Strategy

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Businesses have bad strategy because leaders act like my two year old son

As I mentioned yesterday, I’m re-reading Richard Rumelt’s book, Good Strategy, Bad Strategy. I know a book is really good when I can re-read it, and feel like I’m learning just as much as I did the first time. That’s certainly the case with Good Strategy, Bad Strategy. In chapter five, The Kernel of Good
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Why artificial intelligence can't design strategy

I’m re-reading Richard Rumelt’s book, Good Strategy, Bad Strategy. I love it. I can’t recommend it highly enough. In chapter five, Rumelt talks about the importance of diagnosing the most important challenge facing the company. He uses Starbucks in 2008 as an example. Sales were flat. Return on assets was falling. Different executives had different
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Large businesses circa 1900 grew in very familiar ways

In his book Strategy and Structure, Alfred D. Chandler, Jr., outlined the three most common ways that large businesses grew circa 1900: After 1900, the large industrial enterprise met the needs and opportunities of an economy growing more urban and more technologically advanced through three types of strategies. Growth came either from an expansion of
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What does an executive do? An answer from 1962

Yesterday I found a recommended reading list at Strategy+Business. One of the books on that list was Strategy and Structure, by Alfred D. Chandler, Jr.. It was published in 1962, and is freely available online. Strategy and Structure is a 488 page dive into the structural evolution of four large companies: DuPont, General Motors, Standard Oil
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Razors and generic drugs - the yin to innovation's yang

Yesterday, Unilever announced its purchase of Dollar Shave Club, reportedly for $1 billion. The rationale is clear. Dollar Shave Club avoids the huge fixed cost structure that Proctor & Gamble (the parent of Gillette) has. Without a huge fixed cost base, Dollar Shave Club can charge less for their razors.  On top of the price advantage,
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A quick look at DuPont before the Dow merger

Yesterday we looked at the business of Dow Chemical, before its upcoming merger with DuPont. Today, let’s flip the script, and peer into DuPont’s business. As we covered yesterday, Dow is the better performer. It’s larger and more profitable. One of its segments, Performance Materials & Chemicals, is a cash cow that funds deep investment
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Pharmaceutical companies can learn something from Apple

I read an article recently from Strategy and Business called “Pharma’s Identity Crisis”. The authors gave a high-level take on what  pharmaceutical companies must do to keep up with a rapidly changing market. Here’s one bit I found interesting: But pharma companies don’t have much experience in the delivery of care. In addition, generating positive
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United's big turnaround plan? Do what every other business does

United Airlines is less profitable than its major competitors, American Airlines and Delta Airlines. According to their most recent 10-Q filings, here’s how the three companies stack-up, in terms of operating profit: Delta Airlines: 16.6% American Airlines: 14.1% United Airlines: 7.9% As you’d imagine, this profitability gap is a big problem for United. It’s hard
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LG's two-pronged growth strategy

Bloomberg published an article on Sunday titled “LG Ponders Home Appliance Deals to Speed Up Global Expansion”. The story highlights the importance of market segmentation. It also gives you an idea of where large companies look for growth. LG’s increasingly important decision about which customers to target On the market segmentation front, you have an
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Sears executives show why talking about business can be meaningless

Executives rarely give you interesting information when they talk about their companies. They rely on jargon and platitudes they know will play well with investors. I’m painting with a broad brush, but if you read enough press releases, or listen to enough earnings calls, you’ll see how rare an interesting comment is. An example where
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