Chapter Twelve

1. Chapter Twelve Developing the e-Business Design: Strategy Formulation

2. Introduction • E-business requirement • Simultaneous melding of business strategy, enterprise apps, and technology implementation • None by itself sufficient • Traditional corporations gullible of the “legacy effect” • Refusal to change can mean stagnation and losing ability to generate new value through innovation • e-Business not a silver bullet; simply another technique for reinventing business • Intel www.ebstrategy.com

3. Roadmap to Moving into e-Business • Making e-business a reality involves three key components: • e-Business strategy • Figure out why and what of customer value creation • e-Blueprint formulation • How and when of customer value creation • Tactical execution www.ebstrategy.com

4. E-Business Strategy Formulation • In this phase, managers build awareness and make plan to create new customer value • Develop clear vision of what the customer needs are and what the customer is looking for • Be conscious of own abilities and limitation • Includes • Knowledge building • Capability evaluation • e-Business design www.ebstrategy.com

5. The Process of e-Business Strategy Formulation • Three approaches to e-business strategic plan • Top-down analytical planning • Bottom-up tactical planning • Continuous planning with feedback • Important question to ask • What result do I want? • Strategic success dependent on business results you want, not on what Wall Street thinks • Managers are the change agents • Define destination • When we are done, my customers will ________ • When we are done, my employees will________ • When we are done, my company will_________ www.ebstrategy.com

6. The Process of e-Business Strategy Formulation • Top-Down Analytical Planning • Systematically define a vision of the business’ future to assess cost and prepare capital budget • Data-rich environment, numbers driven; Managers review alternative scenarios to identify most likely outcome and create strategy based on that • Serves well under stable business conditions; e-world is anything but stable • It’s single greatest problem: Separation of strategy formulation and implementation • The never-seen-again strategic plan • The no-goals strategic plan • The no-feedback strategic plan www.ebstrategy.com

7. The Process of e-Business Strategy Formulation • Bottom-Up, “Just Do It” Planning • Frontline force taking on new importance in today’s environment with awareness of changes in customer needs • Organizations with hierarchical structures have few mechanisms in place for ensuring insights of front-line staff reach strategy makers • As a result, bottom-up strategic planning flourishing • Managers abandoning analytical rigor of traditional planning processes and basing decisions on solving immediate needs • Downside: Can result in fractured pattern of authority, with individual managers basing strategic decisions on their business units’ needs, not needs of the enterprise as a whole www.ebstrategy.com

8. The Process of e-Business Strategy Formulation • Continuous Planning with Feedback • In fluid business environment, best approach to allow strategy to evolve through discovery of what works and what doesn’t • Success dependent on feedback • Demand for quick success and max ROI often derails e-business projects undertaken by established firms • Trigger-point planning supports decision making in rapidly changing environments • Lucent, Xerox, and Ericsson www.ebstrategy.com

9. Knowledge Building • Enables managers to understand priorities by gathering information on how customer needs change over time • Strategy must be based on fact, not opinions • Otherwise, right strategy for wrong problem • Fact-based approach involves: idea generation, collection, and evaluation and screening • Knowledge building generates ideas • Ideas are screened for potential core strategic ideas • Data collected should address key areas • Data from these areas is segmented and analyzed to determine the key opportunities in each www.ebstrategy.com

10. Knowledge Building Questions to ask when starting an E-Business www.ebstrategy.com

11. Knowledge Building • Who are my customers? • First, categorize customers into segments • What is important for each segment? • Examine behavior in complementary markets • What 5 new products in your industry have become popular in the last 5 years? • What customer segments are buying these products? • Why do they like these products or services? • Focus on distinctive customer service • Finally, ask who your customers are www.ebstrategy.com

12. Knowledge Building • How are my customers’ priorities changing? • What five things do your customers ask for most often? • Are your customers seeking experience, not just product/service? • How will you add value to them? • How has your customer changed in past 5 years, and what will be the change in the next 3? • How can I add value to my target customer? • Customers want innovation, value and savings • How can a company provide increasing value for its customers while simultaneously reinventing certain parts of its business? • Rule breakers avoid focusing too much on competition, tend to be creative, and don’t let industry assumptions become barrier • Starbucks, AOL, Yahoo!, Palm www.ebstrategy.com

13. Knowledge Building • How do I become customer’s first choice? • Every customer contact creates for the customer a moment of mediocrity, a moment of misery, or a moment of ecstasy; How do your customers experience contact with your firm? • You can be customer’s first choice if you dazzle them with unexpected service • What incentives do you offer your best customers? • How do customers make decisions about buying your firm’s product or service? • What has your company done to retain customers and deepen customer relationship? www.ebstrategy.com

14. Knowledge Building • How does my product reach the customer? • Understanding product distribution and marketing crucial to success • Calyx and Corolla created the direct-from-grower model in flower industry • How are your company’s products delivered? • How many steps do they go through before they reach the customer? • How many of these can be eliminated? • How can this distribution and delivery process be streamlined using the Internet? www.ebstrategy.com

15. Knowledge Building • Do we understand environment and industry trends? • Take a fresh look at the environment and see how it’s changing • Define critical industry and customer issues so that decisions can be made against the backdrop of a broader context • Correctly position the firm within the industry and identify the most critical industry issues • Do we understand technology trends? • What core technology are you betting your future on? • Is it going through a transition? If so, do you have a transition plan? • Are you putting all your eggs in one basket or are you diversified? www.ebstrategy.com

16. Knowledge Building • What are the priorities in the supply chain? • Do you understand what your upstream suppliers need from your company? • Do you know what your suppliers’ current capabilities are? • How can we better partner with them to deliver value more effectively? • Is there a channel conflict problem? • Who are my competitors? • Competitors arent just the other companies in the same business • Which are your firm’s top competitors today? • Which are the five upstart companies that will become fierce competitors within next 5 years? • How sure are you that your firm understands competition? www.ebstrategy.com

17. Capability Evaluation • What do we want to accomplish? • How should we structure ourselves to be most effective? • What capabilities do we have today? • What capabilities and resources do we need to acquire in the future? www.ebstrategy.com

18. E-Business Design • Data analytics, coupled with broadcast engine technology, foundation for proactive business intelligence • Anytime, anywhere, any place • BI is proactive and data driven • Automates delivery of info to customers using exception conditions and recurring schedules as triggers for communication • Traditional decision support apps do not personalize info • MicroStrategy’s DSS Broadcaster include new personalization and distribution capabilities • New BI apps turning traditonal query-and-response paradigm of decision support on its head www.ebstrategy.com

19. E-Business Strategies, Inc www.ebstrategy.com contact@ebstrategy.com 678-339-1236 x201 Fax - 678-339-9793