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Ability to execute on CSFs

Ability to execute on CSFs. Chapter 7 New Business Road Test. The 7 domains of attractive opportunities. Market domain. Industry domain. Market attractiveness. Industry attractiveness. Team domain: Mission Ability Connectedness. Macro- level. Target segment benefits and

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Ability to execute on CSFs

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  1. Ability to execute on CSFs Chapter 7 New Business Road Test

  2. The 7 domains of attractive opportunities Market domain Industry domain Market attractiveness Industry attractiveness • Team domain: • Mission • Ability • Connectedness Macro- level Target segment benefits and attractiveness Sustainable advantage Micro- level Refresher

  3. Entrepreneurs must be able to: • Identify the critical success factors (CSFs) specific to their particular industry • Assemble a team that can execute on these factors

  4. Two key questions to ask to identify your industry CSFs • Which few decisions or activities are the ones that, if gotten wrong, will almost always have severely negative effects on company performance? • Which decisions or activities, done right, will almost always deliver disproportionately positive effects on performance?

  5. A CSF for retailing: Location • Starbucks’ process of site selection was enormously time consuming. • One real-estate error represented a $500K mistake • Starbucks closed only 2 of the first 1,000 stores it opened

  6. 3 high-tech CSFs for customer needs • Anticipating and understanding customers’ real problems or needs • Understanding deeply an area of technology and what it can and cannot deliver, both today and tomorrow • Finding ways to harness the technology to resolve these problems or needs. Can the customer’s pain be relieved?

  7. 3 broad strategic approaches in mature manufacturing industries • Operational excellence: lead the industry in price and convenience (Wal-Mart) • Customer intimacy: focused on individualized service to each customer (Harrah’s) • Product leadership: provide a continuing flow of state-of-the art products or services to stay at the industry’s cutting edge (Palm) Treacy & Wiersema, 1993

  8. CSFs for manufacturing strategies • Operational excellence • Minimize all costs • Optimize business processes for extreme efficiency and effectiveness

  9. CSFs for manufacturing strategies • Customer intimacy • Gather detailed information about each customer to assign them to a micro-segment; tailor the offering specifically to that segment’s needs • Segmentation can be so precise that an offering may be tailored to a micro-segment of one

  10. CSFs for manufacturing strategies • Product leadership • Creativity, to recognize and embrace ideas that may originate outside the company • Optimize business processes for speed to bring these ideas to market quickly • Relentlessly pursue new solutions that may obsolete those that the company has just introduced.

  11. CSFs for manufacturing strategies • Effective, efficient value-chain relationships • From suppliers, manufacturers need reliability, quality, and on-time delivery at an affordable price • From resellers, they need a commitment and sell-through – a commitment that a manufacturer wins be being a reliable supplier of quality products itself

  12. Investors want to know that: • The lead entrepreneur has identified and embraced the CSFs in the industry they propose to enter, as well as the market and competitive environments they will encounter • The lead entrepreneur has assembled a team that can demonstrate in past deeds that it can execute on every CSF

  13. Palm Computing (then…)

  14. Palm Computing (…and now)

  15. Jeff Hawkins • Late 1980s: GRiD Systems – 4.5-pound pen/tablet computer for $2500 • 1993: Palm’s Zoomer – heavy and cumbersome handheld device for $700 sold 20,000 units in first two months • 1996: Palm Pilot 1000 – fast, easy to use organizer for $149 sold 1 million units in 18 months

  16. Palm’s CSFs • What did the customers really need? Palm’s competition was paper, not computers • What could (and couldn’t) technology deliver? Graffiti, screen space solutions • Harnessing technology? Design discipline and better operating system ensured simple features and design

  17. Palm’s execution on the CSFs • Understanding customers’ real needs: Focused on small and simple product. • Understanding deeply an area of technology: Hawkins resolved handwriting recognition with Graffiti • Finding ways to harness technology to meet customers’ needs: Passion about the look and feel of the Pilot prevented compromises

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