|
|
|
|
Read our Strategist magazine online weeks before publication! For methods to contact us, view our Contact Page or our list of International Offices. |
|
CEO e-Strategy Interview
|
|||||||
|
|
|
Neil McDonough
President
FLEXcon
Critical thinking processes are second nature to the people at FLEXcon. From developing the corporate strategy to solving problems on the production line, decision-making teams have used DPI's processes for the past decade. So when the Internet became a Critical Issue, DPI's e-Strategy Process presented the means to sort it out, determine how it fit its business strategy and proceed with a coherent corporate plan they would be comfortable with.
FLEXcon is a privately-held maker of laminated adhesive-backed materials used in diverse applications from labels for shampoo and wine bottles, to membranes for touch pads and holographic security indicia. Since reaching the $100 million mark in the mid-80's the company's growth has accelerated, targeting $400 million in 2000. Part of that success can be related to a strategic clarity that pervades the company, a direct result of going through the Strategic Thinking Process and revisiting the strategy every three years as a reality check.
McDonough and the other managers at FLEXcon have found that having developed this common strategic understanding has formed the basis for all future decisions - including sorting out unexpected challenges such as the Internet. "It all comes down to getting agreement on the Driving Force and the Business Concept, and developing the Critical Issues from there. It's very straight- forward. You've just got to invest the time and do it. And do it with a facilitator who has the experience to force you through these questions and keep the process on track. Then, once you've gotten down to the Critical Issues, give people the tools to make the right decisions and get things done. If you're going to tackle complex issues, you've got to embed these concepts in your company's culture," says FLEXcon President, Neil McDonough.
As it has at most companies over the past few years, the Internet has grown in strategic importance for FLEXcon. Evolving into new ways to communicate with customers, suppliers and employees, the Internet has required more and larger investments, and so has come to require an overall plan that passes the company's "strategic filter".
Like most companies, FLEXcon had developed a website to provide basic information about the company to anyone who wanted to know. Says McDonough, "We had our website, which was essentially a printed electronic brochure. We had the ability to receive email. We had in fact received an order or two, which surprised us. But it was basically general information, not even very specific product information. We had our future plans to include data sheets and a product selector and other things we were working on. But what we actually were doing was just a visual website."
As the capabilities of the Internet and its users developed, a steady stream of ideas began to come forward, each with a rationale to back it up. "It was pieces of things," says McDonough. "It was driven by whoever was the most vocal and thought we ought to have this or that. I wasn't feeling bad about it in the sense that the arguments were persuasive and driven from our strategy and all the things that we were talking about doing to grow the business. But it was not a whole, coordinated, cohesive plan - what should go first and what should go second, and so on. I saw it as linked to the strategy but not integrated. It certainly wasn't a situation where people were saying we ought to create a whole different e-business division. It wasn't anything like that, but nor was it integrated into every aspect of our strategy, what really fit and would make the most sense as a whole. The discussions went on. Do we really want to have data sheets out there or don't we want to talk to people directly? There was always a back and forth going on. And of course, all the offers were coming in from the 'portals', the aggregator guys who want to represent the industry and do auction sites or be the connection point. So, do we join one of these and pay that fee, or not join one of these, maintain our own direct contact, but lose out on those chances? So that was a constant battle," McDonough states.
The company's management needed to develop the same kind of common strategic confidence in its growing Internet investments that it had in other major capital investments. So when DPI developed its e-Strategy Process, FLEXcon jumped on the opportunity.
"I had a goal going into this process, and it was a very simple one: to have a comfort level with what we were doing and the pace we were doing it at. We like the fact that we could make this evaluation and it wasn't just a techie coming in talking about what could be. It was more an approach of what should be, based on who we are and how we see the world."
One of the concepts that caught McDonough's attention was DPI's twelve e-nablerTM, which help to translate the various capabilities of the Internet into tangible business terms. Tentatively plugged into various business and information processes within the company, they form a test bed for evaluating various ideas
"I thought that was a great way of presenting what the Web could do," McDonough says. "One by one, you're essentially trying these capabilities on like a suit of clothes. And you say, 'How does this fit, how does this feel?' And most of them you reject because you say, 'That's not our business.' You get a much better understanding of what they are. The popular press will tell you how Amazon operates, or how the auto suppliers are going to aggregate and put out for bids through an aggregate site, that sort of thing. But the e-nablers let us look at all of those different models more closely and see how they might apply to our business specifically. So, it was a good way to be able to try on the different business models that you're not familiar with because they weren't part of the world ten years ago."
Another aspect of the e-Strategy Process that McDonough found to be essential was the competitive analysis portion. He and his management team are old hands at analyzing their competitor's strategies to be able to anticipate their future behavior, having done it extensively in their Strategic Thinking sessions. McDonough saw the Competitor.com and Killer.com segments of the process as compelling from both offensive and defensive strategic standpoints. This exploration of the competitive aspects of the Internet allowed them to evaluate how FLEXcon's competitors might be able to use the Internet to take business away from them. By looking at FLEXcon as an e-competitor might, they have begun to see how they may be able to tip the balance in any future playing field to their own advantage - to change the rules of play to their favor.
As McDonough sees it, "It's one thing when you're trying on the twelve models for how they fit you. There you're talking about what are your strengths, or Areas of Excellence, that you're trying to work on. Here you're looking more into weaknesses, saying, 'If I were on the outside, how could I attack FLEXcon and be successful?' And you try on some of those and in some areas you feel pretty good because they could try that all they want, they're not going to make much headway. And then you try on some others and you say, 'You know, it may only be a small part of my business but that could make a competitor very healthy if they attacked, and attacked in this way; they definitely could be successful for that part of the business.' As you do that you understand your vulnerabilities better, and know what you need to do. It's kind of like Mike Robert's idea that attacking a competitor's weakness will only make him stronger in the long run. When you see that, you start working on those weakness areas and it actually helps you become a better company overall. But then the flip side of that is, if that's where you can be attacked, how could you use a similar strategy on some of your competitors? That's also very powerful. You're able to look at them, put yet another skin on yourself and say, 'If I did operate this way, I could get a part of their business.'
"This works very well, particularly because with the clearly delineated twelve e-nabler models you have something concrete to play with. It's not pie in the sky or theory. And as long as you can get out of your own skin long enough to really think, 'If I had to start all over again, and compete against my company, which one of these could I make the most headway with?' If you can get yourself thinking like that, you can see the effects of the Internet very clearly, and make yourself stronger."
To FLEXcon, as it is to the majority of existing companies, the Internet is a set of tools to be selectively used to implement an ongoing strategy. The Internet will not impact every company in a given business in the same way, since each player in that market has its own Driving Force, Areas of Excellence and way of relating to its customers. Nor will the Internet impact every part of each business. It will effect, to greater and lesser degrees, individual parts of the value chain. Moreover, each company is a body in motion, with a business model that has worked to some degree. For the majority of companies, there is no need to toss out the existing model and start from scratch to build an e-model.
"The 'why not' is that so much of our business is based on ongoing business relationships," says McDonough. "The Internet is great for an exchange of information but it doesn't match face-to-face, knee-to-knee contact with the customer. If you were able to do all your business over the telephone, or over a fax, the answer is: Yes, it absolutely could be at least partially replaced by the Internet. But I'm flying out at noontime today (Monday) and I'll be back on Thursday. I need that face-to face time with customers. And more importantly, my technical people need that face-to-face time with suppliers and customers. So I see the Web as another tool, but not a replacement tool. Could it replace the fax machine just as the fax replaced the telex? Sure. But it isn't replacing our business model."
The e-Strategy Process gives companies the framework to examine carefully each piece of the information stream from raw material to customer and identify where each e-nabler may add value or pose a threat. The relative value or threat can then be examined through the lens of the strategy. Based on that prioritization, individual applications can be designed and implemented, to satisfy the most pressing needs of the business.
"This e-Strategy Process has changed the way we're prioritizing what we're doing with the Internet. For us it mostly has to do with how we work with present customers and reach new customers. We believe we're doing a good job with our current customers, and the Internet can improve but not radically change that. The big driver for FLEXcon is in reaching new users we haven't been in contact with before. It will be just one method to do that, but a very important one, we believe," McDonough states.
What's the net result for FLEXcon?
"It's the comfort level of the whole team - that we've got an e-Strategy. It's not the most aggressive strategy in terms of the use of the web, but it's the most appropriate strategy in terms of the use of the web for who we are, who are customers are, and what we're trying to accomplish. We're comfortable that we're not either falling behind or trying to do the wrong thing first, but we are in fact choosing very appropriately which things to do and which not.
"But that comfort level is only going to last a short time, because with the Internet, things will change. We'll have to do a check again, much faster than we do our every-three-year strategy check. I think I'd like to go through the e-Strategy Process at least once more, if not twice more. One, because of the refinements that DPI's going to make as they do it multiple times. And two, because it takes a while before you really grasp it all. The second time through I'm sure I will hear things that I didn't understand or hear the first time. So much of adult learning is learning it when you need to know it. And also, the Internet is constantly changing, so we'll have to keep looking at it in the future."
McDonough also believes that if the e-Strategy is integrated with the Business Strategy, that its creation and re-creation give FLEXcon yet another opportunity to refine its overall strategic approach
As Mc Donough explains, "I thought the Process itself was a great strategy review tool, because we have to go back to the fundamentals of our strategy again before we say, 'How does the business potentially apply to this area or that area in the Internet?' So it may actually serve as a great three-year check on our strategy in addition to what's going on with us and our competitors and our areas of expertise. If you think the Internet is going to affect your strategy in some way it will come out in this.
"As it came out in the end, the e-Strategy is just a part of our overall strategy and business concept. And it's using the Web where it's best used, to support the initiatives we already had going on, both in terms of end-user contact, more information to customers, data sheets, the drive to make a product configurator that we're going to use for our telesales people. This configurator would also be capable of being put on the Web and used by end-users to make product selections based on their needs.
"What the e-Strategy Process did was that it allowed us to have a framework so we dovetail applications together so we didn't make essentially a print brochure then have to do everything for an electronic brochure. We now have the internal rules to standardize for the thought that what we're putting on the Web we need to be able to do in print. What we need to do in print, we need to be able to put on the Web. And then not constantly reinvent. We have our options prioritized and my comfort level is much higher now. These can be major investments and I need to be sure we're doing the things that best support our strategy."
