Archive for the ‘On Target’ Category

The release of the PlayBook by Research in Motion is a maneuver designed to preempt another company getting in on the secure tablet market. The negative critiques of the PlayBook that we’re seeing miss the point. RIM has been developing its tablet for too long. The company needs to get it to market, because if they don’t then someone else may develop an application or ecosystem that is just as secure and that runs on Android or iPad.

RIM has always differentiated itself by offering highly secure data communications. It’s the company’s key strength. RIM can’t really compete against the iPad or Android tablets for the consumer market. It must stay focused on the corporate market, where security and data integrity are paramount.

RIM is taking a risk, but the alternative of waiting for perfection is even riskier at this stage. Apple and Android have been making inroads in the security conscious corporate clientele. The risks can be managed because the installed base of BlackBerry clients will at least see movement and may forgive some initial errors on the part of RIM.

Richard Martin is founder and president of Alcera Consulting Inc. He brings his military and business leadership experience to bear for executives and organizations seeking to exploit change, maximize opportunity, and minimize risk.

© 2011 Richard Martin. Reproduction and quotes are permitted with proper attribution.

Every soldier in history has known that the defense is inherently stronger than the attack. As a general rule of thumb, attacking forces have to be at least three times stronger than defending forces. In many cases they should be even stronger, especially at the decisive point. However, the defense is rarely, if ever, decisive. It is only a temporary measure before resuming the offensive. In war and in business, there are three main reasons to go on the defensive:

To buy time or delay an attack until you can go back on the offensive. For instance, major broadcasters and cable companies in North America have invested in at least some level of Internet accessibility for their programming. This is a purely defensive move, protecting their right to control programming while they buy time until they can determine which way the market and industry will evolve.

To rest, reconstitute, and recover after offensive success. For example, when companies try to establish a presence in a new country, they will usually establish a “beachhead” and then reconstitute while they build their infrastructure there. The same often applies after a major takeover, which can be seen as a major offensive move. The buyer will take months, and sometimes even years, to integrate the takeover target. Consequently, the focus will become defensive rather than offensive.

To consolidate a new position that has been gained in an offensive. The iPhone was introduced in 2007, and it immediately disrupted mobile communications and computing. Other cell phone makers were thrown off balance. Apple has kept one step ahead of the competition since then by introducing annual upgrades. But what really allowed Apple to keep the competition off balance was the creation of the App Store in 2008. The App Store gave a marked advantage to Apple, because it allowed the company to consolidate its position by solidifying the loyalty of early adopters.

So what are the principles of business defense?

All around defense. Defensive positions should always be sited and laid out with the assumption that the attack could come from anywhere. Businesses should therefore be on the lookout for new products or services that completely undermine their existing market position. They should also be on the lookout for new entrants and competition from unexpected quarters.

Vital ground. Defenses should be sited to deny vital ground to the attacker and to cover key approaches and terrain. In business, vital ground can be equated with a business’s core customers, those who buy on a repeat basis and who evangelize on behalf of its products and services.

Mutual support. Defenses should be sited with mutually reinforcing strong points. That way, if one or more of them comes under direct attack, the others can bring fire to bear, either to quell the attack or to provide cover fire for a counterattack from another position. In business, this can be equated to products and services that are mutually supporting in the minds of customers and that provide synergistic value for them.

Defense in depth. Defenses should be sited in successive lines of fortifications and with obstacles to slow down and canalize the attacker. This is so an attacker doesn’t have an easy time of it after getting through the first line of defense. The business equivalent is to develop forms of exclusivity that make competition difficult, such as patents and other forms of proprietary information.

Forces in reserve. A savvy commander knows he must always keep forces in reserve to counter unexpected attacks or vulnerabilities. These should remain uncommitted as long as possible and reconstituted immediately after their use. Businesses should do the same by maintaining cash reserves to counter threats by competitors. They should also be prepared to reallocate resources from non-performing products and services to those that deserve protection and consolidation.

Active defense. Defenders should be prepared to counterattack to conquer lost ground, especially if it is vital to the defense. The best time to counter-attack is when the enemy has just finished his own attack and is trying to reconstitute or consolidate his position. This is the time of maximum vulnerability for an attacker. In business, companies should always counterattack thrusts by competitors. If a competitor introduces a similar product, then they should be prepared to stay ahead of them by introducing an improved version of theirs immediately after the competitor has introduced his copycat product. The competitor either must innovate faster than the incumbent or lower his prices. In both cases, margins are much lower for the newcomer and he will therefore remain more vulnerable to continued aggressive moves by the incumbent.

Richard Martin is founder and president of Alcera Consulting Inc. He brings his military and business leadership experience to bear for executives and organizations seeking to exploit change, maximize opportunity, and minimize risk.

© 2010 Richard Martin. Reproduction and quotes are permitted with proper attribution.

Research in Motion (RIM) is the world’s number one provider of secure data communications for corporate clients. Their systems are so secure that governments in many countries rely on them for their own mobile data and voice needs. In fact, some countries find their services so secure that they threatened to shut down RIM’s operations unless they could get access to the traffic for their own dubious purposes. I’m talking UAE, Indonesia, etc. Not exactly paragons of democracy or stability.

Here’s the thing though; you wouldn’t know RIM is the corporate security leader from their actions in the last few years. Instead of building on what has been an almost unassailable position in secure communications, the company has chosen to focus on the gadget that first got them into the corporate arena in the first place, the Blackberry. But now, Android developers and Apple are starting to make inroads into the corporate market by offering what they claim is a similar level of security. Only time will tell if that’s true, but if I were RIM, I would be seriously concerned about that, not about whether their latest version of the Blackberry (What’s it called again?) has made some minute gains against Android and iPhone.

Message to RIM: It’s the secure communications that you should be building on, not the gadget. Wake up before it’s too late!

Richard Martin is founder and president of Alcera Consulting Inc. He brings his military and business leadership experience to bear for executives and organizations seeking to exploit change, maximize opportunity, and minimize risk.

© 2010 Richard Martin. Reproduction and quotes are permitted with proper attribution.

Blockbuster’s bankruptcy shows that its business was built around a narrow definition of its value. Blockbuster defined itself as a chain of video rental stores. Blockbuster experimented with larger locations that offered a variety of in-store entertainment experiences, but this just showed that customers didn’t care to hang out in a glorified arcade, when all they wanted was to rent a video for an evening. Netflix, on the other hand, provides the possibility of watching a video without leaving the couch to order it. Now that Internet downloading and streaming are feasible and cost effective, customers can use their existing computer and Internet connection to watch a video. Smart phones also provide another means for downloading or video streaming.

I predict that as long as Netflix remains flexible about its methods of distribution, it will continue to be successful. If, however, it becomes enamoured with one method in particular, it will probably experience challenges similar to Blockbuster’s.

Richard Martin is founder and president of Alcera Consulting Inc. He brings his military and business leadership experience to bear for executives and organizations seeking to exploit change, maximize opportunity, and minimize risk.

© 2010 Richard Martin. Reproduction and quotes are permitted with proper attribution.

The presence of Enbridge CEO Pat Daniel on the front lines of the pipeline spill in Michigan apparently has some people stumped. Why is he spending so much time in Michigan, talking to people and making sure the right information gets out? Shouldn’t he be in Calgary? Isn’t that micromanagement?

It’s simple really. Pat Daniel understands the driving force behind Enbridge’s business: its pipeline network. Without pipelines, Enbridge’s business model basically disappears. After all, the company exists to distribute oil and gas through pipelines. There are other activities, but that’s pretty much its business.

The spill in Michigan, and what appears to be a smaller spill in Illinois last week, potentially threaten the viability of the enterprise. That’s why the CEO has to be on the front lines, leading and managing the situation, to make sure that it gets resolved quickly and satisfactorily for all stakeholders. If they get it right, they increase their chances of continuing their strategy of investing in new lines to ship Alberta oil to the U.S. Failure in this endeavour would endanger the whole business.

Richard Martin is founder and president of Alcera Consulting Inc. He brings his military and business leadership experience to bear for executives and organizations seeking to exploit change, maximize opportunity, and minimize risk.
© 2010 Richard Martin. Reproduction and quotes are permitted with proper attribution.

Last week Canada’s biggest life insurer Manulife announced a major quarterly loss due to the poor stock market and low bond yields. Most of the analysis and management commentary centred on the hope that the markets could rebound favourably to Manulife. Some claimed that this wouldn’t have happened in the U.S., because they don’t have to follow the same accounting rules, as if that changes the underlying reason for the loss.

My take is that those Canadian rules are in fact uncovering the company’s potentially high-risk position. This seems to be affecting other top Canadian life insurers, though apparently not to the same extent. The real question, though, is this. Why is a major life insurer in the position of showing a loss due to poor stock and bond portfolio decisions? Manulife is a life insurance company; isn’t its capital supposed to be safe?

Of course, these are just accounting rules, but when the financial crisis started in 2007, it started with adjustments due to accounting rules showing that there was something fundamentally wrong. Would hedging and other “risk management” techniques truly enhance the company’s risk position, or just offset one accounting effect with another? If you go skydiving, you can reduce the risk of injury through proper training, safety measures, and wearing a helmet, but you’re still skydiving. I contend that these techniques might mitigate some of the risks, but they can’t counter all the effects of being improperly exposed to inherently volatile markets.

Richard Martin is founder and president of Alcera Consulting Inc. He brings his military and business leadership experience to bear for executives and organizations seeking to exploit change, maximize opportunity, and minimize risk.

© 2010 Richard Martin. Reproduction and quotes permitted with proper attribution.

How long should it take to change a corporate culture? BP has been struggling to change its safety and risk management culture since at least 2005. The BP board was right to ouster Tony Hayward, because it’s taken too long, with the results we’ve seen in the Gulf of Mexico. The reality is that changes can be almost immediate if the CEO and board back up and support the people in the organization who see what is required to make the change. They have to be ruthless in punishing unacceptable behavior and in rooting out holdouts. They also have to promote and reward supervisors, managers and executives that believe in the new orientation. They must literally lead the charge to change practices and beliefs in the organization, even to the point of correcting minor mistakes and micromanaging initiatives that are critical to the strategic change. That isn’t what is taught in MBA courses on strategic management and leadership, but that is what is required for truly deep strategic change to be successful.

© 2010 Richard Martin. Reproduction and quotes permitted with attribution.