“Strategic direction is more important today. It's about providing a framework for managers to navigate through the fog of complex chokes. No company can avoid this."

– C.K. Prahalad –

Case 6: In search of profitability!

Client: A Division of one of India’s largest information technology companies.

Background: The client Division manufactures and markets a wide range of IT hardware products. Over the last several years, fierce competition had driven margins sharply down. Growing emphasis on large volume deals and tender business had adversely affected its ability to improve margins.

The leadership of the business recognised the pernicious transaction oriented operation and requested an intervention. The General Manager asked that his team be trained on segmentation and development of segment specific strategies.

Methodology: A series of meetings with operating managers, especially those in sales and product management, was followed by market visits with sales executives. This discovery phase revealed a preoccupation with price as the basis of sale. Running after large orders exacerbated the problem. No one, except the General Manager, was thinking about how to be and stay competitive.

In consultation with a select team of senior managers, a highly customised Management Development Programme was developed. Its aim was to provide the management team with conceptual inputs on acquiring and sustaining competitive advantage. Lectures and interactive discussion on current and established models of strategy formulation were interspersed with a set of specially designed exercises.

The team was subdivided into four cross-functional groups. Each attempted the exercises and presented their solutions. Each group’s presentation was debated, content refined and synthesised with the solutions offered by other groups.

Result: The two-day custom workshop concluded with a comprehensive strategy platform that covered the following areas.

  • Customer segments that would be targeted and those that will not be served.Clear definition of the segment profile and how its constituent members could be identified.
  • Identification of the company’s valuable resources and distinctive capabilities.How they might be of value to the target customer segment.
  • Growing realisation that focus will lead to better prices and improved margins.
  • Broad guidelines for revamping the sales and distribution network.
  • A clear positioning for the Division’s business.

    The client has undertaken follow through actions to validate premises and formulate strategies on the platforms they arrived at during the Management Development Programmes. They have also started to implement changes in their operational processes so that they are consistent with the strategic direction.