Case Studies: Alibaba Group

Alibaba Group grew from a simple online trading platform designed to connect small business manufacturer with buyers, and is now the biggest e-commerce company in China. It has dominant China’s B2B, B2C online market since 2003. Alibaba Group focused on providing a comprehensive online service package to its customers. It understood the culture well and stepped into the business at perfect timing, the trend of China’s open economy. Doing business in China is a whole new chapter for American’s businesses, and perhaps the successful model of Alibaba Group could provide some insights.

Year: 2010

Goal:

Maintain leading position in both B2B, B2C market. Capture new opportunities in the rapidly growing and evolving online commerce markets. Managing growth with agility.

Results:

Alibaba Group is still the market leader, however, it has different challenges looking into the future. China is currently the fastest evolving market environment. Therefore, in order to maintain the growth and its leadership, Alibaba Group has to satisfy the demanding needs of its customers. For example, Alibaba Group is planning to provide financial support and services for small businesses and individuals.

Lessons:

Jack Ma is the inventor. He elaborated the knowledge and management know-how learned from western culture, then built into the business model fits into local culture and user behavior, and he also captured the needs for the fast growing market.

Alibaba group creates a innovation network from a macro point of view:

• Inventor: Small businesses and individuals
• Transformer & Broker: Alibaba Group
• Financier: Alibaba is planning to provide associate services

Alibaba Group is no doubt a successful business within China. However, its capability to compete with others outside the country is unknown.

Grade: B

– Jason Chen

Case Study: 3M New Product Development

Year: 1996-97

Goal: The New Product Development team for the surgical-medical markets division had to come up successful product ideas and effective positioning. Success  was crucial because the fate of the entire division depended on it.

Result: Using a new methodology for product innovation the team proposed four new product ideas. Three of those ideas were not very radical, but the fourth one was completely radical and required the rethinking and restructuring of the entire division.

Grade: B

Lessons Learned:

• The following lessons are learnt from the 3M cases
• Corporate entrepreneurial ventures need champions.
• A dedicated and focused team is essential.
• Identifying the correct technology/process is central to success.

– Mohit Dhariwal

Case Study: Eli Lilly

Year: 2005

Goal: Eli Lilly is about to invest in an Australian biotech company (called Protagonist) trying to introduce a very systematic method into the drug discovery business through HTS. They had to find a VC company which could provide Protagonist the Series A funding they needed. They also faced internal difficulties where some senior managers didn’t approve this project.

Result: They tried to attract the attention of US VC firms but the distant was a turnoff, so they have convinced local Australian VC companies for the moment

Lessons Learned:

• CVC faces many problems ranging from not being taken seriously by the senior manager to not being able to offer competitive payrolls as great as VC companies can do
• Overseas investment is always a gard case
• Collaborations between large companies and start-ups make the perfect union if steps are taken carefully

– Avdar San

 

Case Study: Intel MXP Processor

Year: 2002

Goal: To create a new type of media processor that is able to provide high efficiencies in processing jobs, while maintaining a reprogrammable architecture that allows for cost reductions for Intel’s customers when designing new products that utilize the processor.

Result: The project, after being moved to the NBI incubator, was canceled as a whole. However, the technology that resulted from the project ended up being integrated into multiple, mainstream product lines owned by Intel.

Grade: B+

Lessons: The issue here was focus, in that members of the Gila processor group failed to see its potential in being integrated into other product lines that would generate bigger returns for Intel. Ultimately, rather than being resistant to being integrated with another group within the company, the group should have recognized an opportunity to expand and run with it.

– Patrick Vorce

Case Study: Sheikh Mohammed bin Rashid Al Maktoum

Sheikh Mohammed bin Rashid AI Maktoum has converted Dubai from a sleepy little coastal village into a world-class city, famous for its ambition, drive, and economic promise. He is the founder, part-owner, and visionary behind companies such as Emirates Airlines, a UAE-based airline serving over 100 destinations, Nakheel, the property developer that built a trilogy of man-made islands, and DP World, a leader in international marine terminal operations. Despite being surrounded by political instability in the Middle East, Sheikh Mohammed pursued capitalism and embraced Western culture while maintaining safety for millions of annual tourists. By 2010, Dubai had the world’s tallest building, the most expensive hotel, and the largest shopping mall. But rapid development did not come without difficulties. While hundreds of thousands immigrated to help build the metropolis, labor conditions suffered and some local Emirati felt like they lost aspects of their cultural identity. Growth was rapid, infrastructure was weak, and the real estate bubble grew as the financial crisis loomed. To produce economic, social, and cultural prosperity for the people of Dubai, Sheikh Mohammed had to balance his role as a business leader and a political ruler.

Year: 2010

Goal: To examine the leadership style of Sheikh Mohammed whom had responsibilities as a business and political leader and to understand how he leveraged Dubai as a strategic location along with its resources to rid the dependency of the countrys economy on Oil and make tourism as the main contributor to the GDP.

Result: After 50 years Dubai saw unprecedented all round growth and the economy dpendenc on oil reduced drastically and is at about 6% as compared to what it was earlier. However tourism was the alternitive to oil which is not substantiable and this was seen in the recession which showed that Dubai was in a great deal of debt and the property prices decline drastically. Instead of tourism if something sturdy was selected then things would have been much better and the growth of Dubai would have been dominant. It is a model for all its neighbouring countries.

Grade: B

Lessons Learned:

• Venturing into new market by exploiting available resources.
• Stratergize the growth in appropiate steps and proper project management techniques should be used
• Communicate and take into consideration the opinions of all the stake holders
• Dont rely on a single source of income specially when it is not sustainable.

– Anson Gomes

Case Study: Extracting Value from Corporate Venturing

Leaders usually see venturing as sources of organic growth and vitally important engines of renewal. However there is always a high risk involved with this and they do not produce the intended result (always).

So, the new venture cycle though rewarding is prone to risk but equally important. This paper looks at some guidelines (8 key points) that have been developed that can be used by organizations who want to look into opening up new ventures by researching one of the largest multi national corporations in the world i.e. Nokia.

Year: Fall 2006

Goal: A in-depth study of Nokia’s venturing program which saw how, and what goes into successful corporate venturing

Result: 8 important lessons that can help companies benefit from their investments in new ventures.

Grade: B

Lessons learned:

• New ventures can benefit the core businesses: If they are structured in a way that it can be absorbed by the core business in the future
• Volunteers are not automatically competent: You need champions and high performing professionals handling new ventures in an organization.
• New corporate ventures cannot deliver the same result as the company’s core business: Losses are part and parcel of new ventures and they cannot be judged or solved based on expected deliverables that core businesses usually have
• Manage with portfolio mindset, not a project mindset, to maximize the company’s benefits from venturing: Have many projects going on simultaneously do not focus or put in your resources for just one particular project at a particular time. Since new ventures take time to develop their progress determines the amount of resources put into them.
• New markets are seldom like existing ones; be prepared to learn your way in and approach learning as an activity that may require several phases and changes in direction: New ventures usually are very fragile like new born babies, they have to be dealt with a lot of care and support. There is no set market for them so accelerating their growth in a premature market (or even if market is visible) can lead to early paralysis or cardiac arrest of the project. There is also a possibility that the project might lead to a different direction than compared to what it initially promised.
• Manage new ventures in stages, with stage-specific reviews by a committee of stakeholders: Projects in new ventures have to be reviewed periodically and in stages but not with metrics that are used to judge a core business. Deliverables have to be decided by an expert team of stakeholders who define progress or setback based on set deliverables for a particular period.
• You can gain a lot from a losing venture if you cut your losses: Businesses should know when to move out of a particular project
• When designing the venturing divisions build in learning transfer mechanism: Teams should share knowledge in an organized manner so that projects which are successes or even failures help the organization succeed in the future.

-Altaf Hajiyani

Summary of book “Innovate with Influence” by Steve Todd

The author starts of the book speaking about the personal brand that individuals who want to work, create business or want to choose any professional career has to create just so to differentiate themselves from the crowd and create a niche for himself. What does he do, what does he stand for what key differences does he bring to the table that others don’t.

 

In the next chapter he goes on to speak about INFLUENCE and how he created that. Influence for him is created through hard work and innovation. In the early days of his career he created influence not by innovating but by doing things, i.e. getting things done and before deadlines that way he earned trust of his managers and his co-employees as someone who can be trusted and can be given extra work loads and important projects and he was awarded with many projects. Innovation is something that you do in your work when you have some influence and your words are heard and respected by your manager and your co-employees.  He created influence by working hard on the projects, giving due to other team members when it is due and taking and asking for help from adjacent team members when needed. This way the projects that he undertook always were submitted as desired and under deadline.

 

The next step as an intrapreneur (a person who works in an organization as an innovator and thinks like an entrepreneur) that he had were four: 1. Manage the existing project 2. Enhance the project 3. Re-architect 4. Leave. All througout his career he avioded the comfortable zone of 1 & 2 and choose instinctively without any set agenda either 3 or 4 depending on the circumstances and choices presented to him. To him it provided more exciting challenge to start something new incubate it, work on it, deliver it and then move on to the next big challenge…he constantly innovated throughout his career on new projects and ideas based on this principle.

 

He also had other idea about visibility that he followed as an intrapreneur

1. He strived to maximize horizontal visibility (i.e. with his co-workers)
2. He strived to minimize his Executive visibility (i.e. the top brass)
3. He strived to limit his visibility to 2 levels above him in terms of vertical visibility (i.e. his managers)

 

This provided him the freedom to engage in thought process and work diligently on new ideas and projects which he could not have if he would have tried to increase his visibility in the organization (a very different approach from an entrepreneur who strives to increase his visibility in the market) here the intrapreneur has a different approach.

 

Steve always maintained new ideas by visiting the customers directly, in the book he tells the story about a library and how they could have benefitted through a new way to store data rather than the TIFF file which would have been obsolete 100 years from now. This presented him ideas and challenges that he could work on in the trenches.  As an intrapreneur he always strived to learn new technologies and challenges in the data storage business, as a single point agenda that’s what he strived for i.e. innovation while maintaining his family bond and leaving work at 5pm every single day. He also had an active social work life and travelled extensively.

 

As an intrapreneur he had a sharp eye for new solutions and ideas which he calls the blue sky i.e. the amalgamation of existing technologies or combining and offering something new which solves the exisiting problem without involving the customer in it. He always maintaing a paper sheet with three different columns 1. Things which he needs to get done now i.e. commitments 2. Innovation i.e. projects that he thinks have the potential to go to the market 3. Personal i.e. projects that he would like to achieve but have been put on the back burner because of the lack of support or lack of time.  Each day he takes out 30-40 min to think about possible innovations but still maintaining the same working hours and working from the trench, but since he now had the influence he had a lending ear within his co-workers who would help him create the project or write the code, he then would get the support of his managers who had the influence and clout to take the project forward.

 

With the advent of technologies came web 2.0 platforms which created immsense opportunites for Steve to bring his personal projects up front in terms of writing blogs and extensive use of social media to create his horizontal INFLUENCE. He was twice awarded personal prizes (2 position both times) for the solutions and projects he had submitted (only ideas) which would then be used by his company to create real products and services for the marketplace.

 

By reading this book it gave me an impression that an Entrepreneur is quite different from an INtrapreneur let alone the comparison between Intrapreneur and Corporate Entrepreneur. But they do have some similarities i.e. they like new challenges and never rest on the laurels of the past, they constantly find ways to innovate in products and services, they INFLUENCE (whether horizontal or vertical or executive) but they carry influence and that happens by the sheet determination, hard work, getting things done and getting them done with integrity and by creation of a personal brand. A look around the world for successful entrepreneurs and we see similar characteristics i.e. a personal brand, hard work, a knack of innovating and constantly finding new things to be done for eg., Steve Jobs, Mark Zuckerberg, Steven Spielberg, Richard Branson all carry clout, personality and INNVOVATION in what they do.

-Altaf Hajiyani

 

Grow from Within: Mastering Corporate Entrepreneurship and Innovation By: Robert Wolcott & Michael Lippitz

In today’s rapidity growing globalized marketplace, competition can come from unexpected places. In order for companies to remain competitive in this marketplace, they must create internal entrepreneurial capabilities. “Enabling the entrepreneurial capabilities of a company’s people is the most powerful way to survive and thrive in the long run.” In this book, the authors discuss how companies can enable and support “internal entrepreneurs” to achieve “innovation-led growth.” This book examines: the fundamentals of designing a new business within a company, the four dominant models of corporate entrepreneurship, ways to align a company’s innovation program with its strategy, and leadership requirements for developing new businesses within a company.

A few important findings from this book were:

• New business creation teams must be vigilant and avoid the pitfalls of becoming too narrow, too broad, or misaligned in their corporate entrepreneurship initiatives.
• There is no one-size-fits-all approach to building entrepreneurial capabilities within a corporation, but rather four basic models: opportunist, enabler, advocate and producer.
• The creation of new businesses within established companies requires strong leadership, and the leader must focus on building an environment that encourages entrepreneurial thinking.

Corporate Entrepreneurship Pitfalls:

The essence of corporate entrepreneurship is the creation of new businesses, and as with most new undertakings there are risks involved. Corporate entrepreneurship can be dangerous to a company if they accept it blindly, and don’t look out for pitfalls. Common pitfalls of corporate entrepreneurship initiatives include being: too narrow, too broad, and misaligned. Being too narrowly focused can restrict the development and pursuit of new opportunities. Being too broadly ambitious can make the team lose focus by creating more opportunities than can rationally be pursued. Lastly, being misaligned with senior management, strategic priorities, or the investors can lead to isolation of the new business creation team. This isolation will make it difficult to move the new business out of incubation and into an appropriate line of business. These pitfalls usually affect new business creation teams in their early stages of development; however, they can be avoided if they are taken into consideration.

The four Models of Corporate Entrepreneurship:

The authors reveal four models of corporate entrepreneurship that a company can adopt and design new businesses around. The models are based on the dimensions of organizational ownership & resource authority, and each possesses their own unique and specific characteristics.

These models are:

• The Opportunist Model (diffused ownership and ad hoc resource allocation): In this model there is no designated organizational ownership or resources, so concepts developed in incubators proceed based on the efforts of “project champions”.
• The Enabler Model (diffused ownership and dedicated resources): The premise of this model is that employees across an organization will be willing and able to develop new business concepts if they are given adequate support. However, since there is no formal organizational ownership for these efforts, implementation success depends on close top management support and attention.
• The Advocate Model (focused ownership and ad hoc resource allocation): This model is relatively new. In it the central office leads and coordinates the formation of new business teams as well as important concept developments, but it must persuade business units to provide most of the funding.
• The producer model: (focused ownership and dedicated resources): In this model organizations are closely tied to corporate leadership and strategy. It provides much greater support for the commercialization, transition and scaling of new businesses than all the other models.

Leadership in Corporate Entrepreneurship:

Most meaningful endeavors require leadership, especially the creation of new businesses within established companies. Executives who are interested in internal growth must build a corporate environment that tolerates and encourages entrepreneurial thinking. In addition they should be directly involved with setting the objectives and success metrics for corporate entrepreneurial initiatives. They also, must “lead by example”, by engaging new business teams, telling stories of entrepreneurial success, and lifting up the company’s future leaders. By actively committing to these suggestions, business leaders can greatly increase their company’s chances of succeeding at sustained growth and securing their continued existence in today’s competitive marketplace.

Grow From Within is a well structured, thought-provoking book that provides good examples of successful implementation of the strategies suggested. I would recommend this book to anyone interested in corporate entrepreneurship.

-Oliver Williams

Who Says Elephants Can’t Dance – Louis Gerstner Jr.

Who Says Elephants Can’t Dance? talks about IBM’s extraordinary turnaround led by Louis Gerstner, the chairman and CEO of IBM from 1993 to 2002. Since Gerstner wrote this book himself, it gives the reader a more personal glimpse into his life as the CEO of IBM and discusses the challenges he faced in transforming the company. By 1993, the computer industry had changed rapidly and because of this IBM was on their way to losing nearly $16 billion. As the new CEO, Gerstner led IBM from the brink of bankruptcy to being a leading technology company.

This book gives a great example as to how fast a company can go from being an industry leader, to being nearly bankrupt. From reading this book it gives you a good understanding of how a company can survive in a fast moving world. To stay competitive, a company has to continually adapt or adjust themselves to the ever changing external environment. In this context the external environment means everything outside the company, including, the customer, competitive, social and technological environments. As we saw with Intel NBI program (discusses in the case study section on this blog), a company needs to regularly create/develop new ideals or products so they can have a competitive advantage or increase their market share.

In this book, Gerstner could be viewed as having the same attributes that a corporate entrepreneur has. Within an organization the corporate entrepreneur leverages resources and looks for assets that aren’t being fully utilized. They also focus on enhancing the firm’s ability to develop innovative ideals and processes. A corporate entrepreneur’s main objective is to improve a company’s competitive position and financial performance. Doing this sometimes requires transforming the organizational structure to better suit the company’s needs. In Gerstner case, he was an outsider coming into a company as its new CEO to help them find ways to become an industry leading business again. Since he was an outsider he had a different perspective about the company then those working there had, and this allowed him to recognize problems more effectively. It became apparent to him that IBM’s problems stemmed from a number of issues but most of  them were from the company’s internal environment, this included, their structure, systems, processes, and culture. So, to get IBM back on their feet, they needed someone to come in and “shake things up” and Gerstner was the right person to do it.

Gerstner had a effective leadership style that he used to mode the new company. In some cases a corporate entrepreneur needs to have good leadership skills. Having good leadership skills allowed Gerstner to make the changes he needed to get the company back on track. As time went on people began to get nerves because they wanted the company to have a quick recovery, but in order to be successful, you need to have the right strategies and processes in place within the organization. Gerstner said that “A successful, focused enterprise is one that has developed a deep understanding of its customer’s needs, its competitive environment, and its economic realities. This comprehensive analysis must form the basis for specific strategies that are translated into day-to-day execution.” A company needs to be aware of its external environment at all times. Without this knowledge, it becomes difficult for them to develop strategies that will keep them align with the changing external environment.

Prior to Gerstner’s arrival at the company, management wanted to split the company into separate business units with hopes that it would help them become more efficient. Gerstner however, felt that breaking up the company wasn’t the right action to take in this evolving marketplace. He always viewed IBM’s size, and ability to integrate as the company’s competitive advantage. Realizing this, he decided that IBM as a whole was greater than the sum of its parts. The rationale behind this was to leverage all of the pieces of IBM’s hardware and software services to deliver top-to-bottom technology solutions. He was utilizing what the company already had in a more efficient way.

Another interesting aspect of IBM’s turnaround was the competitive and cultural changes that had to be made in order to  make the company successful again. When Gerstner started at IBM he realized that their corporate culture needed to change. The reason being because IBM had been successful for so long that they had become immune to competitive and economic forces. They’ve been the benchmark in their industry for a long time and when you’re the best in an industry, there’s no one to push you or challenge you to improve yourself. This is what happened to IBM, and as a result they became a stagnant business that lost their competitive edge.

So, to get the company back to where they used to be, Gerstner suggested focusing more on customer needs. IBM would now make decisions that were market and customer driven, instead of profit driven. Following this he also empowered his employees by eliminating much of IBM’s bureaucracy. People could now contribute more to the business without fear of their ideals being turned away. Another important concept of corporate entrepreneurship is having the ability to find the right people that can help you within the company. This is exactly what Gerstner did, he would give the decision making responsibilities to the individuals who had the greatest proximity to an issue, regardless of rank. It was this type of thinking that led to the turnaround of IBM.

The key lesson that a person or a company could take away from this book is that in order to be successful as a company you need to be aware of your external and internal environment. Doing this will allow you to develop different strategies that can help to increase your market share, and have a competitive advantage. Even though  different companies may have their own unique problems or constraints, a corporate entrepreneur needs to identify areas that can help a company to have a stronger more diverse competitive edge. Gerstner came in with an agenda of what he felt needed to be done and implemented them. Although he was the CEO, he could also be seen as being a corporate entrepreneur in IBM’s case.

-Quentin Williams

“Who Says Elephants Can’t Dance” By: Louis Gerstner Jr.

In 1993 the IBM company was in shambles. IBM was bleeding money dues to there insular corporate culture and just them falling prey to small companies that would make similar products that were both better, fast, and cost far less than IBM. At one point Wall Street wanted them to break there company up into smaller independent business units. That was until Lou Gerstner took the helm of IBM as the CEO.

 

Lou had a vision to keep this company together, change the way it did business and just show it could keep up with and maybe even surpass the startups and small businesses presenting its biggest challenges.  Lou Gerstner thought, “The enormous corporate elephant could dance as gracefully as its much smaller competition.”

 

Not to long after Lou Gerstner was introduced as CEO he had a meeting with the IBM’s Corporate Management Board (the top 50 people in the company). Gerstner outlined a number of troublesome areas in the company. These included:

 

● Loss of customer trust, supported by low customer ratings on quality.

 

● The mindless rush for decentralization.

 

● Slow response to cross-unit issues.

 

● Tension over control of the marketing and sales processes.

 

● A confusing and contentious performance measurement system, resulting in serious problems when closing sales with customers.

 

● A bewildering array of questionable, even senseless alliances.

 

After only 100 days on the job, and with major news outlets and analysts alike calling for some visible, tangible proof of a turnaround at IBM, Gerstner went public with four key strategic initiatives:

 

In his first 100 days as CEO, Gerstner decided to go public with all news outlets and analysts with his 4 keys strategic initiatives to turn IBM around. These included:

 

–  Keep the Company Together

– Change the Company’s Fundamental Economic Model

– Reengineer How the Company Did Business

– Sell Nonessential Assets to Raise Cash

Principled Leadership

In order to breathe some fresh air into the organization, Gerstner did away with the Basic Beliefs, pointing instead to eight principles:

 

1. The marketplace is the driving force behind everything we do.

– “Under the first of Gerstner’s principles, the company vowed to focus on serving customers and, in the process, beating the competition.”

2. At our core, we are a technology company with an overriding commitment to quality.

3. Our primary measures of success are customer satisfaction and shareholder value.

4. We operate as an entrepreneurial organization with a minimum of bureaucracy and a never-ending focus on productivity.

 

5. We never lose sight of our strategic vision.

– “Every business, if it is to succeed, must have a sense of direction and mission, so that it knows what is important, and how it fits into any given situation.”

 

6. We think and act with a sense of urgency.

7. Outstanding, dedicated people make it all happen, particularly when they work together as a team.

8. We are sensitive to the needs of all employees and to the communities in which we operate.

Lou Gerstner was much more than a CEO or namesake for a company. He was a leader. He put his company on his back and reformed it into something never imagined. He did this through careful planning and a few key characteristics that he personally applied to the company. He changed the culture of the company on a whole.

 

Gerstner’s Key to Success:

 

Focus

Gerstner made sure that his company stayed focus. He said,  “At the end of the day, a successful, focused enterprise is one that has developed a deep understanding of its customers’ needs, its competitive environment, and its economic realities.”

 

Execution

Execution is really the critical part of a successful strategy. Getting it done, getting it done right, getting it done better than the next person is far more important than dreaming up new visions of the future.

 

Personal Leadership

In Lou Gerstner’s mind and experience, personal leadership is the most important element of institutional transformation. Great institutions are not managed; they are led. The best leaders create high-performance cultures, with demanding goals, measured results and full accountability. They don’t hide behind staff; they don’t simply preside over the work of others. They are visible every day with customers, suppliers and business partners.

 

A few things to learn from Gerstner and his leadership is to always be ready to fight. Wall Street saw this company as weak and ready to be broken up, but Gerstner thought otherwise. As they were going in the wrong direction and bleeding money, Gerstner pooled IBM’s resources and maximized its potential. He used careful strategy and a golden vision to not only fix what was broken but to fix it regardless if its not broken. He wanted to improve every area of the company and he succeeded. But more than anything he was personally committed to his company, that is the showing of true leadership. It made IBM special.

 

“True leadership — the kind that makes companies special, that can turn them around, that can make elephants dance — requires commitment, determination and passion for life, for business and for winning.”

 

 

– Steve Jagernauth