Successful Business Leadership

Here is the second in a series of four postings that provide a brief review of the 2007 year in business beginning with some interesting new innovations, some interesting business strategies to watch, and then the economy. The last posting in this series will be about what may lay ahead in 2008, especially some thoughts about the job market.

• While more businesses are focusing on one or two core competencies in the value chain, Apple has developed three. Apple makes its own hardware (PCs, laptops, and consumer electronic devices), operating systems (Mac OS X), and it makes programs and online services that connect or provide content to those devices (iTunes and the Safari web browser). How does Apple fly-in-the-face of conventional wisdom? By developing a business culture based on collaboration and control. Apple employees are trained and developed in “deep collaboration”, “cross-pollination”, and “concurrent engineering.” The product development process does not pass a new product from team to team in sequential steps. A product’s design (hardware and software) gets developed in parallel through interdisciplinary design reviews. Thus there is a strong requirement for collaboration that also yields control of the process. Time Magazine reports from Tony Fadell Apple’s vice president of engineering in the i-Pod division: “I think the definition of product has changed over the decades. The product now is the iTunes Music Store and iTunes and the iPod and the software that goes on the iPod. A lot of companies don’t really have control, or they can’t really work in a collaborative way to truly make a system. We’re really about a system.”

• Baidu, a Chinese search engine company that has more than 50% of the search market and profits of $39 million growing 500%+. Baidu has developed partnerships with top technology businesses around the world (e.g., IBM, Intel and Microsoft), and will soon introduce, Baidu Japan. The Chinese user is more interested in entertainment than other types of content, as 70% of China’s Internet users are under the age of 30, most of whom are unmarried, only children. Baidu is the number one web site in China; where about only 10% of the country is even on the web, but they face stiff competition from Google and Sohu.com (another Chinese search engine company). Many US internet companies have tried to enter the Chinese market and failed (eBay and Amazon).

• China Mobile’s customer base, bigger than the U.S. population, has 363 million users with revenues growing in excess of 20% per year. As the globe’s largest cellular service provider in the world’s most populous country, China Mobile is signing up 5 million new customers each month. China Mobile is now the 5^th most recognized brand in the world and claims “the world’s largest unified, contiguous all-digital mobile network”. In 2007, China Mobile purchased 89% of Paktel, the fifth-largest cellular operator in Pakistan. Vodafone owns 3.3% of China Mobile.

• Tata Motor is India’s largest producer of trucks and buses, but now is targeting to make small cares in a joint venture with Fiat (together investing $895 million). Tata Motors of India is preparing to launch its ‘1 lakh car‘ for a price of $2,800. The car, thought to be the least expensive in the world, will be introduced January 2008 at the New Delhi Auto Expo. Other Indian auto industry executives, General Motors, and Renault/Nissan are also believed to have plans to launch their own very-low-priced cars priced at less than $3,000. This car appears to be an example of the pricing strategy to first establish the price affordable by the market and then building the product at a cost structure to make a profit. Time will tell. In the meantime, Hyundai has become one of the top automakers in India, where it is now the company’s primary small-car production location. In July, Hyundai reported that sales of its Indian-made cars rose 15%.
  • Post-Script: the car, called a Nano, was introduced this month. “I think there is immense unmet demand for a vehicle of this type, because it effectively eliminates the great leap currently required to go from a two-wheel to a four-wheel vehicle. They are creating something that has never existed before, the utility of a car with the affordability of a motorcycle.” says John Casesa, managing partner for the Casesa Shapiro Group, a New York-based auto industry financial advisory firm.
  • Here’s a video of the Nano’s introduction.

• Successful businesses have three different strategies for promoting innovation, according to an analysis from Booz Allen Hamilton consulting firm. Innovative companies fall into one of three categories:

• Need seekers: source ideas from current and potential customers to identify needs, then develop those ideas to be first to market with new products (e.g., see how Black & Decker obtains consumer ideas.

• Market readers: watch market trends and create new products that are incrementally better than current products.

• Technology drivers: emphasize research to achieve technological advances for breakthrough innovation or incremental change, often looking for the unarticulated needs of customers (e.g., see Siemens AG technology development projects).

This entry was posted on Monday, January 7th, 2008 at 9:29 am and is filed under Businesses, Technology. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.  Print This Post