Strategic tools for the practising manager

KIT

THIS WEEK: FOOD STORAGE INFRASTRUCTURE IN INDIA

There are approximately 4,500 cold storage units with a storage capacity of more than 19 million tonnes in India.

The average growth rate of commercial and industrial refrigeration is estimated at 10 per cent a year.

The most important indicator of the lack of adequate storage infrastructure is the level of wastage in the system "" which, according to some estimates, is as high as 20-40 per cent of the total production.

Most cold stores do not offer multiple product capabilities, multi-temperature facilities or controlled atmosphere provisions.

Eighty per cent of the capacities are dedicated to potatoes in India.

Existing capacities are mostly owned in an highly unorganised manner by private players who are dependent on just one seasonal product (potato), thus bringing down the capacity utilisation rate.

The commercial refrigeration market is driven by the food and processed food sectors and since these sectors are at an early stage of development and likely to expand, the commercial refrigeration market is poised for growth.

Selections from management journals
NUGGETS

Years ago, when Tata Group Chairman Ratan Tata planned to enter the auto industry, critics treated the venture as a joke. Now, however, Tata Motors has just rolled out its millionth car from its plant in Pune in Western India. Today, sceptics are raising similar questions about the Tatas' pursuit of Jaguar and Land Rover.

A deal with Ford to take over those premium brands inched closer to reality this week after Britain's largest auto union endorsed the Tatas. Could the transaction be just a trophy deal? Experts at Wharton and elsewhere point out that strategic insight rather than hubris might be at work here.

Tiger by the tail: the Tatas are closing in on Jaguar and Land Rover
Knowledge@Wharton,
November 30 - December 13
Read the article at http://knowledge.wharton.upenn.edu/india/

Companies often begin their search for great ideas either by encouraging wild, outside-the-box thinking or by conducting quantitative analysis of existing market and financial data and customer opinions.

Those approaches can produce middling ideas at best, say Coyne, founder of an executive-counselling firm in Atlanta, and Clifford and Dye, strategy experts at McKinsey.

The problem with the first method is that few people are very good at unstructured, abstract brainstorming. The problems with the second are that databases are usually compiled to describe current "" not future "" offerings, and customers rarely can tell you whether they need or want a product if they have never seen it.

The secret to getting your organisation to regularly generate lots of good ideas, and occasionally some great ones, is deceptively simple: First, create new boxes for people to think within so that they don't get lost in the cosmos and they have a basis for offering ideas and knowing whether they're making progress in the brainstorming session. Second, redesign ideation processes to remove obstacles that interfere with the flow of ideas "" such as most people's aversion to speaking in groups larger than 10.

Breakthrough thinking from inside the box
By Kevin P Coyne,
Patricia Gorman Clifford and Renee Dye
Harvard Business Review,
December 2007
Read this article at www.hbr.com

In their quest to harness new sources of creativity, companies are reaching beyond their R&D labs to tap individuals and organisations outside their corporate boundaries.

In their new book titled, The Global Brain: Your Roadmap for Innovating Faster and Smarter in a Networked World, Satish Nambisan, a professor of technology management and strategy at the Lally School of Management at the Rensselaer Institute of Technology, and Mohanbir Sawhney, a professor of technology at Northwestern University's Kellogg School of Management, explore the rise and implications of this network-centric approach to managing innovation. Nambisan spoke with India Knowledge@Wharton recently about how companies can work with outsiders to enhance their own efforts to create new products and services.

Want to create innovative products? Tap into the 'Global Brain'
Knowledge@Wharton,
November 30 - December 13
Read the article at http://knowledge.wharton.upenn.edu/india/

Minor innovations make up most of a company's development portfolio, on average, but they never generate the growth companies seek. The solution, says George S Day "" the Geoffrey T Boisi Professor of Marketing and a codirector of the Mack Center for Technological Innovation at Wharton "" is for companies to undertake a systematic review of their innovation portfolios and increase the number of major innovations at an acceptable level of risk.

Two tools can help them do this. The first, called the risk matrix, graphically reveals the distribution of risk across a company's entire innovation portfolio. The matrix allows companies to estimate each project's probability of success or failure, based on how big a stretch it is for the firm to undertake. The less familiar the product or technology and the intended market, the higher the risk.

The second tool, dubbed the R-W-W (real-win-worth it) screen, allows companies to evaluate the risks and potential of individual projects by answering fundamental questions about each one: "Is the market real?" explores customers' needs, their willingness to buy, and the size of the potential market. "Is the product real?" looks at the feasibility of producing the innovation. "Can the product be competitive?" and "Can our company be competitive?" investigate how well suited the company's resources and management are to compete in the marketplace with the product.

"Will the product be profitable at an acceptable risk?" explores the financial analysis needed to assess an innovation's commercial viability. Last, "Does launching the product make strategic sense?" examines the project's fit with company strategy and whether management supports it.

Is it real? Can we win? Is it worth doing? Managing risk and reward in an innovation portfolio
By George S Day
Harvard Business Review,
December 2007
Subscribe to this article at www.hbr.com