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 →
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?
Corporate leaders need access to a much richer set of experiences than in the past. They need to shape a broader range of people, experts, markets, projects, across the globe. They need a broader knowledge base in order to do this. And they need curiosity as much as they might need charisma so they can grasp the potential of these disciplines and new global markets. But above all else we say that the sapient leader is not about personalities.
Is there a contradiction there?
To explain what we mean we’re going to look at BMW. The experience of BMW led us to many of the ideas and concepts that have gone into the Elastic Enterprise, so let me explain! Continue reading →
The Strange Case of Companies that Grow in Recession
From 2007 and the onset of recession a small group of companies began enjoying exceptional sales and profit growth. Companies like Apple and Amazon.com to name just two. They didn’t just grow. They didn’t just begin to enjoy their best ever years. More significantly, they began performing like no other company before them.
Apple’s revenues in the third quarter of its 2010-2011 fiscal year were up 82% and profits were up 125%. This would be a supreme achievement at any time but the summer of 2011 was not a holiday period, where sales tend to be strong. And the economy still teetered on the edge of recession.
Apple was not just succeeding wildly. On the way to record profits, Steve Jobs’ team had created monumental disruption in a product category (smartphones) that the company had inhabited for a total of only four years. Shortly after entering smartphones, Apple created a new product category (tablets) single handedly with the launch of the iPad.
This was unusual success heaped on top of astonishing corporate performance.
In Amazon’s case, there is a similar tale of total novelty. With the launch of the Kindle ebook reader, the online retailer suddenly converted itself into a device company, a move that would normally spell chaos. At the same time Amazon also pioneered what became known as “platform as a service” and “cloud computing”, a revolution in how companies source their IT needs. Like Apple it opened new horizons for itself during the recession by doing what companies should not do – move into adjaceny markets with entirely new products.
In 2010/2011 Amazon’s revenues from its consumer electronics business line surged 69%, during an extremely weak recovery from recession. The remarkable feature of Amazon’s growth is that its profits briefly fell during the period, yet its share price rose. Barron’s called it a “religion stock”, one you believe in or don’t.
So why do people believe, and what is it people believe in? What is the bigger story behind these and similar successes? Continue reading →