Measuring the Contribution of Collaboration Technologies IV - Worked Example

[Ray Macsweeney]

"Example is more efficacious than precept" (Samuel Johnson)

This is a quick "worked example" I've pulled together to show how the components of this theory can be pulled together to pick a strategic approach for using Web 2.0 tools within an organisation. For a quick refresher on the theories, they are:

1. The AS IS situation
2. Our capabilities and boundaries
3. What is going on outside

In this UniGamble example, I'm going to show how these models of the internal model of the firm, the maturity of technology and the behaviour of the outside world, shape how a "best fit" strategy is chosen.

The Challenge
Sam works for the multi-national FMCG group UniGamble. The company is about to launch a major new product line that promises to transform the hair dye market - "NaturelleIQ! - Because it matters"

Shaking It Up
Instore "mixers" will be installed in supermarkets that will allow specific dyes to be mixed in store to match the consumers exact color preference and hair type. Much like the ICI in-store paint mixer revolutionised the paint market, the hair dye mixer will allow each and every consumer access to 256 million different shades (from blonde to brassy) perfectly matched to their individual hair type. Sam has been charged with working with a selection of retail partners to perfect the launch of this brand new product set.

No Money In The Tin
Unfortunately, due to the credit crunch and a variety of other factors (including a massive overspend by the marketing department on the failed new product line "cheesy chunk cookies" - an attempt to bring together the company's best selling ambient cheese product and award winning biscuits) he has a very limited budget available. He has decided to develop a strategy incorporating some Web 2.0 tools to see maximise the effectiveness of spend.

Background
UniGamble - Where Haircare Meets Yogurt
UniGamble has recently completed a project to centralise all its European functions - supply chain management, finance, operations improvement, R&D - at a new centre in Zurich. The successful implementation of this project took over 7 years and involved the implementation of single instance SAP system to manage the company's key business processes.

Automatic for the People
As part of the SAP implementation, Order to Cash processes were e-enabled with retail partners using EANCOM. One of the key outputs of this process was retail partners providing UniGamble with direct feeds of EPOS data for their key product lines. This has allowed significant improvements in operational and supply chain forecasting and enhanced the ability of UniGamble to meet its key On-Shelf Availability (OSA) metric.

Locations, Markets and Customers
As is standard practice in FMCG, the product will be initially launched in Northern Ireland and Aberdeen, to take advantage of the geographic isolation effects to minimise contamination of any market learning. There are two key retail partners involved in the launch - Tesbury and Sainco. Due to the fierce rivalry, any solution strategy will need to minimise direct communication between Tesbury and Sainco teams.

Problems, Problems Everywhere
The solution will also present significant changes in logistics solutions for all parties, with need for instore management of stocks of base material, individual dyes and packaging. There will also be a need to manage and deliver a servicing team for the equipment.

Rivals
At the same time as UniGamble is launching NaturelleIQ, its arch-rival Krastlé will be launching mixing technology for cereals. They are believed to be launching two months later in the same test markets with the same retail partners.

The As Is
UniGamble is at Stage 2/3 of the contribution matrix. It has significant IT integration with both Tesbury and Sainco and has access to their EPOS data which feed into BI systems to identify key product trends. The only collaborative tool currently in place between the organisations is e-mail.

The impacts of this on strategy are:
1. No existing infrastructure to leapfrog off
2. No defined internal processes and procedures for using Web 2.0 technologies in a business setting
3. Likely to have a steep internal learning curve in implementation.

Capabilities and Boundaries
UniGamble, like most FMCG companies, is highly bureaucratic. Therefore, any integration between UniGamble and its partners is going to be primarily an "Efficiency Cow" - focused on the particular needs to this project and unlikely to feed directly into new product development.

The impacts of this on strategy are:
1. R&D can be made a "reader" of any digital outputs, but is not needed for input. At a later date investment can be made in deepening this relationship if required or appropriate.
2. Internal barriers to success (e.g. it's against IT policy) can be limited by using descriptions such as "temporary measures".

The Outside
Complexity
The wider solution is between a limited number of parties, so something relatively tailored and experimental can be implemented. The ability to change tools and processes mid-way through will be simple and not incur large costs.

The impacts of this on strategy are:
1. Able to "prototype" a solution, rather than engaging in large amounts of up front design work.
2. There is no need to centralise tools, and adhoc use can be made of "off-network" products such as Twitter.

Maturity
Tesbury and Sainsco will already have collaboration tools for working with other "machines maintenance" groups in their shops (e.g. photo printing machines). UniGamble will have to be "Followers" of this technology.

The impacts of this on strategy are:
1. Need to learn and understand existing servicing processes for copy and implementation.
2. Need to develop adhoc solution for gathering learning on key processes from Tesbury's and Sainsco's own people.
3. It is likely that one outcome of this process will be that key corporate data will be held "outside the firewall" (either at Tesbury or Sainco).

Competition
UniGamble will be ahead of Krastlé in implementing its solution. It will get to adapt the already mature technologies that it is a "Follower" for first, with Krastlé plugging into the same solution later.

1. Both UniGamble and Krastlé are going to be Platform Users - the platform is already established and owned by the photo-technology firms.
2. UniGamble will be the first to adapt the platform for mass consumer goods. It can use this opportunity to shape the technology to reinforce its particular organisational strengths.
3. UniGamble's strategy will require it to select a Platform Owner and cooperate with them.

The Strategy
Sam decides:

1. Approach the major photo firms supplying equipment and stock to Tesbury and Sainco and establish how UniGamble can work with these companies to speed and simplify any rollout.
2. Internally prepare the IT department for new tools and working mechanisms that may result in important corporate data being held outside the corporate firewall. Understand how to render that information of minimal use when being accessed without insights from UniGamble.
3. Identify the "boundaries" of the current cooperative solution with the photo firms, and consider how "richer" information may be added to the mix through use of additional data - being aware that any process improvement will be immediately available to Krastlé


Disclaimer:

All character and companies are fictional. Any similarities with living or deceased people are coincidental etc.

Thanks to Gustavo Rivas on Flickr for the image above

[Ray Macsweeney]

It was a "quick" example...

For UniGamble, the challenge is "How do we manage product launch processes more cheaply". Since they are relatively early in the adoption curve, probably the cost/benefit case would be evaluated by considering it using "option" theory. After all, there is no historic data for the company to use in evaluating any business case.

A successful conventional product launch costs X.
A successful collaborative product launch costs Y, where Y << X
Then, the potential benefit is the cost saving between X and Y (appropriately probability weighted etc)

I'd suggest that the main sources of benefit in this case for UniGamble are:
1. Learning and developing new stock and distribution models through copying the photo companies.
2. Developing a deeper relationship with the retailer to allow for better shaping of new product propositions in the longer term so that the meet both customer (retailer) and consumer needs.
3. Some strategic advantages from being able to shape the collaborative framework so it matches UniGamble's structures as opposed to Krastlé's. For instance, some companies engage with the retailer with centralised HQ driven initiatives, others drive engagement at almost store by store level.

The above situation is deliberately crafted to provide extremes. I would hope that no corporation would consider a major product launch without putting a substantial budget behind it.

[Anne Bonnar]

thanks for sharing your theories and ideas on this Ray. In your example, whats the business case - cost and benefit?