strategy & the value of relationships (networks)

Strategy & the value of

Relationships (Networks)

Martin Kramer

Entrepreneur / CEO

IQ TeQ (Healthcare)AvoMedia (Media/IT)Rho-Marine (Leisure/Marine)

Strategy & The Value of Networks

Topic is twofold

Vast amount of information on “Strategy” and almost none on

“The value of Relationships (Networks)”

What is Strategy?

“What do you want to achieve or avoid? The answers to this question are objectives. How will you go about achieving your desired results? The answer to this you can call strategy.”

William E Rothschild

What is Strategy?“Strategy is a plan”

Mintzberg and Quinn

Implies

- Made in advance

- Developed consciously

and purposefully

Basic Model of Strategic Formulation

INTERNALCAPABILITIES

COMPETENCIES

WHAT WE HAVE1

1


EXTERNALENVIRONMENT

KEY SUCCESS FACTORS

WHAT THEY HAVE[what we need?]

2

2


COMPETENCIES

EXTERNALENVIRONMENT

KEY SUCCESS FACTORS


S W O T

CREATION OF STRATEGY

PLANS TO WIN

+ 21

=



EXTERNALENVIRONMENT

S W O T

COMPETENCIESKEY SUCCESS

FACTORS


SocialExpectations

ManagerialValues

Evaluation and ChoiceOf Strategy

IMPLEMENTATION OF STRATEGY

[Source: Minztberg and Quinn]

1 + 2

IQ TeQ MedicalIQ TeQ is a developer of PC Based Medical Diagnostics Equipment

Formed in 2001

Team of 11 [3 R & D, 5 Sales]

Developed 3 Diagnostics Devices

Skirted the IT Security Market

Current Revenue pa. approx R 5 million

IQ TeQ Medical – Our PerceptionsDeveloper of PC Based Medical Diagnostics Equipment

Internal Capabilities (what we thought we had):

A Technology CompetenceA great investment

External Appraisal(what we thought they had):

The competitors were traditional, overhead heavy and slow We were capable of significant market penetration


COMPETENCIES

EXTERNALENVIRONMENT

KEY SUCCESS FACTORS

IQ TeQ Medical – RealitiesDeveloper of PC Based Medical Diagnostics Equipment

Internal Capabilities (what we had):

We had a Technology CompetenceA risky investment with an ‘also ran’ (A start-up)

External Appraisal(what they had):

The competitors were well entrenchedWe would work for every piece of a % point mkt share


COMPETENCIES

EXTERNALENVIRONMENT

KEY SUCCESS FACTORS



EXTERNALENVIRONMENT

S W O T


FACTORS


SocialExpectations

ManagerialValues




1 + 2

AvoMediaAvoMedia is a manufacturer of Digital Media Products (CD & DVD)

Formed in 2000

Team of 15 [6 Production, 6 Sales]

Owned Manufacturing facilities

Current Revenue pa. approx R 8 million

AvoMedia – Our PerceptionsManufacturer of Digital Media Products (CD & DVD)

Internal Capabilities (what we thought we had):

A real ‘smart’ product that everyone would wantEnough experience to “wax” this one

External Appraisal(what we thought they had):

There was no competition / alternative This was a multi million Rand BIG business (instantly!)


COMPETENCIES

EXTERNALENVIRONMENT

KEY SUCCESS FACTORS

AvoMedia – RealitiesManufacturer of Digital Media Products (CD & DVD)

Internal Capabilities (what we had):Product too early to market, but a sound ‘niche’A stupid will to win““Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” Sun Tzu quotes (Chinese General and Author, b.500 BC)

External Appraisal(what they had):

A small market (R 100 million)3 serious competitors


COMPETENCIES

EXTERNALENVIRONMENT

KEY SUCCESS FACTORS



EXTERNALENVIRONMENT

S W O T


FACTORS


SocialExpectations

ManagerialValues




1 + 2

Creation of Strategy

In both companies we exist in the context of competition we had (have) a plan the plan was (is) based on perceptions

[not always close to the reality] we make incremental wins a strategy has emerged [it WILL emerge]

and

Networks were (are) key to the value

What are Networks

We do not mean IT Networks

In the most general sense, meaning

“Systematic affiliation or connections”

or

“Established channels of communication”

The role of Networks

I’m not traditionally a promoter of networking, doesn’t sit well with my profileToo uncontrollableToo vagueToo potentially loaded with ‘failure’

But I cannot, when looking back, deny

the all encompassing value of networks



EXTERNALENVIRONMENT

S W O T


FACTORS


SocialExpectations

ManagerialValues


Networking (Relationships)



Networks in IQ TeQ Medical

IQ TeQ is build on our R&D Capability I met our R& D Director, Ray, though Peter (a

‘supplier’/’customer’ of Avomedia) I was referred to Peter via a FE manufacturer We found the FE manufacturer on the web

IQ TeQ was initially funded by VC Introduced via Rocco Was introduced to Rocco via Johan Contacted Johan initially off contact details found

on the “SAVCA” which was listed on the web

Major Markets via Networks of Distributors Medica: BHS (S America), Elder Group (India),

Clement Clarke (UK / Europe) Via Clement Clarke: AllianceTech Medical (USA) Via Acorn: A strategic local alliance partner

Major Suppliers, Some Key Staff, Strategic Partners

Networks in IQ TeQ Medical



EXTERNALENVIRONMENT

S W O T


FACTORS


SocialExpectations

ManagerialValues





Networks in AvoMedia

AvoMedia is build on our Sales & Marketing & Manufacturing Capability I met Candice (my partner) through a social

network

AvoMedia’s survival was made possible by our competitors We approached the first competitor to assist

us as a supplier. They facilitated the introduction to the rest of the industry.

Jointly, they made it possible for us to supply

Networks in AvoMedia

Our Manufacturing Facilities were sourced via a network

Major Suppliers, Some Key staff



EXTERNALENVIRONMENT

S W O T


FACTORS


SocialExpectations

ManagerialValues





Value of NetworksYesterday and Today

Two aspects that are relatively new and important to small business

1) The increase number, kind and importance

2) The use of technology to facilitate networking

[Source: Dr. Vincent E Giuliano Chief Scientist, Mirror Systems Inc.]

Empowerment Networks

More formalised network valueAre the combination of IT and people networks to create advantages: Branding (Franchisers) Quality Assurance (Associations) Economies of Scale (Co-operatives) Supplier-dealer Networks (e.g. Car Market) Knowledge Exchange at Meetings/Conventions

Things normally associated with Big Business [Source: Dr. Vincent E Giuliano

Chief Scientist, Mirror Systems Inc.]

Conclusion

‘Networks’ provide an invaluable source of resources,

And by implication

They can give your small business the power of big

business if leveraged correctly



EXTERNALENVIRONMENT

S W O T


FACTORS


SocialExpectations

ManagerialValues





strategy & the value of relationships (networks)

Documents

iq teq medical iq teq

william e rothschild

startup external appraisal

avomedia avomedia

perceptions developer

diagnostics devices

approx r

value of networks topic