Strategic Thinking: Chapter 12 Three Strategies for Managing Fast Growth

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Strategic Thinking Chapter 12Three Strategies
for Managing Fast Growth

• Stephen Adams
• Emily Burrill
• Lexi Crawford
• Wade Reese
• Ken Self

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Introduction

• Basic Strategies for Growing a Business
• Scaling
• Duplication
• Granulation
• Supporting Principles
• Organizational Learning
• Knowledge Acquisition
• Knowledge Transfer

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Introduction

• Is This Presentation Going to be Fun?
• Video
• Activity

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Managing Fast Growth

• Video Starbucks
• Report about Starbucks growth into Asia
•  Starbucks Video
• How does this relate to our topic?

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Managing Fast Growth

• Starbucks How does this relate to our topic?
•  
• "To grow steadily and avoid stagnation, a company
  must learn how to scale up and extend its
  business, lengthen its expansion phases, and
  accumulate and apply new knowledge to new
  products and markets faster than competitors."
•  

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Managing Fast Growth

• Starbucks How does this relate to our topic?
• Management can't leave growth to chance.
• Focus comes from within the Organization for
  planning.
• Size does not matter, sharing knowledge and
  implementing ideas does.
• Management must use supporting principles
• Organizational Learning
• Knowledge Acquisition
• Knowledge Transfer
•  

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Managing Fast Growth

• Learning by Doing Stage 1
• Divide into three groups
• Remove the inner bag of LEGOs and set it aside
  for later use
• Using exactly 14 pieces, build a model that is
• Wholly connected
• Has a minimum of 4 pieces touching the table
• Touches the table in at least two places (not
  immediately side-by-side)

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Managing Fast Growth

• Learning by Doing Stage 2
• Without changing the foundation of your business
  (in this case, the pieces already assembled) add
  the remaining pieces from the first bag.
• Continue to leave the second bag sealed

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Scaling

• Growing Select Business Cells

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Scaling

• Doing more of what youre good at
• Supports commitment to growth

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When is scaling the right strategy?

• When the market is large enough for rapid growth
  in a focused product line
• When the product creates unique value (in the
  customers eyes)
• When the company can distribute products widely
  at low cost

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Netscape

• Founded by Jim Clark and Marc Andreessen
• 80 million in sales
• 500 million in sales (acquired in the Fall by
  AOL with a value of more than 10 billion)
• In our business, stability comes from
  doing things quickly. -Jim Clark

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Strategies for scaling

• Invest aggressively
• Specialize and standardize
• Hire the right mix
• Adapt the (organizational) structures
• Find ways to learn from customers early

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Managing Fast Growth

• Learning by Doing Stage 3
• Open the second bag
• As closely as you can, create a second model that
  matches the first

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Duplication

• Growing Select Business Cells

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Duplication

• Overview
• Definition A strategy for managing quick growth
  that is often used by businesses expanding into
  international markets
• Often franchises and overseas subsidiaries
• Packaging of companys core competencieskeys
  to successful execution
• Standardization vs. Adaptation
• Types of duplication
• Manufacturing, HR, Marketing, Management, etc.

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When is it best to use duplication?

• Nature of the business requires a physical
  presenceIKEA example
• A need exists for better distribution
• vs. scaling
• The company is skilled at adapting/adjusting to
  different markets and customer needs

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Black Boxing

• Overviewduplication of key elements of the
  companys infrastructure
• Formal vs. Informal information sharing
• IKEAs use of Black Boxing
• Knowledge Marines
• Limitations of black boxing
• Diversity of customer needs in different regions

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Managing Fast Growth

• Learning by Doing Stage 4
• From the second bag, use any remaining pieces to
• Connect the two models
• Build one model as tall as possible

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Granulation

• Growing Select Business Cells

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Granulation

• Using knowledge and resources to explore new
  territory with new autonomous business units,
  independent subsidiaries, or corporate spin-offs
• Each new venture should reuse existing product
  technologies, manufacturing process,
  organizational processes, and consumer
  information, but combines them in new ways

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SAP

• Started out by scaling growth with ERP R/1-R/3
• Then duplicated by reorganizing into business
  units, from one product to multiple products
• As they matured, used granulation creating new
  business units
• mySAP.com and SAP markets
• Now moving to incorporate business using text
  messages

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Dow Chemical Case

• Had declining growth
• Saw the Internet as a new source for business
• Started a couple different ventures
• Management decided which ones were best to
  continue to pursue

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3M

• Uses current technologies in new ways
• Usually forms a new venture in the company
• Has built a business model upon using granulation
• Website

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Is Granulation right for you?

• Mature market
• New Substitutes could obsolete your business
• Ability to monitor new markets and share
  information
• Relies on having entrepreneurs in the company
• Keeps a mature company from going extinct

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Recap of Concepts

• Scaling
• learn how to do more of what you already do
• Duplicating
• learn how to apply what you know in other
  geographical markets
• Granulation
• gather substantial info about new competitors and
  new product and market opportunities in order to
  grow

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Strategies for Growing Learning
Means of Learning Scaling Duplicating Granulation
Experience Sharing Sharing core business knowledge Share know-how of selecting entrepreneurs and managers Sharing entrepreneur knowledge in new biz cells for new markets
Externalization Making experiences explicit Making entrepreneur know-how in product dev., manufacturing, and sales clear Making the knowledge of entrepreneur in new cells clear
Formal Sharing of Knowledge Sharing knowledge about procedures that work and those that dont Building on recombining clear knowledge across cells to enhance creativity create new business
Devoted practice Learning by doing Developing different routines, practices, functions disciplines Applying black-box procedures knowledge
External knowledge acquisition Acquiring knowledge about the appropriateness of products, services processes in local context Developing procedures for industry learning
Black-boxing entrepreneur know-how applying
across new markets
Sharing within between functions
Devoting attention to evaluating monitoring new
biz opportunities
Establishing formal market connections to ensure
customer feedback to product development
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Differing Strategies

• Large Companies
• with business units or subsidiaries in different
  growth stages can focus on all three at same time
  3M
• New Companies
• may need to take it one step at a time,
  progressing from duplicating to granulation SAP
• Requires continuous sharing of knowledge
• Commitment to growth

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Essay questions

• Q1 When is scaling an ideal strategy as compared
  to duplication or granulation? When is it best
  to use duplication? When is granulation the best
  strategy of the three?
• Q2 When your business is focused on learning by
  doing, how does scaling lead to duplicating, and
  duplicating lead to granulation? How are they
  related (i.e., circular, linear), please explain.