GSK is one of the biggest drugs companies in the world and like all big pharmas faces paradigm completion. That is to say their R&D paradigms have nowhere to go in a world where cost reduction is the overwhelming priority.
The company took a big chance a couple of years back by appointing a 40 something CEO, Andrew Witty. Witty has brought a little humility to GSK. Like GE’s leadership, he is now saying, publicly, that some of the problems of medicine are too big for a company to solve. Continue reading →
Salesforce.com is one of the companies we write about in the Elastic Enterprise. CEO Marc Benioff believes Wall St doesn’t quite understand what he’s achieving (though his P/E is 90). He added 2,500 employees over the past year, mostly in the U.S., an increase of 47%. He also delivered 37% growth.
The complaint is that Salesforce.com is not delivering the margins. But listen to how Benioff responds to this. Continue reading →
How does a sports shoe manufacturer grow? Well if it was the 1980s or 1990’s, you would get sport celebrities, use high technology materials, create great designs, diversify your merchandise, and go global with sales and manufacturing. Nike did exceedingly well with that model. Today you still do all of that but you do more…
If you’re at the top of your game, you “just do it,” differently. You do it as an elastic enterprise. Nike is well on its way to becoming an elastic enterprise. And it’s already reaping the benefits of an elastic strategy with a robust strategic options portfolio.
Nike’s FuelBand, a recently launched high-tech electronic wristband, is another component in Nike’s elastic journey that highlights its strategy. Continue reading →
We think a key ingredient of sustainable future business success is an elastic strategy with a strong strategic options portfolio. There’s a classic example of that out there right now – Apple TV.
In Walter Isaacson’s celebrated biography, Steve Jobs, he quotes Steve Jobs as saying, “I’d like to create an integrated television set that is completely easy to use… It would be seamlessly synced with all of your devices and with iCloud.” But what got the world talking was, “It will have the simplest user interface you could imagine. I finally cracked it.”
Among all the products that Apple is pursuing it still has time for television.
Going further into TV would involve a major multi-pronged strategy. It’s about capitalizing on the competitive advantages that Apple has developed and has as an elastic enterprise. Let’s take a closer look.
I admire Barnes & Noble. The company has guts. I most admire Barnes and Noble’s (B&N) ability to reinvent itself. In fact its recent success with its Nook digital business put them on a path to become an elastic enterprise. So why did a company that I admire for its moves to greater elasticity lose 30% of its stock value in a single week?
Well, B&N’s Nook business has been a mixed blessing. The Nook business revenue is growing at double digits but so are expenses. Such performance puts the entire company in the red. To make matters worse, the Nook business requires more investment and is unlikely to be profitable anytime soon – despite its meteoric topline growth.
In the first week of January 2012, B&N management rattled its investors with a one-two punch: downward guidance and an announcement that the company would explore its “strategic options” regarding its Nook digital business. Shares of B&N stock (NYSE:BKS) plummeted. Continue reading →
In the book we explain in detail how the Elastic Enterprise functions. I thought it would be useful to have a short definition as well so here goes:
An elastic enterprise is one where growth and profitability rely on a range of external factors and automated business relationships that help scale business at low cost relative to the returns that elasticity uniquely makes possible. The external factors are critical resources such as developers, suppliers and customer ingenuity that do not figure on a balance sheet but are instead self-directed entities or partnerships that exist in a recognizable business ecosystem, usually supported by a business platform.
The core competency of the company becomes the orchestration of these independent entities.
The elastic enterprise resource strategy typically sees resource allocation become resource attraction and assembly orchestrated by a lead company.
Elastic enterprise strategies are typically multi-sector because the capacity to orchestrate business through a combination of platform and ecosystem becomes a new core competency. That core competency in turn enables companies to make radical adjacency moves into new markets as competency grows in attracting and orchestrating independent resources. Radical adjacency is one of the toughest of all business moves but it seems to come easily to truly elastic enterprises, signalling a new era of strategy in business.
The current edition of the Economist tells an ambivalent story about Samsung, the South Korean dynasty that graduated from making noodles to become the world’s largest technology firm. Here’s a brief intro to the bets Samsung makes followed by an assessment of its elastic strategy: Continue reading →
I wrote this over on Forbes a couple of months back. It’s really relevant to the Elastic Enterprise so, forgive some of the duplication, I wanted to air the issues again. This was written when I was trying to introduce the term and the idea. Another reason for raising it is we are very interested to hear of examples of radical adjacency – those that are working and those not. Seen any? Would you like to comment? Continue reading →
Radical adjacency is the most important change to corporate strategy in decades. It is wildly important but not just because it represents a significant change to the way companies envision their future. The importance lies in the remarkable success rate of its best exponents.
A simple definition:
A radical adjacency is an acquisition or market move that takes the buyer or executing company into areas where its management has no, or little, current experience.
A more detailed explanation would include the methods that companies use to achieve sucess with radical adjacency. In general they are the five pillars that we have documented in The Elastic Enterprise. Radical adjacency and elasticity are two sides of the same coin.
So what is radical adjacency and how does it work?