Archive for the ‘Strategy’ Category

Flat-pack ready meals

March 19, 2015

Last week with my MSc economics students we spent some time brainstorming different business models for delivering groceries ordered online.  Internet supermarkets such as Ocado, or Tesco’s online presence, adopt one model which combines the range of products that you’d find in a mainstream supermarket, with home delivery.  Asda’s enterprise at London Underground stations is a neat variation of this, and from the supermarket’s viewpoint is a low-cost bolt-on to their existing model because if you can load up a van with groceries for home delivery, you can also load up a van to be serve commuters passing through the station car park.

But there are also models which vary the approach to supplying the food.  The fresh vegetable suppliers, Abel and Cole and Riverford, are examples of this.  So is Hubbub, which works on sourcing food from small retailers.  Interestingly, they compare themselves to Ocado, which is undoubtedly valid in terms of their target market and the importance of service.  However their approach to logistics is at the opposite end of the scale to Ocado, who seek to gain economies of scale by serving a very large number of customers from a single distribution centre, and indeed by working with Morrisons in parallel to its own brand operations in conjunction with Waitrose.

One other model which is worth a look is exemplified by a company called Gousto.  Like Ocado it was set up by former bankers and it has now attracted some investment from Unilever.  The idea is that they deliver a box of ingredients, together with the recipe, so that customer can cook their own meal but can follow the recipe precisely.  I guess that part of the inspiration for this comes from flat-pack furniture, where you can buy a box containing all the components of your furniture but you still need to put it together.  Think of Gousto’s boxes as a flat-pack ready meal


Microsoft’s latest acquisition

September 15, 2014

Having bought Nokia’s mobile phone business,Microsoft have made another acquisition in Scandinavia.  The logic behind them taking over the developers of Minecraft seems clear enough, given the popularity of this particular virtual world, but the statement by Minecraft’s creator makes very interesting reading.

Brands, coffee, banks, and reputation

September 15, 2014

Over the last couple of years there has been consternation in Crouch End, and worry in Whitstable – all caused by the emergence of a chain of coffee shops.  The branch of Harris and Hoole in Crouch End has a distinctly independent feel to it, with chunky chinaware, a blackboard advertising events in-store, and sort-of-local boys the Kinks on the sound system when I was there a week or so back.  But head further into London, and the next branch of the same chain (though not for much longer) is within the small Tesco Express store near to Highbury Corner.

Which is a clue to some curious issues around ownership and branding.  Harris and Hoole, it turns out, may have been the brainchild of three cool young siblings but just under half of it is in fact owned by Tesco.  In fairness to the business, their website is quite candid about the Tesco involvement although my recollection is that this wasn’t the case when Tesco’s stake first attracted media coverage.   Moreover you could argue that the owners of Costa Coffee, which does look and feel like a big chain, don’t expect anybody to believe seriously that their whole enterprise, including sponsorship of a literary prize, was built up by two brothers who started from scratch.  In fact, looking at the development of the coffee business over time, one might wonder why it took 24 years for the Costas to sell out to Whitbread.  So what should we read into brands and reputations?  Should it matter, if a coffee outlet looks and feels right, who owns it?

As I alluded to above, the Highbury Corner store is on its way out – although whether this reflects any sort of broader malaise surrounding the supermarket sector is debatable.

TSB brandingBranding and ownership has also been an issue in the banking sector.  The principal retail banks have used a variety of brands for many years: most notably First Direct was created as a telephone banking offshoot of the then Midland Bank (long since subsumed into HSBC) 25 years ago as a reaction to the parent company having a perceived poor reputation.  This was in a more innocent age, when banks’ reputations suffered because of weaknesses in customer service, and not because of careless governance putting the world’s financial systems at risk.  First Direct has evolved into an Internet bank, but there is still a sense that its call centre is the principal channel for customer contact, and the one into which First Direct puts most effort.  This isn’t something I’ve tested scientifically, but I’ve long suspected that there is a correlation between the prominence of the HSBC logo on First Direct’s advertising and stationery, and HSBC’s overall reputation.  So when there is bad news about HSBC in the media, their logo, and the wording about First Direct being part of the HSBC group, are as tiny and inconspicuous as possible.  When HSBC is doing well, then First Direct advertising gains more of an HSBC look.

First Direct formed a template for a couple of other Internet banks.  Famously, some of the same people involved with setting up First Direct went on to work on Egg, the Internet banking brand which has successively been operated by the Prudential, then Citi Group, and now the Yorkshire Building Society.  It was followed by Smile, which set out to move the Co-op Bank from being a rather staid but worthy bank to a more contemporary ethical institution.  Though Smile seems to have been troubled by customer unrest even before its parent company’s problems came to light.

Ironically, the Co-op was involved with the other significant change in bank branding lately – the re-emegence of the TSB brand after 18 years, as some former Lloyds TSB branches have been hived off into this separate business.  At one time the intention was for the Co-op (when it looked stable and financially solvent) to take over the Lloyds TSB branches that became TSB.  In fact TSB has been set up as a separate busines, though with a logo not dissimilar to the one that was around in the 1990s before the merger with Lloyds.  And TSB is branding itself as a more accessible, less corporate, bank than its rivals.

Of course a small, artisanal, bank is a less plausible notion than a small, artisanal coffee shop.  But TSB’s ‘local banking’ strapline, and its positioning as a bank which deals with individuals and large corporates (a position which has echoes of the role historially occupied by building societies in the UK) suggests something distinct from the large corporates.  And it’s another instance of the importance of the presentation and positioning of a brand.

Nokia under new management

September 4, 2013

Given my interest in changes in the phone business, I should have seen Microsoft’s takeover of Nokia’s phone business coming – and I didn’t.  Lots has been written about the move but I was struck by this piece on its significance for Finnish entrepreneurship.

Historically Microsoft hasn’t been a huge player in mobile devices: even in the days of personal digital assistants, the portable version of Windows was a much smaller player than, for example, the Palm operating system.  I wonder if that will change following the recent news.

Centralised or not?

April 29, 2013

Many of my students will have worked through the example of Ocado as a case study in e-business.  There are lots of issues around it, but one of the key issues is to contrast Ocado, which has a fundamental business model based initially around a single fulfillment centre in Hatfield, not far north of London, with the business model adopted by Tesco for internet shopping, which was fundamentally highly decentralised and used local shops as distribution centres.  The aim is not to present one approach as intrinsically superior to the other, although it’s surprising how often some students do defend a preference for one or another as though it’s a religious belief.  Rather, it’s to show that this sort of decision does affect the type of strategy that an Internet supermarket should pursue.  And also that each of these supermarkets chose their strategy in response to a particular set of conditions.

Of course students often point out that the Ocado model isn’t quite as centralised as it looks.  For a start there is now a second major distribution centre in the midlands.  But also the centralised system depends on a hub and spoke approach.  One of the smaller depots that acts as a spoke is in Byfleet in Surrey.  Those with knowledge of the area will recognise this as the sort of affluent, reasonably well-populated territory that Ocado sets out to serve, and those with inclinations towards systems thinking may recognise this as where Stafford Beer lived.

Ocado is also interesting because of the (at times rather fraught) relationship with Waitrose.  But it’s significant that perhaps the partnership with Ocado paved the way for Waitrose own-brand goods to be sold through a variety of outlets.  This move to sell Waitrose products on Eurostar services between London and the continent provides another outlet for their brand, along with the rather entertaining idea that a French or Belgian visitor to Britain could dine on a Waitrose Croque Monsieur on the way.

Waterstones, Amazon, and synergies.

October 25, 2012

There’s been some news coverage this week of the decision by Waterstones, who operate ‘brick’ bookshops, ranging from their huge store in Piccadilly – a 1930s modernist building which was previously a rather up-market clothing shop –  to smaller outlets on university campuses, to sell Amazon’s Kindle in their stores.

This isn’t the first time that Waterstones and Amazon have collaborated.  For much of the 2000s, Waterstones had a web site which promoted its branches, but which also offered customers the opportunity to buy books through a Waterstones-branded version of Amazon’s online shop.  The strategic logic behind this was fairly straightforward.  Waterstones’s strengths were in their locations so they saw their core business as being about creating a sense of place in their bookshops.  For customers who really wanted to buy online, the reasoning was that Waterstones couldn’t compete with Amazon for the logistics and reach necessary to achieve a really good online service, so they would be better to pass customers on to the biggest player in the business.  From Amazon’s viewpoint Waterstones was just another source of referrals of business, and Amazon has always worked very effectively alongside partners.

So in the past there have been synergies between Waterstones and Amazon and the reasoning behind the current move is to find if such synergies exist today.  And part of the reasoning is to ensure that as E-books increase in importance, Waterstones does gain some benefit from being in that market.

Incidentally, if you are a bibliophile Londoner you may well find the name of Waterstones’s current managing director, James Daunt, familiar.  Daunt Books is a chain of just six shops, all based in prosperous areas of London, with a traditional feel and with enough of an emphasis on travel literature to justify a ‘browse by continent’ sidebar on their website.  Its cotton bags have acquired a level of popularity out of all proportion to the size of the chain, perhaps because somebody carrying one of the bags is neatly defined as somebody who would spend time in a bookshop.  James Daunt left the world of banking in the 1980s to start up Daunt Books, and only last year was recruited to take over Waterstones.  On the evidence of his previous enterprise, he does have a strong sense of place and some ideas about how to make this work for a bookshop.

In defence of quick hits

September 10, 2012

Here’s a thought which has been raised by my participation in ALT-C (incidentally when participants sign up for the social network associated with the conference, they are asked whether they intend to blog about it, so I will certainly put up a couple of posts based around the event).

I’m contributing – along with two people who are essentially learning technologists rather than educators – to a presentation about lecture capture.  Significantly, in the context of my lectures, I was careful to regard lecture capture as the proverbial flyon the wall, and not to allow its presence to influence my own behaviour.  In particular, even though the lecture capture used a fixed camera focused on the front of the room, I would still walk around the room, still invite students to participate, and still lead discussions.  In fact during student discussions, where the camera was fixed on an empty seat at the front while the microphone picked up the sound of me moderating a dialogue among students elsewhere in the room, the effect would have been rather like that of listening to a serious discussion taking place on the radio.

So lecture capture in this instance could be regarded as a bolt-on to an existing set of classes.  It was clearly appreciated by the students, and could be regarded as a ‘quick hit’ which could be achieved by bringing in something new with minimal impact on the existing pedagogic processes.

Maybe I’m reading too much into a few remarks, but I detect an undercurrent in some of the dialogue surrounding learning technology that it should be about transforming the student experience, and should be embedded in the way that students are taught – with the corrollary that simply adding a bit of technology such as lecture capture is rather an unfashionable approach.  But the concept of the quick hit does come up in a lot of management discourse about dealing with change.  And it was interesting to reflect on why lecture capture provided quick hits for the module where I used it: it was an innovative approach which neatly complemented the student discussions and presentations which I knew were popular on this module.

Of course there isn’t a contradiction between having major change an an institution and promoting quick hits.  It could very easily be argued that both are necessary.

However there is another point around the way that innovations in pedagogy are promoted and disseminated within the university where I work at least.  We hold occasions such as the showcase – see again my blog entry from earlier in the year – to allow people who have made local initiatives to reach a wider audience.  So this is an approach which does value quick hits because it encourages a ‘bottom-up’ approach where individuals can try out different ideas and publicise them, not a ‘top-down’ approach which is focused on promoting a particular overarching strategy.

Satisfaction on wheels

September 10, 2012

Later this week I’m attending the association for learning technology conference – known as ALT-C. I will only be there for one day but will be there in connection with my experiences with lecture capture, as documented in showcased and captured on this blog earlier this year, and some bigger issues around change. And I’ll also be pursuing a very long-standing interest in how educational technology fits into an instution that’s based in a city centre, that relies on its physical location to attract students, and that uses face-to-face teaching as a primary method of instruction. At one time, students taking a university-based course such as an executive MBA were actively resistant to any sort of learning materials being delivered online, because they had often chosen their course in preference to a distance learning option and they would resent being offered anything that felt as though it was distance learning. Now students’ expectations are to have supplementary material available on the web.

Inevitably one of the issues raised at the conference is likely to be how we measure success, and I’m well aware that in the university context there is only a weak correlation between satisfaction and educational outcomes.

Unless I unexpectedly need to travel somewhere along the line out of Euston later this year, or Richard Branson succeeds in deferring the end of the his franchise, my trip to this conference will be the last time that I travel on Virgin Trains. While I don’t have strong views on whether Virgin’s joint venture with Stagecoach, or First Group, would be better at running the line, I was struck by this piece from the Guardian demonstrating that First Group came higher on measurable indicators of performance while passengers were overwhelmingly more satisfied with Virgin. Another example of satisfaction not being closely aligned with other outcomes?

TomTom finds its way

June 21, 2012

TomTom is a fascinating business for several reasons.  For a start, it’s an example of being successful through having the right product at the right time, and when the technology was available for that product to be saleable at the right cost – notably simple stand-alone satellite navigation devices in the early 2000s.  It’s also an example of the effective use of open source, not just for the software but also for mapping data which can be kept up-to-date with the help of information provided by users.  Perhaps most significantly, the same product which looked successful in the early 2000s is now starting to look dated.

It’s interesting, then. to see that TomTom has now made a deal with Apple to provide mapping and satellite navigation tools for iPhones – immediately bringing TomTom into the position of being a key player in the ‘ecosystem’ of hardware, application, and accessory providers that Apple has created.  This cartoon from the Guardian’s Kipper Williams rather neatly sums up one aspect of the deal – that it could be seen as a significant snub for Google who would like to promote their own mapping and direction finding tools.

Autonomy being less autonomous

June 1, 2012

There are some parallels between Logica, mentioned in the previous post, and Autonomy.  Both were once ambitious British start-ups, and both depended on a team of bright people and creating a distinctive business with a clearly defined skills.  And both have been in the news lately, in Autonomy’s case because of the ill-tempered departure of its founder, Mike Lynch, not long after the company’s acquisition by HP.

This is being portrayed in most press coverage – including the Guardian article linked above – as a clash of cultures, between the small, entrepreneurial, Autonomy and the bureaucratic HP.  I’ve no doubt that’s true, but I also wonder how well Autonomy really fitted with HP, or even whether HP under Meg Whitman really has a clear view of where it wants to go.  The acquisition of Autonomy was initiated under HP’s previous CEO Leo Apotheker, and there was some synergy between Apotheker’s intention to focus on the less visible, back office, aspects of computing and Autonomy’s provision of tools for handling large amounts of data.  It’s not clear whether any of that synergy is still there.