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Archive for the ‘Harvard Business Review’ Category

As anyone who has read my blog may have gathered, I love businesses that continually pursue new ideas and believe organizations need to embrace change in order to remain competitive in the long run. A few days ago I got e-mail from Bain Insights on a subtle approach to business change called Repeatability. Bain and Company have set up a website containing articles and research on this topic in support of a new book by two of their partners Chris Zook and James Allen called ‘Repeatability: Building Enduring Businesses for a World of Constant Change.’

The Idea:

The authors recognize that while 80% of high performing companies have differentiation at the heart of their corporate strategy, such differentiation can become excessively complex. As a company becomes more complex they may lose a sense of who they are and what they are good at, as they continually pursue radical change in order to stay ahead of the competition. Such an approach Zook and Allen’s strategic research suggests may not be sustainable in the long run.

The Concept:

Zook and Allen advocate a simple repeatable business model that can be applied to new products and changing markets. The concept requires an organization to constantly adapt over time building on their differentiation in a way that reinforces their strategic advantages and keeps everyone on the same page. Under this concept all employees should know what the company’s key success factors are and change is constant rather than radical and disruptive. This quote from the authors’ Harvard Business Review article sums up the repeatable business model concept:

‘Really successful companies build their strategies on a few vivid and hardy forms of differentiation that act as a system and reinforce one another. They grow in ways that exploit their core differentiators by replicating them in new contexts. And they turn the sources of differentiation into routines, behaviors and activity systems that everyone in the organization can understand and follow.’

In addition, learning systems are put in place to ensure continuous improvement can occur constantly.

Repeatability in Practice:

Organizations with repeatable business models do three things:

  1. They understand what their customers want.
  2. They translate their strategy into clear business principles that can be easily understand and adopted by employees and leaders from all levels of the hierarchy.
  3. They are wired to connect and respond to feedback, adapting accordingly to keep learning.

Lego is an example of a company with a repeatable business model in place. After years of strategic errors Lego developed clear principles and metrics in order to replicate and improve on past successes, while adapting to new markets and the changing business environment. Using their repeatable business model Lego were able to increase their profit margins by 40% creating additional value for the company, which they hope to sustain.

For more information on the repeatable business model check out Chris Zook and James Allen’s book: Repeatability: Build Enduring Businesses for a World of Constant Change.

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Growing up in England, I remember being 13 years old and using the earnings from my newspaper delivery route to go shopping for the latest top 40 CD at Woolworth’s.  At the time, Woolworth’s was one of the UK’s best-known retailers, having opened its first store in 1909.  The company’s product categories included entertainment, home goods, children’s toys and clothing, and confectionary.  The company had over 800 stores in the UK and a Woolworth’s store could be found in almost every British town.  I am no longer living in the UK and unfortunately, I’m not the only one.  In January 2009, just short of its 100th birthday Woolworth’s closed its doors in one of the biggest company collapses in British business history.

There were many different reasons cited for Woolworth’s UK collapse, which collectively demonstrate a business that had failed to adapt their business model to the changed 21st century environment. Woolworth’s made a classic mistake that many other organizations make. They were complacent and assumed their past successes would continue into the future.

A Harvard Business Review Article (from July – August 2011) ‘Adaptability: The New Competitive Advantage,’ by Martin Reeves and Mike Deimler addresses how today’s complex changing business world requires organizations to adapt in order to survive and thrive. Reeves and Deimler assert that traditional business approaches assume a relatively stable and predictable world, which is clearly no longer the case. The 21st century business needs to be good at scanning the environment, learning new things and trying out these new ideas not just in terms of product and service innovation, but also in regards to their business model, processes and strategies (Reeves and Deimler).

The purpose for my blog is to explore forward thinking and innovative business approaches, to encourage business leaders to reconsider traditional business practices and to consider incorporating new creative approaches to leadership and the work environment. Business is continually changing and as Woolworth’s, Borders, Circuit City and many others have demonstrated, there is no guarantee that approaches that have been successful in the past will continue to be effective in the future.

Photo Credit: Staffordshire Newsletter

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