Strategically speaking

As I was finishing up what I was able to on the Situation Analysis late last night, I found myself thinking about Cohen’s Chapter 15, “How to Do Marketing Research the Drucker Way.”  Specifically, “Why Drucker Preferred Thinking to Number Crunching.”  After crunching the numbers and concluding what I already knew would be the key issues, I could see why he preferred thinking.  I just hope I didn’t “rig” my analysis with my preconceived biases.  However, since we had to provide the facts that provide the basis for the key issues, I’m pretty confident I can defend my conclusions.  Maybe, if I had more skin in the game and this was a real business I was dealing with, I wouldn’t mind spending so much time on the number crunching.

Now that I’m off the soapbox, this week’s reading included Drucker’s Marketing Strategy in Chapters 10 through 14 of Cohen’s book, “Drucker on Marketing.”  I think what sticks with me the most is “The Fundamental Marketing Decision.”  “Your first responsibility is deciding what your business is.”  This reminds me of Jim Collins’ “Hedgehog Concept” from his book, “Good to Great.”  It’s in reference to the hedgehog and the fox story.  Actually the “Hedgehog Concept” integrates some of what Jack Welch did at GE.  Essentially, “if you cannot be the best in the world at your core business, then your core business absolutely cannot form the basis of a great company.  It must be replaced with a simple concept that reflects deep understanding of the three intersecting circles.”  The three intersecting circles are what you are deeply passionate about, what you can be the best at and what drives your economic engine.  From there, strategy may change based on changing conditions, but needs to always consider the “Hedgehog Concept.”  Something else that seems to coincide between Drucker and Collins is “We Go All Out Only for Important, Challenging Goals.”  Collins refers to these as BHAG (Big Hairy Audacious Goals).       

Proff. Spotts asked us to comment on three of our non-teammate classmates’ blogs.  Kenny provided a nice summary of this weeks’ reading on Drucker, including the five certainties that can help strategists predict the future.  He also includes a short synopsis of his team’s PharmSim activities and provided comments on three blogs, including both of my teammates’ blogs.  Kristin also chose both of my teammates’ blogs as two of the three which she provided comments.  She also seems reluctant (as I am) of providing too much information on her teams’ PharmaSim activities, since it is intended to be a competition.  The she provided a nice short description of Drucker’s “looking out the window.”  And to complete the trend, Christine also comments on both of my teammates’ blogs as two of her three.  I already knew I had great teammates, so I’m glad to see I was not alone in that assessment.  Christine definitely provided more detail about her team’s PharmaSim activities and I am pretty impressed with the results. 

Specific prompts during class included, “Do you agree that customers determine what business you are in?”  Yes, because without customers, you have no business.  If you decided that your business was to make the highest quality rotary phones on the market, how many customers would you have?  You have to satisfy the customers’ needs or wants.  Otherwise, you will not be in business very long.

Another prompt was “What is the purpose of using historical data to predict the buying habits of customers?”  My answer is because, currently, that’s all there is.  So far, no one can accurately predict the future, except by random guess.  In fact, research has shown that so-called experts are actually worse at long term predictions than the average observer.  This may or may not be a factor named by Daniel Kahneman in “Thinking, Fast and Slow” as the Law of Small Numbers.  Since there are a smaller number of experts, their errors may be exaggerated.  More than likely, though, it is as he explains later, “you should not expect much from pundits making long-term forecasts - although they have valuable insights into the near future.  The line that separates the possibly predictable future from the unpredictable distant future is yet to be drawn.”   Near term trends can be estimated using historical data, but you also need to keep an eye on how much market penetration already exists and what else is going on.  Economic or other factors could collapse the market, but they could also expand the market.  These factors are pretty unpredictable, so all you have left are the factors in which historical data exists.     

 
The last prompt was to think about the metrics to be used for the PharmaSim case.  Since we are kind of competing as teams, I’m not sure how much information about our team metrics we should release.  We are in the process of thinking of them and I'm thinking we should make them BHAG!

Speaking of predicting the future, I think we need to hire Griffin!
http://www.youtube.com/watch?v=PSxuL_54sMk