Lessons from Wharton - Application of Strategy, Competitive Advantage and Alliance for Cyber Security Services Firm

Though of making this year as a year of formal learning, its application in professional life and sharing. Though learning is a continuous process and we all learn on the job, but this year I thought of going back to the classroom to learn both technical and management subjects and apply them in professional life.

I am herein presenting the excerpt and learnings from Wharton’s Strategic Thinking and Leadership course, a 4-course program of Accelerated Development Program.

Strategy is the common word for any vision and set of goals supported by detailed plan and responsibilities, have a measurable outcome and metrics to monitor its achievement. There can be many strategies depending on the situation like for growth- one can have acquisition strategy, new markets, organic etc., while for turnaround – it can be innovation, cost cutting, consolidation, spin-off of no-core assets etc. and lastly for survival and profitability – to make good mix of cost control, maximization of capabilities and efficiency improvements.

We studied all three cases, a Nissan turnaround by Carlos Ghosn, an Acquisition strategy by Cisco and Alliance with Pfizer.

Here is the excerpt

Strategy for Turnaround

• Diagnosis – come up with 3-4 key reasons for fallout /things that can be communicated and addressed.
• Profit model should be in the head. Framework about how the profit drivers are for that industry should be clear.
• Communication of strategy should be clear and brief. Credibility should be high else everything is lost. Speak the truth like it is.
• During turnarounds, everyone is susceptible about job losses, unit closures and sell offs etc. and hence communication strategy is the key which has high credibility.
• Involve people and have them drive your strategy; same people behave differently with different leadership and people often surprise you on the upside; especially in competitive and turnaround situation.
• Do not undermine uncertainty; but be prepared to address situations, competition and changing market reaction.

Leveraging Capabilities

·      Value of capability = repeatable processes, not people dependant.

·      Capability = competitive advantage and not based on historical evidences.

·      Customer driven capability design.

·      If you fail, then fail fast and cheap.

Alliances

·      Quality of relationship is important for success.

·      Strategy – breakup executable plans- owners/accountability / initiatives/execution process.

Now, the critical part is applying them to our businesses.

So, put across the cyber security services business in the context and created a short term and long-term strategy and aligned executable plan to achieve them

Short Term

Be Profitable – via 5 short term plans

1.    Cost rationalization

2.    Consolidation of smaller and less profitable customers

3.    Increase in price to value and shying away from pure price wars to win revenue.

4.    Better farming into existing accounts to get incremental revenue

5.    Gross margin based sales incentivization rather than order booking.

Long term

1.    Creation of accelerator to reduce the cost of delivery and build non-linearity in revenue

2.    Shifting from pure services to platform driven services, with some IP, some accelerators and some managed services, that is repeatable

3.    Increase the revenue of Managed Services to 60% from existing 35%

4.    More investment in creating entry barriers in hunting key clients in developed market

5.    Customization of service delivery

To summarize – borrowing a statement from Microsoft – Perform while you transform

The strategy seems to be working, as the business has become profitable and is moving towards long term value creation. Without going into details, a good execution has resulted in extremely positive metrics that were not even thought off; when making it. To our surprise, increment in price and shying away from price wars caused more revenue against our thought of some loss in revenue.

Lessons learned in execution of strategy

1.    It should be simple, effectively communicated and continuously monitored and measured

2.    Do not do too much analysis of number, depend sometimes on intuition, do not fall in self-justification trap

3.    A good idea can come from anywhere; do not dismiss; sometimes a strategy is a moving and living document and not casted though the outcome and principle are.

4.   Last but not the least – Reorganization is not the solution and answer to all the strategic problems. People often tend to re-organize business units, geographies and people titles but more often then not; it will not yield any fruitful result. Need is to have a clear profit model, tight control on cost, enhancing capabilities and driving with clear vision. We tried moving to centralized delivery for scale and capability, but it failed so tried back to competency based model and then to Strategy, Integration and Managed services model with final realization that stuff works with finding the right people for the right role and effective communication and shared goals with common objectives rather them structure.

Comments Welcome and please do share your experiences.