Tuesday, June 02, 2009

#ASTD09 Tuesday Morning Keynote

Presentation: Tuesday Morning Keynote
Presenters:
- Jim Capara – Preemptive Talent Management
- Renee Mauborgne – Blue Ocean Strategy

Well – breakfast was not particularly well attended this morning. Sounds like there was quite a party at Fados last night. (BTW – for beer, Fados is highly recommended!)

Meanwhile – I was semi-happily (much to my surprise) doing what I am now going to call “rubber-band pull-ups”. Just enough support to not kill myself and get a springy effect when I hit full extension. Pretty cool. Push-ups, however, were brutal. By the end, I wobbled home while trying to stretch out my cramping feet and ankles.

Can’t wait to go back! (and no…that was NOT sarcastic).

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Jim Captrara

One responsibility in common – making sure the organization is ready
- How do we best contribute?
- Answers varies on strategic goals, talent required, etc.
- Don’t just tackle most obvious challenges

Preemptive talent management – look forward to where org is going
- YOU can lead the organization

We have to change our thinking.
- No barrier to role that talent management plays in organization
- You can influence org at MUCH higher level.

(The guy is reading directly from a teleprompter. I suspect part of it is for the translators and closed captioning)

Nextel – challenge of continual and TIMELY development of sales force.
- Move creation of product information from marketing to learning
- Responsible for test trials, documentation, sales training, help marketing
- Put it at earliest point in development cycle
- Take on functions not traditionally “training” can help the organization
[Take more responsibility! Do more!]

[In his org – he has been shifting other functions into training function.
- Customer Service
- Marketing
- Documentation
- Even a certain level of testing (which makes sense since they have perspective on the end-users others don’t have)]

Did some measures based on sales metrics when at NVR, 2006
- test sales folks to see how much retained (1/2 way)
- then test skills utilization (180 secret shopping experiences with same script and video)
- Maryland and DC – sales folks not using sophisticated skills
- Weaker markets – sales folks using many more of the skills trained.
- Got metrics division by division
- Clear predictions of change in performance when see downturn. Highest performance sales teams most at risk because didn’t need to use the skills. The prediction proved accurate.

Next 12 months – test and control groups.

If had waited for skills training need to emerge – results would have been catastrophic.
- Right now NVR in position to make strong recovery.

We have power to predict performance. We can position the organization to succeed in tough markets.

Use ALL tools at your disposal. Look BEYOND traditional training offerings.

No need to think and behave in same way.

We shouldn’t be operating at the END of key processes.
We SHOULD assume we can be pre-emptive.

We have to jump into the most strategic processes in our organizations [whether they like it or not]

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Renee Mauborgne

How can a company create and capture uncontested market space?

In difficult times – strategy is more important than ever before.
- Don’t worry about stock price. Market forces working.
- Don’t focus on the news. Even the best (Buffett) getting it wrong

When facing oscillation – gotta have razor sharp focus so that come out of the downturn stronger than you go into it.

How are you going to stand out in the market and at the same time lower cost structures so you can be competitive.

Is Blue Ocean Strategy relevant to you?
- Is your company facing heightened competition?
- Is it hard to stand out among rivals?
- Are your sales reps arguing for deeper price cuts?
- Is your company blaming slow growth on market conditons?
- Is company seeing outsourcing key to regaining competitiveness

Yes – Red Ocean – bloody ocean. Lots of sharks.

How do you capture a new market?

Video Game industry example
- 1990s – 2000s became flat. Sony Playstation / Microsoft Xbox / Nintendo
+ Dividing up the market of antisocial boys
+ Way they competed – technological advancement, blood, higher processing

- Nintendo – why do I need to fight for a small segment?
+ Why use the same basis of competition?
+ Who says we can’t grow the market.
+ Nintendo Wii – how they tried to change the market. [big fan of mine, though WoW has taken over my gametime recently]

- Big question – when is that coming out!!!! People wanted it for Xmas
+ Nintendo called this Blue Ocean in Action

- They wanted to reach beyond existing demand
+ Captured occasional players.
+ Captured non-gamers – more active people (sports + video game)
+ Captured women, senior citizens, adults.
-- Senior citizen centers are using it as recreation
-- Kids visitng grandparents more!

Tool – Strategy Canvas
- Horizontal access – all factors business competes on
- Vertical access – level of offering / investment in that offering

When did video game industry – all competed on same strategy and invested in the same thing.
- No investment in HDTV
- Reduced processing power
- Raised other factors – motion remote – that never existed
- Noted that the cost structure is lower by reducing many traditional factors. Gave it more than ample money to focus on the more important factors.

You can reduce cost by rethinking strategy.

4 actions framework
- What factors can we eliminate / reduce?
- What factors can we raise/create to increase buyer value
- Intersection where we have maximum value index

30-50% of what industry competes on may have made sense in the past, but creates limited value now.
- Because we are benchmarking the competition!

Nintendo’s profitable growth
- Sony loses $240 on each PS3. Nintendo makes $40-50 on each console.
+ Challenge assumption that you lose money on the box, make money on the software.
+ Why can’t we make $$$ on the box?
+ Do we need the graphics? How many really HAVE HDTV ?
- Nintendo sales up 90%, net profit up 77% Plus HUGE brand recognition
- Nintendo now #1 in industry by growing market.

Nintendo Wii created blue ocean uncontested market space.

The whole point – they didn’t “compete”. They created new marketplace.

Red Ocean – compete in existing market
Blue Ocean – create OWN market
Red Ocean – beat the competition
Blue Ocean – how do we make the competition IRRELEVANT?
Red Ocean – Exploit existing demand
Blue Ocean – Create and capture new demand
Red Ocean – Differentiation or Low Cost
Blue Ocean – Differentiation AND Low Cost

Red Ocean – how the Structure of an industry drives my Strategy
Blue Ocean – how does my Strategy drive my Structure.

2nd example – Cirque du Soleil
- No animals (therefore no insurance), no starts

Substantially higher returns from Investments in Blue Ocean
- Red Oceans – Market competing business launches.
+ 86% Business launch = 62% revenue impact = 39% Profit impact
- Blue Oceans – Marketing creating Business Launches
+ 14% Business launch = 38% Revenue Impact = 61% Profit Impact

How can we systematically create blue oceans
- What learning officers can bring = tools and frameworks so that you have a consistent language and system.

Research
- 150 Blue Ocean creations across 30 industries. 120 years of data (1880 – 2000)
- Industrial, organizational and strategic variables
- Took 10 + years to compile and series of articles.

Macro findings
- Incumbents often create blue oceans, and usually within their core businesses. Not just startups
- No permanently excellent company
+ Companies rise and fall based on strategic moves made.
- No permanently excellent industry
+ Gotta create new strategic moves.
- Creating blue oceans build strong brands.
+ EARNED, not bought through advertising.

Ex. Sony – strategic move from just Japanese company to bleeding edge.
- Sony Walkman – Quality of boombox, size of transistor.
- Has Sony made smart moves since Walkman? Uh, no.
- Wound up taking on western CEO (unheard of in Japan at time)
- Still think “high quality” if see a Sony AV device.

Ex. 2 Apple – iPod

Example – Orchestra industry
- Audiences shrinking 1983 avg audience 1137. 2008 768
- Cost structure going up
+ High fixed costs – superstar guests, soloists, conductors, salaries
+ Variable costs on rise – fundraising, marketing, competition for funding (which is shrinking)
- Difficult environment for Big 5 (Boston, Cleveland, New York Philharmonic, Chicago, Philadelphia)
+ Endowments together amount some $800mil. Deficits in millions

- Andre Rieu Orchestra – Netherlands.
+ Audience participation. And HUGE audiences
+ Concert revenue – 75 mil. London Symphony – 11mil
+ Top 10 grossing concerts in US. Ahead of Springsteen
+ Over 20 mil albums sold (10,000 considered exceptional)
+ France alone – 10% of all classical music CD sales
- How Andre Rieu differs
+ Customers want “more for less”
+ Look at Non-Customers! Why do people not come. Found average person intimidated.
+ What can I do to change?
+ All orchestras in world again have identical strategy: fancy theatre, exclusivity, high prices.
+Andre Rieu – no star soloists. Soloists demotivating for existing orchestra! No fancy theatres. Reduce size of orchestra.
+ Less intimidating music
+ Audience participation added

Six paths to Blue Ocean – don’t just accept the below boundaries…
- Industry - what are the baseline assumptions of your industry?
- Strategic group – can I collapse groups? Create new players as a result?
- Buyer group – don’t just look to one target market!
- Scope of product or service offering – go beyond the way your industry defines what the industry is.
- Functional-emotional orientation of an industry – can you switch the orientation of your industry? Eg. Body Shop took cosmetics (emotional) and made it functional.
- Time – how do you take advantage.

Look at alternative industries
- Create new industry
- Became Non-Benchmarkable

Have a healthy balance between your Red Ocean business and Blue Ocean business
- Red ocean still your current cash stability and earnings
- Blue ocean your future

GMs problem – their whole product line in the Red Ocean
Microsoft problem – also now in the Red Ocean. Where is your Blue Ocean?

Most companies too much in the Red.

We still need to have something creating our future!

Blue Ocean in action [sigh….gotta buy the book for details]
- Formulation
- 6 path framework
- buyer utility map
- Execution
+ Tipping point leadership
+ Fair Process – Engagement, Expiration, Expectation / Clarity

In 70s – Japan came over and made us change our concepts of Quality
- Quality
- Training became a low level job to a higher level.

Can we create a Blue Ocean for the Training industry?

How to bring ideas to your company?
- Blue Ocean Strategy simulation.
- Simulator – StratX. Company does 2-3 day exercise.
+ Red Ocean first.
+ Then does Blue Ocean round
+ Company can play with ideas
- Webinars – start the conversation among your top people.
- Training materials being created

Blueoceanstrategy.com
- teaching materials on these ideas.
- How to create programs for your people

Turnaround will be dependent on new ideas.

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