Focusing your Strategy for Tribal Business Development

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Focusing your Strategy for Tribal Business Development

  1. 1. NAEMI Biomass & Business Training Workshop FOCUSING YOUR STRATEGY FOR TRIBAL BUSINESS DEVELOPMENT Len Greenhalgh Professor, and Faculty Director, MWBE Programs, Tuck School of Business at Dartmouth
  2. 2. Assumptions about what impedes Native American & Minority-owned Minority-owned businesses • Access to capital • Access to contracts
  3. 3. RESEARCH FINDINGS: Weaknesses of Native American and minority-owned businesses -the top eight… -the eight…
  4. 4. RESEARCH FINDINGS: Weaknesses of Native American and minority businesses Lack of strategic direction
  5. 5. Weaknesses of Native American and minority businesses Lack of strategic direction Not empowering employees effectively
  6. 6. Weaknesses of Native American and minority businesses Lack of strategic direction Not empowering employees effectively Poor cash flow management
  7. 7. Weaknesses of Native American and minority businesses Lack of strategic direction Not empowering employees effectively Poor cash flow management Control systems underutilized
  8. 8. Weaknesses of Native American and minority businesses Lack of strategic direction Not empowering employees effectively Poor cash flow management Control systems underutilized Inefficient processes
  9. 9. Weaknesses of Native American and minority businesses Lack of strategic direction Not empowering employees effectively Poor cash flow management Control systems underutilized Inefficient processes Organizational structure gets in the way
  10. 10. Weaknesses of Native American and minority businesses Lack of strategic direction Not empowering employees effectively Poor cash flow management Control systems underutilized Inefficient processes Organizational structure an impediment Not customer-oriented customer-oriented
  11. 11. Weaknesses of Native American and minority businesses Lack of strategic direction Not empowering employees effectively Poor cash flow management Control systems underutilized Inefficient processes Organizational structure an impediment Not customer-oriented Narrow portfolio of products / services and customers
  12. 12. Defining strategy involves addressing the following questions: 1. What business is your organization in? Not in? 2. What is your basic business model? 3. Who are your organization’s competitors? Who could be? 4. How is the market changing? 5. How is your organization positioned in the market? 6. What are your organization’s sources of competitive advantage?
  13. 13. What business are we in? --the question of Strategic Domain • Vision/Mission • Breadth of Domain – Can be too narrow – Can be too broad • Core Competency
  14. 14. What is the basic business model? -How do you make money? • Life Insurance • Satellite Insurance • NASCAR Race Team • Mobile Phones • Retail Banking (“Savings & Loan”) • Auto Manufacturer • Law Office • Janitorial Cleaning Service
  15. 15. Which of these business models is scalable? -can you easily become 5x as large? • Life Insurance • Satellite Insurance • NASCAR Race Team • Mobile Phones • Retail Banking (“Savings & Loan”) • Auto Manufacturer • Law Office • Janitorial Cleaning Service
  16. 16. Basic business model issues: Strategic Questions • Place in the value chain • What value is added • Share of total value-chain revenue
  17. 17. How do we fit into the value chain? Raw Components Assembly Distribution After End-Use Materials Market Customer
  18. 18. Is each component of the value chain equally profitable?? Raw Components Assembly Distribution After End-Use Materials Market Customer
  19. 19. Who is taking the profits in the value chain? High Level of Profit Low Raw Components Assembly Distribution After End-Use Materials Market Customer
  20. 20. Who is taking the profits in the value chain? High Level of Profit Low Raw Components Assembly Distribution After End-Use Materials Market Customer
  21. 21. An MBE Mission Statement “We train sewage-treatment facility employees to operate the water treatment plant”
  22. 22. Needs Design Build Train Operate Maintain Assessment Treatment Treatment Workers Facility and Upgrade Facility Plant Facility
  23. 23. Another MBE Mission Statement “We provide high-quality janitorial services”
  24. 24. Workspace Rent or Building Clean Determine Repair Tenant Needs Seek Build Mgmt. Premises Maintenance And Uses Assessment Best Needs Refurbish Space Location
  25. 25. Where are YOU in the biomass value chain? Is there much profit potential there?
  26. 26. .
  27. 27. Who are our competitors? -Who else is in our part of the value chain? • Current “obvious” competitors
  28. 28. Who are our competitors? -Who else could come into our part of the value chain? • Current “obvious” competitors • Suppliers and customers
  29. 29. Who are our competitors? -Who else could come into our part of the value chain? • Current “obvious” competitors • Suppliers and customers • New market entrants
  30. 30. Who are our competitors? -Who else could come into our part of the value chain? • Current “obvious” competitors • Suppliers and customers • New market entrants • Substitute products
  31. 31. How is the market changing? • Deregulation
  32. 32. How is the market changing? • Deregulation • Globalization
  33. 33. How is the market changing? • Deregulation • Globalization • Changing technology
  34. 34. How is the market changing? • Deregulation • Globalization • Changing technology • Changing tastes
  35. 35. How is the market changing? • Deregulation • Globalization • Changing technology • Changing tastes • Changing the rules
  36. 36. How is the market changing? • Deregulation • Globalization • Changing technology • Changing tastes • Changing the rules • Changing economic conditions
  37. 37. How are you positioned? • Target market
  38. 38. How are you positioned? • Target market • Value proposition
  39. 39. The value proposition must be aligned with the growth strategy Customers/Market Segments Current New Current Services/ Products New
  40. 40. The easiest approach is to gain a larger “share of customer”—such as becoming sole-source provider Customers/Market Segments Current New 1 Current Customer Penetration Services/ Products New
  41. 41. The value proposition must be aligned with the growth strategy Customers/Market Segments Current New 1 2 Current Customer Market Penetration Penetration Services/ Products New
  42. 42. The value proposition must be aligned with the growth strategy Customers/Market Segments Current New 1 2 Current Customer Market Penetration Penetration Services/ Products 3 New New “Product” Development
  43. 43. The value proposition must be aligned with the growth strategy Customers/Market Segments Current New 1 2 Current Customer Market Penetration Penetration Services/ Products 3 4 New“Product” New Diversification Development
  44. 44. How are you positioned? • Target market • Value proposition • Portfolio of products/services
  45. 45. Why a portfolio? -Because it’s better than a single product/service + Cash Flow TIME BREAKEVEN (-)
  46. 46. You can only do so much with a single product/service Life-cycle extension Faster roll-out Market penetration TIME Efficiency Faster Decisive (-) Time to breakeven termination market
  47. 47. A portfolio allows you to grow and be resilient + (-)
  48. 48. How are we positioned? • Target market • Value proposition • Portfolio of products/services • Defense of position
  49. 49. Sources of competitive advantage • Do it better – Cheaper, higher-quality, quicker, more-responsive, just-in-time, etc. – Operational excellence strategy • Do it differently – Segment, target, position – Differentiation strategy • Gain customer loyalty – Repeat vs. conquest purchasers – Customer relationship management strategy
  50. 50. Apply this learning to your business --Is the strategy clear and well-defined? --Does it make sense, given your business context? --Is it widely understood and agreed upon? --Are you positioned for the future? --Add items to your To-Do List
  51. 51. Once you have gained strategic clarity, the next step is to: CREATE THE CONTEXT in which the business can survive, prosper, and grow
  52. 52. First, make absolutely sure the strategy is customer-focused Customer Strategy
  53. 53. the strategy must be implemented by means of processes that create customer value Customer create value Processes Strategy
  54. 54. Until recently, processes were designed with a focus on the organization, not the customer 1986 Selling a Book Maintain premises Forecast demand Stock inventory Wait for buyer to come to store Take customer inquiry Check current inventory Take special order Secure customer deposit Contact wholesale supplier to assess availability Place special order with wholesaler Process wholesale order confirmation Inspect delivered order from wholesaler Process wholesaler account payable Set book aside for customer Notify customer of arrival Hand over book when customer comes in Collect balance of transaction price Process accounts receivable
  55. 55. In 1986, the customer’s experience—and therefore value—was determined by the organization’s processes 1986 Selling a Book 1986 Buying a Book Maintain premises Forecast demand Stock inventory Wait for buyer to come to store Visit bookstore Take customer inquiry Ask for book Check current inventory Take special order Place special order Secure customer deposit Pay deposit Contact wholesale supplier to assess availability Place special order with wholesaler Process wholesale order confirmation Wait for book 4-6 weeks 4- Inspect delivered order from wholesaler Process wholesaler account payable Set book aside for customer Notify customer of arrival Receive notification of arrival Hand over book when customer comes in Go to bookstore to pick up Collect balance of transaction price Pay unpaid balance Process accounts receivable
  56. 56. Today, processes have been re-engineered in order to create greater value for the customer 2006 Buying a Book Visit website Search for book Order/pay Wait 1-3 days Receive book by UPS/FedEx
  57. 57. Customer-focused processes create competitive advantage 2006 Selling a Book 2006 Buying a Book Maintain integrated value chain Integrate MIS with Internet Install cross-selling software Maintain control system Visit website Activate cross-selling software Search for book Auto-update customer data base Order/pay Auto-track delivery Wait 1-3 days Auto-update accounting Receive book by UPS/FedEx Results: Customer is more satisfied with “solution” Leaner organization is more profitable
  58. 58. Processes require appropriate architecture: the organizational and value-chain structures must be aligned with the strategy and processes Customer create value Processes Strategy Architecture
  59. 59. Appropriate resources are needed —financial, technological, human Customer create value Processes Strategy Architecture Resources
  60. 60. Resources must be aligned with architecture, processes, and strategy….and managed well • Portfolio should balance generation and consumption of financial resources • Technology must increase competitive advantage through innovation, efficiency • Knowledge-workers must be attracted, developed, and retained
  61. 61. Systems ensure that the various elements are functioning in line with the strategy Customer create value Processes Strategy Architecture Resources Systems
  62. 62. Systems are mechanisms for coordination and control: • Management information systems • Controls • Communication
  63. 63. When the other elements of strategy implementation are in place, and properly aligned, good people need to be appropriately empowered Customer create value Processes Strategy Architecture Empowerment Resources Systems
  64. 64. Success produces the need to reiterate the cycle Customer Create value Processes Strategy Architecture Empowerment Resources Systems
  65. 65. To make it all work, relationships must be managed effectively Customer Create value Processes Strategy Architecture Relationships Empowerment Resources Systems
  66. 66. Creating the context involves aligning these elements Customer Create value Processes Strategy Architecture Relationships Empowerment Resources Systems
  67. 67. Apply this learning to your business • What are its areas of weakness ? (where would there be low scores on the SPARSE questionnaire?) • What can you do to improve these? • Prioritize the necessary improvements

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