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Written by ZOOZ
consulting and training | (972)-9-9585085 | info@zooz.co.il
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| Issue 02 |
Hello!
We are glad to
send you the second issue of LaZOOZ.
The newsletter is sent
as a free service to thousands of senior executives in
the Israeli market. It is published every
other month, and does not include advertisements.
We tried to keep it short, assuming that
your
time is precious
and the work is plentiful. Those who wish to learn more, will find
links to articles and relevant information sources.
We hope that you will find the newsletter useful. We will be glad to read any comments and suggetsions.
Pleasant reading!
Ari Manor, CEO, ZOOZ
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Details
An interview with a senior executive
Haim Mishan, CEO, Shilav Chain
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Number of employees in firm:
400
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Number of employees under my direct responsibility
: 12
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We provide: Mother & Baby solutions - from
pregnancy to age 4
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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Send comments to: haim_m@shilav.com
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Would you like to be interviewed?
: contact us
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Focus
On strategic development in practice
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.
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To read a new article on organizational level strategy
(Hebrew only)
: click here
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Education
A must-read book for managers
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.
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Innovation
Methods and tools for managing innovation processes
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.
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Improvements that have already been made:
- Two or more hooks (for hanging heavy paintings)
- Two combined frames (esthetic benefit)
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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…
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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)
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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)
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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
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Invention
An innovation which
surprised the world market and competitors
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!
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Futurism
Innovation ideas not yet realized
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)
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Move
What's new at ZOOZ
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).
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Efficiency
A tip on effective management
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.
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Exposure
A creative
advertisement and its logic
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.
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Source:
Volkswagen Fastback ad, by
Volkswagen, issued at
April
1966
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For information on creative
advertising work is on page 5 of
our training description (Hebrew, PDF
file)
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