| Issue 02 |

Haim Mishan, CEO, Shilav Chain

• Number of employees in firm: 400
  
• Number of employees under my direct responsibility : 12
  
• We provide: Mother & Baby solutions - from pregnancy to age 4
  
• I'm on the job for: Two years. Before that I was VP and other positions in Shilav for 5 years. Before Shilav I worked for 15 years in Degem Systems. I hold a B.A. in Economics from Tel Aviv University.
  
• I like on the job : The dynamic action of the retail business. A killer pace, with new things starting each day. Shelf life offers a very unique perspective: everything is fast, moving, changing.
  
• Most difficult on the job : Coping with the lack of certainty and independent outside influences. Things happen all the time (for instance, Yassin's assassination), and have immediate consequences out of our control.
  
• Goals I set for myself : On the job - marching the firm forward. Shilav Group is celebrating 30 years of leadership, and I wish for it to lead 30 more years, in fashion and toys, and in other fields. In life - in the next three years I wish to succeed as CEO, as I am still new in this position.
  
• Our vision : To focus on providing the best solution to the consumer. Our slogan reads: "Making Happy Parents". We've reached this in the past six months, following an inner process. The idea is that when the other side is happy, you are happy, too. In order to achieve this, we focus on providing the best value for money, on safety, on product development, on baby development and on top-level service. Personally, I also hold the post of Chairman of baby consumer goods in the Trade Bureau, and our goal there is to raise the level of standards.
  
• Original product in our market: While the Gemini (= "Baby University") is an example of a global innovation by Shilav, I wish to point out three local examples: (1) A baby cabinet with two plastic straps preventing the drawer from closing on the child's fingers. (2) A baby carriage-stroller - a product which may be used both for the baby's first months and for later years as well. (3) A specially designed towel, with a velcro strap to hold around the the parent's neck, allowing her to wrap and wipe the baby with ease.
  
• Sources of innovation : Mostly focus groups. Ideas are also collected from our branches, from mothers and from our website. People ask us: "Why don't you have..." and we listen and do it. You should remember that we manufacture exclusively for our chain, so it is not easy to find ideas of reasonable potential commercial value.
  
• Book recommendation: I read a lot, but I am not a fan of a certain doctrine. Therefore I will not recommend any specific book, but rather the constant search for inspiration from many sources and books.
  
• Send comments to: haim_m@shilav.com
  
• Would you like to be interviewed? : contact us
  

How to become a monopoly

When an organization is a monopoly, it may become overcomplacent or be strictly controlled by the trade restriction authorities. Nevertheless, such an organization undoubtedly holds a strong position versus clients and suppliers, and with the lack of competition it enjoys stability, prosperity and higher than normal profitability levels. Therefore, if you turn your organization into a monopoly, your chances of success will be greatly improved. How may this be done?

A "classic" monopoly is usually an organization operating in a narrow and limited market, that cannot support more than one competitor. Often, the major limitation is high establishment costs and expensive infrastructure, so that only one firm - the first to grab the chance - may survive in the market (for example - a government established firm, supplying infrastructure services for the State of Israel, such as the Israel Electric Company). Similar to a monopoly, in a state of duopoloy, oligopoly or cartel the market cannot contain many competitors, and profitability is usually higher than in a competitive, perfect market, situation. Coordination of prices (=cartel) is an (illegal) temptation in such a market, and is naturally not what we recommend here. 

Although "classic" monopolies become all the more rare in free economy, one may still plan a strategy to turn a new organization into a monoploy. The most interesting way to do so is to focus on markets and services in which a single supplier/player should suffice. For example, establishing an association in a specific and well-defined field enables the founder to enjoy monopoly conditions. Examples include the Joint Kibbutz Movement (TAKAM), The Israeli Artist Association (AKUM), and the Israeli Printing Industry Association - which all enjoy a monopolistic position with their members. Starting a global association in a new field (for instance - toy cars), will likewise enable the founder to enjoy exclusivity and high profitability (in organizing conferences and other services), without drawing too much attention from potential competitors.

In a comparable manner, businesses wishing to increase profitability, may choose new markets, too narrow to support other competitors. In addition, there are other ways for achieving a monopolistic position, including: unique location and distribution agreements (a monopoly on client access), patents and copyrights (a monopoly on a product or a work of art). Surely you may come up with more ways. Can some of them be applied to your organization?

Actually, the three major strategy types discussed by Michael Porter - low price, differentiation and focusing, allow organizations to enjoy a monopoly, or a partial one:

1. An organization choosing the low price strategy (cost control) usually enjoys an advantage in size and experience, allowing it to supply products and services in a lower-than-competition price level. Thus, it may achieve monopoly status in the low range of the particular market.

2. An organization that achieves differentiation , adds a specific added-value, and is seen as such in the eyes of the customers. Such an organization enjoys a monopolistic status somewhere in the clients' minds (=positioning). For example - Mercedes has a relative monopoly in the field of luxury cars. It is interesting to note that this monopoly is based on a limitation of the human mind, usually capable of linking only one or two firms (e.g. Volvo & Renault) in a market to a given value (e.g. Safety).

3. An organization choosing the focus strategy (specializing on certain clients) has tight relations and a profound knowledge of the customers on which it focuses, and it offers them unique solutions, well adapted to their needs. Thus, it enjoys a monopolistic status in the eyes of these customers.

To conclude, there are various attainable strategic directions which endow a relative monopoly, be it in a very narrow and well-defined area. When one forms a strategy, it is recommendable to try and move in one of these directions in order to increase the organization's profitability and stability. Actually, one of the major goals of strategy is to create a monopoly, that is, an area where the organization is protected from competition.

• To read a new article on organizational level strategy (Hebrew only)  : click here

Leading The Revolution / Gary Hamel / Plume

Gary Hamel is a leading and highly acclaimed consultant on strategy and innovation, the founder and chairman of international consulting firm Strategos, and a lecturer at Harvard and London Business Schools. His book "Leading The Revolution" is, in our opinion, among the five most imporatant management books of the 21st century (true, this may change - as there are 996 years ahead of us...).

In the book, Gary advises organizations to focus on revolutionary and extreme innovation (developing new products and services to the world, which create revolutions and transform entire markets to the core), rather than on evolutionary innovation (upgrading existing products). According to Hamel, in order to succeed in conditions of uncertainty, one should choose a strategy similar to risk distribution in stock market investments. That is - better invest (smaller amounts) in ten high-risk strategic directions, than (everything) in one conservative and low-risk strategic direction.

The book includes numerous examples of major revolutions, and describes the principles and stages of turning an ordinary organization into a truely innovative one. Most important - interlaced throughout the book are Gary Hamel's deep economic insights, including an instructive description (chapter 4 -  "Be your own seer") of business models that accelarate profits (that is - create very profitable businesses). The book also specifies, with high sensitivity, how to consider "the human factor", that is - to mold the organizational culture in order to nurish the spirit of (extreme) innovation. Undoubtedly, a winning combination.

• Buy the book on: Amazon | Barnes & Noble
• A list of must-read books for managers
• Strategos consulting website
• An article on Gary Hamel

Multiplication

The Multiplication thinking tool, as the name suggests, is a thinking process where one or more components can be added to a product or service. The added element is equal in form (although not necessarily in size or function) to existing components.

The steps for performing Multiplication are as follows:

1. Choose an existing product or service

2. List the components of the product or service

3. Multiply one of the components

4. Visualize the new product or service, and identify its benefits and uses

Example 1:

• Existing product: framed painting
• Components of the product: painting, layers of paint, protective glass, frame, hook.
• Improvements that have already been made:
  • Two or more hooks (for hanging heavy paintings)
  • Two combined frames (esthetic benefit)
• Improvements that have not yet been made (as far as we know):
  • Double sided painting (multiplying the painting: for creating interest and diversity, changing it periodically, etc..)
  • A painting with two protective layers of glass (better isolation, for a magnifying glass effect - with the layers of glass used as lenses, for a 3D effect using details of the painting on the actual glass layers, which change as you approach the painting)

Example 2:

• Existing service: general store
• Components of the service: store, floor, department, cash register, products, packages, delivery person, cashier, manager…
• Improvements that have already been made:
  • Chain of stores (multiplying the store, achieving a size advantage in costs and branding)
  • Two cashiers at every cash register (helping each other bag and attend to problems, refunds and returns)
• Improvements that have not yet been made (as far as we know):
  • Two "general goods" departments of the same kind but designed differently (for example - separate home accessories for men and for women, a separate medication department for senior citizens)
  • All products sold in six-packs (for a "six for half the price" discount store)
    
• For a description of the Multiplication thinking tool, along with other tools, read the article on Six Thinking Tools

A hybrid car - with two engines

A current example of Multiplication (the thinking tool presented above) is found in hybrid cars, equipped with two engines: gasoline engine and electric engine. Honda and Toyota launched this year models of mass production hybrid cars, already successfully sold in Europe and the USA. The combination of two engines in one car makes it highly efficient (with a gasoline consumption of over 30 Km/Liter, a third of the average family car). The battery of the electric engines needs no charging, as it is recharged during driving. This achieves the low gasoline consumption - simply by using the surplus electric charge available in every car! In addition, such a car is more environmentally friendly, with only minor pollution, much lower than regular engine cars. The future is definitely around the corner!

• For additional information: see relevant pages on the Honda website and on the Toyota website.

Innovation ideas for elevators

The following ideas were developed using various thinking tools, and do not exist at present (to the best of our knowledge):

1. An elevator that knows to what floor a person needs to go (for regular employees, wearing an appropriate employee tag)

2. An elevator with no ceiling (a relief for claustrophobics, as well as a quick escape option in case of a stuck elevator)

3. An elevator which closes the doors as soon as people stand in place (instead of waiting for someone to push the "close doors" button)

4. An elevator which stops on the next floor when a smoke detector is triggered somewhere in the building

5. Two adjacent elevators that may be linked together - for getting a bigger space (for example - in order to move a piano)

• Articles on Systematic Innovation 
• We will be glad to read your comments and suggestions

Strategic Accounting

Annual and quarterly financial reports should, among other things, provide an understanding of the business state of a given organization, its weaknesses and strengths and the soundness of an investment. However, using the reports as an internal strategic decision-making tool is another matter. On the one hand, senior managers do not have financial background, and have a hard time deciphering these reports and making conclusions based on the data. On the other hand, senior financial officers, which understand the reports, are not necessarily "business oriented". To top it all, even if an integrated team of business and finance-oriented managers tries to make decisions based on these reports, there is a need for "translation tools", as the rules of accounting create innate distortions, sometimes hiding the true business meaning of data on reports.

As of April 2004, ZOOZ offers a process for solving these problems. In a series of in-house organizational workshops (usually 2-3 meetings), for managers and senior decision-makers, we provide the ability to decipher, for the first time, financial reports from a business point of view (rather than from an accounting point of view), and make concrete strategic decisions during the workshops themselves. The workshops are facilitated by Amnon Danzig, a senior ZOOZ consultant, and the manager of the Israeli branch of Stern Stewart & Co. (an international strategic and economic consulting firm).

• For further details please contact us
• Further information on Amnon Danzig may be found in About ZOOZ Team page.

SMS as a management tool

Being up-to-date means, among other things, following trends and changes in consumer habits. One of the recent and significant changes in communication is the increasing usage of instant messaging service - SMS - on mobile phones. Is this trend, common among teenagers, relevant for mangers as well? Indeed it is.

We do not recommend the trivial possibility of using SMS as and advertising media, unless you wish to annoy your potential clients (honestly - wouldn't you be annoyed to get a message, bother to open it, and find out that it was a commercial?). However, using SMS as an informative media is more acceptable, as long as the information is relevant and important to the recipients, and as long as you have a close and intimate relationship. A message announcing an "open day" for family and friends, sent to health club members is an acceptable use of SMS (but be sure to send such messages not too often, i.e. once in a quarter). An urgent message to a team of employees on postponing a meeting in a day is a clever and effective use of SMS. You should know that several commercial solutions offer software and/or services for instant messaging to predefined distribution lists, and may be used just for such occasions.

But the immediate and best way for using SMS as a management tool is simply for making a relevant and intimate, one-on-one, contact with a specific recipient (employee, client or supplier). For instance, you may send a short message inviting the other party to call you if they're available. This is an economic and polite way in comparison to a direct phone call. Economic - as a regular call costs more. Polite - as it avoids awkward situations when the other person answers but is not really free to attend the call. In a similar manner, sending a short message to someone describing the advancement of a process you are both involved in will allow them to respond immediately (by phone or SMS), or at a later date, and the information would be transmitted in either case. Another common usage of SMS is sending a message from overseas ("Please call me now"), so that the local recipient may call you at a much lower rate (the difference may be up to a 1,000% cheaper!!!). You may also use SMS for effectively exploiting "dead" times, such as a boring lecture. Other uses exist, and you will surely discover them yourself.

If the ways listed above are common knowledge to you, than you are certainly up-to-date. If not - consider the fact that the learning curve is quite quick (where and how to type? how to send?), and once you get into it, you won't understand how you managed before SMS as a daily work tool. It is worth noting that mobile phone companies allow clients to type and send SMS messages through there websites (with faster and simpler typing), and that most modern mobiles have built-in common messages ("call me soon", etc.), and other common messages may be recorded, saving typing time and effort.

• SMS business solutions on Cellcom website (Hebrew)
• SMS sending from mobile service providers: Cellcom, Pelephone, Orange, Mirs

Self Reference

It is easier to accept someone who uses self-humor, willing to laugh at his own expense. The same principle applies to advertisements, as it is a refreshing and uncommon approach compared to the self-important manner in which companies and advertisers portray themselves and their products.

In the logic of self-reference, the ad openly refers to the media and to the fact that it is an advertisement (in a kind of inside joke between companies and advertisers), and that is its charm.

In the above example, showing a new car model by Volkswagen, the title reads: " What's a nice-looking car like you doing in a Volkswagen ad? ". As you see, there is an explicit reference to the fact that this is an ad, as well as self-humor suggesting that a typical Volkswagen car is...quite ugly (so it was thought to be in the 1960's USA, when this ad came out).

The text of the ad speaks for itself: " Nobody made a mistake. That shapely car is the new Volkswagen Fastback. It's in this VW ad because it's a VW. We haven't made very many yet, so you probably haven't even seen one yet (that's why we're running this ad in the first place) .". The ad then details how this car maintains the standard of all other VW cars, but how it also has better advantages (strong engine, bigger space, etc.). The closing sentence is: " If you've steered clear of a Volkswagen because it wasn't big enough or good-looking enough or expensive enough, you may be forced into thinking it all over again. Sorry ."

A direct, surprising and and amusing text, in line with the spirit of the Volkswagen brand. A text only true brands can support.

• Source:  Volkswagen Fastback ad, by Volkswagen, issued at April 1966  
• For information on creative advertising work is on page 5 of  our training description (Hebrew, PDF file)