The 5 levels of change

We face opportunities and challenges everyday. Taking advantage of the opportunities or managing the challenges involves change and maybe moving workers out of their comfort zone. Each challenge or opportunity requires different management and change level. The following is a spectrum of change levels that will cover almost every challenge faced in business.

Level 1: Improve efficiency

2014-12-19 20.51.12Improve efficiency by determining if workers are putting the right effort at the right place. Take a look at the current work practices and if the workers are doing what they are suppose to do.
Worker competence and willingness to work are two major factors at this level. Superstars in box 1 are those who are competent and willing to work. They are go-getters who you only need to describe the job for them and they will execute it flawlessly. Workers in box 2 are good workers who are willing to work, but not competent enough to execute a faultless job. Training and development are the solution to increase the workers’ efficiency in this box. Competent and experienced workers in box 3 are unwilling to do their jobs for different reasons. Motivation may help improve the efficiency in box 3 but the workers are choosing not to work for different reasons. Workers in box three knows the rules and regulations, knows the lube holes, shortcuts and exceptions. Troublemakers are usually found in this box and the leader or manager should be careful with them. Workers in box 4 are either new workers or older workers who’ve been moved to a new job without proper training. Their unwillingness to work may be affected by their incompetence or the neglect they feel after they have been assigned to their new role. The leader should either replace workers in the box or train and motivate them to do their jobs.

Level 2: High performance.

Importance vs UrgencyExecuting the right business process. Focus on the important and not urgent part of the business before they become important and urgent. Important and urgent businesses are usually executed in a firefighting mood which lead to mistakes or substandard jobs. Organize work by using the right procedures and setting priorities with key performance indicators and milestones. Pareto Principle states that 80 percent of all the things being done are executed by 20 percent of the right effort by the right people. Assign the right workers with the right resources to high yielding part of the business.

Level 3: Improve, eliminate and copy.

Cut or improve some of the steps from the best process recognized for the business. In level 2 we selected to automate processes to conduct the organizational business, but we need to improve or trim some of the redundant steps that take up time and recourses with little or no positive effect. Redesign the business process by eliminating the unnecessary steps, improve vital steps and imbed best practices in the process. Revisit the business process with fresh and unbiased eyes. Some of the steps in the process were put to inflate somebody’s ego. Other steps were useful for many years, but became absolute now. Some activities and regulations are practiced in the organization for no apparent reason. When asked, the workers will say “we always do it this way, but we are not sure why!” Simple questions can reveal a lot of wrong practice. The same simple questions can be directed to top management and floor workers.

2014-12-17 08.53.29Organization’s do not work soon. Competitors with similar products are produced by similar processes or even better. The organization should explore how others are executing their businesses and find ways and means to adapt them in the organization. Change will always have resistance from workers living in their comfort zone. Not Invented Here (NIH) is one of the hurdles that workers used to stop or even sabotage processes or practices they did not develop internally in the organization. Workers ego and selfishness will find faults and difficulties in the new best practices they did not develop. Resistance can be handled by explaining or demonstrating the benefits of the new best practice and how it may help the workers in their daily work.

Level 4: Think out of the box.

Brainstorm new idea nobody thought could be possible or feasible. The new ideas may have a slim chance to succeed, but experimenting with these ideas after careful thought may yield great results. The new ideas may lead to other possibilities worth further exploring. Integration between different tools or technologies can result in different possibilities and products. New ideas are always welcome, but implementing them will face Great resistance. Change management is a major factor in getting the new ideas go through the comfort zone.

Level 5: Breakthrough.

Complete shift in the thinking paradigm. In this level the business owner was exploring new territories that never been explored before. The breakthrough might be in changing the future direction by more than 90 degrees. Intel dropped the memory chip business and pursued the processor business. Steve Job reduced the Apple products from 12 to only fore after his legendary return to Apple.

 

Bargaining Power of Customers (Porter’s 5 Forces)

Five Forces - CustomerAn evaluation of how it’s simple to drive costs down for the customers. The customer can influence the price and terms of purchase and may request better service and product quality. The customer power is magnified when the market has many sellers and fewer customers. The switching cost from one seller to another is another factor in the buyer’s bargaining power. The buyers switch to another seller if the products are similar and there is no significant cost to switch. The washing machine detergents are almost similar and do the same cleaning. Dental care products are almost the same with different flavors. Online search engines are another example of service similarities. Users may switch because of a delay of a fraction of a second during the search. The customer will buy another toothpaste because of the new flavor of the month. In undifferentiated market, the brand loyalty between the buyer and seller could be the only reason why a consumer sticks with one seller over the other.

The customer may switch to another product if the customer is well-deducted about the product and have price sensitivity. The availability of the product substitute makes the seller weaker relative to the customer bargaining power. Supermarket shelves in most countries are stacked with different bands of a similar product that the consumer can conveniently choose from according to the brand name, price tag, or attractive packaging.

Regional small farmers, selling most of their farm products to a large supermarket chain have little influence on the terms of the sale. The farmer may opt not to sell to the supermarket at the price they set, but then the farmer has to endure the additional transportation cost to sell his products to another market.

The Suppliers Bargaining Power (Porter’s 5 Forces)

Supplier power is an evaluation of how easy it is for providers to drive costs up. The supplier power is driven by the singularity of the product or service; the number of suppliers; relative size and strength of the supplier; and price of changing from one supplier to another.

Located in London and South Africa, DeBeers controls 58 percent of all rough, uncut diamonds sold worldwide until 2004. DeBeers had to pay a $10 million to settle a 10-year-old indictment. The settlement was huge but gives DeBeers a bigger marketing presence and greater legitimacy with U.S. consumers. However, DeBeers market share eroded as new profitable mines were discovered in Russia, Australia, and Canada and those miners started selling to the market directly without the help of DeBeers.

TheFive Forces - Suppliers suppliers power increase if there are fewer suppliers in the market who can form a monopoly or duopoly on the buyers. The same power will decrease if there are alternatives to what the suppliers are selling to the buyer. For example, if natural rubber farmers form coalitions and start raising their prices, then the buyers may switch to synthetic rubber as a suitable alternative. However, if both producers of natural and synthetic rubber form a consortium and start raising their prices then the buyers are forced to accept the higher prices (or pass the additional cost to their customers) until the buyers can find a good and reliable alternative for rubber.

Sometime the alternative is available, but the switching cost from one supplier to another is higher than accepting the original supplier’s prices. Professional video editors are on the look for the latest tools and gadgets to improve their skills and performance. However, the cost of abandoning Final Cut Pro and switching to Adobe Premier Pro maybe too much because of the price they paid to buy the editing software. Another cost to consider is the skill and experience they build up by using one system and they have to re-learn again for the new software. Similar situation is faced by international organisations when they consider switching from Oracle to SAP or for the airline companies to switch from Airbus to Boeing.

The supplier may not decide to raise the price but forward integrate its business. A fishing company that has boats to catch fish in the sea is a supplier to the fish market and the local distributors. The same fish supplier may decide to integrate its business to catch the fish then open stores in the same neighbourhood to sell the fish directly to the customers. The supplier will disrupt the market by taking the distributor’s business and competing with the local fish stores. The same example may apply to Airbus or Boeing if they chose to build the plane and then set up their own airline company.

Read also Threat of New Entrants (Porter’s 5 Forces)Bargaining Power of Customers

Simplified Business Coaching

Businbusiness_grey_stickmen_shake_hands_pc_800_clr_1570ess coaching provides the business owner time and space to stand down and reflect on the overall business. Business coaching will give the leadership team the opportunity to voice their concerns, discuss their challenges, and future circumstances. Business and personal coaching are similar, to some extent, to sport coaching because the coach will help the individuals to discover their true capabilities and overcome mentally set limitations. 

Business and personal coaching are both build on the trust between the coach and the client. A professional coach asks the right question at the right time to provoke the client thoughts and imagination. Business coaching is located between therapy and consulting. The coach’s power-questions inspire the client to search through his or her experience to find new answers and the means to overcome the challenge or solve the problem.

For more information on coaching and to request a free professional online coaching session please click here.

 

The Purpose of the Business

The purpose of the business is to maximize shareholder value, but the stakeholder may be enriched in the same process. The media is evaluating the organization according to its hiring and firing policy and practices. The organization may be firing employees because of a strategic and profitable decision but the media will report this decision negatively. The organization may be hiring without good business sense but the media will positively talk about the organization even if the hiring is adding unnecessary cost to the bottom line. Drucker (2004) state that the purpose of business is to create and keep a customer. The customer will create the jobs and will demand products from the organizations. The customer demand will increase the organizational productivity which will enrich the shareholder then the stakeholder.
Rasmussen and Den Uyl (2009) state, the purpose of the business is to maximize the owners value by selling goods or services. Business leaders focus on their strategy’s direction, momentum, and balance to achieve the business goals. Setting and implementing good strategy will maximize the shareholder value and enrich the stakeholder. Walker and Shenkir (2008) state, the leader should examine the effect of the strategy on the organization’s objectives after he or she develop the strategy.

References:
Drucker, P. (2004). The daily drucker: 366 days of insight and motivation for getting the right things done. New York: Harper Business.
Rasmussen, D. B., & Den Uyl, D. J. (2009). Making room for business ethics: Rights as metanorms for market and moral values. Journal of Private Enterprise, 24(2), 1-19. doi: http://www.apee.org/journal-private-enterprise.html
Walker, P. L., & Shenkir, W. G. (2008). Implementing Enterprise Risk Management. Journal of Accountancy, 205(3), 31-31.

Competitive Advantage

Market imperfections can be in the form of monopoly, externalities or public goods, but sometimes defined as anything that interferes with trade (DeGennaro, 2005). The organizational competitive advantage can be achieved by adapting to the external trends and events and adapt to the changes in capabilities and resources. The organizations can make the competitive advantages by formulating and implementing strategies that help adapting and taking advantage of these changes (Ogrean, Herciu, & Belascu, 2009). Organizations can definitely take advantage of the market monopoly and keep up its position until another competitor force its market penetration. Externalities can be used as a competitive advantage when the organization anticipates and plan for the positive externalities. Over fishing in a place would increase the demand when the fish supplied to the market is less than the demand. The organizations can take care of this externality by anticipating the decrease in the supply and importing enough supply of fish for the consumer in the local market.

Rolls-Royce found out that its automobile business was not competitive and its jet engine market was booming. Rolls-Royce sold its automobile business and concentrated on leasing jet engines to the airline companies (Carpenter & Sanders, 2009). The leasing strategy made Rolls-Royce take larger share of the jet engine business (Carpenter & Sanders, 2009). Xerox had good innovations coming from its research center in Palo Alto, which could have been good competitive advantages. Innovations like personal computers, bit-mapped, desktop, icons, and the use of mouse and menus (Carpenter & Sanders, 2009; Rothkopf, 2000). Xerox did not use these competitive innovations and lost a good chance to be a leader in these markets (Carpenter & Sanders, 2009; Rothkopf, 2000).

References:

Carpenter, M. A., & Sanders, W. G. (2009). Strategic management. Upper Saddle River, NJ: Pearson Prentice Hall.

DeGennaro, R. (2005). Market Imperfections. Journal of Financial Transformation, 14(2005), 107-117.

Ogrean, C., Herciu, M., & Belascu, L. (2009). Searching for sustainable competitive advantage– From tangibles to intangibles. Journal of US-China Public Administration, 6(4), 1-9.

Rothkopf, M. H. (2000). Under the Mike-R-Scope: What happened at Xerox PARC? Interfaces, 30(6), 91-94.

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CSF and KPI

Acronyms are everywhere these days and they can mean different things to different people. In the business lingo, CSF means Critical Success Factor. These factors are what will make or break the organization. The organization should focus on a limited number of CSFs, typically between 3-8, that affect the services efficiency, or product quality. The success in the CSF will differentiate the organization from it’s competitors. For a hairstylist, the the design and beauty of it’s styles would be it’s CSF. For a baker, the freshness and taste of the it’s backed products will be a CSF. Successful surgeries with few (or no) complications is a good CSF for a medical surgeon. The CSF needs a Key Performance Indicators (KPI) to measure them. The old saying “What gets measured, gets done!” is so true in this situations. The critical success factors have key performance indicators which the organization should carefully monitor. The key Indicators should be measurable but not all of them can be measured easily. Customer satisfaction is a good KPI but very difficult to measure. However, number of units produces can be calculated easily.

What Is Right For The Business?

Many employees work very hard to perform their  daily tasks, but they make mistakes and got blamed for it. The first reaction from their superiors is to look for the obvious mistakes and shortfalls in following the plans, procedure or regulations. Catching the obvious mistake is easy but will only solve the problem momentarily. Eliminating the cause of the problem is very difficult. Sometimes, the organization needs to change the procedures, review their assumptions or even ask themselves if they need the workers to perform that task at all. The following discussion and examples will show how mistakes and errors can take place and how we can we eliminate these mistakes immediately and permanently. Long term solutions needs time, effort and big budget, but eliminating a reoccurring problem will worth the cost, effort and time spent. Read More …

Acer SWOT Analysis

Listen to this postAcer was founded in 1976 under the name “Multitech” and had a significant role in popularizing the PC use in Taiwan. The Brand name was firmed in 1987 and then Acer switched from technology manufacturer to  world-wide recognized computer brand name.

Strength: Acer has many innovations like the Aspire One laptop that let the user connect to the Net almost anywhere with 8 hours of battery live. Acer presented the Tempo Smartphone series in 2009 to compete in the lucrative mobile phone market.  Acer main factory is located in Taiwan which has low-cost labor and distribution advantage in the US market and Asian market. Acer price its products with low competitive prices to compete with the strong rivals and acquire the low-priced laptop market share.

Weaknesses: the PC, laptop and mobile phone markets are extremely competitive and require frequent innovations to keep up or exceed the customers’ expectations. The laptop customers expect new functions and improved computing power at least once every year. Innovations and changing market demand needs strong and flexible supply chain to execute the successful innovations and deliver them to the market before the competition.

Opportunities: Acer had competed on delivering a reliable PC’s and laptops at a competitive price. Similar market entry model would be useful to enter the eBook Readr market and the iPad© market. Acer would be a good competitor in the eBook Reader market and had the ability to enter a new market of acquire an existing manufacturer. Acer was successful in acquiring Gateway©, emachines and pockard bell (Acer inc., 2010). This success will help Acer to integrate its existing assets or set up new manufacturer to producer eReders or similar products that does iPad functions. Acer can also compete in the Asian market by using its low price model. The Asian market is huge and would consume many of Acer’s products if marketed well.

Threats: the laptop and PC market are extremely competitive. Both products needs management support to invest in the Research and Development departments. Research and development departments would consult between each other to produce new competitive products that can be produced from the current integrated ability for Acer’s subsidiaries. The innovation will continue as long as the workers are compensated and the subsidiaries are willing to compromise for the sake of benefiting the holding company.

To know more on SWOT analysis and how to make one please click here.

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Multinational Organizations Role in Human Rights

Listen to this postI witnessed a heated discussion over the human rights and one of the discussion points was around the question “Should multinational organizations work in countries that are accused of human rights violations?”

Multinational organizations may work in countries that are accused of human rights violation. The organization should not intentionally violate human rights or encourage it. However, the organization should help the local community by paying them a fair wage to the amount of work done by the labor. Lam (2009) surveyed Chinese executives working for American multinational organizations in China and the executives felt that “Corporate Social Program” are human resources department job. The Chinese executives did not see their ethical responsibility or feel the obligation toward the society because their functional strategies did not incorporate social responsibilities (Lam, 2009). Multinational organizations, similar to domestic  organizations, are influenced by three conflicting needs, the organization, the industry and the society (Labbai, 2007). The ethical conflict between personal ethics and the organization would have strong effect on the organization operations in the international market (Labbai, 2007). The executives’ and the line managers’ ethical responsibilities would be the deciding factor for the multinational organization to behave ethically in countries that violate human rights.
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References:

Labbai, M. (2007). Social Responsibility and Ethics in Marketing. Paper presented at the International Marketing Conference on Marketing & Society, 8-10 April, 2007, IIMK.

Lam, M. (2009). Beyond Credibility of Doing Business in China: Strategies for Improving Corporate Citizenship of Foreign Multinational Enterprises in China. [Article]. Journal of Business Ethics, 87, 137-146. doi: 10.1007/s10551-008-9803-3

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