initially put in the ‘must do’ and ‘now’ buckets. But over the course of the conversation, a ‘high must-do’ cluster emerged that was clearly more important than the ‘low must-do’s’. As the ‘low must-do’ category devolved, predictably, into ‘high should-do’, the borders of the buckets were soon aligned into the appropriate clusters of initiatives. Assigning relative importance (e.g., ‘must do’, ‘should do’, ‘nice to do’) and relative time (e.g., ‘now’, ‘soon’, ‘later’) to a set of initiatives, and then stepping back to examine the clusters of activities– isn’t precise, isn’t black-and-white, and isn’t crisp, however, because it more closely matches the way companies are actually run, it’s a far more effective tool for aligning the various priorities of the management team.

In the article Dealing with the Early Phase of the Innovation Process Characterized by High Degree of Ambiguity by Vadim Kotelnikov writes: The early stage of an innovation process is ripe with opportunity, but it is also devoid of many definitive facts. Due to its high degree of ambiguity, the development phase has become known as ‘the fuzzy front end’. While the situations that fuzzy logic addresses are ambiguous; fuzzy logic itself is a very well-defined methodology. Business leaders use the managerial equivalent of fuzzy logic to address the ambiguity of ‘the fuzzy front end’. The core elements of the approach include:

  • No plan survives: Whatever plan you create will not be one you will ultimately implement.
  • Having a plan is better than not: Having a collective understanding of the business      and intentions enables the team to select and communicate alternate directions knowledgeably and quickly.
  • Make decisions at an early phase: You’ll never have all the data. Waiting for more      data can go indefinitely, and much of what is called data, such as market research, is more opinion than fact.
  • Be flexible: Ongoing thinking and action brings strategy to life. Scan constantly for new developments and be ready to retarget briskly when needed. Locking into any plan when the competitive context continues to change is a foolish approach.
  • Think of product families: One-off thinking yields one-off products.
  • Find a partner: Don’t do it alone. Focus internally on making a world-class contribution and then leverage others who can bring their complementary skills, resources and capabilities to the party.
  • Balance customer feedback with technology potential: Listen to your current customers, but don’t always believe them. Although customers can be overly conservative, technology by itself rarely wins.
  • Focus on opportunity, not financial returns: Money isn’t everything. Measuring return, risk, and investment solely in terms of dollars is a mistake.

Fuzzy logic is designed to deal with imperfect information, which in one or more respects is imprecise, uncertain, incomplete, unreliable, vague or partially true. In the real world, such information is the norm rather than exception. Fuzzy logic is usually defined as an approach for decision-making based on ‘degrees of truth’ rather than the usual ‘true or false’. With today’s information overload, it has become increasingly difficult to analyze the huge amounts of data and to make appropriate management decisions. It’s important to extend traditional decision-making processes by adding intuitive reasoning, human subjectivity and imprecision. Most publications in management and marketing do not address the problems which arise when using just traditional, non-fuzzy, or crisp methods. According to Tomasz Korol; globalization has led to the emergence of a complex network of relationships in the business environment, which means increased complexity and uncertainty of factors affecting all businesses. For example; many phenomena in finance and economics are fuzzy, but are treated as if they were crisp… the vague and ambiguous concepts of fuzzy logic can define terms, such as; ‘high risk’ or ‘low risk’ and make them very much relevant… According to João Paulo Carvalho and José A. B. Tomé; management of uncertainty is an intrinsically important issue in the design of decision systems, because much of the information in the knowledge base is imprecise, incomplete… In the existing systems, uncertainty is dealt through a combination of; predicate logic and probability-based methods. A serious shortcoming of these methods is that they are not capable of coming to grips with the pervasive fuzziness of information and, as a result, are mostly ad hoc in nature. A feature of fuzzy logic, which is of particular importance to ‘management of uncertainty’ is that it provides a systematic framework for dealing with fuzzy quantifiers, for example, terms as; most, many, few, not very many, almost all, infrequently, about… Fuzzy logic makes it possible to deal with different types of uncertainty within a single conceptual framework… Fuzzy logic is all about the relative importance of precision: How important is it to be exactly right when a rough answer will do?

As complexity rises, precise statements lose meaning and meaningful statements lose precision. ~Lotfi Zadeh

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