Alchemy of Growth PDF
Preview Alchemy of Growth
Excerpts from the book by Mehrdad Baghai, Stephen Coley, and David White Global research base: 36 great growers and kick-starters North America Europe Asia-Pacific • Barrick Gold • Gillette • Germany • 7-Eleven Japan • Bombardier • Johnson & −SAP • Acer • Compaq Johnson −Bertelsmann • Arvind Mills • ConAgra • Lear • Finland • Coca-Cola • Disney • Reynolds & −Nokia Amatil • Emerson Reynolds • Ireland • Hindustan Electric • Sara Lee −CRH Lever • Enron • Charles Schwab −Jefferson • Kyocera • Federal • State Street Smurfit • Lend Lease Signal • Thermo Electron • Li Ka-shing • Frito-Lay • Warnaco • Samsung • GE Capital • Wells Fargo • Softbank • Village Roadshow 1 The Three Horizons: Secret of Sustained Growth Profit Horizon 3 Create viable options Horizon 2 Build emerging businesses Horizon 1 Extend and defend core businesses Time 2 Concurrent Management Across Three Horizons Profit Simultaneously . . . . . . secure options in Horizon 3 that will ensure the company’s longer term future . . . build Horizon 2 businesses that will drive medium term profit growth . . . extend and defend profit generators in Horizon 1 Time 3 Balanced growth at Coca-Cola Amatil - 1997 Horizon 3 Profit Create viable options Horizon 2 Former Soviet republics Build emerging − Belarus businesses − Ukraine China/Asia − Option with Robert Horizon 1 Kuok Extend and defend Eastern Europe India − Hungary core businesses − Option with San − Czech Miguel Republic Other (more franchises, − Slovakia new products, − Slovenia new channels) − Poland Australasia − Romania − Australia − Croatia − New Zealand Indonesia Western Europe Philippines − Austria − Switzerland Time 4 Cascading horizons: Coca-Cola Amatil Asia-Pacific, 1997 Indonesia: New customers Profit •Rural areas Horizon 3 •Jakarta •Other •Korea? major Horizon 2 •China? • Tourists urban •India? • Urban centers •P hilippines sites ••IInnddoonneessiiaa Horizon 1 •Fiji/Papua New Guinea Australia: Value delivery •• AAuussttrraalliiaa •Smart • New Zealand cards •Vending machines •New drinks • Traditional Time channels 5 Every leader at every level manages across Three Horizons CEO Division A Division B Division C Division D Marketing Sales Marketing Sales R&D Production 6 Gillette’s seven degrees of freedom MMoovveess iinnttoo IImmpprroovvee-- nneeww mmeenntt ooff ccoommppeettiittiivvee EExxppaannssiioonn iinndduussttrryy aarreennaass ssttrruuccttuurree iinnttoo nneeww IInnnnoovvaattiioonn • Toiletries, iinn vvaalluuee ggeeooggrraapphhiieess • Drove IInnnnoovvaattiioonn stationery, ddeelliivveerryy consoli- iinn pprroodduuccttss appliances, ssyysstteemm dation of aanndd • 70% of oral care, stationery NNeeww sseerrvviicceess • Use of dual profits from batteries industry ccuussttoommeerrss sales outside US • Successfully channels, e.g., • Acquired • Built female migrated • Dominant with Oral-B Wilkinson customer consumers to positions in and Braun Sword in base with higher margin most Asia & Current Sensor shavers • Sale of emerging S. America business technology • Leveraged Waterman markets pens through Gillette brand Parker’s in other corporate gift products channels EExxiissttiinngg EExxiissttiinngg EExxiissttiinngg EExxiissttiinngg Existing EExxiissttiinngg ccuussttoommeerrss pprroodduuccttss vvaalluuee ggeeooggrraapphhyy industry ccoommppeettiittiivvee aanndd ddeelliivveerryy structure aarreennaa • Massive brand sseerrvviicceess ssyysstteemm and volume building through advertising and promotion 7 Staircases to Growth YD Use staircases to 1. Build new capabilities 2. Adapt business model 3. Protect the venture Aspiration Existing New capabilities capabilities Required future capabilities Capability platform 8 Staircase Architecture Intro Seed growth Test business Replicate proven Manage for options model business model profitability Source and secure Test commercial Realise growth options for future viability of business potential through growth concept business-building Maximise growth initiatives potential by unlocking incremental growth, then manage value in decline 9
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