Monday, 4 March 2019
Thursday, 25 October 2018
Triple Bottom line - John Elkington
Triple bottom line
It consists of three Ps:
profit, people and planet
The phrase “the triple bottom line” was
first coined in 1994 by John Elkington, the founder of a British consultancy
called SustainAbility. His argument was that companies should be preparing
three different (and quite separate) bottom lines. One is the traditional
measure of corporate profit—the “bottom line” of the profit and loss account.
The second is the bottom line of a company's “people account”—a measure in some
shape or form of how socially responsible an organisation has been throughout
its operations. The third is the bottom line of the company's “planet”
account—a measure of how environmentally responsible it has been. The triple
bottom line (TBL) thus consists of three Ps: profit, people and planet. It aims
to measure the financial, social and environmental performance of the
corporation over a period of time. Only a company that produces a TBL is taking
account of the full cost involved in doing business.
In some senses the TBL is a
particular manifestation of the balanced scorecard. Behind it lies the same
fundamental principle: what you measure is what you get, because what you
measure is what you are likely to pay attention to. Only when companies measure
their social and environmental impact will we have socially and environmentally
responsible organisations.
The idea enjoyed some success in the
turn-of-the-century zeitgeist of corporate social
responsibility, climate change and fair trade. After more than a decade in
which cost-cutting had been the number-one business priority, the hidden social
and environmental costs of transferring production and services to low-cost countries
such as China, India and Brazil became increasingly apparent to western
consumers. These included such things as the indiscriminate logging of the
Amazon basin, the excessive use of hydrocarbons and the exploitation of cheap
labour.
Growing awareness of corporate
malpractice in these areas forced several companies, including Nike and Tesco,
to re-examine their sourcing policies and to keep a closer eye on the ethical
standards of their suppliers in places as far apart as Mexico and Bangladesh,
where labour markets are unregulated and manufacturers are able to ride
roughshod over social and environmental standards. It also encouraged the
growth of the Fairtrade movement, which adds its brand to products that have
been produced and traded in an environmentally and socially “fair” way (of
course, that concept is open to interpretation). From small beginnings, the
movement has picked up steam in the past five years. Nevertheless, the
Fairtrade movement is still only small, focused essentially on coffee, tea,
bananas and cotton, and accounting for less than 0.2% of all UK grocery sales
in 2006.
One problem with the triple bottom
line is that the three separate accounts cannot easily be added up. It is
difficult to measure the planet and people accounts in the same terms as
profits—that is, in terms of cash. The full cost of an oil-tanker spillage, for
example, is probably immeasurable in monetary terms, as is the cost of
displacing whole communities to clear forests, or the cost of depriving
children of their freedom to learn in order to make them work at a young age.
Elkington, J., “Cannibals with Forks:
the Triple Bottom Line of 21st Century Business”, Capstone, 1997
8 Principles of Blue Ocean Strategy
пятница,
8 мая 2015 г.
The fundamentals that will jump start
your strategy development process
W. Chan Kim and Renée Mauborgne
What is distinctive about blue ocean
strategy as a theory? How is blue ocean strategy different from a classic
differentiation strategy? Is it another form of low cost strategy? What’s the
research process behind it? In the decade since Blue Ocean Strategy was first
published, we’ve fielded thousands of such questions. Some executives want to
understand how it addresses the issue of execution. Some ask what the strategy
is based on. Others question whether the strategy will be effective in their
industry. We heard certain questions again and again and, in response, have
identified eight core principles. Here we outline the essence of blue ocean
strategy.
It’s grounded in data
Blue ocean strategy is
based on a decade long study of more than 150 strategic moves spanning more
than 30 industries over 100 years. Industries ranged from hotels, cinema,
retail, airlines, energy, computers, broadcasting, and construction to
automobiles and steel. We analyzed not only winning business players who
created blue oceans but also their less successful competitors. We searched for
convergence among the group that created blue oceans and within less successful
players caught in the red ocean. We also searched for divergence across these
two groups. In so doing, we tried to discover the common factors leading to the
creation of blue oceans and the key differences separating those winners from
the mere survivors and the losers adrift in the red ocean. As our database and
research have continued to expand and grow over the last ten years since the
first edition of our book was published, we have continued to observe similar
patterns whether blue oceans were created in for-profit industries, non-profit
organizations, or the public sector.
It pursues differentiation and low cost
Blue ocean strategy is
based on the simultaneous pursuit of differentiation and low cost. It is an
“and-and,” not an “either-or” strategy. Conventional wisdom holds that
companies can either create greater value for customers at a higher cost or
create reasonable value at a lower cost. Here strategy is seen as making a
choice between differentiation and low cost. In contrast, blue ocean strategy
seeks to break the value-cost tradeoff by eliminating and reducing factors an industry
competes on and raising and creating factors the industry has never offered.
This is what we call value innovation.
Value innovation is distinctively
different from the competitive strategic approach that takes an industry
structure as given and seeks to build a defensible position within the existing
industry order. The strategic logic of value innovation guides companies to
identify what buyers commonly value across the conventional boundaries of
competition and reconstruct key factors across market boundaries, thereby
achieving both differentiation and low cost and creating a leap in value for
both buyers and the company.
It creates uncontested market space
Blue ocean strategy
doesn’t aim to out-perform the competition. It aims to make the competition
irrelevant by reconstructing industry boundaries. Whereas conventional
strategic approaches drive companies to define their industry similarly and
focus on being the best within it, blue ocean strategy prompts them to break
out of the accepted boundaries that define how they compete. Instead of looking
within these boundaries, managers need to look systematically across them to
create blue oceans – new and uncontested market space of new demand and high
profitable growth.
It empowers you through tools and
frameworks
Blue ocean strategy offers systematic
tools and frameworks to break away from the competition and create a blue ocean
of uncontested market space. The field of strategy, by contrast, has
predominantly focused on how to compete in established markets, creating an
arsenal of analytic tools and frameworks to skillfully achieve this. Blue ocean
strategy is built on the common strategic patterns behind the successful
creation of blue oceans. These patterns have allowed us to develop underlying
analytic frameworks, tools and methodologies to systematically link innovation
to value and reconstruct industry boundaries. The visual and actionable
frameworks and tools like the strategy canvas, four actions framework and six paths form the analytic foundations
of the blue ocean creation process, bringing structure to what has historically
been an unstructured problem in strategy. They provide a roadmap and critical
visual guidance for systematically pursuing value innovation and creating
uncontested market space. Companies can make proactive changes in industry or
market fundamentals through the purposeful application of these blue ocean
tools and frameworks.
It provides a step-by-step process
From assessing the
current state of play in an industry, to exploring the six paths to new market
space, to understanding how to convert noncustomers into customers, blue ocean
strategy provides a clear four-step process to break away from the competition and
create a blue ocean of strong profitable growth. The four-step process is
designed around the concepts and analytic tools of blue ocean strategy
and fair process. It is built based on our strategy practices in
the field with many companies over the last two decades. It allows managers and
their teams to develop rigorous and concrete strategies while capturing the big
picture. In this way, it presents an alternative to the existing strategic
planning process, which is often criticized as a number-crunching exercise that
keeps companies locked into making incremental improvements.
It maximizes opportunity while
minimizing risk
Blue ocean strategy is an
opportunity-maximizing risk-minimizing strategy. Of course any strategy will
always involve risks – be it red or blue. However, blue ocean strategy provides
a robust mechanism to mitigate risks and increase the odds of success. A key
framework here is the Blue Ocean Idea Index. The Blue Ocean Idea Index lets you
test the commercial viability of your blue ocean ideas and shows you how to
refine your ideas to maximize your upside while minimizing downside risks. It
allows you to answer four key questions: First, is there a compelling reason
for people to buy your offering? Second, is your offering priced to attract the
mass of target buyers so they have a compelling ability to pay for it? Third,
can you produce your offering at the strategic price and still earn a healthy
profit from it? And finally what are the adoption hurdles in rolling out your
idea and have you addressed these upfront? The first two questions address the
revenue side of your business model. They ensure that you create a leap in net
buyer value. The third question ensures the profit side of your business model.
And the last question ensures that you have given good thought and addressed
externalities that could trip up even the best new idea.
It builds execution into strategy
The process and tools
of blue ocean strategy are inclusive, easy to understand and communicate, and
visual – all of which makes the process non-intimidating and an effective path
to building execution into strategy and the collective wisdom of a company.
Equally as important, blue ocean strategy is a strategy that expressly joins analytics with the human dimension of organizations. It recognizes and pays respect to the importance of aligning people’s minds and hearts with a new strategy so that at the level of the individual, people embrace it of their own accord and willingly go beyond compulsory execution to voluntary cooperation in carrying it out. To achieve this, blue ocean strategy does not separate strategy formulation from execution. Although this disconnect may be a hallmark of most companies’ practices, our research shows it is also a hallmark of slow and questionable implementation and mechanical follow-through at best. Instead, blue ocean strategy builds execution into strategy from the start through the practice of fair process in the making and rolling out of strategy.
Equally as important, blue ocean strategy is a strategy that expressly joins analytics with the human dimension of organizations. It recognizes and pays respect to the importance of aligning people’s minds and hearts with a new strategy so that at the level of the individual, people embrace it of their own accord and willingly go beyond compulsory execution to voluntary cooperation in carrying it out. To achieve this, blue ocean strategy does not separate strategy formulation from execution. Although this disconnect may be a hallmark of most companies’ practices, our research shows it is also a hallmark of slow and questionable implementation and mechanical follow-through at best. Instead, blue ocean strategy builds execution into strategy from the start through the practice of fair process in the making and rolling out of strategy.
Fair Process, namely, engagement, explanation
and expectation clarity, prepares the ground for implementation by invoking the
most fundamental basis of action: trust, commitment, and the voluntary
cooperation of people deep in an organization. Commitment, trust, and voluntary
cooperation are not merely attitudes or behaviors. They are intangible capital.
They allow companies to stand apart in the speed, quality, and consistency of
their execution and to implement strategic shifts fast at low cost.
It shows you how to create a win-win
outcome
With its integrated approach, blue
ocean strategy shows how to align the three strategy propositions – value,
profit, and people – to ensure your organization is aligned around your new
strategy and that it creates a win for buyers, the company, and for employees
and stakeholders. For any strategy to be successful and sustainable an
organization must develop an offering that attracts buyers; it must create a
business model that enables the company to make a tidy profit; and it must
motivate the people working for or with the company to execute the strategy.
While good strategy content hinges upon a compelling value proposition for
buyers and a robust profit proposition for the organization, sustainable
strategy execution is based largely on a motivating people proposition. The
alignment of the three propositions proposed by blue ocean strategy ensures
that an organization is taking a holistic approach to the formulation and
execution of strategy. Together the three propositions provide an organizing
framework for creating a winning strategy that will benefit buyers, the
company, as well as internal and external stakeholders.
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Strategy Canvas - Blue Ocean Strategy
https://static.intrafocus.com/uploads/2014/06/Strategy-Canvas-2.jpg
The above site gives an excellent description of Strategy Canvas
The above site gives an excellent description of Strategy Canvas
Monday, 8 October 2018
Segmentation & Targeting
https://www.slideshare.net/fmuntaha/segmentation-and-targeting-42830730?next_slideshow=1
A great slide show on Segmentation and Targeting .
A great slide show on Segmentation and Targeting .
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