Who’s the Genius?
Source: techmtaa.com

According to Doug Sundheim in his HBR blog post, innovation is not key to building a competitive advantage. He claims that “innovation is byproduct” which seems to be contradictory, as Google and Apple have built their success by introducing innovative products. According to Micheal Porter, a company needs  competitive advantages, which according Rita McGrath in her article (HBR, June 2013), are “transient” and not “sustainable, leading to a need for constant innovation. With this in mind, what is Sundheim saying?

In my opinion, Sundheim makes a very important point that many companies fail to grasp. He states that “focus [on innovation] tends to… sideline” customers, whereas “focusing on solving… problems tends to be born from customer-centered motives” and naturally leads to innovation. Many companies in their pursuit of delivering the best and greatest product tend to forget about the customer’s needs. If these companies actually used tools such as the value proposition canvas, they would know that the first question they needed to answer is what job does the consumer need to have done. By focusing on customer’s needs, a company can understand what the customer’s pains and gains are, and how to create products that act as the gain creator and pain reliever. By helping a customer reduce his pains, a company generates a point of difference that is actually relevant for the customer.

Sundheim also notes that focusing on solving a customer’s problem develops “determination to see the world through your customers’ eyes” within a company. We can see this with Apple, which only includes functions that reduce customer hassle, despite pressure to introduce novel functions like Samsung that don’t contribute to the user experience. According to Sundheim, such “mindset… can’t be captured in a process” and must be fostered, which is why companies like Apple manage to maintain a competitive advantage. Unlike innovation,  dedication to the customer simply can not be copied.

References

http://blogs.hbr.org/2014/10/successful-innovators-dont-care-about-innovating/

BC Hydro’s dam on the Peace River will cost not only billions of dollars but also kilometers of fertile land used by First Nations to hunt and trap

BC Hydro’s $7.9 Billion dollar hydropower project has encountered much opposition financially and environmentally. Although the project has received environmental approval from both federal and provincial governments, many First Nations have voiced concern over the flooding of aboriginal land, which would affect their ability to hunt, trap and fish. Other opponents also voiced concerns over the financial viability of the project, claiming that the upfront costs are unjustified given the unknown growth in demand for electricity, and that smaller scale hydroelectric plants developed by would have lower overall costs. BC Hydro and the crown government it represents has downplayed these concerns, while First Nations groups have vowed to challenge the project in the Supreme Court.

The government, represented by the provincial crown corporation of BC Hydro, must understand understand how it can create shared value, and that the need for electrical capacity does not necessarily have to come in conflict with environmental and First Nation interests. This is especially important for BC Hydro, as it represents a government that has to act in the interests of all its citizens, including First Nations. The government needs to realize that building the dam could create externalities that outweigh the benefits of the dam. For example, damaging the livelihoods of the First Nations could increase their reliance on social aid, increasing costs for the government. By downplaying issues for the First Nations, the government is making huge PR mistake given that Premier Clark is trying to advocate for cooperation instead of litigation. Only by looking at the benefits and costs with a broader perspective that incorporates the interests of all citizens will the government realize that alternatives, such as geothermal and small scale hydropower, create much greater shared value.

References

http://www.vancouversun.com/life/First+Nation+chiefs+stage+Site+showdown/10215965/story.html

http://www.vancouversun.com/life/Premier+urges+cooperation+more+litigation+government+natives+reach+fork+road/10194776/story.html

http://www.theglobeandmail.com/news/british-columbia/first-nations-challenge-to-site-c-approval-could-make-dam-a-test-case/article21121456/

Yahoo was once a household name known for it search engine and email services. Today, Google has more than 50 percent market share in the search engine business, and Yahoo has become increasingly irrelevant. Over the past ten years, Google has innovated by developing the most popular smartphone platform in the world, which acts as a platform for users to use its core search and services, while Yahoo has stagnated by not introducing any new services. As a company, Yahoo has failed to realize competitive advantages can no longer by expected to be sustainable, especially in the rapidly changing IT industry.

However, Yahoo has a card up its sleeves, its large share in Alibaba and Yahoo Japan, which are worth 30 billion and 11 billion respectively. Together, these shares are worth more than Yahoo, meaning that Yahoo’s core business, search, is worth nothing. An important question is whether Yahoo can sustain itself off the rising share prices of Alibaba and Yahoo Japan. Under agreement, Yahoo is required to sell a significant stake in Alibaba now that Alibaba has gone public. This means that Yahoo’s share price will be less affected by Alibaba. In addition, now that Alibaba has gone public, Yahoo’s shares could fall as stockholders sell and buy Alibaba shares directly. Although Yahoo bought many start ups such as Tumblr in the last few years, it has failed to turn these investments into revenue. If Yahoo is to stay relevant, it must use its investments to help revive its core search business.

Links: http://www.bloombergview.com/articles/2014-03-17/is-yahoo-s-business-worth-less-than-nothing

http://www.businessweek.com/articles/2013-10-16/how-much-is-yahoo-worth-without-alibaba-not-much

Source: http://freightlinersf.com/

Over the years, McDonald’s has built a reputation of providing, fast and delicious food at an affordable costs. However, as times have changed, so have the tastes of consumers. These days, people have become more aware of healthy living, and how a diet based on “burger, fries and soft drink is an ‘unhealthy choice'”. As a result, McDonalds has been introducing healthier choices such as  caesar salads, and grilled chicken snack wraps.  While I applaud McDonald for providing healthier choices to consumers, I cannot say I don’t have doubts about their change in market strategy. For a company that has relied on a cost leadership strategy for so long, developing a new focus (differentiation) strategy will take millions of dollars and a very long time. Yet, in the hearts and minds of people, McDonald’s is still a fast food company.

One must also notice McDonald’s increasing prices as it shifts to a focus (differentiation strategy). Ten years ago, one could buy a Big Mac meal at McDonalds for less than five dollars; the same meal now costs almost 10 dollars. McDonald’s target segment has always been the been the lower-income, and college students. The pains of these people are not having much time or money and McDonald’s provided them with fast, cheap meals. But McDonald’s new strategy targets the wealthier and health-conscious, a market segment already fulfilled by competitors like Subway and Quiznos, at the cost of the former. Lastly, many of McDonald’s healthier alternatives, such as “chicken sandwiches–even if they are grilled–are higher in calories and/or fat than we prefer,” making it even more doubtful that they will become a healthier choice in the minds of consumers. Therefore, McDonalds should return to its roots, and provide cheap, unhealthy meals.

Links: https://blogs.ubc.ca/jasonwong123/

http://www.independent.co.uk/life-style/food-and-drink/news/fast-food-is-the-unhealthy-choice-mcdonalds-tells-its-own-staff-9025364.html

http://www.sparkpeople.com/resource/sparkdining-eatery.asp?id=3

Link: http://www.theglobeandmail.com/report-on-business/blackberry-revenue-plunges-loses-423-million-in-fourth-quarter/article17715869/

Over the past 10 years,  cell phones have  increasingly become an integral part of everyday lives so one would think established phone vendors like RIM, Motorola and Nokia would thrive. However, instead of capitalizing on this growth, these firms have failed to innovate, and as a result paid a heavy price as new comers such as Apple and Google stole most of the market share. This year, RIM posted its first sub-1 billion dollar quarterly revenue and its new Q10 and Z10, failed to challenge Apple and Samsung in the consumer hardware market. Being incompatible with older Blackberry servers installed at many firms, RIM even managed to alienate its last stronghold, the corporate market. Facing ever declining market share, RIM’s new CEO is betting on the Blackberry’s old revenue stream, paid services like BBM. But once again, RIM is relying on an outdated business model. as many services are available on competing devices that are not only free.  As a result many corporate have migrated from Blackberry. Therefore, RIM cannot hope to survive by revisiting old revenue streams or those of competitors. RIM must realize competitive advantages do not last, and that must innovate and find a new business model.