The

Operational Excellence
Consulting
Method
Strategy management

Strategy Management
Vision Strategic competitive advantage (SCA): patent,
install base, image/branding, disruptive/innovative
Mission technology, …
Strategy

Project are launched from a current situation ‘AS-IS’ E.g. innovation (new service/product/market)
in order to obtain a desired future situation ‘TO-BE’
Organization Projects Portfolio
Business
management
Products/Services Selection of projects is based on benefits of the
Selection ‘Business Case’ (quality, performance, status,. ..)

Operations Detailed operations Project Projects

=> generates value management

Function Resources Role

 Strategy Management
Vision Strategic competitive advantage (SCA): patent,
install base, image/branding, disruptive/innovative
Mission technology, …
Strategy

Project are launched from a current situation ‘AS-IS’ E.g. innovation (new service/product/market)
in order to obtain a desired future situation ‘TO-BE’
Organization Projects Portfolio
Business
management
Products/Services Selection of projects is based on benefits of the
Selection ‘Business Case’ (quality, performance, status,. ..)

Operations Detailed operations Project Projects

=> generates value management

Function Resources Role

What is Strategy Management ?

Strategy is to prepare systematically plans for the future in order to interact to new emerging
trends and changes in the wider scope of the company with special attention to avoid rigidity,
because the past is not equal to the future.

– “Wide scope of the company” : Companies are open systems : input side for resource seeking
and output side for market seeking (system dynamics!)
– “Avoid rigidity” : New events, new knowledge makes that the original strategy is no longer up
to date
– In general, strategy arises incrementally: “What are realistic objectives with current
characteristics of the context and future trends?”

Predictability is key for making strategic plans and investment decisions in the long run. Planning,
with hard data and soft data (tacit knowledge), is easier in stable environment. However in the
long run a small change in wide scope of the company could escalate dramatically due to system
dynamics.

Besides predictability, there is also legacy: most big companies have legacy to carry on while small
companies (e.g. Fintech) start from a clean sheet and are flexible, focused, motivated and can “do
more with less”.
For building and accumulating a “strategic competitive advantage (SCA)” a consistent flow of
investment is needed in order to obtain desired level of accumulation.
A “strategic competitive advantage (SCA)” can be a patent (intellectual property), a customer
install base, a certain image or branding in the mind of the customers, a new disruptive or
innovative technology, … and is the result of a strategic decision in investing a consistent flow and
stock.
– Stock – flow diagram : “Success breeds success”
For example: (1) a consistent investment in R&D will give a bigger stock of knowledge/competence
than the double investment in half of the time. So speeding up the investments will not give the
same stock at a certain moment. (2) a consistent investment in advertising will give a bigger stock
of reputation/image/branding than the double investment in half of the time.

Inflow Stock Outflow

great great
time time
lag lag
Inflow or Cumulative result Outflow or
investment are of the inflow. This depreciation of
immediately “stock” or knowledge
adjustable knowledge is not
immediately
adjustable (time
lag!)
Making strategic decisions involve resource commitments for future profits (and not volume) that
are irreversible : For example: company decision to drop a product/service, or company decision
to move production to low-wage countries, …).
However, strategic decisions have an impact on the system (“wide scope of the company”) and
due to system dynamics, there can be a reaction from others (with some time delay).
Crisis arises if eventually there are no profits made in the future.

How to start building a strategy plan ?

“Ambition pulls the future to the present and strategic planning is the road from the present to the
future. “

Building a strategy depends on : (1) phase of industry/product-life cycle, (2) B2B or B2C market , (3)
changes in consumer habits, (4) level of import in the market, (5) cluster/concentration of
companies, (6) changes in technology, (7) uniqueness of the offered product/service, (8)
consumer buying repeatedly/frequently or one-time
– Industry/Product-life cycle :

High
Market / Consumer demand
Low

Introduction Growth Maturity Decline

Time

1. Identify the “core competence” of the company (via SWOT-analysis) :

Core competence of the company has produced the success in the past and will generate a solid
capability/competence for future success
– SWOT-analysis:

Strengths Weakness
Current ……………….. ……………….. Current
characteristics ………………... ………………... characteristics

………………… …………………

Opportunities Threats
Future Future
trends ……………….. ……………….. trends
………………... ………………...
………………… …………………

2. Strategy fit : the combination between the “product and target market”:

Which of our products/services are served where in which market ? (market can be a geographic
region or it can be a market of a certain lifestyle) : “Where are we in currently? Where should we
be in for the future?”

Combination between the “product and target market” depends on (1) the long-term
attractiveness of the market, i.e. growth and (2) the company’s strength, i.e. market share.
– BCG-matrix : Market Attractiveness (future growth) vs. (current) Market Share

(1) Calculation of the weighted average of multiple factors collectively determine the
attractiveness of the market (e.g.: long run growth rate, industry size, barriers to entry, supplier
power, changes in demand, trend of prices, seasonality …)

(2) Calculation of the weighted average of multiple factors concur to determine the
competitiveness of the company (e.g. : total market share, brand strength, customer loyalty,
market share growth, strength of value chain, level of product differentiation, …)
Low Market attractiveness (future growth) High

Question Mark Stars

Market at growth
Market at introduction
phase of industry-life Mature market
of industry-life cycle
cycle generates stable
revenues which can
be investment in the
new but risky markets
Dogs Cash cow for the future
Disinvest Mature market

Low Current Market Share High

In the wider scope of the company, one important parameter is the competition.

How to build a competition strategy ?

Compare the “strategic competitive advantage” of the company (can be a patent, install base,
image/branding, new disruptive/innovative technology, … ) with the critical success factors of the
market. Critical success factors are rules of the game to be in the market (usually of vital
importance for the consumer to buy the product/service). For example critical success factor in the
clothing industry is fashion, in the computer industry is CPU power, ….

Options :
1. Low cost strategy (operational excellence) consists offering a ‘basic’ product or service (it does
what it has to do). Economies of scale (and market share) can be achieved by mass production
in order to spread fixed costs. Usually attention on removing waste that has no perceived
value for the consumer. Also robotisation and automation.

2. Differentiation strategy (product innovation) : offering a product/service with different

features (or bundle package) that is perceived as “unique” by the customer due to certain
“associations” in the mind of the customer. Marketing creates an image where “the perceived
value” is higher than “what client pays for”. Usually the perceived quality by the customer
makes that the company is less exposed to low cost strategy of competitors.

3. Focus strategy (customer intimacy) is targeting a very specific (and structural) need of the
customer.
The “first mover” in the market has an advantage and sets the industry standard and establishes a
customer install base or a customer loyalty foundation.

However success is not guaranteed because mostly due to network effects. Becoming the industry
standards requires a critical mass (a certain level of threshold should be passed).

Next to that, a follower can easily copy the quality and the technology of the “first mover” and
avoid “learning time/costs”.

– Strategy for growth and expansion :

Current Product Future Product

Current Market
Market Product
penetration expansion

Future Market Market Diversification

expansion
 – For analysing the wider scope of the company  Porter’s 5 Forces Model : “for each force who
has more power and who is more vulnerable”. Internet has dramatically changed the 5 forces
with more power for clients (less stickiness of the clients).

1. Clients (output side) have more power when:

2. Suppliers (input side) have more
power when: there are few suppliers,
when only few substitution
possibilities, when supplier has a
wide range of customers, when
company is a small buyer from the
supplier, when the company has
huge switching costs to another
supplier, when supplier decides to
“go to market” instead of supplying
4. Competitor threat (future entry like
innovative start-ups) when : market
has low capital barriers, low switching
costs, low initial investment,
government incentives, strong
distribution channels, easy access to
resources, high location advantage,
easy to copycat, no lock-out
possibility. Company has low loyal
clients, low branding, low economies
of scale
Clients are sensitive to price increases of ‘basic’
products/ services, when there is low switching
costs to another platform, when there is a low
buying habit of client, when the client is vital for
company’s revenue, when company itself has high
fixed costs, when the client decides to make
instead of buying, when all clients form one group
Company
 To secure
against threats and
find opportunities
3. Substitution threat when:
Interesting “price-quality” ratio. So if
there are substitution possibilities,
the maximum willingness to pay by
the client is much lower. Competitors
within sector could improve their
“price-quality” ratio or competitors
from outside the sector with high
profit margin could enter the market
with a new business model
5. Hostility (current competitors) :
Rivalry when numerous and different
competitors, when few competitors
control 80% of market, when
products/services are standardized,
when decreasing/change of consumer
demand, when mature market, when
high fixed costs, when sunk costs (exit
barrier), overinvestment in the market

6. General environment (PEST) is complex (due to numerous and different factors) and
dynamic (due to frequent changes and period of unpredictability). PEST = Political (laws),
Economical (market size), Socially (human capital), Technology (industry-life cycle) + culture
(lifestyle) + environment (nature) + demographics (elder)
How to benchmark and measure performance of a chosen strategy ?

1. Identify Strategic Groups : Strategic groups are a group or category of companies within the
same market industry for which the conduct of strategy is closely similar.

The division of groups is based on perceptions of the client on the characteristics of the product or
service. E.g. category of top companies of the same sector, category of average companies of the
same sector, category of local companies of the same sector, ….

Example of analysis at strategic group level:

1. Future trends
Price evolution, legal,
digitalization, robotisation,
specialization, diversification,
…

3. Strategic Options 4. Strategic Decisions

2. Financial • Continue as-is
• Operational Excellence
performance analysis • Consolidate
• Customer intimacy
per strategic group • Specialization
• Product Innovation
• Merger Acquisition
2. Competition analysis : benchmarking of own critical success factors (‘rules of the game to be
in the market’ like CPU power for computer industry or fashion for clothing industry) versus
critical success factors of the strongest competitor

Other benchmarking variables that can be used for comparison with the strongest competitor:
profits, growth, financial, manpower, R&D, modernisation, production,…

3. Balanced scorecard : a tool used to translate mission and strategy into indicators and
concrete, measurable initiatives that will be monitored.

Mission – What we do

Values – What we believe

Vision – What we aspire to be

Strategy – How we accomplish our goals

Strategic objectives – What we have to do

Criteria – Indicators of our progress

Objectives
– Measurable state we want to
reach
Initiatives – Concrete actions we launch to
get there
4. (Real-time) monitoring of the strategy implementation:

– Example of balanced scorecard at company level :

Useful for benchmarking however the four angles are interrelated which makes a lot of indicators.
There are interactions in between. There are leading indicators and lagging indicators.

Customer Innovation & Learning

Delivery time, after sale Manpower, IT system,
service, complaints, …. procedures, ...

Initiatives Initiatives
Targets Targets
Measures / action Measures / action

Objectives Objectives

Financial Internal Process

Cash flow, profit, ROI, Operations, processes, service,
turnover, productivity,… …
Initiatives Initiatives
Targets Targets
Measures / action Measures / action

Objectives Objectives
– Goal is to link the critical success factors (‘rules of the game to be in the market’) with relevant
processes/activities of the company. The linking can be done by finding those variables that
can be adjusted and directed in the right direction.

– KPI is a “early warning system” : A KPI (Key Performance Indicator) is connected with initiatives
so that measures or actions could achieve a target. The number of KPI (a lot or very few)
depends on “statistical principal component analysis” by reducing the number of
correlated/associated variables.

– Scorecard (snapshot) : is a cross-functional analysis of KPI in order to achieve a strategy

– Dashboard (real time) : is a scorecard on operational level : visual representation of the most
important information that is necessary in order to achieve an objective. It can be a single
screen display: e.g. operating a machine. Managers aggregate the data and analyse relations
between the root cause and the consequence

– Management reporting can also be used for monitoring the strategy implementation.
Examples reporting on motivation, productivity, forecasting, governance, strategy,
markets/segments, clients, brand image, characteristics of consumer.
– Basics of corporate finance:
Using for

Liabilities (equity/capital) Assets (components)

Turnover

Ratios:
– Liquidity: short-term obligations:
𝐴𝑠𝑠𝑒𝑡𝑠<1 𝑦𝑒𝑎𝑟
=
𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 <1 𝑦𝑒𝑎𝑟
– Profitability: profit margin
=
𝑃𝑟𝑜𝑓𝑖𝑡 Capital needs
𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟
– Leverage: use of debt (pay interest)
Working capital (assets < 1 year) for accounts payable <1year
to acquire additional assets (make
profit)
Fixed capital (equity, loans …)
– Solvency: long-term obligations:
𝐴𝑙𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 Time
=
𝐴𝑙𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
For example, a company with $2 million in total assets and $500,000 in total liabilities would have
a solvency (or debt) ratio of 25%.
Evolution of ratios in time :

𝑃𝑟𝑜𝑓𝑖𝑡
– Return On Investment ( ) decreases over time when market is in maturity
𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

– Quality has a positive impact on ROI due to repeated buying and less price sensitivity of the
consumer.

– ROI is low in start ups with small market share and high investment in R&D.

– High ROI is when full production capacity is used and market is concentrated in few
companies.

𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡
– ROI is low when high capital intensity ( ). Capital intensity leads to less
𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟
profitability (is more an exit barrier than an entry barrier). However low capital intensity and
high capacity usage leads to high ROI.

– High capital intensity and high marketing intensity leads to low ROI

– Market share is an indication of performance (profit) and not of concentration/cluster

Strategic advantage of Location
• Some regions are attractive due to concentration of companies, e.g. Silicon Valley (in San
Francisco) where the biggest tech companies are clustered.
• In many regions or cities around the world, the same agglomeration effects are being
observed due to “clustering dynamics”, meaning a successful or innovative entity such as a
company, university, harbour, … attracts and enforces a chain of positive and cumulative side
effects. Example :
– Clustering dynamics are usually triggered by a successful or innovative entity (companies,
universities, harbours, … ) when they have influence outside the agglomeration or region
through “export”
– This region serves as a magnet for other smaller companies and business.
– This concentration of companies in the region then creates a dynamic that benefits all players on
input side (resource seeking) and on output side (market seeking).
– Importance of an attractive region (location advantage) depends on its characteristics :
Accessibility, market size of the area, labor market, production structure, vitality or dynamics of
the region, sufficient qualitative business locations, administrative power, administrative culture,
image of the area, attractive location in relation to the area that it serves

Industry/Product-life cycle also applies to regions :

– Example: the successful or innovative entity can decline in time if the same product/service is
standardized and produced in low-income countries.
– Eventually that specific region can decline as well with high unemployment rates. The chain of
effects is now reversed in negative way (negative cumulative side effects).
Market / Consumer demand

Introduction Growth Maturity Decline

Time
How to select a location ?

Tools for location analysis : input side (resource seeking) and output side (market seeking)

– Scenario analysis of the region : Trend analysis of the characteristics over time

Reflection of possible trends and description of a scenario with ‘early warning systems’. Trends can
be “in line with the past” or be “opposite of the past”

Examples of trends in a region/cluster : world wide supply chain, local demand, customer intimacy,
customization/personalized, trend setting city vs followers, flexible labour market “24/7”, division of
workers and disadvantaged people, division of attractive region and neglected/abandoned country
side

– SWOT-analysis of region : Strengths Weakness

Current ……………….. ……………….. Current
characteristics ………………... ………………... characteristics

………………… …………………

Opportunities Threats
Future Future
trends ……………….. ……………….. trends
………………... ………………...
………………… …………………
– Porter’s diamond model

1 – Resources (input)
Despite globalization, the importance of agglomeration or region is increasing. Companies rely on location-specific
factors, like skilled workforce, energy, commodities, natural resources, culture, nature, education, ICT, infrastructure, …

2 – Market demand of consumers (output)

Transferring domestic demand into international demand, sophisticated domestic demand for innovation, size of
demand in absolute numbers matters.

3 – Related and supporting industries

Network of companies: international companies work together with local national companies and transfer knowledge
Competition (culturally or government) that benefits resources via training, capital markets, management, …

4 – Firm strategy, structure and rivalry

Innovation reward and strong competition

– Clusters are formed due to competitive sectors/markets. Government policy is also

important: Policies that support the positive dynamic of a cluster (free market, support
resources, high standards/quality).
– However there can be disruptive changes  for example : unexpected new technologies or
inventions or war.
– Strategy for sustainable growth as opposed to tactical “short-term” view . Taking strategic
decisions while it shouldn’t be the case, for example relocation of company in reaction to
foreign exchanges rates fluctuations or ending of temporary government incentives,
Strategy for International Business
– Companies overestimate the ability to transfer internationally its Strategic Competitive
Advantage “SCA” (patent, customer install base, image/branding, new technology, …). This
because of the cultural, economic, institutional (in emerging economies!) and spatial distance.

– 3 types of international companies : (1) export-oriented of the home country preferences, (2)
multi-national with focus on national preferences and (3) global company who serves the world
market (world wide preference)

– Success is mostly due to advantage of a favourable local environment : settle in an attractive

cluster in a region and entering the local scientific community. Choosing to be present in a
cluster for not only market seeking but also seeking resources or knowledge by becoming an
insider of the cluster.

– Objective within the cluster should remain to upgrade its SCA with newly accessed local
resources : (1) allow initiatives from bottom-up, (2) tacit knowledge (the way of thinking,
brainstorming, insights, taking strategic decisions,…) is difficult to access but important.
However sometimes there is resistance from headquarter : “not invented in here”

– “Globalization of markets” makes no longer need for customizing to cultural preferences. Due to
technology, price and quality are more important. Even small local niches are not safe for global
approach. However customizing could be a strength (a type of customer found across different
countries).
1. Operationally: 24/7 order-taking, customer service, customs-handling expertise, foreign
marketing

2. Distributors : often companies sell in foreign markets on a unplanned way. Initial use of local
distributors is to reduce costs and minimize risks. Companies remain too long in the “initial
entry phase”.

However selection and relationship governance with distributors may avoid problems (e.g. buy-
back price depends on profit margins instead sales volumes). Select location and then select
suitable distributors (the largest who already distribute competing product lines is not the best).
Keep independent, local distributors in the long term, even after own local network. Don’t
delegate marketing strategy to distributors.

3. Alliance / Joint Venture : opportunity to upgrade its own Strategic Competitive Advantage by
forming an alliance or joint venture on solely the wanted tacit knowledge of the partner.
However the best alliances on the surface may be the most vulnerable in reality because of
risk by the partner to replicate and enter market on its own. The multi-national is likely to win
any “learning race”.

4. Mergers/Acquisitions is a method to (1) acquire competences/platforms/businesses, (2) to

have a more power in Porter’s 5 Forces model, (3) to reach critical mass (economies of scale
or market share).
Sometimes integration of the two companies is sometimes difficult due to low synergy
benefits.
Product management

Strategy Management
Vision Strategic competitive advantage (SCA): patent,
install base, image/branding, disruptive/innovative
Mission technology, …
Strategy

Project are launched from a current situation ‘AS-IS’ E.g. innovation (new service/product/market)
in order to obtain a desired future situation ‘TO-BE’
Organization Projects Portfolio
Business
management
Products/Services Selection of projects is based on benefits of the
Selection ‘Business Case’ (quality, performance, status,. ..)

Operations Detailed operations Project Projects

=> generates value management

Function Resources Role

 Vision
Mission Strategy Management
Strategic competitive advantage (SCA): patent, install
Strategy base, image/branding, disruptive/innovative technology,
…
Project are launched from a current situation ‘AS-IS’ E.g. innovation (new service/product/market)
in order to obtain a desired future situation ‘TO-BE’
Organization Projects Portfolio
Operations Business
management
Products/Services Selection of projects is based on benefits of the
Selection ‘Business Case’ (quality, performance, status,. ..)

Detailed operations Project Projects

=> generates value management

Function Resources Role

Strategic Marketing : Advertising is a strategic investment. Continuity of advertising is key.
– Stock-Flow diagram :

Inflow Stock Outflow

great great
Inflow or time Cumulative time
investment lag result of the lag Outflow or
are inflow. depreciati
immediately on of
adjustable knowledge

How ?
1. Attract consumers from top market leaders and develop them into your loyal customers.
2. Client relation marketing in order to become the best structural partner of the client.
However the top 20 % best clients are not always the most loyal clients (perhaps they are also
big clients at competition as well).
3. Positioning of the product/service happens in the “mind” of the consumer.
4. Differentiation strategy of the product/service (that is perceived as “unique” by the consumer)
by making certain “associations” of the product/service

Those associations that are made in the “mind” of the consumer, are appealing to deeper motifs of
the consumer : For example certain social objectives (like getting in touch with other people), a
certain self-image (like a luxury lifestyle), certain values (like healthy or environmental issues) ,…
Voice of Customer  identify client’s needs : reactive via complaints or proactive via
benchmarking

Pleasing Expressed Underlying

function (A) desire (B) desire (C)
……………….. ………………... ………………...
………………… ………………… …………………

What is the perception of the product/service by the customer. For each feature ask the customer
2 questions :
–How would they feel if a feature (or association) “Was present”
–How would they feel if a feature (or association) “Was Not present”

4. Market segmentation:
– Consumers group that generates high profits (at the introduction phase of the life-cycle)
– Consumers group that are committed on the long run (at the growth phase of the life-cycle)
– Consumers group that have low switching costs (=low stickiness) and easily change their
buying habit (at the maturity phase of the life-cycle)
– Consumers group that have influence on others (at the decline phase of the life-cycle)
Market segmentation into “groups of consumers” :

– Based per characteristics of the consumer or the lifestyle of the consumer

– Based per characteristics of the product/service

Marketing mix “the 4 P’s”

Product/Service
• Characteristics of product/service
• Quality : performance, features for
intended use, reliability (no defect),
conformity (standardized),
sustainability, user support,
aesthetics, perception)
• Product range : different features for
each product-life cycle phases
• Growth phase: new products
needed to accelerate acceptance
Price
• Cost-plus pricing
• Consumer-demand based pricing
via price sensitivity analysis or
conjoint analysis: per segment, per
time, per location
• Competition based pricing : higher
price if “content” is different

Promotion
Place
• Communication
• Advertisement needed to accelerate
• Location advantage
acceptance
• Distributor
• AIDA : attention, interest, desire,
action
• Social media / influence
How ?

Positioning of product/service happens versus (1) other market segments and versus (2) other
competitors within the same segment.

Positioning is done by cluster analysis with 2 axis : “perception by appearance” versus “segment of
characteristics of the product/service”

perception by
appearance

segment of characteristics
of the product/service

Re-positioning is needed when there is a “subjective brand image”. Objective is then to change
this “belief” of the consumer.
How to get the maximum from a customer ?

– “Acquisition” of a customer  ask existing costumers to “recommend a friend”

Also, software like “Salesforce” or advertising “from communication to conversation” : “paid
advertising” is towards strangers, “owned advertising” is with customers and “earned advertising”
is with fans or ambassadors

– “Satisfaction” and “retention” of a customer  maximize by asking to use a loyalty card

Also deliver additional services or deliver a product/service that answer the customers’ needs

– 100 % “Share of Wallet”  a customer is completely loyal to a business and does not spend
any € with any competition brand

“people also bought these related products”

Upselling : Induce customer to purchase more expensive items, upgrades, or other add-ons in an
attempt to make a more profitable sale. Can also be simply exposing the customer to other
options that were perhaps not considered previously.
Cross selling : related products or additional complement products
Segment Migration : e.g. retail product to professional product
Product bundling
Cannibalization
– Win Back a customer  “How can I win my ex-customer back”
Maximize by “promotion or reduction” when customer comes back

– Unhappy customer  “Understand why I loose customer and try to control this flow”

– Missed opportunities  “Why does some customer prefer my competitors?”

Some marketing trends:

– Trend towards nice moments and enjoyable experience in a specific and enjoyable setting :
e.g. coffee on San Marco Square in Venice
– Trend towards internet of things and wearable's
– Gamification : Customer engagement by “application of game elements” (like challenges,
missions, competition, reward, badges and leader boards) to non-game contexts. These game
elements leverage our love of competition and reward, and use it to encourage certain
actions.
– Example of encouraging safe driving style : Lottery to win a cash prize which is paid from the
fines from people that don’t keep to the speed limit.
– Example in companies : Manager can give for specific behavior points. Employee compete for
trophies and badges.
– Example in marketing : a personalized dashboard for consumers displaying bonus rewards for
completing an action (social media share or paying with their registered loyalty cards).

Some market trends:

– Concentration effects (even monopolies in some industries like Amazon)
– Entry barriers to access the users of a platform (which is the target market)
– Retaining a ‘consumer habit’ by controlling online traffic
Big tech companies like Google or Facebook are increasingly becoming gatekeepers. Other small
companies need to pay “a toll” in order to access the users of a network of the big tech company
and thus the market.
Due to changing lifestyles, habits, competition,… the role of the product manager is important :

– Being the messenger of the market, delivering information to the departments that need
market facts to make decisions.
– Serves as a customer representative in planning and requirements definition (i.e. come up with
a valuable proposition for the customer that fits target’s expectations of functionality, pricing,
accessibility, etc.… of a product ).

How ?

Creating a “Product brief” :

– Defining the what and detailing the target audience
– Giving context on market positioning (product/service may create an entirely new market
segment, but most of the time it will compete against other, similar products within an existing
segment)
– Indicating success criteria : when can we say that we have reached our goal : e.g. brand
impact, sales, downloads, engagement, etc.
– Build a minimum feature set that brings a valuable proposition to life and allows testing it with
customers and partners. The concept allows to efficiently test the interest in a product before
building it entirely (pilot project, prototype of alternative valuable propositions, defining
scenarios)
Before starting a project, a “Business case” needs to be made for decision making :

A Business Case captures the reasoning for initiating a project or support decisions to invest in a
service/product (a project/initiative of a new product/service or its improvement)
 Business Case determines if the project(s) should be undertaken

The logic of the business case is that, whenever resources such as money or effort are consumed,
they should be in support of a specific business need.

Build a business case to evaluate options, not justify a position.

How?
– Define the costs and expected benefits of the project(s)
– Reasonable set of alternatives to realize the opportunity if project not undertaken
– What are the objectives with current characteristics and future trends?
– Data search: internal (product positioning, cost drivers) & external (market trends, …)
– Financial analysis : Revenue streams
– Implementation and ongoing cost : operational expenditures (OpEx), capital expenditures
(CaPex)
– Describe the risks
– Calculations :

(+) Revenues
(-) Operating Expenses
= EBITDA (Earnings before interests and taxes, deprecation and amortization)
(-) Amortization (of CapEx)
= EBIT (Earnings before interests and taxes)

Revenues stream assumptions  market share x price (price per click, royalties, …)
Costs stream assumptions  cost of goods sold in the future, and “infrastructure or maintenance
costs” for keeping the lights on

Understand that there are many uncertainties about the future :

– Use of “Scenario analysis” with early warning system.
– Identify “risks” and write a mitigation plan

– Evaluation :
Which is the present value of the investment?  Net Present Value (NPV)
When do I reach the breakeven point?  Pay Back period
Is the investment worth doing?  Internal Rate of Return (IRR) or Return on the Investment (ROI)
Project management

Strategy Management
Vision Strategic competitive advantage (SCA): patent,
install base, image/branding, disruptive/innovative
Mission technology, …
Strategy

Project are launched from a current situation ‘AS-IS’ E.g. innovation (new service/product/market)
in order to obtain a desired future situation ‘TO-BE’
Organization Projects Portfolio
Business
management
Products/Services Selection of projects is based on benefits of the
Selection ‘Business Case’ (quality, performance, status,. ..)

Operations Detailed operations Project Projects

=> generates value management

Function Resources Role

 Vision
Mission Strategy Management
Strategic competitive advantage (SCA): patent, install
Strategy base, image/branding, disruptive/innovative technology,
…
Project are launched from a current situation ‘AS-IS’ in E.g. innovation (new service/product/market)
order to obtain a desired future situation ‘TO-BE’
Organization Projects Portfolio
Operations Business Projects
management
Products/Services
Selection Selection of projects is based on
benefits of the ‘Business Case’
Detailed operations Project (quality, performance, status,. ..)

=> generates value management

Function Resources Role

– A Project is a temporary attempt undertaken to create, adapt or stop a unique product or
service. There is a clear definition of what needs to be delivered. It has a start and an end, it is
temporary, and it is resulting in something unique and is outside of normal operations.

– A project life cycle is a collection of generally sequential and sometimes overlapping project
phases.
Cost / effort level

Pre-project Project Plan Carrying out project Closing

Time
 Pre-project

– Feasibility study of the project

– Budget Range and estimations
– High level planning
– High level scope
– High level requirements

Start of project management : Project Plan

– Project management plan is the project baseline (budget baseline, scope baseline, schedule
baseline). Progress will be measured against the baseline (are we on track ? time? budget?).

Carrying out project

– Quality assurance on budget, scheduling/timing, governance, risks, reporting, communication,
resources, documents, outsourcing, change
– If it is not a one-time project, then the procedure must be standardized.

Closing

– Performance indicators
– Lessons learned
Steps for the project manager:

1. Understanding the context. What is the strategy behind this project. What is the need or
business problem/issue? What are the objectives and the success criteria of the project?
When can we say that we have reached our goal ? What is the relation between the
objectives and the means at your disposal (what is needed to do the project and what is the
action plan to develop the missing skills or knowledge) ? What is the level of hostility of the
environment?
2. Setting up logs of the business problem/issue to measure the problem
3. Defining the scope by gathering data via interviews or brainstorming
4. Define a project plan with phases (1) analysis phase of current situation “as-is”, (2) proposed
solutions phase for the “to-be” situation, (3) implementation phase, and with room for
uncertainties (contingency)
5. Setting up early warning systems (KPI)
6. What are the risks ? What is the action plan against it? Risk is a feared event that is not
predictable. Every risk has a level of probability and a level of impact.
7. Carrying out the project : making the deliverables (e.g. coding, development, definition of
parameters, interface, documentations, testing, prototype, end to end test), communication
of it and provide feedback to client.
8. Project closing: handover, presentation, training.
– Problem solving techniques :

1. Understand the business situation and make a list of the issues with the current situation in
well defined activities (organizational issues, cultural issues, personal issues)  “as is
situation”
2. Define the most feasible solution or the requirements for the solution  “to be situation”

Requirements describe how to develop and specify pieces of work in enough detail to allow them
to be successfully implemented by a project team (work breakdown structure)

How?

Desk research, Interview, Job-shadowing, PowerPoint, ARIS, Excel, Word, Diagrams, …

Use “Business Process Modelling” or “Requirements analysis” or “Business Process Improvement”

to find errors and limitations, and fully understand the product or system.

Reverse Engineering : analyzing a product or system to understand underlying processes, data and
rules.
– Brainstorming technique : The 6 Thinking Hats

6 distinct directions are identified and assigned a color for each person. The 6 directions are:

1. Managing Blue – what is the subject? what are we thinking about? what is the goal? Can look
at the big picture.
2. Information White – considering purely what information is available, what are the facts?
3. Emotions Red – intuitive or instinctive gut reactions or statements of emotional feeling (but
not any justification).
4. Discernment Black – logic applied to identifying reasons to be cautious and conservative.
Practical, realistic.
5. Optimistic response Yellow – logic applied to identifying benefits, seeking harmony. Sees the
brighter, sunny side of situations.
6. Creativity Green – statements of provocation and investigation, seeing where a thought goes.
Thinks creatively, outside the box.
– Scheduling technique : sequential order of activities or tasks. Each activity or tasks has : Time,
Resource, Effort, Charge of resource

– Scoping technique :

Business Need

Requirements

Specifications Exclusions

Scope baseline

Deliverables
– Quality standard technique for the project : completeness of the deliverable and associated
work (e.g. change management, document management)

– Quality of the deliverable itself (no defects, error-free):

Checklist of criteria = performance, smooth, responsive, no lags, no dead points, no crash,

compatible, flexible, features for intended use, reliability (no defect), conformity (standardized),
sustainability, user support, aesthetics, perception,…

How ?
1. Quality to prevent defects or errors  a process to go through or a procedure to follow
2. Quality to detect and correct errors  real-time “early warning system”
– A Project Manager manages the project and so the development of the product by aligning
available resources and managing issues and risks. Project Managers aim to maximize quality
and minimize risk. They must balance time, cost, and quality — for example, if the deadline is
shortened, they must either increase costs by adding people on the project or reduce the
scope with less work in order to maintain quality.
Other solution may be to drop a feature, postpone delivery date, increase resources, overlap
in planning, allow occasional overload.

– A Project Manager needs to manage stakeholders for managing expectations of the project for
decisions and roles/responsibilities  technique “power/interest grid” in order to prioritize
your stakeholders
Low Power influence of the stakeholder High

Manage
Keep satisfied closely
Discuss approach No surprises

Monitor Keep informed

Minimum effort Avoid rumour

Low Interest of the stakeholder High

– Communication depends on information nature and on the audience size:

“A picture says more than a thousand words”

Low Information nature High

Public Speech
PowerPoint for ideas
Whiteboard
Sketches

Discussions

Word document
Micro details

Low Audience size High

– PowerPoint technique : “Situation”  “Complication”  “Question”

Situation
Complication
Question

Recommendation/Answer

Main assertion

Detailed assertion

Lowest level assertion

Summary

Next steps

Appendices
 Deductive logic Inductive logic

You must You must

change change
Why? How?

Here’s what is Here’s what is So here’s what you A3 B3 C3

going wrong causing it should do Why?
How?
A1 A2 B1 B2 C1 C2
A1 B1 C1 A2 B2 C2 A3 B3 C3
Slides should tell the story clearly by walking through the titles. The flow of main assertions' slide
titles is your management summary. Keep the slide titles short (limited to two lines)

Story line

TITLE... ...TITLE... ...TITLE

Title slide 4
Logic
flow Title slide 3
Title slide 2
Title slide 1
– A Project Manager needs to manage the risks of the project. Technique “Logging risks with
mitigation plan” :

Feared event Probability Impact Cause

Describe risk level Describe the origin
level
………………... Estimate chances Estimate impact ………………...
………………… ………………… ………………… …………………

Preventive Corrective action Assignee Deadline

action How to correct the event? Who will take care of? When the risk is under control?
How to avoid the risk? ………………… ………………... ………………...
………………… ………………… ………………… …………………
– A Project Manager needs to communicate the overall status of the project and the current
status of different action points (to do).

Example of a status reporting of action points:

Main achievements Planned for next Hot issues +

Project Status
done week (to do) action plan

1. ……………….. • ……………….. 1. ……………….. • ………………..

2. ……………….. • ……………….. 2. ……………….. • ………………..
3. ……………….. • ……………….. 3. ……………….. • ………………..
• ……………….. • ………………..
4. ……………….. • ……………….. 4. ……………….. • ………………..
5. ……………….. 5. ………………..
– Example of a overall project dashboard:

Objectives Project phases Status Risk

……………….. ……………….. ……………….. ………………..
………………... ………………... ………………... ………………...
………………… ………………… ………………… …………………

Hot issues +
Action Status Deadline
action plan

1. ……………….. • ……………….. 1. ……………….. • ………………..

2. ……………….. • ……………….. 2. ……………….. • ………………..
3. ……………….. • ……………….. 3. ……………….. • ………………..
• ……………….. • ………………..
4. ……………….. • ……………….. 4. ……………….. • ………………..
5. ……………….. 5. ………………..
– Example dashboard with indicators:

Indicators can be about:

Planning (progress of the activities identified plan), resources (current and future resources
allocation compared to the plan), risk, critical incidents, bugs quality, budget, scope change
control, perception, user satisfaction, new problem management/change requests, business
continuity danger due to capacity usage.

No Red No Red
AND AND
At least 1 Red general
less than 50% of Orange Equal or greater that 50%
indicators
general indicators of Orange general
indicators

“General Status” is an indicator which is a composite of all indicators for a given area.
– A Project Manager needs to manage the change that will have an impact on the people or
systems when the project is fully implemented.

Change management comes down to dealing with technical aspect of change (skills, IT), human
aspect of change (resources, responsibilities), organizational aspect (procedure, process) of
change.

How?

Technique : ADKAR assessment for change management

ADKAR stands for awareness, desire, knowledge, ability, reinforcement.

Step 1 : map all 5 possible impacts that the project might have by scoring (low-medium-high) per
impacted team :
1. Awareness of the need of the project and need for change
2. Desire and motivation to make the change happen. Teams may be impacted positively or
negatively.
3. Knowledge and understanding about the project and the change
4. Ability to implement new skills and behaviours. Teams may need to immediately start the
change in practice
5. Reinforcement to retain the change once it has been made in practice.

Team A Team B Team C

1
Awareness
2
Desire
3
Knowledge
4
Ability

5
Reinforcement
– If awareness is needed: discuss and explore the reasons and benefits for this change. Discuss
the risks of not changing and why the change needs to happen now.

– If more desire is needed: to move this person forward you must understand and address their
inherent desire to change (which may stem from negative or positive consequences). These
motivating factors have to be great enough to overcome the individual’s personal threshold to
resisting the change.

– If more knowledge is needed: avoid dwelling on reasons for change and motivating factors, as
this is unnecessary and could be discouraging. Focus now on education and training for the
skills and behaviors necessary to move forward.

– If more ability is needed: first, time is needed to develop new abilities and behaviors, and this
person simply may need more time to develop new skills with proficiency. Second, ongoing
coaching and support could be required - consider outside intervention, continued support
and mentoring.

– If more reinforcement is needed: investigate if the necessary elements are present to keep the
person from reverting to old behaviors. Address the incentives or consequences for not
continuing to act in the new way and re-visit the knowledge and ability milestones. It may be
that more training and education is needed as processes develop and evolve.
 Step 2 : complete the people impact assessment per project.

It helps you evaluate quickly the situation of each impacted team and what the change means for
them. Focus on the most impacted team

Example of people impact assessment :

Complexity (need for additional knowledge/skills)

Limited Extend existing Build new

No
Sensitivity of impact

Least impact
Some
Most impact

Important
Step 3 : Make a Change plan : focus on the way in which your change initiatives need to “flow” or
“cascade” though the company. Include any milestone.

During project :
– Communication, emails, workshops
– Training & Documentation

After hand-over of the project :

– Sponsorship
– Coaching
– In the end, a Project Manager needs to close the project and make a list of lessons learned.

Lessons learned can be about the processes we go through, about the people we involve, about
the objectives that we pursue.

Success factors Difficulties Recommendation

• ……………….. • ……………….. • ………………..

• ……………….. • ……………….. • ………………..
• ……………….. • ……………….. • ………………..
• ……………….. • ……………….. • ………………..
• ……………….. • ……………….. • ………………..

Continue doing Stop doing Start doing

……………….. ……………….. ………………..
………………… ………………... ………………...
………………… ………………… …………………
Guide : Six Sigma, Pareto, Lean, Agile
What is Six Sigma ?

When you bake a cake, you take a set number of ingredients, combine them in a certain way, bake
the mixture, and after a period of time, you get a cake ready to eat.

If you made this cake several times, the outcome may not always be identical.

– Six Sigma is an methodology to improve customer satisfaction by reducing defects (variability)

and measures the capability of a process to run error-free work (with a failure rate of 3,4 parts
per million or success rate of 99,9997%)

How ?

1. Find valuable or critical processes that cause variation

2. Find what is causing errors or defects
3. Find a solution to reduce errors or defects
4. Standardize the process and measure for monitoring
The steps are also known as the “PDCA cycle” :
1. Planning the change
2. Do the change
3. Check by observing and measuring
4. Act on what you learned

Here are 4 tools for analyzing processes (that are critical or cause variation) :

1. SIPOC is an approach for understanding and structuring a process. This is done by filling in
below table.

Supplier Input (info/data) Process Output Customer

• ……………….. • ……………….. • ……………….. • ……………….. • ………………..

• ……………….. • ……………….. • ……………….. • ……………….. • ………………..
• ……………….. • ……………….. • ……………….. • ……………….. • ………………..
• ……………….. • ……………….. • ……………….. • ……………….. • ………………..
• ……………….. • ……………….. • ……………….. • ……………….. • ………………..
2. The Ishikawa diagram for finding the root cause of an unwanted situation

How ?

– Ask 5 times “why?”

or
– Identify the origin of imperfection by:
1. Putting the possible causes that belong together in major groups
2. Finding the influence and impact of each major group on the identified variation

3. Pareto rule (the 80:20 rule) says that 20% of the effort result in 80 % of the output

How ?

Finding quick wins and concentrating on a part of the problems : 80% of the problems is caused by
20% of the root causes.
4. Process maps in order to visualize a process that are critical or cause variation

How? Using flowchart symbols (sometimes “swim lanes” are used if process is cross-functional):

– Task

– Decision

– Process termination point

– A connection between two processes

– Process flow or direction

When can we say we have reached our goal ?

1. Real time monitoring of the success criteria : We need to ensure that the improvements
achieve the project goals so KPIs need to be put in place.

How to find the right Key Performance Indicators ? Brainstorm about :

• What needs to be monitored?
• Who is going to be keeping the process functioning properly?
• How are they going to monitor?
• Where will the monitoring be conducted?
• Where should the plan reside?
• What will be done if the monitoring detects a condition outside of the customer’s specifications?

2. Risk analysis

Brainstorm about potential risks and build safety nets for critical processes

3. Training

Training needs to be focused upon the direct needs of the audience. In training you must explain
why a change in process is needed (Why it is good for your company?). You must also explain why
this change is good for the person being trained. The training must show them the right way to do
things. It is best to have highly interactive training where the trainee can actually practice the new
skill under the supervision of the trainer.
What is Lean ?

– Relentless effort to systematically reduce and remove waste while improving the flow that is
valuable to the customer

Example of waste : Transport, Inventory/Open/unfinished/unused work, Motion, Waiting, Over

Production, Over processing, Defects

Reducing, eliminating waste  “low hanging fruits” or “quick wins”

1. Sort: keep things clearly identified

2. Straighten: keep closely the most used items
3. Shine: keep the tools operational, ready to use
4. Standardize: avoid adaptation time
5. Sustain embed in culture

How ?

1. List all activities “Value Stream Mapping”

2. Identify the valuable functions for the customer
3. Identify the waste
What is Agile ?

The Agile Manifesto (agilemanifesto.org) reads: “We are uncovering better ways of developing
software by doing it and helping others do it. Through this work we have come to value:
– Individuals and interactions over processes and tools
– Working software over comprehensive documentation
– Customer collaboration over contract negotiation
– Responding to change over following a plan

That is, while there is value in the items on the right, we value the items on the left more”
Key principles of agile development :

1. Focus on something valuable for the customer. Therefore align project, product and team
visions to deliver a better product, faster and cheaper.
2. Small batches. Create a flow of valuable parts to customers with iterative delivery of features
by smaller, controlled increments.
3. Small integrated teams. Intense collaboration via face-to-face communication and diversified
roles on integrated, self-organising, self-disciplined teams.
4. Small, continuous improvements. Teams reflect, learn and adapt to change through rapid
feedback and response.

The agile development process is called SCRUM, in which shorter work sessions accomplish a
determined amount of tasks. These shorter work sessions are called sprints. The workable product
is shown in the sprint demo to the business management.

In a rapid changing environment that is complex and unpredictable, short validation and feedback
serves as a fall back. The iterations allows everyone to see what the end result will look like.
The essence of Agile is the “MoSCoW Prioritization model” :

1. A technique to come to an agreement with your stakeholders on the importance they place
on the delivery of each requirement
2. Prioritize to deliver the greatest and most immediate business benefits first
3. Often used with time-boxing where a deadline is fixed so the focus can be on the most
important requirements

How ?

Agreement on “Must Have / Should Have / Could Have / Won’t Have ” :

– Must have  Without this requirement, there is no project. Max 60% of the total effort
(worst case)
– Should have  Without this requirement, workarounds are costly/difficult. 20 % of the total
effort (expected case)
– Could have  Without this requirement, workarounds are cheap/easy. 20 % of the total effort
(serves as contingency and when accomplished this is the best case scenario)
– Won’t have this time. 0% of the total effort
Product Backlog Sprint Backlog Valuable increment

• ……………….. 1. Must have • ………………..

• ……………….. 2. Should have • ………………..
• ……………….. 3. Could have • ………………..
4. Won’t have
• ……………….. • ………………..
... • ………………..

Iteration

Focus on early delivery of real benefits to the customer. Deliver what is possible to deliver
on time and just enough to move on.
– Key milestones of agile development for Management team and Development team :

1. Feasibility study of the solution : what are the benefits?

2. Foundation : Detailed business case. Baseline for governance, schedule/planning and risk.
High level list of requirements (these are called “user stories” for example As a … I need … so
that…”) and the level of priority.

3. Iterations : Work breakdown of requirements, estimations for velocity (predictability),

piloting, prototyping, implementation. Measure progress with early warning system (however
measures drive behaviors). Communication (“it doesn’t happen by itself”).

4. Post-project: deployment and benefit assessment.

– “Agile principles” has come with some conditions that are need to agree on upfront :

Availability of resources, flexibility of features, MoSCoW prioritization, contingency for

uncertainties, contingency for changes (change is inevitable), early delivery of the most valuable
part, build final product incrementally (and not built first time perfect), re-assess priorities, co-
location, protect team from external influence, availability of business for questions or validations,
no detailed project plan (overall high level plan with only details in the next step), clear success
criteria of the project (expectations management)