Ramon Saravia shares an always useful post on how to improve the bottom line by reducing purchasing costs.
In many companies, the purchasing area is only seen as a transactional function, attached to the routine . In these companies, purchasing is just another function to acquire what is necessary for the company’s operations. Typically, one, two, or three quotes are requested for each order for products or services, and the area chooses the supplier with the lowest price.
This brings a loss of value to companies, mainly due to:
(A) More expensive prices: even when there are eventually some price agreements, many companies do not properly leverage their purchasing power for the main categories – mainly because of the dispersion of purchases among several suppliers, the lack of contracts, or the negotiated contracts inappropriately.
(B) More costly operating model: due to inadequate processes, organization, technologies and/or metrics, for many companies the purchasing area ends up being inefficient – to carry out the same volume of operations, a greater effort is needed (e.g., it is a larger team of people, etc.), consequently translating into an also higher operating cost.
To solve the first of the questions, (A) more expensive prices, the company must review its purchasing strategy:
First, it must perform a purchase analysis and diagnosis: this evaluation includes everything from the analysis of the purchase history, the categorization of purchases, the elimination of non-addressable categories (ex.: JV, contractual agreements, etc.), to the segmentation and prioritization of purchasing categories. At this stage, the action plan and cost reduction estimates by category for the short, medium and long term are also prepared.
Second, the company needs to implement the opportunities identified (in the previous step) : this step includes everything from the detailing of internal purchasing and market information for each prioritized category, the identification of suppliers and negotiation of proposals, to the initial delivery of the expected savings.
To solve the second of the questions, (B) more costly operating model , the company needs to review each of the 4 pillars of the operating model (processes, organization, technology and metrics) , develop them and align them correctly.A company can negotiate a number of very good contracts, but without clearly defined mechanisms for managing and measuring performance, contracts will struggle to achieve the benefits initially estimated. Similarly, purchasing technology can provide all the information executives need to make informed purchasing decisions, but this capability is meaningless if the organization has not well-defined decision rights that identify who decides and who will be responsible for your results. In other words, to ensure adequate and consistent capture of the gains identified in the new purchasing strategy, it is critical to adjust the operating model.
Read the full post, Strategy, Implementation, Results, on Ramonsaravia.blogspot.com.
Andrew Hone shares a post that highlights the reasons strategies fail and what to do to implement them successfully.
Developing the strategy is the easy part
You’ve just put the finishing touches to your business strategy. You’ve spoken to customers, researched the key market segments, and projected the financials.
The Board and shareholders are aligned and agree on the priorities to take the business forward.
That was the easy part!
Translating a strategy into action is a significant challenge. All too often, the benefits that were promised are delivered late, or fail to materialise at all.
Management teams get distracted by the day-to-day challenges of running the business. Cross-functional initiatives fall between operating silos, budgets get reallocated and the initial momentum is lost.
High failure rates
If this sounds familiar, you are not alone.
Despite strategy implementation being seen as a key priority by most senior executives, fewer than 15% of organisations consider themselves to be successful when it comes to executing strategy.
Estimates for strategy implementation failure rates range from 50% to 90%.
Our experience in implementing strategy
We have spent over twenty years helping clients translate strategy into action, working with a range of clients from start-ups through to large corporations and public sector organisations.
Through this, we have identified a number of key principles that can help you to avoid common implementation pitfalls.
By applying these principles, strategy implementation can be a more predictable, transparent and repeatable process.
Key points include:
- Why do strategies fail?
- Strategy Implementation Framework
- Underpinning strategy implementation
Read the full article, Implementing Strategy, on ZenithStrategy.com.
Umbrex is pleased to welcome Peter Costa with Capman Organizational and Leadership Excellence, LLC. Pete leverages his extensive global experience as a Leader and General Manager to help organizations implement transformational strategies and leaders achieve their potential. In addition to his time at McKinsey, where he was an Engagement Manager in the operations practice, he has served as an Officer in the US Navy, a change leader at GE, and held P&L responsibility at Honeywell and Jensen Hughes (a PE-backed global leader in life safety consulting). In all of these operational roles, Pete has successfully turned around struggling organizations and developed a cadre of exceptional leaders. He draws on this practical experience to quickly build credibility with clients and to develop lasting change programs.
After 7 years as an expat based in London and Dubai, he now lives north of NY City with his wife and 4 children at their hobby farm. Pete would be happy to assist on projects involving strategy implementation, management operating system deployment, or building out talent development programs in a US or international setting. He is also a formally-trained executive coach
Anna Engstromer shares a post that identifies what goes wrong with strategy implementation and what needs to be applied to ensure successful adoption.
The Everyday Value of the Right Design in Services
Just because it happens all the time, all over, strategy implementation isn’t easy. It may appear so judging from corporate communication, but it is a special type of team effort that needs energy and effort. The trick is to both carry forth with planned changes and pay attention and adapt.
Change as Part of Life
Change is part of every organization’s life. It is frequent to experience or bear witness of it in any department or work group. It tends to happen through projects and initiatives, and only rarely is the perspective that of the individual working group. Teams and people cope with change, sometimes managing to reflect on their work and craft it into the way they like it, but other times addressing it with less purpose. How people react to change depends a lot on how they are doing. Someone who feels safe, manages their calm, and cares about their work will naturally be more proactive and effective. For many others, change is “dealt with”. The result is a patchwork of intentional and adapted changes, often with great discrepancy between formal and informal roles and structures. This is not necessarily bad. After all, we are creative beings that like to solve problems. But it leaves groups sort of hanging, and I’ve seen it many times that groups either thrive or implode when change is either too fast or not well enough supported. Sadly, the practice to dedicate or engage professional change managers has gone a little bit out of fashion. Fortunately, people with other roles often emerge and act in such roles. I did it many times.
Key points include:
- Why change seems incoherent
- The design process
- How norms play a role
Read the full article, The Value of Continuous Care in Service Design, on engstromer.com
If your team has difficulty moving strategies from thought to action, take advantage of 20 years of experience in strategy consulting from Andrew Hone’s company by clicking through to this comprehensive guide on strategy implementation.
You’ve just put the finishing touches to your business strategy. You’ve spoken to customers, researched the key market segments, and projected the financials. The Board and shareholders are aligned and agree on the priorities to take the business forward. That was the easy part!
Translating a strategy into action is a significant challenge. All too often, the benefits that were promised are delivered late, or fail to materialize at all. Management teams get distracted by the day-to-day challenges of running the business. Cross-functional initiatives fall between operating silos, budgets get reallocated and the initial momentum is lost.
If this sounds familiar, you are not alone. Despite strategy implementation being seen as a key priority by most senior executives, fewer than 15% of organizations consider themselves to be successful when it comes to executing strategy. Estimates for strategy implementation failure rates range from 50% to 90%.
We have spent over twenty years helping clients translate strategy into action, working with a range of clients from start-ups through to large corporations and public sector organizations. Through this, we have identified a number of key principles that can help you to avoid common implementation pitfalls. By applying these principles, strategy implementation can be a more predictable, transparent and repeatable process, improving both the speed and certainty of the outcome.
Information in this article includes:
- Why strategies fail
- A strategy implementation framework
Access the guide and full report, Implementing Strategy, on the Zenith Strategy Associates’ website.
Robbie Kellman Baxter writes about her experience as an online subscriber to Disney+ and whether Disney will deliver on their forever promise of family connection through membership.
This weekend, my family watched Hamilton on Disney+. We weren’t the only ones. I’m guessing a lot of the 54 million (as of May) subscribers were also singing along as part of a “shelter at home” Fourth of July holiday.
Like many others, we subscribed last week, specifically to watch the musical. To be specific, we upgraded from our Hulu-with-ads subscription (which I got initially so my kids could watch The Handmaid’s Tale…but then we got hooked on some other shows) to the Hulu/Disney+/ESPN+ bundle.
Disney is most certainly seeing a spike in subscribers this week, but will it last?
Will this cohort of subscribers who joined to watch Hamilton be less likely to stay engaged and more likely to cancel? Probably.
Points covered in this article include:
- The key to retention
- Five retention tactics
- Disney’s approach to on-boarding
Read the full article, Everyone Subscribed to Disney+ for Hamilton. Will Disney’s Onboarding Process Be Enough to Retain This Cohort?, on LinkedIn.
Robbie Kellman Baxter identifies what ‘freemium really means’, how it can be used as a tactic, and the role of freemium in both ordinary and extraordinary times.
Lots of organizations, particularly subscription businesses, are changing their rules about what is free and what is paid, in response to the coronavirus.
The Atlantic, The Wall Street Journal and Bloomberg News are a few of the many publishers that have removed the paywall in front of coronavirus-related content. In other words, non-subscribers have access to articles relating to the pandemic and impending financial meltdown.
News isn’t the only industry that is giving away more than usual during this time of crisis.
Fitness organizations, like Orange Theory are live streaming classes that were formerly in-person, for members only.
Hello Core is offering free meditation classes to the public 3x/day through Instagram Live.
Zoom Communication CEO Eric S Yuan is expanding the features available on free accounts for K-12 educators.
Many of my clients are asking what they should be giving away–a difficult choice in a time when many businesses are desperate for short-term revenue to avoid mass layoffs and ‘keep the lights on’.
Points covered in this article include:
- The difference between free trial and freemium
- Viral freemium models
- Customer engagement and retention
Read the full article, In Crisis, What Should Be Free(mium)?, on LinkedIn.
Robbie Kellman Baxter shares a story about her favourite bookstore and how it provides a great example of the Membership Economy in action.
When a Menlo Park bookstore was economically threatened, the community stepped in and created a membership program to improve long-term sustainability.
Founded in 1955 by peace activist Roy Kepler, Kepler’s Books is a large independent bookstore. After its founding, it quickly became a center for intellectual thought and community discussion for the people living in the suburbs surrounding Stanford University. Over the years, the bookstore moved to increasingly larger locations, until it found its current home in downtown Menlo Park, California. Kepler’s is a neighbor to many of the Membership Economy pioneers featured in this book. After its move to Silicon Valley, many of the most innovative and successful investors and entrepreneurs frequented Kepler’s as a favorite browsing destination.
By 2005, however, the bookselling landscape had changed, due in large part to the innovations of online retailers like Amazon. On August 31, 2005, Kepler’s Books closed its doors.
Read the full article, Kepler’s Books – A Story of a Local Business and the Membership Economy, on LinkedIn.
Subscription businesses were a big deal in 2019, so what’s the forecast for 2020? Robbie Kellman Baxter shares her expertise on what lies ahead.
I’m no fortune teller, but something about the beginning of a new year and a new decade makes me want to start spouting predictions. Actually, this isn’t the first time I have taken a crack at predictions. The final chapter of my new book THE FOREVER TRANSACTION is all about the future of subscription and membership models too.
Here’s what I think will happen.
In this post, topics covered include:
- There will be a right-sizing of the “Subscription Box” industry.
- Subscription “Managers” Will be Everywhere.
- Subscription CMOs will swing back toward strategy and away from “growth hacking”.
- Consumers will start subscribing to the thing itself, not just services and boxes.
- Big Companies will try to buy their way into the Membership Economy through Acquisition.
- Healthcare will become increasingly consumer-centric, which will lead to more forever transactions.
Read the full article, Crystal Ball: The World of Subscriptions in 2020, on LinkedIn.
Robbie Baxter explains why companies need to prioritize their mission over their products to take advantage of new technologies and services and build a new kind of relationship with today’s–and tomorrow’s–members.
As association leaders, many of you are Membership Pioneers. Membership is something you probably have been thinking about for years. But in the last 10 years, membership has reinvented nearly every industry. Companies like LinkedIn, Amazon and Salesforce have created forever transactions of their own with their customers by using many of the tactics that are core to the deep relationships trade groups, professional societies and other not-for-profit associations have been building for decades.
But they’re using new tactics–streaming content, frictionless checkout, recommendation engines, artificial intelligence–to create dramatically improved experiences. As a result, consumer expectations about what membership means have changed. And the drivers of this new perception are not coming from other associations, they’re coming from Silicon Valley tech.
Maybe this is a good thing though. In times of great change, there are big winners, and big losers.
So what can your organization do to be one of the winners?
Points covered include:
-Product market fit
-Taking advantage of new technologies and services
-Prioritizing your mission over your products
Read the full article, Memberships Are Changing and What it Means for Your Association, on LinkedIn.