Strategy for Management Consultants & Business Analysts

1
Strategy for Management
Consultants
Top advices from consulting practice with examples and
case studies

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In business you have to make a lot of important decisions
The company has to have a strategy to grow and prosper. Without one
you may spend a lot of time and resources on the wrong things

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Balanced Scorecard
SWOT
Blue Ocean
Competitive Advantage
McKinsey 7S Matrix
BCG Matrix
Porter’s 5 forces
Porter’s 5 forces Value Chain
M&A
Lean Manufacturing
Canva Model
Lean Startup
Working Capital Optimization
Low Cost Model
Revenue streams
Value Driver Tree
Business Model
Financial Model
3Cs
The GE-McKinsey Nine-Box
Matrix
The three horizons of growth
The strategic control
map
Jobs to be done
Customer journey
KPIs
Lean Analytics
Industry cost curveStrategic groups
Lean Canva
Lean Analytics
Performance
Improvement
There are plenty of not connected strategic choices and tactics.

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Do what you do
but better
Expand TransformGo niche
Penetrate
existing
markets /
products
Target new
customers
with existing
products
Enter new
markets for
existing
products
New
products
within old
categories
New
products
expanding
brand
Go up /
down the
value chain
Capitalize on
business
assets
M&A
Improve
processes
Pricing
Cross-selling
Up-selling
Sell non-
core assets
Operational
Excellence
Optimize
Working
Capital
Renegotiate
the deals
Review
what and
why you buy
Upstream
niche
Low cost
player
Blue Ocean
Change the
business
model
Build add-on
business
Build
entirely new
businesses
Disrupt yourself
Change the
business
model
Intrapre-
neurship
M&A
potential
competitors
Copy
competitors
that may
disrupt you
Sell some
business
units
We will try to organize it into 5 coherent strategic directions along with
strategic options

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This presentation will help you develop
and apply strategy for the business you
are responsible for

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Strategy for Management Consultants
and Business Analysts
$190
$10
What you will see in this presentation is a part of my online course where
you can find cases showing analyses along with detailed calculations in
Excel
Click here to check my course

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Do what you do but
better – Introduction

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Quite often you are satisfied with the size of the business but you still want to somehow
improve your business. You want to do the same things you are already doing but better

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Do what you do
but better
Expand TransformGo niche Disrupt yourself
As we said there 5 strategic directions you can take. Simply improving
your business without much growth is one of those directions

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Do what you do
but better
Improve
processes
Pricing
Cross-selling
Up-selling
Sell non-
core assets
Operational
Excellence
Optimize
Working
Capital
Renegotiate
the deals
Review
what and
why you buy
Disrupt yourself
Within this direction we have the following options

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Overview of cases we will
talk about in this section

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To see full details of cases for this section check my online course where
you can find all the calculations
Improving processes –
DIY
Improving processes –
Consulting and
Aluminium Profiles
Pricing – Multichannel
Pricing – Price increase
impact for a coffee shop
chain
Operational Excellence –
Low Costs
Cross-selling –
Consulting
Cross-selling – Aircraft
Maintenance
Sell non-core assets –
Cosmetics
Optimizing Working
Capital – Inventory
Analysis for Retailer

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Improve processes –
Introduction

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Improving process is a ongoing project that helps you achieve
small gains that make the big difference
Describe and
measure the
processes
Set KPIs for each and
one of them
Improve, automate
or eliminate the
process
Describe the new
process and measure
again
Create mechanisms
to prevent the
workers from going
back to old habits
 In most firms
processes are not
described or
described on 1000
pages that nobody
reads
 Firms don’t
measure the cost
and effect
 What is not
measured cannot
be managed
 Find way to cut cost
of the process and
at the same time
improve other KPIs
 Describe the new
process so that it is
not forgotten
 3-5 KPIs related to
cost, efficiency and
the effect you want
to achieve
 Poka Yoke
 New habits
 Routines
 Checklists

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There are plenty of methods how you can achieve process
improvements
Lean Manufacturing Theory of Constraints Critical Chain
6-sigma SIPOC
Management
Consulting
Techniques

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Check my other presentation for examples of techniques
used for process optimization
Essential Lean Manufacturing
for Management Consultants
Practical guide how to cut costs
presentation

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Check my other presentation for examples of techniques
used for process optimization
Management consultant
productivity hacks
How to be lazy and still get things done
presentation

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Price has a lot of different meanings
It is a profitability driver
affecting the top line
It is an image or positioning
lever
Price impacts customer
lifetime value (LTV)
Can be used to achieve
strategic / tactical goals
Will change during the
product life cycle

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The good thing about the price is that you can achieve much more by
lifting the price than just cost cutting. Below a nice example
Cost decrease by 10% Price increase by 10%Base situation
Volume
 300 K units  300 K units  300 K units
Price
 $ 30 / unit  $ 30 / unit  $ 33 / unit
Unit cost
 $ 15 / unit  $ 13.5 / unit  $ 15 / unit
Fixed cost
 $ 100 K  $ 90 K  $ 100 K
Profit
 $ 4.4 M  $ 4.9 M  $ 5.3 M

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Pricing quite often depends on the value / benefit that the customer
gets from the product. There are 3 main options
Monetary
Benefit
 I bought this because I believe if
offers a great value for money
 I bought this because I believe it
was so damn cheap
Customer approach Examples of such products
 Private label products
 Entry price products
Approach to pricing
 Low price strategy aimed at market penetration
and high margin volume instead of high unit
margin
 Usually less demanding mass market or the
customer of low cost players
 The main competitive tool is pricing
Utilitarian
Benefit
 I bought this product as it fully
meets my needs
 Customized built-in wardrobe in
a small apartment that enables
to fully use the scarce space
 Medium to high price strategy
 More demanding segments of the mass market
 The main competitive tools include quality and
functionality, to a lesser extent price
Psychological
Benefit
 I bought this because it
represents me / my status
 I bought this because having it
makes me feel good
 BMW / Audi / Ferrari vs Toyota  High to outrageous prices aimed to achieve high
unit margin
 The most demanding market segments, very
often niche markets
 The main competitive tools include quality and
prestige, almost never price

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The price also has to be perceived as fair. A fair price must be
expressed by the right numbers – it is all about perception:
Ending of the
price
 Research indicates that prices ended with 0, 5, 7, 9 are viewed as more natural; for example the price of USD 8.76
looks weird and is perceived as weird
Description
Decimal part
 For prices in excess of USD 10.00, sometimes even for prices in excess of USD 100.00, decimals of 0.99 are viewed as
natural; there is no statistically significant difference between the perception of 5.90 and 5.99 so why leave o.09 on
the table?
 Typically for prices in excess of USD 100.00, decimals of 0.90 or 0.95 are better perceived than for example 199.99;
the latter could be viewed as a proof of the sellers greed and as such might not be liked by customers
 The higher the price, the fewer decimals; it is better to price 599.00 than 599.90
High prices
rules
 For high end products or professional services prices should be ‘rounded’; a lawyer who charges 999.00 per hour is
perceived as inferior to the one who charges 1000 per hour; it looks like the former’s services are on sale now; also, it
is better to price a high end TV 4900.00 than 4999.00 unless we want to underline the sale / promotional nature of
the price

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On top of that a price is fair if it looks so on customer’s mental pricing
scale; this mental pricing scale is affected by a number of factors:
Prior experience
How much other
paid
Recollection of
price promo
Brand perception
Common sense
Comparison
Sale

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For detailed case studies that will help you optimize the
profit by playing with the price check my online course
Multichannel pricing
The effect of price increase in a
chain of coffee shops

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Operational Excellence –
Introduction

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Operational excellence is something that almost all businesses should
pursue
 You execute the business strategy more
consistently and reliably than your competition.
 Given two companies with the same strategy, the
operationally excellent company will outperform
the others
Operational
Excellence =

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In practice achieving operational excellence requires certain set of
actions to be taken
Process
Improvement
Working Capital
Optimization
Throughput
Optimization
Capacity
Management at each
stage of value chain
Constant cost cutting
Achieving and
keeping strategic fit

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In the next slides as an example of a operational excellence
we will go through the model of low cost carriers i.e. Ryanair
Low cost carriers

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Operational Excellence – Low
cost carriers

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Just let’s have a quick look at the pillars of low cost model
Simplified product and
services
1 type of assets
Better asset utilization
Efficient process
You target only 80/20
Scale matters
Simplified operations

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Low Cost Models are great at optimizing the Profit to Assets Ratio
Better and longer
usage of assets
1 type of assets
Optimized processes
Quicker change of
assets
Using purchasing
power to get assets
Fewer processes
Reduce the complexity
and limit the choice
Profit
Assets
Unbundling
Dynamic pricing
Creating big
purchasing power
Innovative revenue
streams
Reduce the
dependence on people
Reducing non-core
assets

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Optimize Working Capital
– Introduction

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Better working capital gives you a lot of benefits
You can pay out more in
dividends
Scaling becomes much cheaper
and easier
Cash can be used to buy and
optimize other firms
Cash can help you reduce debt –
make your business safer
Less assets are needed – further
reduction in Capital Employed
Less working capital helps you
optimize the firm for speed

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Optimizing Working Capital requires from you actions on 3 elements
Inventory Receivables
 Materials
 Work in Progress (WIP)
 Finished Goods
 At your own
warehouse
 At warehouses
belonging to your
partners
 At your retail chain
Liabilities
 From your daughter
companies
 From 3rd party customers
 Towards suppliers
belonging to the same
capital group
 Towards external
suppliers
 Towards others i.e.
employees

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There are plenty of things you can do to optimize working capital
Inventory Receivables
 Reorganize materials ordering –
more just in time, smaller batches
and what is needed
 Shorten lead time from your
suppliers
 Use the lean manufacturing and
theory of constraints to reduce the
Work in Progress and materials
that you do not require
 Shorten lead time of production
and decrease finished goods
 Improve delivery lead time and
reduce the finished goods
inventory in sales channels (esp.
warehouses and retail chains)
Liabilities
 Look at discounts for earlier
payments and fees for paying late
 Pick channels / customer that pay
faster
 Get rid off the middlemen
especially get to the end-customer
that pays cash
 Pick suppliers that offer good
terms of payment but with prices
close to market prices
 Look at legal solutions that help
you optimize liabilities towards the
employee and the Inland Revenue
/ IRS

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You can check nice example of optimizing working capital in
my online course
Inventory analysis in a retail chain

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Cross-selling & up-selling
– General remarks

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Once you have the customer there are 2 main options in
which you can increase his value for you
Cross-selling Up-selling

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To better understand the cross-selling and up-selling let’s imagine that
you are operating a chain of coffee shops

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If the most customers are buying medium latte then an
example of cross-selling would be…..
+

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When it comes to up-selling it would have to do more with
convincing him to buy a more expensive products

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Cross-selling and up-selling is extremely important for
number of reasons
You already have the customer
Easy to implement
No significant Capex required
Perfect for B2C businesses and B2B
for SMB
Protects your current revenue by
providing options to your customers
Provides some variability that has a
value for the customer

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To see details of 2 cases devoted to cross-selling go to my
online course
Auditing Firms Aircraft Maintenance Services

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Sell non-core assets –
Introduction

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By non-core assets we mean things that you do not need for your core
business. You may have different strategy
Non-core
Do we use the assets
for current
operations?
Non-core assets that are for some reason used
today
 Spin-off into a new business if they are above
the market average in operating those assets
 Check whether they give you some competitive
advantage with respect to customers, suppliers
of employees
 Go through make-it-or-buy-it analysis to see
whether you are the best owner of this
business
 Try to improve the utilization of those assets
Non-core assets that you do not need
 Spin-off into a new business if they are above
the market average in operating those assets
(have high % EBITDA or ROA, ROCE)
 Try to improve the utilization of those assets
 Sell the assets if they are below the market
standards
Asset that remained from glorious past or give
you room for growth
 Keep them
 If possible rent them
Core assets currently heavily used
 Optimize usage
 Look for efficiency gains and cost cutting
 Apply lean manufacturing and theory of
constraints to use them to the fullest potential
Core
Not-used
Used

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Expand your business –
Introduction

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At some point what you have may not be enough. You will be tempted to develop, scale,
expand your business

51
Do what you do
but better
Penetrate
existing
markets /
products
Target new
customers
with existing
products
Enter new
markets for
existing
products
New
products
within old
categories
New
products
expanding
brand
Go up /
down the
value chain
Capitalize on
business
assets
M&A
Disrupt yourself
When it comes to expanding we have the following strategic options.
We can used them all

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Overview of cases we will talk
about in this section

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For details of the cases I will be discussing go to my online course.
Saturating existing markets –
Retailer
Target new customers with
existing products – Fitness
Clubs
Expansion strategy into
other countries – Fashion
Retailer
New products within old
categories – Small domestic
appliances
How to expand the brand –
Milk Producer
Does it make sense to
introduce new services or
product – Salad Fast Food
Chain
Go up / down the value
chain – Fitness Card
Operator
Go up / down the value
chain – Zara
Capitalize on business assets
Expand via M&A – Amazon Expand via M&A – Plywood

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Penetrate existing markets /
products – Introduction

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One of the easiest way to expand is penetrate till saturation
markets in which you already operate with products you have
You have all competence you need
You have the brand recognition
You have got the product-market fit
Procedures are in place
Most likely your business is
generating cash
Saturation may strengthen your
current position

56
Nevertheless, increasing penetration requires certain things
There has to be room for growth
You cannot have overly big market
share as the growth will cause
cannibalization
Your business model has to be
scalable
You have to have necessary money to
support the growth
You have to be able to recruit and
train people
Your firm should be adjusted to the
required speed

57
In the next few slides we will use the case study of a retail
chain
Saturation of retail chain

59
Once your business model is right you will want to expand
and grow. There are some options to do that
Increase size in current locations
Enter new locations but still the cities
were you are already
Enter new cities in your country
Enter new countries
Add new brands but within the same
concept
Create new concepts in Retail
Enter totally new business models

60
Expansion of current model -
options

61
When it comes to expanding of current business models there are 2
aspect at which you should look: management and type of format
Own Stores
Franchising
Joint Management
Stand alone store
Store in Store /
Corner

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Saturating existing markets -
intro

63
If you are present on specific market you want to know when you will
reach a saturation market – the maximal number of shops that will not
cause much cannibalization
1 000
1 500
800
2 000
# of stores Saturation 1 Saturation 2 Saturation 3

64
You may be close to saturation point
1 000
1 500
800
2 000

65
… or above it…..
1 000
1 500
800
2 000

66
….in some cases you may be far away from it. As you can see the saturation
point matters a lot for the future of your business
1 000
1 500
800
2 000

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Moreover you have to know it by regions not only on the level of
the whole country
Gdańsk
Szcecin
Bydgoszcz
Poznań
Wrocław
Katowice
Łódź
Kraków Rzeszów
Kielce
Lublin
Warszawa
Białystok
Gdynia-Sopot
Gliwice
Olsztyn
Opole
Zielona
Góra
Current number of stores

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Gdańsk
Szcecin
Bydgoszcz
Poznań
Wrocław
Katowice
Łódź
Kraków Rzeszów
Kielce
Lublin
Warszawa
Białystok
Gdynia-Sopot
Gliwice
Olsztyn
Opole
Zielona
Góra
Targeted number of stores
Current number of stores
Moreover you have to know it by regions not only on the level of
the whole country

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$190
$10
For more details go to my online course where you can find cases showing
analyses along with detailed calculations in Excel

70
existing products – Introduction

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Every business starts with a relatively well defined target
group. If you want to grow you have to at some point move
into new segments

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In practice it means that after starting from 1 segment

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….you slowly expand into adjacent segments

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….and conquer them one by one

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Entering new segments is a process
Segment the market
Select the segments
that you can enter
Check what has to
be changed in your
product to get into
new segment
Estimate in Excel
whether the entry
makes sense
Execute
 Define criteria for
segmentations
 Use the criteria to
divide the market
 Identify which
segment is your
current customer
base
 Carry out customer
research among the
new segment
 Check what has to
be changed when it
comes to: the
product, the price,
channels via which
you push the
product, how you
spend the money
on customer
acquisition
 Estimate the cost of
entering the
segment and
acquiring the
customers
 Estimate the size of
the segment and
your potential
share in it
 Estimate margins
 Check what is the
outcome in terms
of EBITDA and net
profit on this
segment
 Check for which
segments your
product is good
enough
 Check how the new
segments differs
from your current
customer base
 Plan conquering
the segment
 Implement what
you have planned
and iterate if
needed the
product, channel
mix and the
acquisition strategy

76
In the next few slides I will give you 2 examples
Restaurant Chain Fitness

77
Defining customer segments
– example from restaurant
industry

78
There are number of criteria you can use to segment your
market
Type for criteria you can use
• Gender
• Age
• Location
• Money spend per meal
• Frequency of visits
• Type of cuisine you are serving
Examples
• Usually men and women
• 0-12 year old
• 13-18 year old
• 19-25 year old
• 26-35 year etc.
• The capital
• Big city, Average size city
• Suburbs, Center
• By states, provinces, districts
• Etc.
• 10-20 USDmax
• 21-35 USD
• 36-60 USD etc.
• Italian
• Fast food
• Sushi etc.
• daily
• 1 a week
• 1 a month
• From time to time (a few times a year)

79
We recommend choosing 2 criteria to create sensible segmentation. Below an
example of such an attempt – we took the frequency of visit and the spending per
1 visit to divide the whole market into understandable pieces
Casual
dating
Wealthy
nomads
Stay at
home
Fast food
freaks
Frequency of visits
Spending per 1 visit

80
After you have looked at the market it makes sense to pick 1 segment that
will become your primary target. For them you will be building the
restaurant, so you should know their preferences and needs
Casual
dating
Wealthy
nomads
Stay at
home
Fast food
freaks
Frequency of visits
Spending per 1 visit

81
Age:
After choosing the segment describe your ideal customer
from this segment
Expectation to design:
Frequency of dining out
Average Spending
Couples age 25-35 with higher
salaries
Cozy, with little resemblance to
chains
1 time every 2 months
100 USD / visit
Expectation to location: Interesting, unique
Expected CAC 200 USD
Time spend in the restaurant on a
1 single visit
They spend a lot – on average 1.5 h
per visit
Prices sensitivity Small

82
existing products – Case
Introduction

83
Let’s imagine that you have to decide whether a fitness card operator
should enter a new segment
A fitness card operator
Present in 5 countries
Considers targeting with
new product students

84
They currently specialize in selling B2B their products. The
segment they want to reach will require B2C sales tactics
Fitness Card
Operator
HR Departments in
big companies
B2B sales
B2C sales
Students at
university level

85
existing products – Case Solution

86
Let’s imagine that you have to decide what to do with not used core
assets and non-core assets of a cosmetics producer
A fitness card operator
Present in 5 countries
Considers targeting with
new product students

87
100
15
6
109
Group EBIT without the new segment EBIT from the new segment Cannibalization Effect Group EBIT with the new segment
Entering the new segment of customers despite some cannibalization
effect seems to make sense
Impact of the new segment on the group EBIT
In thousands of USD

88
Enter new markets for existing
products – Introduction

89
Once you have saturated your home market you want to
move to new ones

90
There are some golden rules of entering new markets that
should be followed
Don’t enter too many markets at the
same time
Use the blitz scaling strategy
Pick the right markets to expand to
Make sure that the expansion does
not jeopardize your current markets
Before entering new markets scale
ahead of time the team
If needed change your culture

91
Expansion strategy into other
countries – Introduction

92
Creating an expansion strategy requires you to do a number
of things
Define criteria and
weights for the
criteria
Gather data on the
markets
Create the ranking
of markets to enter
Define limits that
you have
Set priorities
 4-6 criteria on the
basis of which you
will value specific
markets
 Ranking on the
basis of criteria and
weights created
 Money for
expansion
 People for
expansion
 Logistics
 Lead time due to
your supply chain
 Limitation in stock

93
categories – Introduction

94
From time to time it makes sense to create new products
within already existing category

95
There are plenty of reasons why in some cases adding new
SKUs in already existing category makes sense
Low number of SKUs in
comparison with competition
High growth rate for the
category
Low base
Blocking the access to others
You need more SKU to be
more visible in a retail chain
Unused production capacities

96
In the next few slides I will discuss an example of small domestic
appliances producers. For more details check my online course
Small domestic appliance
producers

97
categories – Case Introduction

98
Let’s imagine that you have to estimate whether it make sense to
introduce new products within old categories
1 factory
Present in most of
Easter Europe
Considers introducing
new products in Russia

99
We have in most cases less developed portfolio than our main
competitor and we are trying to decide how big should be our
target portfolio
40 40
30
20
45
3
10 10
Vaccum cleaners Electric kettle Mixers Microwave oven
Competitor Portfolio Your Current Portfolio Your Target Portfolio

100
categories – Case Solution

101
As a remainder you have to estimate whether it make sense to
introduce new products within old categories
1 factory
Present in most of
Easter Europe
Considers introducing
new products in Russia

102
Just as a reminder we have in most cases less developed portfolio than
our main competitor and we are trying to decide how big should be our
target portfolio
40 40
30
20
45
3
10 10

103
After some analysis we can to conclusion on the target portfolio.
Below the result
40 40
30
20
45
3
10 10
45
20 21
14

104
The increase in portfolio will help us increase the net margin by more
than $ 1 M
Net margin increase thanks to increased number of SKUs per category
In thousands USD
0
399
306
448
1 153
Vaccum cleaners Electric kettles Microwave ovens Mixers Total

105
In order to find the number of products you can add within existing
categories you should look at the following things
Pricing gaps - price points for which
you have no products
User cases that you don’t cover
Different configuration of existing
physical products
Different packaging

106
Below an example of price map that helps you see the price gaps
and suggest you when you can implement new products
0
10
20
30
40
50
60
70
Producer A Producer B Producer C Producer D

107
New products expanding brand
– Introduction

108
Once your brand is strong you can add not only new SKUs
within existing category but actually add a whole new
category

109
Entering new categories is possible under certain conditions
You own the customer
You have high brand recognition
You have high NPS score
New categories require the same
sales machine
Similar or higher margins to
categories you are selling now
New categories cannot endanger
current revenues
New categories have to be
consistent with your brand
Customers spontaneously already
thing that you sell those categories

110
In the next lectures I will discuss 2 examples. For more details check
my online course
Milk producer Salad Fast Food

111
How to expand the
brand – Introduction?

112
Let’s have a look at milk producer that wants to expand its product
range
Leader in milk
2nd place in butter
25 products considered

113
There are things you should consider when selecting the right
products to be developed within the same brand
Is the product consistent with the
current brand?
Does it require the same
distribution?
Do you have strong players on
the market you enter?
What is the potential of the
market?
Are there customers who already
think that you have the product?
What is the growth rate of the
market for the product?

114
How to expand the
brand – Solution

115
After we have gone through research we got the following results.
This suggest that we should start with yoghurt and yellow cheese
0
50
100
150
200
250
300
350
0 0,5 1 1,5 2 2,5 3
Market size
In mln USD
Attractiveness
(1-Low;3-High)
Cheddar
Cottage cheese
Yoghurt
Milk Desserts
(i.e. Monte)
Yellow (swiss)
cheese
Ice cream
Feta

116
Does it make sense to introduce new
services or products – Introduction

117
You have to remember that when you introduce a new product or
service it may have benefits but it can also cause problems
It can create new reasons to
visit the place
It can increase frequency
New product can attract new
customers
New product can disturb the
delivery of basic product
It can require additional assets
or training
It can repel current customer
base from coming
It can increase margins
May be not compatible with
your concept

118
Imagine that you are analyzing a salad fast food that has just introduced 2
new products and you want to check whether it makes sense
100 location in Easter
Europe
Fast food for salads
They have just introduced
coffee and soups to the
menu

119
Does it make sense to introduce new
services or products – Solution

120
Imagine that you are analyzing a salad fast food that has just introduced 2
new products and you want to check whether it makes sense
100 location in Easter
Europe
Fast food for salads
They have just introduced
coffee and soups to the
menu

121
100
15
115
Gross Margin before the soup introduction The effect of soup introduction Gross margin after we introduce soups
Introduction of soups makes economical sense. When it comes to coffee it
causes a lot of operational problems and lower gross margin
Gross Margin change due to soup introduction
In thousands of USD
100
20 12
92
Gross Margin before the coffee
introduction
Drop in Gross Margin of salads Increase in Gross Margin from Coffee Gross margin after we introduce coffees
Gross Margin change due to coffee introduction
In thousands of USD

122
Go up / down the value chain –
Introduction

123
The first step is to draw value chain and check the margins
Transport and
Warehousing
FMCG producer Retail Chain
Supplier 1
Supplier 2
Supplier 3
Supplier 4
Producers of
raw materials
and
components
Elements of value chain
that you want to take over

124
Going down the value chain / downstream usually means
getting closer to the customer
Transport and
Warehousing
Supplier 1
Supplier 2
Supplier 3
Supplier 4
Producers of
raw materials
and
components

125
Going up / upstream means going closer to the source of
materials that you use
Transport and
Warehousing
Supplier 1
Supplier 2
Supplier 3
Supplier 4
Producers of
raw materials
and
components

126
When it makes sense

127
Going up or down makes a lot of sense if at least one of the
below condition is met
Your supplier position is very
strong
Your customer has high
purchasing power
In other part of the value chain
you can get higher margins
You want to block competitors
You acquire players to show how
to improve their businesses
To increase responsiveness of
your base business
Too much cash that cannot be
put to good use

128
Zara

129
Before we move to analyzing the value chain of Zara let’s have a look
at the supply chain of a typical fashion retailer

130
Let’s have a look at Zara Value Chain
Transport Transport Transport
Supplier Manufacturing Warehousing Stores Consumers
Transport
Flow of information
Design
 40% of raw materials
in company Conditex
– Inditex subsidiary
 Other raw materials
come from 260
different suppliers
 Important products
are produced by Zara
manufactures
 Simple or time-
consuming products
are outsourced to
local manufactures
 Zara distributes by
planes or by tracks
products to almost
2 000 stores all
over the word
 Ready garments
from manufactures
are shipped back to
the Zara logistics
center
 From there all
products are
distributed to Zara’s
stores
 Zara uses its own
design team

131
Capitalize on business assets –
Introduction

132
Business asset is something that helps us deliver value to our
customers and that is within our control
Business asset
 Business asset is not the same as
asset in accounting
 Helps us deliver value to our
customer
 We can control it at least to some
extent
 Can be further monetized
 Usually has to reach some tipping
point to become an asset
 Does not have to be tangible
=

133
Let’s have a look at some examples of business assets…
Strong brand
Content
Physical assets
Retail chain (when
a market leader)
Data
Exclusivity right to
something
Attention (i.e.
minutes spent on
the site)
Unique capability

134
Expand via M&A –
Introduction

135
You can also expand via Mergers and Acquisitions (M&A)
M&A
Vertical (along the
value chain)
Horizontal (on the
same level of the
value chain)
Totally not
connected

136
M&A makes sense in the following situations
To gain strategic advantage i.e. block
competitors
Leverage your core competence on
different assets i.e. performance
improvement, marketing etc.
Achieve scale effect
Gain from multiplier arbitrage or
multiplier difference
High cash position of your company
You buy asset almost free of debt
Synergies

137
Expand via M&A –
Plywood – Introduction

138
Let’s have a look at plywood producer that has 2 factories and is
considering taken over another one
2 plants
Considers taking over a
plant in Lithuania
Try to estimate the
possible benefits

139
Expand via M&A –
Plywood – Solution

140
There are plenty of potential benefits that you can expect
from this particular M&A
Reducing Head Quarters costs
Savings on Capex
Less competition on price Cross-selling among customer baes
Lower Purchasing price on wood
Exchange of best practices

141
From the analysis of benefits we can see that we can gain up to
$17 M from acquiring the Lithuanian factory
2 100
3 500
3 720
2 739
576
4 280
16 915
Reducing Head
Quarters costs
Savings on Capex Less competition on
price
Lower Purchasing
price on wood
Exchange of best
practices
Cross-selling among
customer baes
Total benefit from
M&A
Annual additional benefits from M&A
In million of USD

142
$190
$10

145
Do what you do
but better
Upstream
niche
Low cost
player
Blue Ocean
Disrupt yourself
Going niche is another strategic choice you can consider. Here you have
3 options

146
Going niche is a strategy that you can follow for 2 main
reasons
Move to a more defendable position
where you have a better competitive
advantage
Create an insurance just in case your
current business model will collapse

147
If you consider going niche you have 3 options on the table
Go up with the price
Low-cost player
Blue ocean

148
This strategy can help you fight incumbent mainstream players. There are
too big to go up with the price and too invested in current set-up to lower
the price
Growth rate
Price level
Mainstream player
High
Low
0
Luxury
player
Low cost
players

149
Low Cost Model –
introduction

150
Low cost model has been quite successful in many
industries
Airlines
Furniture
Buses
Retail

151
In low cost model you have important pillars that fuel the
model
services
1 type of assets
Efficient process
Scale matters

153
IKEA has been very successful in implementing low cost
model in furniture
Model „big box” built outside the city
center
Design
Consistent message
Diversified revenue streams
Operational excellence
Business scale
Retail
Acquisition
Activation
Retention
Revenue
Referral

154
Model „big box” built outside the city center

156
Communication cheap, convenient solutions

157
Diversified revenue streams

158
Very efficient operations management at every level

159
The scale of activity is so high that orders for the same chair are
apportioned between the various production plants, because one would
not be able to execute orders

161
Raynair is an example of a great execution of the low cost
model in airlines
B2C Services
Acquisition
Activation
Retention
Revenue
Referral

162
They have used 1 type of aircrafts and increased their capacity
B2C Services
Acquisition
Activation
Retention
Revenue
Referral
1 type of aircraft
No classes
No reserved places
More places in the plane
Better Loading factor

163
They do only point-to-point and use cheap airports
B2C Services
Acquisition
Activation
Retention
Revenue
Referral
Point-to-point
Regional airports
No waiting for passenger

164
Raynair is also master of operational excellence
B2C Services
Acquisition
Activation
Retention
Revenue
Referral
Shortest taxi time and turn around time
More courses per day
Shortest time of preparing
Better usage of people

165
Raynair has been also very creative on the revenue side
B2C Services
Acquisition
Activation
Retention
Revenue
Referral
Dynamic pricing and not so low prices
Unbundling
Charge for everything
Alternative revenue stream

167
There are plenty of examples of successful low cost fitness clubs
B2C Services
Acquisition
Activation
Retention
Revenue
Referral
Get rid off things that do not generate sales:
reception, sauna, solarium, café, relax room
Unbundling (shower, fitness classes require
additional fee)
Low on staff; much more self service
Higher density of machines and usually
bigger format
Usually more technologically advanced
Available 24 /7
UK Germany USA
0
20
40
60
80
100
Price Join Online Opening
Hours
Club Design Technology Hospitality # of staff
Low cost gym Mid-market gym

168
What drives the profitability
of low cost model?

169
Just let’s have a quick look at the pillars of low cost model
services
1 type of assets
Efficient process
Scale matters

170
Low Cost Models are great at optimizing the Profit to Assets Ratio
Better and longer
usage of assets
1 type of assets
Optimized processes
Quicker change of
assets
Using purchasing
power to get assets
Fewer processes
Reduce the complexity
and limit the choice
Profit
Assets
Unbundling
Dynamic pricing
Creating big
purchasing power
Innovative revenue
streams
Reduce the
dependence on people
Reducing non-core
assets

171
Blue Ocean –
Introduction

172
Let’s have a look at a Blue Ocean Strategy
 The strategy in which instead of competing in the current market
segmentation you look for a niche / market where there is no competition or
very less competition
 In this approach you search for a business in which only a few firms operate
and where there is no pricing pressure
 In Blue Ocean Strategy through value innovation, diversification and low
cost you try to achieve a significant and profitable growth of the company
 In Blue Ocean Strategy you redefine the market and concentrate on
non-users.
 You try to create a center of gravity that will suck customer from other
markets / niches / strategic groups
Blue Ocean
Strategy =

173
Hotels
Online
services
Retail
Blue ocean strategy was successfully implemented by many
companies from different industries
Entertainment
Transport
B2B

174
There are few main characteristics of Blue Ocean Strategy
Avoid head to head competition
Taping into non-users
No industry boundaries
Value innovation. Break the
value-cost trade off
Looking for high profit and
growth opportunity niches
Align the whole business to
pursue diversifications
Low costs – you do not spend
money on things of little value
Creates quite often entirely new
markets

176
The non-users can be divided into 3 groups
Current
Market
First Tier
Purchase only out of
necessity, are on the
edge of market and wait
to join
Second Tier
Non-users that ignore
your industry consciously
Third Tier
Non-users that have
never consider your
product

177
Let’s have a look how this tiers look like for Yellow Tail – an Australian
wine that is much simpler and cheaper drink than regular wine
Wine
market
First Tier
Occasional wine drinkers
Second Tier
Drinkers of easier to
consume alcohols: beer,
drinks
Third Tier
All people who drink
water
Yellow Tail wine – easy to drink /does not require any
knowledge about wine

178
Bear in mind that you can be taking shares from many different not
connected markets
Player 1
Player 3
Player 2
Player 4
Player 1
Player 3
Player 2
Player 4
Niche of
Blue Ocean

179
Blue Ocean Strategy – 4 action
framework

180
Bellowed 4 action framework which can be used to redefine and redesign
the current company strategy into the blue ocean strategy
Eliminate
Reduce
Raise
Create
All aspects that are not value added
for company and customers
Certain (not important to the
customer) aspects below industry
standards
Additional value for the customers.
Which features should be above the
industry standard?
Innovative products or services.
Create things that the industry has
never offered

181
Blue Ocean Strategy – 6 paths
to achieve it

182
You can reach Blue Ocean by taking one of the six paths. You can look
across
Industry
Strategic Groups
Buyer Groups
Complimentary Products
Functional / Emotional
Orientation
Time
Red Ocean Blue Ocean

183
You can reach Blue Ocean by taking one of the six paths. You can go
across. Below some examples
Industry
Strategic Groups
Buyer Groups
Complimentary Products
Functional / Emotional
Orientation
Time
Red Ocean Blue Ocean

185
0
20
40
60
80
100
Price Production
costs
# Food
products
Quality Brand Location Customer
service
Variety
Starbucks Coffe Competitors
Starbucks has been very successful in implementing blue
ocean strategy
Wide range of products
Customer experience – selling not the coffee
but rather the place to meet
High product quality - ethically, sustainably
grown coffee (C.A.F.E.)
Value innovation
High market penetration and short distance
to the closest Starbucks
High standard service and low prices

186
The company is also innovative in many fields of its activity
New flavors
Happy hours
Free Wi-Fi
Free birthday treat
Mobile ordering

187
Starbucks has created strong accessibility. This is due to the fact that stores are
located close to each other to make it easier for customers to buy a cup of coffee

189
CitezenM is an example of company that has created a new market
space in hotel industry
Relatively low prices
High standard – they kept what is
important from the 5-start hotels and
removed the rest
0
20
40
60
80
100
Price Front desk Restaurants Room type Room size Room
standard
Location Self check in
Luxury hotels Three-star hotels CitizenM
Value innovation
Build from premanufactured sleeping
rooms

190
They created an affordable luxury hotels which have a great standard - like
5-star hotels. They were many things that the have added / raised to make
the experience similar to 5-star hotel
High boutique standard
High quality of sleeping environment
Good locations
Free extras

191
CitizenM offers a stay in very affordable prices, like in 3-star hotels, This together
with a high standard creates a big competitive advantage. To achieve this they
had to eliminate or reduce some aspects
No front desk
No restaurants
No lobby
Limited room type and size
Lower prices than in 5-star hotel

192
Thanks to this they achieved great results
Occupancy rate – 90%
Labor costs – 50% lower
Cost of construction – 35%
lower
Construction time – down
by up to 50%
Premanufactured sleeping
rooms

194
Zappos is one of the online retailers who decided to move into a
blue oceans
Low prices
Value innovation
New market
0
20
40
60
80
100
Price Shipping costs Costs of
returns
Frequency of
promotions
Variety Delivery speed Customer
assistance
Zappos Online retailers
Customer experience

195
Variety
High delivery speed
24h customer assistance
Free shipment
Customer experience
They created a unique online service where customer can order a batches
of shoes to try them on and send them back for free if they do not fit

196
Zappos was able to lower the services costs thanks to few things
Long return time
Close warehouse location
Close relations with business partners
Changing shipping cost to a marketing cost
Increasing sales through returns

197
$190
$10

199
Transform –
Introduction

200
We have seen many businesses transforming drastically their
business model. It resembles the transformation of a caterpillar into
a butterfly

201
Do what you do
but better
Change the
business
model
Build add-on
business
Build
entirely new
businesses
Disrupt yourself
Sell some
business
units
Within transforming we have the following options

202
My dear, here we must run as fast as we can,
just to stay in place. And if you wish to go
anywhere you must run twice as fast as that.
Alice in the Wonderland

203
A very good examples is Amazon that has drastically
transformed its business
Online book store
Online store for
many categories
Content provider in
all forms
Online marketplace
for many categories
Integrated content
producer and
provider
Online & offline
marketplace
Vertically integrated
FMCG producer and a
full marketplace

204
Transformation can take one of the 4 forms
Change the business
model
Build add-on
businesses
Build entirely new
businesses
Sell some business
units

205
By changing the business model in transformation we mean
changing not one but many elements
Key Partners Key activities
Key resources
Relationships
Channels
Value
proposition
Customer
segments
Cost Structure Revenue structure
Key resources
Relationships
Channels
Value
proposition
Customer
segments

206
If you build an add-on business it means that you do not replace elements
of the business model but rather add. Below the usual suspects – where
most likely you would play with go add a new business
Customer segment
Revenue structure
Channels
Value Proposition – Product
Key Partners esp. suppliers
Totally different business model

207
Change the business model –
Introduction

208
By changing the business model in transformation we mean
changing not one but many elements
Key partners Key activities
Key resources
Relationships
Channels
Value
proposition
Customer
segments
Cost structure Revenue structure
Key resources
Relationships
Channels
Value
proposition
Customer
segments

209
There are a number of good reasons why it makes sense to change your
business model
Others are doing it
New market standard
The change will help you 10x
your business
You want to kill the competition
The current business model will
die at some point
You want to change the rules to
be competitive again

210
Netflix

211
Netflix has gradually changed their business model
Pay per rent of DVDs
via mail
Renting in
subscription model
of DVDs via mail
Video on demand of
movies
Renting in
subscription model
of DVDs, Blu-Ray via
mail
Online streaming of
movies on all
possible device
Online streaming of
own & 3rd party
content on all
devices
Production of own
content

212
Netflix started in 1997 as an e-commerce version of Blockbuster. They
would rent the DVD to people over Internet
Key resources
Relationships
Channels
Value proposition Customer segments
 Rental of DVD (no VHS)
similar to Blockbuster but
more convenient and also
longtail (non-novelties
titles)
 US households
 Their webpage Warehouses and logistics
 Capital to invest in the
DVDs
 Cost of processing the DVD in warehouses (rent, labor) – receiving and sending
 Cost of sending the DVD to the customers
 Purchase of new DVD to replace the broken ones or to meet the growing
demand
 Head Office (Purchasing Department, Marketing & Sales, cost of the website)
 Pay per rent model – you per pre # number of rented DVDs
 Late fees for keeping the DVD for loner
 Rates similar to Blockbuster
 Fast processing of orders
in the warehouse
 Purchasing – picking the
right DVD and quantity
 Keeping the website
operating
 Get: Their webpage, online
ads
 Keep: increase number of
DVDs and titles
 Grow: Mailing list –
convince to rent more
 Warehouse operators
 Supplier of DVDs
(wholesaler)

213
In 1999 Netflix have implemented monthly subscription and removed late
fees
Key resources
Relationships
Channels
 Rental of DVD (no VHS) of
almost all titles much
cheaper than Blockbuster
(no late fees)
 Something between
renting and owing (you
could keep specific title as
much as you wanted)
 US households
 Their webpage Warehouses and logistics
 Capital to invest in the
DVDs
 Cost of processing the DVD in warehouses (rent, labor) – receiving and sending
 Cost of sending the DVD to the customers
 Purchase of new DVD to replace the broken ones or to meet the growing
demand
 Monthly subscription fees
 Fast processing of orders in
the warehouse
 Purchasing – picking the
right DVD and quantity
 Keeping the website
operating
 Get: Free trial, online ads,
Word of mouth
 Keep: increase # of DVDs and
titles, suggestions
 Grow: Mailing list – convince
to use more
(wholesaler)

214
In 2007 Netflix have introduced a video on demand via Internet service
Key resources
Relationships
Channels
 Rental of DVD and Blu-ray
of almost all titles in a
subscription model
 Video on demand via
Internet
 US households
 Limited expansion outside
USA
 Their webpage
 Any device that can be used
to screen the movie including
mobile phone, play stations,
etc.
 Warehouses and logistics
 Streaming Infrastructure
 Algorithms, data on
customer preferences
 Cost for keeping, processing and replacing DVDs,
 Cost of streaming movies to customers
 Fees to Movie / TV shows producers / right owners / studios
 Monthly subscription fees
 Streaming at the proper
quality the movies
 Signing deals with studios
 Fast processing of orders in
the warehouse
 Get: Free trial, online ads,
word of mouth (WoM)
 Keep: increase # of titles –
DVD and on demand
 Grow: Mailing list – convince
to add also video on demand,
recommendations
 Providers of servers
 Provider of necessary
software
 Movie / TV shows
producers / right owners /
studios
 Universities
(wholesaler)

215
In 2011 Netflix has started also producing their own TV shows. The first big
title was House of Cards released in 2013
Key resources
Relationships
Channels
 Streaming video paid
services on all possible
devices
 Some content only
exclusively available on
Netflix
 Households in almost all
countries
 Their webpage
 Any device that can be used
to screen the movie including
mobile phone, play stations,
etc.
 Algorithms, data on
customer preferences
 Customer Understanding
 Ability to manage
production process of new
content
 Producing or acquiring own content
 Marketing the platform as well as own productions
 Fees to Movie / TV shows producers / right owners / studios
 Cost of streaming movies to customers
 Head Office (Purchasing Department, cost of the website)
 Monthly subscription fees – more than 1 plan
 Selection of the titles
 Signing deals with studios
 Supervising Content
Production Process
 Get: Free trial, online and
traditional ads, WoM,
partnerships
 Keep: produce or acquire
new content, mailing &
notifications - consume more,
and not cancel
 Grow: upsell
 Movie / TV shows
producers / right owners /
studios
 Executive producers /
Directors /
 Providers of servers
 Provider of necessary
software
 Universities

216
What helps you to succeed

217
Changing the business models means that you are vulnerable. There are still
some factors that may help your cause
Trends i.e. in the case of Netflix DVD
readers prices went down
Incumbant hooked on the current
model, unable to switch
Incumbant being on the Stock
Exchange – requrierd dividents and
1-year perspective
Speed of execution
If you grow fast you are increasing
your cash position despite being not
profitable

218
Build add-on business –
Introduction

219
If you build an add-on business it means that you do not replace elements
of the business model but rather add. This changes will not be marginal
but will transform your business
Key resources
Relationships
Channels
Value
proposition
Customer
segments
Key resources
Relationships
Channels
Value
proposition
Customer
segments
New revenue stream
New
customer
group
New
product

220
As you may remember in building add-on businesses we said that there are 6
usual suspects.
Customer segment
Revenue structure
Channels
Relationships

221
Amazon

222
If you build an add-on business it means that you do not replace elements of
the business model but rather add. Below the usual suspects you would usually
play with
Customer segment
Revenue structure
Channels
Relationships

223
Let’s see what Amazon has managed to apply this strategy
Customer segment
Revenue structure
Channels
 Added new segments of customers as they have added new products
 Added people who want to publish their own books via Amazon Kindle
 They have allowed Amazon to work not only as e-commerce but also as a marketplace
 Logistics fee (for the FBA customers)
 Advertisement fee
 Revenue sharing from apps
 Subscription fees – Amazon Prime, Amazon Video, Audibles
 Digital distribution of products i.e. Amazon Kinde, Amazon Video,
 They have entered mobile apps market
 They have entered offline world
 Started with physical books but then entered also digital books (Kindle), audiobooks (Audibles) as well as all
possible physical products

224
WordPress

225
As we said building add-on business requires you usually to change one of the
elements of your business model. Below the usual suspects
Customer segment
Revenue structure
Channels
Relationships

226
Let’s see how has WordPress managed to apply this strategy
Customer segment
Revenue structure
 First an open source solution that enables flexibility
 Second group they targeted are non-technical customers – mainly SMB with 1-stop solution – Wordpress.com
 Third group they targeted are enterprise customers i.e. TechCrunch, CNN, NBC,
 Fees from Wordpress.com plans
 Fees from the marketplace of themes that is linked to worpdress.org
 Fees from Word Ads (similar to AdWords belonging to Google)
 1-stop solution for non-technical customers – mainly SMB
 E-commerce solution
 Plugins
 Creators of themes / plugins
Relationships
 Getting customers via marketplace build by them as well as Partners that build themes / plugins
 Getting customers via influencers

227
Let’s recap the changes done to the business model of
WordPress
Open source solution
for blogging
Open source solution
for building online
presence and selling
1-stop solution for
non-technical
customers – mainly
SMB
Marketplace of
themes and add-ons
for WordPress

228
Shopify

229
As we said building add-on business requires you usually to play with one of
the elements of your business model. Below the usual suspects
Customer segment
Revenue structure
Channels
Relationships

230
Let’s see how has Shopify managed to apply this strategy
Customer segment
Revenue structure
Channels
 From Micro firms to SMB and then to enterprises
 From online to multichannel customers
 Developers building apps on the bases of Shopify API
 Fees from apps sold via Shopify marketplace
 Shopify Experts & Shopify Partners
 Apps as add-on products
 POS offline solution for customers that were acting as a multichannel (combining online and offline sales)
 Buy-Buttons – enabling to sell not only from the Shopify website solution but any place i.e. WordPress blog
 Developers building apps on the bases of Shopify API
Relationships
 Get and keep customers via Shopify Experts & Shopify Partners
 Get customers via marketplace build by them as well as developers building add-ons
 Get customers via content marketing

231
Let’s recap the changes done to the business model of Shopify
Online store for
snowboards
Solution to run your
e-commerce – for
micro firms
Shopify App Store –
Marketplace of apps,
adds-on for Shopify
Solution to run your
online sales – all sizes
of firms
Shopify Experts &
Shopify Partners
Integrated solution
to run your online
and offline sales

232
Build entirely new businesses
– Introduction

233
Sometimes transformation is more abrupt. You may be forced or choose
to build an entirely new business on top of what you already have
New businessYour original business

234
This happens usually due to following reasons….
You need the new business to be
successful in the current business
Your supplier sucks
Your customer sucks
There is no sufficient capacity
available
Owing the business will give you
unfair competitive advantage
You want to develop skills that can
be applied to your current business

235
Below some examples of well know brands applying this tactics
You need the new business to be
successful in the current business
Your supplier sucks
Your customer sucks
There is no sufficient capacity
available
Owing the business will give you
unfair competitive advantage
You want to develop skills that can
be applied to your current business

236
Sell some business units –
Introduction

237
On some occasions you may decide to sell some of your businesses. There
are plenty of situation when it makes a lot of sense
You reached the limit in value
creation
Some business units no longer fit in
with your strategy
High valuation on a specific business
unit
You sell a business unit to reduce
significantly the debt
You sell a business unit to get
money to turn around the core
business
Your other business units are
performing much better and require
capital

238
$190
$10

240
Disrupt Yourself –
Introduction

241
If you have a nice cash generating business you are unfortunately running
the risk of being disrupted by some new comer operating in different
business model
Taxi / Cabs
Combustion
car producers
 Mailing the DVD
 No late fees
 Streaming
 Better value proposition
 Lower Price
 No friction in usage
 Totally new design from a scratch
 Value proposition pretty close to the existing
solutions
 Emotional value appealing to certain segments
 Self-driving feature
 Software that helps you constantly improve the
product
 Infrastructure that supports electric cars
How the businesses were disrupted?

242
You can immune yourself against disruption by….disrupting yourself. This
however may have dire consequences
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

243
In short term you may be loosing a lot of money
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

244
Once you find the new business model you not only gain what you have
lost…..
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

245
… but you also start taking more and more market share from competitors
that did not adjust to new business model
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

246
Do what you do
but better
Expand TransformGo niche Disrupt yourself
Change the
business
model
Intrapre-
neurship
M&A
potential
competitors
Copy
competitors
that may
disrupt you
Let’s see what options we have within this strategic direction

247
Change the business model
– Introduction

248
Sometimes when you change the business model you will not gain
anything in the short term but rather protect what you have from
external disruption
Key resources
Relationships
Channels
Value
proposition
Customer
segments
Key resources
Relationships
Channels
Value
proposition
Customer
segments
Model A Model B

249
Moreover in order to survive you have to disrupt yourself even further
and change the model in such a manner that it has nothing to do with the
original one
Key resources
Relationships
Channels
Value
proposition
Customer
segments
Model B
Key resources
Relationships
Channels
Value
proposition
Customer
segments
Model C

250
Moreover in order to survive you have to disrupt yourself even further
and change the model in such a manner that it has nothing to do with the
original one
Key resources
Relationships
Channels
Value
proposition
Customer
segments
Model C
Key resources
Relationships
Channels
Value
proposition
Customer
segments
Model A

251
There are a few examples of such a behavior
 Build a Kindle – after creating fulfilment centers to ship fast physical books
they have invested heavily in Kindle that did not need the infrastructure
 They have moved to totally free product (after being bought by Facebook.
This killed the payment that created the valuation of WhatsApp)
 A Facebook introduced the calling in their main product
 This was done as a move against WeChat that by offering the free calls could
take away customers both from Facebook and WhatsApp.
How did they change their business model to disrupt themselves?
WhatsApp + Facebook
Amazon

252
Intrapreneurship –
Introduction

253
Intrapreneurship is a great source of disruption
 Is the act of behaving like an entrepreneur while
working within a large organization
 Entrepreneurship within corporate worldIntrapreneurship =

254
Intrapreneurship can be a successful way to find ways to disrupt yourself,
provided certain rules are followed
Autonomy
Separate budget
Freedom to be often wrong
Judged on the basis of the long run
results
Proper mix of people (not
necessary related to mother
company)
Permission to kill core business
Decentralized decision making

255
Intrapreneurship –
Google

256
Google has been very successful in implementing intrapreneurship programs in their
organization. They encouraged employees to spend 20% of their work time on its
own projects. Thanks to that they were able to create many well-known products
Google
Gmail
Google Maps
Google News
AdWords
Google Glasses
AdSense

257
Below you can find practices which were used by the Google in order to
encourage employees to take part in intrapreneurship program
Employees can choose the project
on which they would like to work
Access to courses and professional
trainers
Organization support for internal
enterprises
Rewards for team members
Teams are more like profit centres
than cost centres

258
M&A potential competitors
– Introduction

259
M&As are a fast way to disrupt yourself. It has plenty of advantages
You tame potential significant
competitor that could have killed
your business
M&A is a fast method of creating
alternative business models
Acquihire
Diffusion of knowledge from bought
company to your current business
You de-risk your business model
against future trends
Acquired firm can be used to kill
competition

260
M&A potential competitors
– Altassian

261
Altassian is a M&A machine
2 IT guys built on
the side their own
issue tracker called
Jira
2002 2004 2007
M&A
They created a new
dev team
collaboration
platform —
Confluence
Altassian buys
Cenqua, which
made 3 developer
tools — Fisheye,
Crucible, and
Clover. These tools
filled the gaps in
Atlassian’s product
offerings
Atlassian raised $60
M for M&A
2010 2012
Atlassian acquired
and integrated into
its main products
the hosted private
chat service
Hipchat
Atlassian combined
all of their Git-
based services
under the Bitbucket
brand
2015
IPO – starting
market cap $ 5.8 B
Atlassian acquired
Statuspage, which
allows businesses
to keep users
updated about the
status of their
online services
2016 2017
Acquisition of
Trello – a simpler
version of Jira for
Project
Management. It
cost them $425 M
Organic growth

262
Let’s recap the changes done to the business model of
Altassian thanks to M&A
Simple tool for
tracking tasks for
Developers
Complicated tool for
tracking tasks for
developers
Simple tool for
tracking tasks for All
Integrated solutions
that makes the life of
developer easier

263
Copy competitors that may
disrupt you – Introduction

264
If you cannot buy the competitor sometimes you have to copy him to stay
relevant for your customers. A great example is Facebook strategy
towards Snapchat
Snapchat becomes
popular
Facebook tried to
buy Snapchat
Facebook started to
copy some Snapchat
features
Facebook copied the
features into its
main product
Snapchat user
growth went
drastically down
 Snpachat was
established in 2011
 Very fast it become
number one social
media used by
teenagers and
college students
 Snapchat launched
Snapchat Stories in
October, 2013.
 Instagram launched
Instagram Stories in
August 2016.
 WhatsApp
launched an update
to WhatsApp Status
in February 2017
that incorporated
features which
resembled
Snapchat Stories.
 Messenger Day (a
copy of Snapchat
Stories) launched in
March 2017
 Few weeks later
Facebook launches
the Stories clone in
the Facebook app
 Facebook tried to
create a clone of
Snapchat (Poke)
which was a failure
 It offered $ 3
billion for Snapchat
in 2013
 The offer was
declined and
Snapchat prepared
for IPO
 In March 2017
Instagram Stories
had already more
active users than
Snapchat
 Till August 2017
Snap has lost 51%
of its valuation
from IPO (In less
than 6 month
shareholders of
Snap lost $16 B)
 In the same time
Facebook
shareholders
gained 21% ($89 B)

265
Copy competitors that may disrupt
you – When you have to do it

266
On many occasions copying the competitor is a must
Your competitor grows very fast
among segments that are important
to you
The competitor has refused the
M&A offer
You want to defend a cash
generating business
You have sufficient competence to
copy
You can copy successfully fast the
competitor
After copying you will still remain
attractive to your current customers

267
$190
$10

268
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Consultants
Blog
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269
FMCG for Management
Consultants & Business Analysts
Practical Guide
presentation
For more information on Supply Chain check also my other presentation

270
Supply Chain for Management
Consultants
Practical Guide
presentation
For more information on Supply Chain check also my other presentation

271
Essential Excel for Business
Analysts and Consultants
A practical guide
presentation
Check also my other presentations

272
Top 10 courses that every
Management Consultant should
take
My super objective view
presentation

273
Top 25 books that every
Management Consultant should
read
My super objective view
presentation

274
Management Consulting Tools,
Techniques and Frameworks
A practical guide
presentation

275
How to manage a consulting
project?
A practical guide
presentation

276
Business modeling of offline
businesses in Excel
A practical guide
presentation

277
Supply Chain for Management
Consultants
Practical Guide
presentation

278
Sales Analysis for Business
Analysts and Consultants
A practical guide
presentation

279
Retail for Business Analysts and
Management Consultants
A practical guide
presentation

280
productivity hacks
presentation

281
Market research
Practical guide for startups and entrepreneurs
presentation

282
5 examples of business /
financial models in Excel
Practical guide how to check whether the business makes
sense
presentation

283
Essential Lean Manufacturing
for Management Consultants
Practical guide how to cut costs
presentation

284
What is an issue tree and how
to use it?
Practical guide with examples
presentation

285
Excel shortcuts for Management
Consultants and Business
Analysts
Practical guide how to work fast in Excel
presentation

286
Financial Modeling for Business
Analysts and Management
Consultants
Step by step guide
presentation

287
Management Consulting
Presentations
Practical guide how to prepare a great presentation
presentation

288
How to get into consulting
Practical guide how to pass the case part
presentation

289
How to become world class
analyst
A practical guide
presentation

290
Management Consulting
Presentations
Practical guide how to prepare a great presentation
presentation

291
Production for Management
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Practical guide
presentation

292
Business models
Practical guide for startups and entrepreneurs
presentation

293
How to create management
consulting presentations?
A practical guide
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294
productivity hacks
presentation

295
Start and run consulting
company
A practical guide
presentation

296
How to open a successful
restaurant
A practical guide
presentation

297
On-line Business Models
A practical guide
presentation

298
MVP – how to test your
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A practical guide
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