KELOMPOK 4:KELOMPOK 4:

AULYA AGUSTIN DWI ANDHINIAULYA AGUSTIN DWI ANDHINIPURI WIDYAKSARIPURI WIDYAKSARI

WIBOWO AJI UTOMOWIBOWO AJI UTOMOTEGUH IMAM SANTOSOTEGUH IMAM SANTOSO

THE THREE TENSIONS

PERTEMUAN 1PERTEMUAN 1

PROFITABILITY VS GROWTH

The Three Conundrums1.Focus vs DiversificationHard to keep revenue growing with a narrow businessDiversifying often end up reducing profitability2.Organic growth vs Growth by Merger and Acquisition (M&A)Majority acquisition are found to have resulted in fewer benefit than cost3.Profitability Business vs Growth BusinessA manager suited to task of growth is surely different from another suited to managing profitability

What are leader do?BALANCE

Narrow & diversified portfolioOrganic & Growth M&AProfitability & growth

BATTING AVERAGE

Batting Average: A Measure of Success in Overcoming Tensions

A company’s batting average is a measure of how often a company is able to succeed at two competing objectives at the same time in any given year.

1. Portfolio Diversity and Batting Average

Degree of portfolio diversity has very limited impact on

batting average.

BATTING AVERAGE2. Acquisitiveness and Batting Average

There is no relation between batting average and how acquisitive company have been

As acquisitiveness rises, bating average stays the

same

BATTING AVERAGE3. Market Exposure and Batting Average

Batting average do vary according to industry attractiveness

Batting average varies more within industry than across

Portfolio mix, exposure to attractive market, is less important in determining batting average than relative performance within a market

BATTING AVERAGE

Batting Average doesn’t behave as you might imagine: companies with high batting averages have all degrees of

portfolio diversity, all degree of acquisitiveness, and all types of portfolio exposure.

BALANCE IS NOT THE ANSWER TO SCORING A HIGH BATTING AVERAGE

CUSTOMER BENEFIT

PROVITABILITY AND GROWTH IS THE IMPACT OF SUCH ACTIVITIES ON CUSTOMER BENEFIT

Customer benefits is the reward that customers receive through their experience of choosing and using a product or services

Increase in customer benefit manifests itself in higher prices, a higher market share, or both

The same product/services can have different benefits for different customers and different purchasing context.

Revenue growth that is underpinned by high or increasing customer benefit has much higher odds of being profitable than revenue growth that is not.

GOOD COST VS BAD COST

A good cost is necessary to produce customer benefit.

Bad costs are costs that are not necessary to produce the company's customer benefit, either now or in the

future.

Three types of bad cost:1.Costs that are not necessary to accomplish a given activity.2.Activities that are not necessary to produce the customer experience3.Elements of the customer experience that produce no or even negative customer benefit

HOW COMPANIES LOSE SIGHT OF CUSTOMER BENEFIT

Grow Customer Benefit

Grow Customer Benefit

Shrink Bad Costs

Shrink Bad Costs

Reduce bad costs relative to competitors while offering at least

comparable customer benefit

Grow customer benefit relative to competitors

without growing bad costs

Grow Customer Benefit and

Shrink Bad Costs

Grow Customer Benefit and

Shrink Bad Costs

Grow customer benefit faster and reduce bad costs more than

competitors

THE CUSTOMER FOCUS TRAP

GROWTH WITHOUT PROFITABILITY

Confusing features for benefits

Assuming that lower prices mean higher customer benefit

Leaning on sales and marketing "push“ when there is not enough customer benefit “pull"

Proliferating the offer rather than increasing the benefit from the offer

Entering new customer segments because they look attractive to you rather than because you look attractiveto them

TRYING COST TO EARNING TRAP

PROFITABILITY WITHOUT GROWTH

Managing costs more closely in the bad times than in the good times

Treating costs differently according to who owns them, who sees them, or whether they are fixed or variable, as opposed to whether they are good or bad

Basing prices on costs or costs on prices

Overestimating economies from scale;underestimating complexity from scope

Reinvesting cost savings into bad costs

WHAT CAN LEADER CAN DO

MAKE "GROW CUSTOMER BENEFIT"

YOUR BROKEN RECORD

MAKE "GROW CUSTOMER BENEFIT"

YOUR BROKEN RECORD

Managers are more used to justifying acquisitions on the grounds of cost "synergies" than customer benefit

ASK HOW TO GROW YOUR MARKET, NOT JUST YOUR MARKET

SHARE

ASK HOW TO GROW YOUR MARKET, NOT JUST YOUR MARKET

SHARE

ASK WHAT WOULD GROW BENEFIT FOR

THE CUSTOMER'S CUSTOMER

ASK WHAT WOULD GROW BENEFIT FOR

THE CUSTOMER'S CUSTOMER

Market growth makes you look to your customers and the fundamental benefit of your market.

Sometimes, changing the question by changing the customer you are considering can lead to new avenues for profitable growth.

WHAT CAN LEADER CAN DO

DEFINE YOUR BUSINESS BOUNDARIES BY

CUSTOMER BENEFITS, NOT JUST PRODUCTS

DEFINE YOUR BUSINESS BOUNDARIES BY

CUSTOMER BENEFITS, NOT JUST PRODUCTS

Ask managers to consider the business in both ways, product and customer benefit

PREFER MARKET STRENGTH TO MARKET

ATTRACTIVENESS

PREFER MARKET STRENGTH TO MARKET

ATTRACTIVENESS

GROW PRODUCTIVITY IN GOOD TIMES AND

BAD

GROW PRODUCTIVITY IN GOOD TIMES AND

BAD

a company's relative position within its markets matters more to a high batting average than being in an attractive market

companies can set targets for continuous improvement in cost efficiency-and therefore reduction in bad operating cost

WHAT CAN LEADER CAN DO

MAP COST TO CUSTOMER WILLINGNESS TO PAY

MAP COST TO CUSTOMER WILLINGNESS TO PAY

How well costs are aligned with customer benefit

SEGMENT ONE LEVEL LOWER THAN THE

COMPETITION

SEGMENT ONE LEVEL LOWER THAN THE

COMPETITION

APPLY BOTH AN OPERATING PERSPECTIVE

& A STRUCTURAL PERSPECTIVE TO COSTS

APPLY BOTH AN OPERATING PERSPECTIVE

& A STRUCTURAL PERSPECTIVE TO COSTS

Not all sub segments were losing money because of bad costs

The best ways to increase the odds that company costs are cut ever closer to what is absolutely necessary to produce high and growing customer benefit