If you don't want to change your current car, there are still ways you can drive greener.
Lose some weight
Don't drive around with unnecessary weight in your car - the engine will have to work harder and use more fuel. Empty your car of anything that you don't need to carry around all the time.
Remove roof boxes and roof racks when you’re not using them - they cause extra aerodynamic drag, which will raise your fuel consumption. Open windows and sunroofs do the same; and for the same reason, get any loose items of external trim fixed.
Look after your car
Stick to the manufacturer's service schedule, and get work carried out by a competent garage. Under-inflated tyres can increase your fuel consumption, so check them weekly. Also, keep an eye on your fuel consumption and investigate sudden changes.
Switch it off
Modern engines don’t need to be warmed up before you start driving, so get in and drive off straightaway.
If you get stuck in traffic, switch the engine off. Air-conditioning, heated seats and other electric components also consume energy, so switch off whatever you don't need.
Anticipation
By keeping an eye on the road ahead, you can drive greener as well as safer. Always try to keep the car moving, and allow the engine to slow the car rather than using the brakes - this gives more time for the cars in front to move off, so you don't have to stop. Avoid having to brake suddenly and don't race between sets of traffic lights or junctions. Finally, use gravity - rather than the accelerator - to start the car rolling down slopes.
Lower your speed
Going no faster that the speed limit will save fuel, so why not try slowing down a bit more? You'll be less stressed and have a calmer journey. Cruise control can help you maintain a steady speed. Use the highest gear possible without letting the engine labour, and try changing straight from second to fourth gear, or third to fifth – this saves time, fuel and wear and tear on the clutch.
Leave the car at home
An engine is at its most inefficient when cold, so consider not using the car for very short trips. If it's a nice day, walk or ride a bike instead. Consider using public transport for other trips, too.
Plan your journey
If you don’t need to travel during rush hour, avoid the congested times. Plan a route that misses busy areas and road works, and try to stick to roads that allow you to drive at a steady speed rather than having to stop and start. Consider car-sharing with friends or colleagues.
Change your driving style
Learn to press the accelerator lightly and smoothly - no more heavy, jerky movements. Don't over-rev the engine, either. Keep the revs under 3000rpm and cruise along.
Give yourself more time for journeys so you don’t have to rush, and stay relaxed for a smoother trip.R
Monday, January 31, 2011
Sunday, January 23, 2011
...what cars dream of...
These are the first three shots of Ferrari’s first ever four-wheel drive car – the Ferrari Four, also known by its acronym FF. It has a shooting brake-like body style, with a long front bonnet that clearly says this Ferrari is front engined!
The Four in its name refers to its four seats and four wheel drive. Ferrari’s implementation is called 4RM, and Ferrari claims it’s weighs on average half the weight of a conventional four wheel drive system. We all know what a properly tuned system can do – just look at how the Nissan GT-R goes around the ‘Ring. Ferrari’s implementation is tied in to its electronic dynamic control systems to make sure the system doesn’t only just deliver power to a wheel for grip, but for maximum velocity around a corner as well.
The Ferrari Four is powered by a new 6,252cc V12 engine with direct injection, revving high to make 660 horsepower at 8,000rpm and 683Nm of torque at 6,000rpm. It is mated to a dual clutch transmission mounted at the rear axle. The combination of the engine, gearbox and 4RM takes the car up to 100km/h in just 3.7 seconds. Other less exciting specs include 450 liters of boot space extendable to 800 liters. There’s also the option for the HELE system which includes various ‘green’ features like auto start-stop.
Tuesday, January 18, 2011
Subaru FT 86..Nice!!
Subaru is set to give its version of the Toyota FT-86 coupe its world premiere in Geneva in March. It’s not officially named yet, so as of now it remains called the Subaru Rear-Wheel Drive Sports Car Technology Concept.
Official details haven’t been announced, but Subaru says the concept will feature the use of a horizontally-opposed boxer engine, and showcase the integration of its boxer engine expertise with rear-wheel drive in a vehicle it says will offer a new and highly enjoyable, Subaru-like driving experience.
Geneva will also see the European debuts of the Subaru Impreza Concept, which was unveiled last November in Los Angeles, as well as the Trezia, which it is hoping will appeal to the increasing demand for smaller and environmentally friendly cars in Europe. The compact smart wagon, as it has been tagged, will be available in 1.3 litre petrol and 1.4 litre turbodiesel forms in European markets.
Sunday, January 16, 2011
Who says cars cant fly.
Described as an “exciting new chapter in its history”, Caterham – the British carmaker famous for the Seven – has unveiled the SP/300.R sports prototype racer at the Autosport International Show in Birmingham, UK. Created in partnership with British engineering brand, Lola Cars, the “aesthetically-sensitive” prototype will feature Caterham Motorsport’s new supercharged version of the Ford Duratec engine, expected to produce around 300 hp.
That’s enough to propel the sub-600 kg car from rest to 60 mph (0-96 km/h) in around 2.5 seconds. The gearing of the car has been selected to reach maximum rpm in top gear at the end of Spa-Francorchamps circuit’s Kemmel Straight, one of the more frequently-visited trackday venues. Top speed will be around 270 km/h.
Lola led the downforce development and aerodynamic styling using CFD (Computational Fluid Dynamics). The basic chassis is an aluminium tub with a longitudinally mid-mounted engine, coupled to a stress-bearing rear transaxle. A forward splitter and large rear wing reduce lift, while a flat underbody maximises ground effect benefits. There’s also an F1-style raised nose section and sectioned panels, which will help reduce repair costs, ease maintenance and allow single-handed removal of body panels on track.
The SP/300.R gets full race suspension – front and rear dual wishbones with pushrod dampers plus adjustable ride height. The rear suspension architecture is derived from Lola’s Formula 3 cars. The tyres are bespoke items by Cooper Avon fitted to 13-inch race rims.
Only 25 SP/300.Rs will be manufactured each year. Caterham is planning a one-make series in which the SP/300.R will star, but details are yet to be finalised.
...back to bizz...
The Government will continue to aid Approved Permit (AP) holders after 2015, the year when issuance of APs will finally stop. The aid will be from a special fund filled by the RM10,000 fee charged for each AP issued.
The man who gave the assurance, Deputy Minister of International Trade and Industry Datuk Mukhriz Mahathir, said the aim was to help bumiputra entrepreneurs shift smoothly to other sectors.
“We charged RM10,000 for every AP issued to set up the fund and the money will be used to ensure a smooth and orderly shift of bumiputra entrepreneurs to other business sectors. By having the fund, we hope to execute the shift orderly and smoothly,” he told reporters.
On claims by the Association of Malay Importers and Traders of Motor Vehicles Malaysia (Pekema) that 70,000 people would lose their jobs if the AP policy was enforced by 2015, Mukhriz had this to say:
“They need to prove that statement because we have our own figures. We have been helping them for a long time, some about 30 years already. I think they will benefit greatly from this government policy. At this time, there are many more bumiputra companies that wished they have the APs enjoyed by the 98 companies (selected by the government).
“There are about 160 companies eligible to get APs but the government will stick to the 98 companies and will protect them until 2015,” he added.
The man who gave the assurance, Deputy Minister of International Trade and Industry Datuk Mukhriz Mahathir, said the aim was to help bumiputra entrepreneurs shift smoothly to other sectors.
“We charged RM10,000 for every AP issued to set up the fund and the money will be used to ensure a smooth and orderly shift of bumiputra entrepreneurs to other business sectors. By having the fund, we hope to execute the shift orderly and smoothly,” he told reporters.
On claims by the Association of Malay Importers and Traders of Motor Vehicles Malaysia (Pekema) that 70,000 people would lose their jobs if the AP policy was enforced by 2015, Mukhriz had this to say:
“They need to prove that statement because we have our own figures. We have been helping them for a long time, some about 30 years already. I think they will benefit greatly from this government policy. At this time, there are many more bumiputra companies that wished they have the APs enjoyed by the 98 companies (selected by the government).
“There are about 160 companies eligible to get APs but the government will stick to the 98 companies and will protect them until 2015,” he added.
Poor man race cars..
Here’s something for the racer on a budget to chew on. Turkish composite specialist Avitas has taken the covers off its first complete car, the Control-1, at the Autosport International 2011 show in Birmingham.
Designed and built in-house, the Control-1 is the result of two years of development by the Istanbul-based company, which has been around since 1969 and specialises in producing automotive composite plastic products.
The Control-1 is built around a tubular chassis, and features carbon fibre panels and all-round double-wishbone suspension. It’s equipped with a four-cylinder 150 hp engine, mated to a five-speed sequential gearbox, and the rear-wheel drive vehicle weighs in at just 660 kg.
It’s intended to be inexpensive to buy and run, providing both competitors and championship organisers with an efficient way to go racing, or start a new series. Any takers then?
. Proton .Rally cars for Sale
Pretty soon, MEM won’t be the only company around doing up Proton Satria Neos as rally cars as today Proton announced that Japanese auto parts company CUSCO will be buying standard road-going Satria Neo bodyshells to engineer and homologate according to FIA Group N regulation competition use.
CUSCO is famous for their aftermarket suspension systems and other parts such as LSDs and chasiss reinforcements and naturally they’ve also been involved in motorsports including rallying. Being a Japanese company naturally the rally cars that they’ve dabbled with so far are cars like the Impreza and the Lancer Evolution.
With the Satria Neo, CUSCO is essentially Proton’s customer – they buy the bodyshells, equip them with CUSCO-developed race components, and then sell the completed Group N rally-going Neos to customers who will compete in Junior Rally Championships in Japan and Asia Pacific. Way to go, Proton Motorsports! :)
Thursday, January 13, 2011
You Are What You Think...
In 1931, Alfred Korzybski, a Polish-American scientist and philosopher, coined the phrase “the map is not the territory” to distinguish the words we use to describe reality from reality itself. He said that we tend to confuse the map with the territory, and we often don’t realize that we are confused. We communicate with others as if we all share the same map — and the same world — which causes conflict and collisions.
General semantics, the discipline that Korzybski pioneered, studies the relationships between the map and territory: the ways in which the words we use affect how we think and, ultimately, how we act. In the decades since he introduced his pioneering concepts, we have learned — in part because of technologies such as fMRI that enable neuroscientists to study how the human brain works in real time and full color — that Korzybski’s theories tell only part of the story. Words and thoughts are not always accurate reflections of reality, but they can and do provide the impetus for reshaping reality.
This year’s best business books on the human mind explore the implications of the relationship between perception (what we see) and reality (what is), and argue for the use of mind-awareness approaches in managing real-world problems and issues. Neuroscience research has begun to confirm that brain connections are formed socially; when two people connect through a conversation, their neural pathways (as illuminated by fMRI scans) take on similar patterns. These changes in brain patterns are reinforced by further conversation — so that an organization that successfully draws employees into repeated patterns of thought and action may literally rewire their neural pathways. These pathways are further reinforced by the reactions of hormones, neurotransmitters, and other chemicals within the body.
Each of these books, in its own way, explores the contradictions between these findings and the conventional wisdom about behavior and the workplace. The authors integrate neuroscience into everyday life, shine a light on how we map the territory of our perceived environment, and help us figure out ways to map that territory more constructively.
Deniers Never Prosper
In Denial: Why Business Leaders Fail to Look Facts in the Face — and What to Do about It, Harvard Business School professor and business historian Richard S. Tedlow tells tabloid-worthy tales of what happens when business leaders find reality so unappetizing that they refuse to acknowledge it. The stories are of well-known companies, including Ford, A&P, IBM, and Coca-Cola, and the details and drama that Tedlow packs into them earn the book the title of best business book of the year on the human mind.
The executives featured in the stories travel different paths to failure, but they all separate themselves from reality by acting as if their maps are the territory. They refuse to adjust course even in the face of opposition from trusted advisors and incontrovertible evidence that they are following the wrong path. Thus, for example, Henry Ford’s success with the Model T blinded him to the desires of his customers, and gave General Motors the opportunity to capture a winning share of the automobile market with a broader range of models and options. And the executives at A&P stuck with the grocery chain’s private-label products even as their customers defected en masse to supermarkets that carried the national brands they saw advertised on TV.
The good news is that companies can recover from denial, even when they seem permanently wed to their histories, their philosophies, or their belief systems. Tedlow points to IBM, which got caught up in its own “bureaupathology,” but learned, with Louis Gerstner’s help, to conquer arrogance and overcome its history and culture. He says that Intel, DuPont, and Coca-Cola were also able to recover from denial by activating new “cultural DNA.”
Tedlow offers different approaches to staying clear of the pitfalls of denial in each chapter. They include looking truth in the face every day — identifying how and where people are dismissing the truth or rationalizing their version of reality. In all cases, however, getting ahead of the denial curve is vital. Tedlow says that executives can accomplish this by encouraging straight talk, challenging assumptions, avoiding groupthink, and keeping their eyes open to the symptoms of denial in their own thinking and in others.
Denial explains why the “smartest people in the room” (as Enron’s top executives were famously called) can sometimes be very dumb. It’s a wake-up call to be sure that we don’t allow ourselves to confuse our maps with the actual territory.
Better Decision Making
People make decisions by building models in their minds that are based on what has worked in the past, and then using those models as templates to follow. In Think Twice: Harnessing the Power of Counterintuition, Michael J. Mauboussin, chief investment strategist at Legg Mason Capital Management and adjunct professor at Columbia Business School, argues that old mental models can contain traps that lead to flawed decisions. Conversely, recognizing these mental traps can raise the probability of making good decisions.
Mauboussin takes us into the dark alleys of the human mind where decision makers can easily go astray. In chapter one, for example, he describes how we fall prey to three illusions that lead to poor decisions: We suffer from the belief that our ideas are superior to the ideas of others, the inclination to overestimate our chances of success, and the perception that we have more control over situations than we actually have. Deniers beware!
There is a long list of other traps in the book. When you go into a store to buy one thing and come out with another, you may have been a victim of “priming.” You thought your mind was made up before you went into the shop, but you were a lot more susceptible to influence than you realized. How susceptible? Mauboussin cites a study that found that 77 percent of people shopping for wine in a supermarket bought French wine when French music was playing and 73 percent bought German wine when German music was playing. Yet nine out of 10 people claimed music did not influence their choices.
Crowd or herd behavior also influences our decision making. In chapter four, Mauboussin describes how we are overly influenced by authority and by our desire to be insiders. In studies in which groups were asked to solve puzzles, people posing as subjects were able to get the groups to agree to answers that they originally thought were wrong.
The failure to account for context is a decision-making trap that causes much grief in organizations. Knowledge acquired in one context does not necessarily translate in another context. That is why a new executive who does not account for the culture of the company he or she is joining will often fail. Combining knowledge and context, says Mauboussin, increases our chances for success.
The intent of Think Twice is not to make you feel insecure or to get you to distrust your instincts; far from it. The book brings into focus how people are unconsciously influenced by their experiences, by other people, and by the environment in which they find themselves. Once you become conscious of these influences, you become a better mental mapmaker and can more effectively navigate the territory of your life.
The Rider and the Elephant
According to Chip Heath and Dan Heath, authors of Switch, change is hard because there are two conflicting sides of the human brain, the rational and the emotional, vying for control. Switch: How to Change Things When Change Is Hard is their first book after the best-selling Made to Stick: Why Some Ideas Survive and Others Die (Random House, 2007). When most people try to foster change, say the Heath brothers, they focus almost exclusively on the rational side and ignore the emotional side, which then rebels, often sabotaging the change effort.
To describe and solve this problem, the authors draw on research from psychology and neuroscience, using a metaphor of a rider (the rational brain) and an elephant (the emotional brain). The authors are reductionists, in this approach, because new research is providing a richer and more complex picture of the brain’s workings. Yet what makes the book worth reading is the practical framework it offers to executives who must undertake organizational change.
This framework involves three major activities. The first is to rationally motivate the rider. For example, instead of focusing on what people are doing wrong and nagging them about it, the authors suggest focusing on what they are doing right (the “bright spots”) and encouraging them to continue their winning ways. The authors also advise would-be change makers to reduce the number of choices people have to make, thus eliminating some of the fear and uncertainty inherent to change, and to script the changes to ensure that people have a clear vision of the desired goal and the rewards of attaining it.
The second set of activities in the framework is designed to get the elephant moving in the right direction. The Heath brothers draw from motivational psychology to achieve this, focusing on the positive elements of change, “shrinking” the change to make it seem less difficult to attain, and building confidence so people feel that they are capable of attaining it.
The final set of activities is designed to show the rider and the elephant the path forward. It describes how change agents can tweak the environment to change behavior (as with playing music for shoppers), how they can create new habits that support change, and how they can reinforce them by enlisting the help of others.
Avid readers of neuroscience and psychology will find many familiar ideas in Switch; managers charged with creating change will find these ideas cloaked, usefully, in colorful stories and metaphors.
Grace under Pressure
In Clutch: Why Some People Excel Under Pressure and Others Don’t, Paul Sullivan, a columnist for the New York Times, explores how to shine when the stakes and the pressure to perform are high. The secret that separates the players who are good in the clutch from those who choke, he says, is a well-developed ability to respond in stressful situations in a constructive way.
Sullivan summarizes this ability in five “clutch” principles and three “choke” principles that readers can use as guidelines for how — and how not — to deal with high-pressure situations. All the principles are copiously illustrated with stories of people and companies we know, which help the reader to see how the principles can be applied. Aside from his gimmicky reliance on the word clutch, Sullivan has written an easily digestible book.
The five key principles used by those who successfully handle pressure and perform well in clutch situations are focus, discipline, adapting, being present, and managing fear and desire. Focus is not the same as concentration; it is an intentional mapping of what you want to achieve. It requires thinking through the steps and the end game before you start playing. Discipline is staying with the plan, even in the face of great challenges. It is often the key to success. Adapting is knowing when and how to change the plan. It’s about, Sullivan says, “fighting the fight, not the plan.” Being present means being in a state of heightened awareness in the moment — it’s analogous to the state described by Mihaly Csikszentmihalyi in his book Flow: The Psychology of Optimal Experience (Harper & Row, 1990). Finally, managing fear and desire is using these emotions as motivators and drivers of performance without allowing them to paralyze you.
Sullivan employs a chapter-long analysis of how Billie Jean King beat Bobby Riggs in the highly publicized Battle of the Sexes tennis tournament in 1973 to summarize the clutch principles. He calls the tournament a double-clutch situation because King was playing not only to win the match, but to challenge the conventional thinking about women in sports.
The three principles for avoiding choking, which are described in part two of the book, are included to help the reader steer clear of the behaviors that cause people to fail to meet their goals in high-pressure situations. The principles are taking responsibility for your role in the situation; not allowing overthinking to take you out of being present; and ensuring that overconfidence doesn’t stop you from putting energy into focus, discipline, and living in the moment.
People who master clutch are really mastering the amygdala, the part of the human brain that responds to stress and that can sometimes seem to take control of us when we are in pressure-laden situations. Sullivan thinks we are all capable of creating stress-resilient maps that can enable us to traverse these toughest of territories. Clutch is a good place to start drafting such a map.
Beyond Carrots and Sticks
Reading Drive: The Surprising Truth about What Motivates Us, Daniel H. Pink’s newest book, can be depressing, especially as you realize how large a role extrinsic rewards and punishments play in our lives. That’s because the most prevalent means of motivation are what Pink calls if–then transactions: If you do this, then I’ll give you that.
These incentives for changing behavior are based on the assumption that motivation is extrinsic — people will do more of what you want if you reward them for it (the carrot) and will stop doing things if you punish them (the stick). But Drive suggests that we should limit our use of “currencies,” such as bonuses and fines that try to externally motivate people, and instead engage their intrinsic motivators, especially three paramount human needs.
These needs are autonomy, the freedom to make choices and determine our future; mastery, the ability to learn and grow our expertise; and purpose, the quest for meaning in our lives. They are wired into our brains, according to Pink, who supports his thesis by drawing on four decades of scientific research. When we do not satisfy these needs, we can fall into depression and lose our reason for being.
Pink singles out several companies that have put intrinsic motivation to work. He takes us inside 3M Company, where William McKnight, who served as the company’s president from 1929 to 1949 and its chairman from 1949 to 1966, came up with the unusual idea of giving employees free time for what he called experimental doodling, a practice that yielded Post-It notes, among many other new products. Pink also points to Google’s policy of allowing employees to devote 10 percent of their time to projects of their choice, which has produced services such Google News, Gmail, Google Translate, Google Talk, Google Sky, and more.
Pink explores the wide gap between what science teaches us about motivators and how companies actually seek to motivate people. For instance, one of the most prescient bodies of research presented in the book highlights the negative impact that extrinsic rewards have on productivity over time. This research found that extrinsic rewards narrow our focus to attaining the promised reward itself at the expense of everything else. As a result of holding this myopic view, companies such as Enron produce toxic environments and flawed decisions, as well as unethical and even criminal behavior.
Instead, says Pink, corporate leaders should create environments that enable people to be creative, empowered, and engaged, and that provide them with a sense of their intrinsic worth. The last section of the book, which contains an array of ideas, practices, questions to ponder, and action lists, should help in that endeavor.
Mapping the Intersections
Together, these books on the human mind are a welcome breakthrough in business writing. Each one addresses a sliver of the biggest challenge we have as human beings — how to align our map with the territory for sanity, for growth, and for success. Without this extraordinary ability, we fail to adapt to our changing world — and we get stuck in the past while the world evolves around us.
In the past, in mainstream publishing, you could not mix business topics with personal effectiveness topics. But these books confirm that the barrier has fallen. By integrating research from the fields of neuroscience and psychology into books about business challenges, their authors give us a new lens through which we can more effectively and successfully navigate our complex, unpredictable world.
General semantics, the discipline that Korzybski pioneered, studies the relationships between the map and territory: the ways in which the words we use affect how we think and, ultimately, how we act. In the decades since he introduced his pioneering concepts, we have learned — in part because of technologies such as fMRI that enable neuroscientists to study how the human brain works in real time and full color — that Korzybski’s theories tell only part of the story. Words and thoughts are not always accurate reflections of reality, but they can and do provide the impetus for reshaping reality.
This year’s best business books on the human mind explore the implications of the relationship between perception (what we see) and reality (what is), and argue for the use of mind-awareness approaches in managing real-world problems and issues. Neuroscience research has begun to confirm that brain connections are formed socially; when two people connect through a conversation, their neural pathways (as illuminated by fMRI scans) take on similar patterns. These changes in brain patterns are reinforced by further conversation — so that an organization that successfully draws employees into repeated patterns of thought and action may literally rewire their neural pathways. These pathways are further reinforced by the reactions of hormones, neurotransmitters, and other chemicals within the body.
Each of these books, in its own way, explores the contradictions between these findings and the conventional wisdom about behavior and the workplace. The authors integrate neuroscience into everyday life, shine a light on how we map the territory of our perceived environment, and help us figure out ways to map that territory more constructively.
Deniers Never Prosper
In Denial: Why Business Leaders Fail to Look Facts in the Face — and What to Do about It, Harvard Business School professor and business historian Richard S. Tedlow tells tabloid-worthy tales of what happens when business leaders find reality so unappetizing that they refuse to acknowledge it. The stories are of well-known companies, including Ford, A&P, IBM, and Coca-Cola, and the details and drama that Tedlow packs into them earn the book the title of best business book of the year on the human mind.
The executives featured in the stories travel different paths to failure, but they all separate themselves from reality by acting as if their maps are the territory. They refuse to adjust course even in the face of opposition from trusted advisors and incontrovertible evidence that they are following the wrong path. Thus, for example, Henry Ford’s success with the Model T blinded him to the desires of his customers, and gave General Motors the opportunity to capture a winning share of the automobile market with a broader range of models and options. And the executives at A&P stuck with the grocery chain’s private-label products even as their customers defected en masse to supermarkets that carried the national brands they saw advertised on TV.
The good news is that companies can recover from denial, even when they seem permanently wed to their histories, their philosophies, or their belief systems. Tedlow points to IBM, which got caught up in its own “bureaupathology,” but learned, with Louis Gerstner’s help, to conquer arrogance and overcome its history and culture. He says that Intel, DuPont, and Coca-Cola were also able to recover from denial by activating new “cultural DNA.”
Tedlow offers different approaches to staying clear of the pitfalls of denial in each chapter. They include looking truth in the face every day — identifying how and where people are dismissing the truth or rationalizing their version of reality. In all cases, however, getting ahead of the denial curve is vital. Tedlow says that executives can accomplish this by encouraging straight talk, challenging assumptions, avoiding groupthink, and keeping their eyes open to the symptoms of denial in their own thinking and in others.
Denial explains why the “smartest people in the room” (as Enron’s top executives were famously called) can sometimes be very dumb. It’s a wake-up call to be sure that we don’t allow ourselves to confuse our maps with the actual territory.
Better Decision Making
People make decisions by building models in their minds that are based on what has worked in the past, and then using those models as templates to follow. In Think Twice: Harnessing the Power of Counterintuition, Michael J. Mauboussin, chief investment strategist at Legg Mason Capital Management and adjunct professor at Columbia Business School, argues that old mental models can contain traps that lead to flawed decisions. Conversely, recognizing these mental traps can raise the probability of making good decisions.
Mauboussin takes us into the dark alleys of the human mind where decision makers can easily go astray. In chapter one, for example, he describes how we fall prey to three illusions that lead to poor decisions: We suffer from the belief that our ideas are superior to the ideas of others, the inclination to overestimate our chances of success, and the perception that we have more control over situations than we actually have. Deniers beware!
There is a long list of other traps in the book. When you go into a store to buy one thing and come out with another, you may have been a victim of “priming.” You thought your mind was made up before you went into the shop, but you were a lot more susceptible to influence than you realized. How susceptible? Mauboussin cites a study that found that 77 percent of people shopping for wine in a supermarket bought French wine when French music was playing and 73 percent bought German wine when German music was playing. Yet nine out of 10 people claimed music did not influence their choices.
Crowd or herd behavior also influences our decision making. In chapter four, Mauboussin describes how we are overly influenced by authority and by our desire to be insiders. In studies in which groups were asked to solve puzzles, people posing as subjects were able to get the groups to agree to answers that they originally thought were wrong.
The failure to account for context is a decision-making trap that causes much grief in organizations. Knowledge acquired in one context does not necessarily translate in another context. That is why a new executive who does not account for the culture of the company he or she is joining will often fail. Combining knowledge and context, says Mauboussin, increases our chances for success.
The intent of Think Twice is not to make you feel insecure or to get you to distrust your instincts; far from it. The book brings into focus how people are unconsciously influenced by their experiences, by other people, and by the environment in which they find themselves. Once you become conscious of these influences, you become a better mental mapmaker and can more effectively navigate the territory of your life.
The Rider and the Elephant
According to Chip Heath and Dan Heath, authors of Switch, change is hard because there are two conflicting sides of the human brain, the rational and the emotional, vying for control. Switch: How to Change Things When Change Is Hard is their first book after the best-selling Made to Stick: Why Some Ideas Survive and Others Die (Random House, 2007). When most people try to foster change, say the Heath brothers, they focus almost exclusively on the rational side and ignore the emotional side, which then rebels, often sabotaging the change effort.
To describe and solve this problem, the authors draw on research from psychology and neuroscience, using a metaphor of a rider (the rational brain) and an elephant (the emotional brain). The authors are reductionists, in this approach, because new research is providing a richer and more complex picture of the brain’s workings. Yet what makes the book worth reading is the practical framework it offers to executives who must undertake organizational change.
This framework involves three major activities. The first is to rationally motivate the rider. For example, instead of focusing on what people are doing wrong and nagging them about it, the authors suggest focusing on what they are doing right (the “bright spots”) and encouraging them to continue their winning ways. The authors also advise would-be change makers to reduce the number of choices people have to make, thus eliminating some of the fear and uncertainty inherent to change, and to script the changes to ensure that people have a clear vision of the desired goal and the rewards of attaining it.
The second set of activities in the framework is designed to get the elephant moving in the right direction. The Heath brothers draw from motivational psychology to achieve this, focusing on the positive elements of change, “shrinking” the change to make it seem less difficult to attain, and building confidence so people feel that they are capable of attaining it.
The final set of activities is designed to show the rider and the elephant the path forward. It describes how change agents can tweak the environment to change behavior (as with playing music for shoppers), how they can create new habits that support change, and how they can reinforce them by enlisting the help of others.
Avid readers of neuroscience and psychology will find many familiar ideas in Switch; managers charged with creating change will find these ideas cloaked, usefully, in colorful stories and metaphors.
Grace under Pressure
In Clutch: Why Some People Excel Under Pressure and Others Don’t, Paul Sullivan, a columnist for the New York Times, explores how to shine when the stakes and the pressure to perform are high. The secret that separates the players who are good in the clutch from those who choke, he says, is a well-developed ability to respond in stressful situations in a constructive way.
Sullivan summarizes this ability in five “clutch” principles and three “choke” principles that readers can use as guidelines for how — and how not — to deal with high-pressure situations. All the principles are copiously illustrated with stories of people and companies we know, which help the reader to see how the principles can be applied. Aside from his gimmicky reliance on the word clutch, Sullivan has written an easily digestible book.
The five key principles used by those who successfully handle pressure and perform well in clutch situations are focus, discipline, adapting, being present, and managing fear and desire. Focus is not the same as concentration; it is an intentional mapping of what you want to achieve. It requires thinking through the steps and the end game before you start playing. Discipline is staying with the plan, even in the face of great challenges. It is often the key to success. Adapting is knowing when and how to change the plan. It’s about, Sullivan says, “fighting the fight, not the plan.” Being present means being in a state of heightened awareness in the moment — it’s analogous to the state described by Mihaly Csikszentmihalyi in his book Flow: The Psychology of Optimal Experience (Harper & Row, 1990). Finally, managing fear and desire is using these emotions as motivators and drivers of performance without allowing them to paralyze you.
Sullivan employs a chapter-long analysis of how Billie Jean King beat Bobby Riggs in the highly publicized Battle of the Sexes tennis tournament in 1973 to summarize the clutch principles. He calls the tournament a double-clutch situation because King was playing not only to win the match, but to challenge the conventional thinking about women in sports.
The three principles for avoiding choking, which are described in part two of the book, are included to help the reader steer clear of the behaviors that cause people to fail to meet their goals in high-pressure situations. The principles are taking responsibility for your role in the situation; not allowing overthinking to take you out of being present; and ensuring that overconfidence doesn’t stop you from putting energy into focus, discipline, and living in the moment.
People who master clutch are really mastering the amygdala, the part of the human brain that responds to stress and that can sometimes seem to take control of us when we are in pressure-laden situations. Sullivan thinks we are all capable of creating stress-resilient maps that can enable us to traverse these toughest of territories. Clutch is a good place to start drafting such a map.
Beyond Carrots and Sticks
Reading Drive: The Surprising Truth about What Motivates Us, Daniel H. Pink’s newest book, can be depressing, especially as you realize how large a role extrinsic rewards and punishments play in our lives. That’s because the most prevalent means of motivation are what Pink calls if–then transactions: If you do this, then I’ll give you that.
These incentives for changing behavior are based on the assumption that motivation is extrinsic — people will do more of what you want if you reward them for it (the carrot) and will stop doing things if you punish them (the stick). But Drive suggests that we should limit our use of “currencies,” such as bonuses and fines that try to externally motivate people, and instead engage their intrinsic motivators, especially three paramount human needs.
These needs are autonomy, the freedom to make choices and determine our future; mastery, the ability to learn and grow our expertise; and purpose, the quest for meaning in our lives. They are wired into our brains, according to Pink, who supports his thesis by drawing on four decades of scientific research. When we do not satisfy these needs, we can fall into depression and lose our reason for being.
Pink singles out several companies that have put intrinsic motivation to work. He takes us inside 3M Company, where William McKnight, who served as the company’s president from 1929 to 1949 and its chairman from 1949 to 1966, came up with the unusual idea of giving employees free time for what he called experimental doodling, a practice that yielded Post-It notes, among many other new products. Pink also points to Google’s policy of allowing employees to devote 10 percent of their time to projects of their choice, which has produced services such Google News, Gmail, Google Translate, Google Talk, Google Sky, and more.
Pink explores the wide gap between what science teaches us about motivators and how companies actually seek to motivate people. For instance, one of the most prescient bodies of research presented in the book highlights the negative impact that extrinsic rewards have on productivity over time. This research found that extrinsic rewards narrow our focus to attaining the promised reward itself at the expense of everything else. As a result of holding this myopic view, companies such as Enron produce toxic environments and flawed decisions, as well as unethical and even criminal behavior.
Instead, says Pink, corporate leaders should create environments that enable people to be creative, empowered, and engaged, and that provide them with a sense of their intrinsic worth. The last section of the book, which contains an array of ideas, practices, questions to ponder, and action lists, should help in that endeavor.
Mapping the Intersections
Together, these books on the human mind are a welcome breakthrough in business writing. Each one addresses a sliver of the biggest challenge we have as human beings — how to align our map with the territory for sanity, for growth, and for success. Without this extraordinary ability, we fail to adapt to our changing world — and we get stuck in the past while the world evolves around us.
In the past, in mainstream publishing, you could not mix business topics with personal effectiveness topics. But these books confirm that the barrier has fallen. By integrating research from the fields of neuroscience and psychology into books about business challenges, their authors give us a new lens through which we can more effectively and successfully navigate our complex, unpredictable world.
The Right To Win
t’s 8 a.m. in the executive conference room of a large global packaged-foods manufacturer (a real company, its name withheld to preserve confidentiality). For the past two months, a team made up of 15 senior people has been exploring options for growth, winnowing them down to three basic strategies. Each is now summed up in a crisp 20-minute presentation.
The first option focuses on innovation. The company would rapidly develop and launch many new types of snacks and foods, packaged in new and interesting ways, offering leading-edge nutrition and convenience.
Under the second option, the company would get closer to its customers, producing the food people ask for. It could incorporate ideas gathered online into its offerings and provide busy working families with customizable, convenient, and well-balanced meals.
The third option would involve transforming the dynamics of the relevant food sectors by competing more aggressively. The company would become a category leader by investing in new process technology, rightsizing operations to push costs down, and completing key acquisitions.
After the screen goes blank, the CEO leans forward and asks a simple question: “Which strategy would give us the greatest right to win?” His tone, calm and direct, makes everyone sit up a little straighter. And they probably should, for this is the core question underlying every business strategy, although it isn’t always phrased that way.
A right to win is the ability to engage in any competitive market with a better-than-even chance of success — not just in the short term, but consistently. Imagine a coach, observing a player entering a sports competition, saying, “That kid has the right to win out there.” Or a teacher, watching a student about to take a test, saying, “That student deserves to excel.” What they are really saying is, “That contestant is the right player, in the right type of contest, with the precise capabilities needed to meet this particular challenge.” Of course, the contestant will lose at times, but over the years, a consistent innate advantage will establish itself, giving this contestant the ability to pull off seeming miracles while making it all look easy. This essential advantage is particularly rare in business — a more free-form and unpredictable game than sports or academia. But it is increasingly important at a time of unprecedented competitiveness.
The phrase right to win may strike some observers as arrogant. After all, no company has this kind of assurance handed to it. But that’s precisely the point. The right to win cannot be taken for granted. It must be earned. You earn it by making a series of pragmatic choices that align your most distinctive and important capabilities with the way you approach your chosen customers, and with the discipline to offer only the products and services that fit. At Booz & Company, where we call this approach a capabilities-driven strategy, research and experience have led us to conclude that only high levels of coherence — among market strategy, capabilities systems, and a company’s portfolio of offerings — can give any firm the right to win.
All corporate strategies are at heart theories about the right to win. That is why, for those trying to understand the nature of business success, the history of strategy is both helpful and fascinating. One valuable recent source is The Lords of Strategy: The Secret Intellectual History of the New Corporate World (Harvard Business Press, 2010), in which former Fortune managing editor Walter Kiechel recounts the prevailing theories of business strategy over the past 50 years, and the stories of the people who developed them. Drawing on Kiechel’s history and those of others, such as Henry Mintzberg, Bruce Ahlstrand, and Joseph Lampel in Strategy Safari: The Complete Guide through the Wilds of Strategic Management (2nd ed., FT Prentice Hall, 20
The Basic Tension in Strategy
Business strategy, as we know it today, has a relatively short history. The word strategy was first applied in print to mainstream business in 1962, with the publication of Alfred Chandler’s book Strategy and Structure: Chapters in the History of the Industrial Enterprise (MIT Press). Since then, at least a dozen major trends and ideas have appeared under the rubric of business strategy, often in great conflict with one another, often drawing companies in very different directions. Despite their differences, all four schools of strategy represent attempts to resolve the same basic underlying problem: the tension between two conflicting business realities.
The first reality is that advantage is transient. Even the most formidable market position can be vulnerable to technological disruptions, upstart competition, shifting capital flows, new regulatory regimes, political changes, and other facets of a chaotic and unpredictable business environment. As William P. Barnett showed in The Red Queen among Organizations: How Competitiveness Evolves (Princeton University Press, 2008), this turbulence can never level off into stability; as companies copy and outdo one another’s proficiencies, the game of business continually becomes more challenging. Rapid economic growth in emerging markets has made advantage even more transient, bringing billions of people into the global economy, along with hundreds of energetic new business competitors.
One might assume that the answer is to become completely resilient, morphing to match the changing demands of the market. But companies can’t, because of the second reality: Corporate identity is slow to change. The innate qualities of an organization that distinguish it from all others — its operational processes, culture, relationships, and distinctive capabilities — are built up gradually, decision by decision, and continually reinforced through organizational practices and conversations. Very few companies have thoroughly reinvented themselves, and those that have managed it have typically had to force many people out, including top executives, and to replace them with new recruits chosen for a different set of attitudes and skills. Even when leaders recognize the need for change or know that the company’s survival is at stake, this identity is difficult to shift; if no deliberate effort is made to refresh it, it can stagnate to the point where it erodes advantage from within. As writers such as Jim Collins, Clayton Christensen, and Donald Sull have noted, it’s all too easy for established companies to fall prey to complacency and hubris (Collins), entrenched customer relationships and disruptive technologies (Christensen), or inertia (Sull).
Yet although the “stickiness” of a company’s identity is typically regarded as a weakness, it’s also a great source of strength. No company can survive long, let alone distinguish itself, without a rich body of capabilities and a resonant corporate culture. Indeed, the fundamental enabler of strategy — the source of competitive advantage — is a distinctive, coherent corporate identity. This is the quality that attracts customers, investors, employees, and suppliers. It is grounded in internal capabilities (that is, the things your company can do with distinction) and in market realities (that is, the games in which your company chooses to play).
The yin and yang of strategic fad and fashion — the movement of business leadership from one trend to another over the past 50 years — has often led companies to make incoherent and ineffective moves. The answer is not to keep adopting new theories in hopes of finding the right answer, but to develop your own capabilities-driven strategy: your own theory of coherence for your business. How do you capture value, now and in the future, for your chosen customers? What are your most important capabilities, and how do they fit together? How do you align them with your portfolio of products and services? The more clearly and strongly you make these choices, the better your chances of creating a corporate identity that gives you the right to win in the long run. Not surprisingly, each of the four basic schools of thought in Exhibit 1 (position, execution, adaptation, and concentration) has something significant to offer business strategists, so long as they are adopted in an appropriately balanced way.
The Value of Position
According to Walter Kiechel, strategy became relatively formal in the 1960s for two reasons. The first was an increasing amount of available data on business costs, prices, and operational performance. The second reason was uncertainty, and the anxiety that went with it. The economic stability of the early 1960s dissolved into the turbulence of the 1970s and ’80s, striking different components of society with different degrees of prosperity and calamity. No company could ever be sure it would remain on top (even in established industries such as steel and automobiles), global economies were highly interconnected (although it wasn’t always quite clear how they might interact), and corporate decision making was increasingly constrained by fiercer capital markets and upstart technologies.
When intuitively obvious decisions fail, people yearn for better guidance. Thus, starting in the mid-1960s, the idea of strategic planning, with echoes of Napoleon, Carl von Clausewitz, and Sun Tzu, evolved into an irresistible business management fashion. In its pure form — as delineated by Kenneth Andrews and Igor Ansoff, the premier authorities on business strategy at that time — a strategy was an overarching plan for growth, usually written up in a formal document and endorsed by the CEO, aimed at creating an unassailable position for the company in the marketplace.
These early efforts by the position (or positioning) school assumed that the right to win would be held by companies that comprehensively analyzed all critical factors: external markets, internal capabilities, and the needs of society. Although Andrews said the goal should be a simple “informing idea” about the direction of the business, it inevitably became a complex checklist of strengths, weaknesses, opportunities, and threats (the origin of the SWOT analysis still prevalent today). This was long before the invention of the spreadsheet program, so big companies hired armies of planning staffers to compile all this data into elaborate documents, which were debated in annual strategy sessions that became exercises in bureaucratic complexity. Only gradually did it become clear that the plans did not correlate with real-world performance or issues.
A breakthrough in the position school occurred in 1966 when Bruce Henderson, founder of the Boston Consulting Group (BCG), began to market services based on what he called the “experience curve.” Analyzing cost and price data across companies and industries, Henderson showed that as experience with operations led to greater proficiency, the capacity to produce increased and costs dropped. The phenomenon was hardly noticeable month by month, but every few years, capacity doubled and costs dropped 10 to 30 percent, so reliably that many companies could plan their investment cycles and competitive marketing accordingly. For example, Texas Instruments Inc. (TI) cut the prices of its semiconductor chips and electronic calculators every few months. Sales rose as customers switched to TI from competitors, and production costs then fell further, which allowed TI to drop prices even more. Even the billing procedures and advertising budgets became more efficient as those departments managed greater volumes.
To Henderson, the right to win went to companies that made the best use of the experience curve by holding the leading position in market share for their sectors. This meant emphasizing the value of some divisions over others, basing those judgments on the dynamics of each business’s customer base (Henderson was an early proponent of market segmentation) and on its competitive position. The famous growth-share matrix divided a company’s businesses into “stars” (high growth and market share), “dogs” (low growth and share), “question marks” (high growth, low share) and “cash cows” (low growth, high share), thus providing a clear rationale for reallocating investment. For instance, it was worth borrowing money to keep a star shining, because a star might end up dominating its market niche.
The experience curve and growth-share matrix rapidly became popular because they worked powerfully well — at first. But in practice, these tools had a serious flaw: As retroactive analyses of a company’s past success, they made it irresistible to continue that same behavior into the future, even when circumstances changed (for example, when competitors began to apply the same approach). This led many companies into counterproductive strategies. Some, including Texas Instruments, got caught up in ruthless price wars that contributed to the commoditization of their own products.
More generally, many business leaders became disenchanted with the idea of formal strategic planning. It was expensive, and it didn’t necessarily make companies profitable. For example, Ford and General Motors experienced losses of more than US$500 million in 1979 and 1980 — their first such losses in decades. In the aftermath of these and other sharp reversals, mainstream business leaders began to question the wisdom of the position school, and its claim on the right to win.
Execution Strikes Back
Those most annoyed by the position school tended to be in production and operations. No wonder, then, that the first great contrary reaction came from operations; specifically, from the Harvard Business School’s (HBS) operations management department, which had been gradually losing status to finance. Two members of the faculty found themselves in Vevey, Switzerland, during the summer of 1979: William Abernathy, the HBS expert on auto manufacturing, and Robert Hayes, known for his studies of assembly lines. Researching the differences between European and U.S. multinationals, Hayes visited a small machine tool manufacturer in southern Germany. Sophisticated Americans barely understood computer-aided manufacturing software, but this firm of 40 people was using it on a daily basis, and producing custom-made tools. Other plants in Germany, Switzerland, France, and even eastern Europe were using machine tools in ways that the Americans couldn’t match.
At a seminar that summer, a European businessman asked Hayes why American productivity had declined so much during the past 10 years. Hayes hauled out the standard answers: organized labor, government regulations, the oil crisis, and the attitudes of the younger generation (which, at the time, meant the baby boomers). The attendees looked at him with polite amusement. “We have all those factors here,” one said, “and our productivity is increasing.”
Confused and shaken, Hayes began taking regular hikes and having long conversations with Abernathy, who had just arrived in Vevey and saw similar stagnation in the U.S. auto industry. Only one explanation made sense to them: The reliance on market share and financial growth as strategic objectives was crippling U.S. industry. For example, many companies had cut back any initiative that didn’t seem to guarantee rapid returns, and the entire U.S. economy was suffering as a result.
Abernathy and Hayes wrote up this conclusion in an article for the Harvard Business Review (HBR) called “Managing Our Way to Economic Decline,” published in July/August 1980. It is still one of the magazine’s most requested reprints, and one of the most controversial articles in its history. They had introduced another school of strategic thought, based on the idea that the right to win came from execution and operational excellence: the development and deployment of better practices, processes, technologies, and products.
The execution message was bolstered by companies such as General Electric and Motorola, which provided influential examples of operations-oriented strategies with their reliance on executive training and such practices as Six Sigma.
Operational excellence was also a basic tenet of the quality movement — the continuous improvement practices that were developed at the Toyota Motor Corporation and a few other Japanese companies in the 1950s and ’60s and are now generally known as lean management. Of the many people associated with the quality movement, including Toyota’s influential chief scientist Taiichi Ohno, the most significant for corporate strategy was W. Edwards Deming. Deming was an American statistician born in 1900. He began consulting regularly in Japan just after World War II, helping Japanese companies develop their production systems. Ignored in the West at first, he became prominent in the United States after 1980, and actively taught and consulted with many of the world’s leading companies until his death in 1993. Deming saw his methods as critical for escaping economic malaise (his most prominent book was titled Out of the Crisis [MIT Press, 1986]). In his view, the right to win was held by companies that honed and refined their day-to-day processes and practices, eliminating waste, training people throughout the company to use statistical methods, and cultivating the intrinsic “joy in work” that people feel when they are truly engaged in their jobs.
Although the execution school would be frequently challenged, it continued to gain influence through the early 1990s — especially after it was adapted by Michael Hammer, an MIT computer science professor, into an approach called “reengineering.” According to Hammer, the right to win went to companies that looked freshly at all their processes, as if redesigning them from scratch. Unfortunately, many companies used reengineering as a launching pad for across-the-board layoffs that left them weaker, and operational excellence couldn’t compete with the exuberance of the high-tech bubble. By the end of the 1990s, execution-based strategy had been largely relegated to the production side of the business.
The idea of building value through managerial methods returned to strategic relevance after the dot-com bubble burst. Its return was symbolized by the business bestseller Execution: The Discipline of Getting Things Done, by strategy expert Ram Charan and then Honeywell CEO Larry Bossidy, a well-known GE alumnus (with Charles Burck; Crown Business, 2002). Many leaders now understood, through experience, both the value of improving execution and its challenges. It generally required major changes in managerial and employee behavior. As BCG strategist George Stalk complained to Walter Kiechel, “That was a lot more difficult than just ‘buying a concept off a shelf.’”
Michael Porter’s Advantage
The other major limit of the execution school was best articulated by HBS professor Michael Porter — probably the most influential thinker on corporate strategy in the institution’s history, and a source of new vitality for the position school. In his early publications, from the late 1970s to the early 1990s, Porter brought positioning to a level of unprecedented sophistication. He recast the turbulence of a company’s business environment into a “value chain” and “five forces” (competitors, customers, suppliers, aspiring entrants, and substitute offerings): two frameworks that could be used to analyze the value potential and competitive intensity of any business.
Then, in his flagship HBR article called “What Is Strategy?” (November/December 1996) Porter pointed out that operational excellence could guarantee competitive advantage for only a limited time. After that, it too would lead to diminishing returns as other companies caught up. (Indeed, most observers believe that Ford, GM, and other Western automobile manufacturers have done exactly that between 1980 and 2010; it may have taken them 30 years, but the quality and resale value of their motor vehicles is, as a whole, rising to meet that of Toyota and Honda.)
To Porter, execution-oriented ideas like reengineering, benchmarking, outsourcing, and change management all had the same strategic limit. They all led to better operations, but ignored the question of which businesses to operate in the first place. Porter argued for picking industries or markets where either overall conditions were favorable — where most companies were relatively weak, suppliers had relatively little clout, and aspiring entrants were few — or where a company could differentiate itself. In “What Is Strategy?” Porter used Southwest Airlines Company as an example of differentiation in a relatively unattractive industry. Southwest’s market power came from the choice not to follow the spoke-and-hub routing model of other airlines, but to offer “a unique and valuable strategic position” — flying only direct routes, with one type of aircraft, using automated ticketing and limited services (for example, no assigned seats). These and other strategic choices allowed the airline to operate a different type of flying business, one that could offer attractive prices and convenience even when compared with travel by bus, train, or car. Sure, operational excellence was involved: Southwest had perfected fast turnarounds and friendly customer service. But the core strategic decision was the pursuit of simplicity through a clear market strategy.
The position school became a major driver of the resurgence of corporate competitiveness in the West during the 1980s and ’90s. W. Chan Kim and Renée Mauborgne took the position argument to its extreme with Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant (Harvard Business School Press, 2005). Big companies, they advised, should look for new upstart positions themselves, in places where there were no competitors already, breaking out of conventional ways of looking at their industry. The popularity of that approach demonstrated the pressure that business leaders felt to break free of established practices and find a niche that they could dominate with first-mover advantage.
The limits of the position school became evident in the 1990s and 2000s. Although Michael Porter took pains to explain that industry structures can change and can be shaped by the actions of leading companies, he was interpreted as saying that some industries are innately good and others are irredeemably bad. To many corporate leaders in tough businesses, or in highly regulated industries like electric power generation, there was no real advantage to developing distinctive capabilities or facility with execution. Some companies tried to escape by entering new businesses where they had no distinctive capabilities, “blue oceans” where they didn’t know how to swim. These efforts generally failed. And as the 2000s unfolded, companies with enviable market positions, such as Microsoft, also saw their advantage fade when new competitors, such as Google, emerged. This didn’t disprove Porter’s hypothesis, but it gave others an opening to criticize his thinking.
Adaptation and Experimentation
Starting in the 1990s, another group of strategy thinkers provided an alternative to the position and execution schools. This was the idea of strategy as perpetual adaptation, best represented by Henry Mintzberg, professor of management studies at McGill University. In his history The Rise and Fall of Strategic Planning: Reconceiving Roles for Planning, Plans, Planners (Free Press, 1994), Mintzberg dismissed the position school (which he called the design school) as formulaic. He acknowledged that execution was important, and much of his work was dedicated to analyzing what managers did in practice, but, like Porter, he felt execution was insufficient for success. His strategic approach centered on finding a more creative, experimental approach to executive decision making.
Thus, instead of analysis and planning, executives in the adaptation school (or, as Mintzberg called it, the learning school) sought to gain the right to win by experimenting with new directions. In Mintzberg’s words, they “let a thousand strategic flowers bloom...[using] an insightful style, to detect the patterns of success in these gardens of strategic flowers, rather than a cerebral style that favors analytical techniques to develop strategies in a hothouse.”
Adaptation has helped many companies; it’s been the source, for example, of the vitality of the Chinese manufacturing industry. It’s also been the most central guiding theme of Tom Peters’s work. The companies applauded by Peters — starting with his seminal business bestseller, In Search of Excellence: Lessons from America’s Best-Run Companies (with Robert Waterman; Harper & Row, 1982) — have varied enormously in their industries, approaches, and philosophies, but they all share a willingness to experiment with new ideas and directions, discard those that won’t work, and adjust their efforts to meet new challenges.
But the adaptation school is also seriously limited, because its freewheeling nature tends to lead to incoherence. A multitude of products and services that all have different capability needs and different market positions cannot possibly be brought into sync. The more diverse a company’s efforts become, the more it costs to develop and apply the advantaged capabilities they need. Letting a thousand flowers bloom can lead to a field full of weeds — and to businesses that can’t match the expertise and resources of more focused, coherent competitors.
Concentration at the Core
Hence the appeal of the fourth group of strategy thinkers — the concentration school. Its forerunners were Gary Hamel and C.K. Prahalad, authors of Competing for the Future (Harvard Business School Press, 1994), who argued that the most effective companies owed their success to a select set of “core competencies”: These were the bedrock skills and technological capabilities (such as new forms of hardware, software, systems, biotechnology, and financial engineering) that allowed companies to compete in distinctive ways. Companies that focused on these, and used them to develop a long-range “strategic intent,” would claim the right to win.
Chris Zook of Bain & Company, drawing on his firm’s experience with private equity, has been the most prominent recent exponent of this school. In his book Profit from the Core: A Return to Growth in Turbulent Times (2001, with James Allen; Harvard Business Press, 2010), he argues that the right to win tends to accrue to companies that stick to their core businesses and find new ways to exploit them for growth and value. This means differentiating a company by starting with its central capabilities: Enterprise, Dollar/Thrifty, and Avis all prospered by focusing on, respectively, rentals for people with car repairs, vacationers, and business travelers.
However, in practice, the concentration strategy often becomes a way of holding on to old approaches, even when they become outdated. Many companies (and private equity firms) translate this strategy into slash-and-burn retrenchment. They cut costs and minimize investments in R&D and marketing to create a pared-down company that produces more profits at first, but that can’t sustain the growth required for a healthy bottom line. When they seek to grow, it’s through “adjacencies”: products or services that seem related to their existing core businesses. But many adjacencies are less profitable than they were expected to be, in part because they may require very different capabilities — and in part because the truly successful game-changing leaps, like Apple’s into consumer media or Tata’s into the inexpensive Nano automobile, can’t be managed from a concentration strategy alone.
Strategy as a Way of Life
It’s important to note that most of the thinkers who introduced these strategies to business leaders saw the challenges and limits of their approaches, and even warned against misapplying them. But businesspeople misapplied them nonetheless. Each theory thus backfired, and created opportunities for the next.
How can your company gain the most from considering all these theories of the right to win? Only by stepping back, away from any particular answer, to look at your company’s identity as a whole, encompassing the way you expect to compete, the capabilities with which you will compete, and the portfolio decisions that fit. In fact, that’s exactly what happens with the packaged-foods company described at the beginning of this article.
The CEO’s question about the right to win has sparked many levels of discussion. For several more days, spread over a few weeks, the executive team talks through its three proposed strategies in detail: the estimated market value of each, the risks involved, and the capabilities required. All three strategies have roughly the same potential for increasing enterprise value, but the differences among them become clear when the functional leaders speak.
For example, the head of operations explains that the three strategies would require completely different investments. Becoming an innovator would mean configuring a flexible value chain to launch new products rapidly and economically. The closer-to-customers option would mean selling more food at different temperatures: some frozen, some fresh. It would also mean building a more direct, collaborative relationship between operations and R&D. And the category transformation strategy would require new process technologies, economies of scale, and deftly managed acquisitions.
The head of marketing and sales has a similar presentation. As an innovator, the company would focus advertising and promotion on new products, while ensuring rapid, widespread retail distribution. Being a solutions provider would move the company directly into engagement with consumers, through websites, social media, and better in-store displays. As a category leader, the company would seek to own the grocery shelf through “sharp pencil” tactics (in other words, tactics tailored to each brand and geographic region) for pricing, promotion, and merchandising.
The company executives ultimately settle on the category leader strategy. It fits best with the capabilities that they already have. Another company, even with the same market dynamics, might choose differently — appropriately so, because of very different capabilities and customs.
A capabilities-driven strategy process, like this one, takes into account “market back” aspirations (the position the leaders want to hold) and “capabilities forward” concerns (the company’s ability to deliver). In the course of discussion, ideas from all four schools of thought come forward: ideas about holding an unassailable position, executing with new capabilities, adapting rapidly to competitive pressures, and focusing on the core business as a platform for growth. It takes time to complete this process, and it is very difficult and stressful at times, but the company gains, in the end, from a far higher level of coherence.
It’s taken 50 years for the field of business strategy to reach the point at which many companies can conduct this kind of conversation effectively. Most companies have relied on business strategists for strategic answers. But now we see that we have to generate our own answers — our own theory of the right to win for each company, with its unique identity and circumstances — and that we have the tools to do so. Given the pressures that business continues to face, this leap in knowledge is coming just in time.t
The first option focuses on innovation. The company would rapidly develop and launch many new types of snacks and foods, packaged in new and interesting ways, offering leading-edge nutrition and convenience.
Under the second option, the company would get closer to its customers, producing the food people ask for. It could incorporate ideas gathered online into its offerings and provide busy working families with customizable, convenient, and well-balanced meals.
The third option would involve transforming the dynamics of the relevant food sectors by competing more aggressively. The company would become a category leader by investing in new process technology, rightsizing operations to push costs down, and completing key acquisitions.
After the screen goes blank, the CEO leans forward and asks a simple question: “Which strategy would give us the greatest right to win?” His tone, calm and direct, makes everyone sit up a little straighter. And they probably should, for this is the core question underlying every business strategy, although it isn’t always phrased that way.
A right to win is the ability to engage in any competitive market with a better-than-even chance of success — not just in the short term, but consistently. Imagine a coach, observing a player entering a sports competition, saying, “That kid has the right to win out there.” Or a teacher, watching a student about to take a test, saying, “That student deserves to excel.” What they are really saying is, “That contestant is the right player, in the right type of contest, with the precise capabilities needed to meet this particular challenge.” Of course, the contestant will lose at times, but over the years, a consistent innate advantage will establish itself, giving this contestant the ability to pull off seeming miracles while making it all look easy. This essential advantage is particularly rare in business — a more free-form and unpredictable game than sports or academia. But it is increasingly important at a time of unprecedented competitiveness.
The phrase right to win may strike some observers as arrogant. After all, no company has this kind of assurance handed to it. But that’s precisely the point. The right to win cannot be taken for granted. It must be earned. You earn it by making a series of pragmatic choices that align your most distinctive and important capabilities with the way you approach your chosen customers, and with the discipline to offer only the products and services that fit. At Booz & Company, where we call this approach a capabilities-driven strategy, research and experience have led us to conclude that only high levels of coherence — among market strategy, capabilities systems, and a company’s portfolio of offerings — can give any firm the right to win.
All corporate strategies are at heart theories about the right to win. That is why, for those trying to understand the nature of business success, the history of strategy is both helpful and fascinating. One valuable recent source is The Lords of Strategy: The Secret Intellectual History of the New Corporate World (Harvard Business Press, 2010), in which former Fortune managing editor Walter Kiechel recounts the prevailing theories of business strategy over the past 50 years, and the stories of the people who developed them. Drawing on Kiechel’s history and those of others, such as Henry Mintzberg, Bruce Ahlstrand, and Joseph Lampel in Strategy Safari: The Complete Guide through the Wilds of Strategic Management (2nd ed., FT Prentice Hall, 20
The Basic Tension in Strategy
Business strategy, as we know it today, has a relatively short history. The word strategy was first applied in print to mainstream business in 1962, with the publication of Alfred Chandler’s book Strategy and Structure: Chapters in the History of the Industrial Enterprise (MIT Press). Since then, at least a dozen major trends and ideas have appeared under the rubric of business strategy, often in great conflict with one another, often drawing companies in very different directions. Despite their differences, all four schools of strategy represent attempts to resolve the same basic underlying problem: the tension between two conflicting business realities.
The first reality is that advantage is transient. Even the most formidable market position can be vulnerable to technological disruptions, upstart competition, shifting capital flows, new regulatory regimes, political changes, and other facets of a chaotic and unpredictable business environment. As William P. Barnett showed in The Red Queen among Organizations: How Competitiveness Evolves (Princeton University Press, 2008), this turbulence can never level off into stability; as companies copy and outdo one another’s proficiencies, the game of business continually becomes more challenging. Rapid economic growth in emerging markets has made advantage even more transient, bringing billions of people into the global economy, along with hundreds of energetic new business competitors.
One might assume that the answer is to become completely resilient, morphing to match the changing demands of the market. But companies can’t, because of the second reality: Corporate identity is slow to change. The innate qualities of an organization that distinguish it from all others — its operational processes, culture, relationships, and distinctive capabilities — are built up gradually, decision by decision, and continually reinforced through organizational practices and conversations. Very few companies have thoroughly reinvented themselves, and those that have managed it have typically had to force many people out, including top executives, and to replace them with new recruits chosen for a different set of attitudes and skills. Even when leaders recognize the need for change or know that the company’s survival is at stake, this identity is difficult to shift; if no deliberate effort is made to refresh it, it can stagnate to the point where it erodes advantage from within. As writers such as Jim Collins, Clayton Christensen, and Donald Sull have noted, it’s all too easy for established companies to fall prey to complacency and hubris (Collins), entrenched customer relationships and disruptive technologies (Christensen), or inertia (Sull).
Yet although the “stickiness” of a company’s identity is typically regarded as a weakness, it’s also a great source of strength. No company can survive long, let alone distinguish itself, without a rich body of capabilities and a resonant corporate culture. Indeed, the fundamental enabler of strategy — the source of competitive advantage — is a distinctive, coherent corporate identity. This is the quality that attracts customers, investors, employees, and suppliers. It is grounded in internal capabilities (that is, the things your company can do with distinction) and in market realities (that is, the games in which your company chooses to play).
The yin and yang of strategic fad and fashion — the movement of business leadership from one trend to another over the past 50 years — has often led companies to make incoherent and ineffective moves. The answer is not to keep adopting new theories in hopes of finding the right answer, but to develop your own capabilities-driven strategy: your own theory of coherence for your business. How do you capture value, now and in the future, for your chosen customers? What are your most important capabilities, and how do they fit together? How do you align them with your portfolio of products and services? The more clearly and strongly you make these choices, the better your chances of creating a corporate identity that gives you the right to win in the long run. Not surprisingly, each of the four basic schools of thought in Exhibit 1 (position, execution, adaptation, and concentration) has something significant to offer business strategists, so long as they are adopted in an appropriately balanced way.
The Value of Position
According to Walter Kiechel, strategy became relatively formal in the 1960s for two reasons. The first was an increasing amount of available data on business costs, prices, and operational performance. The second reason was uncertainty, and the anxiety that went with it. The economic stability of the early 1960s dissolved into the turbulence of the 1970s and ’80s, striking different components of society with different degrees of prosperity and calamity. No company could ever be sure it would remain on top (even in established industries such as steel and automobiles), global economies were highly interconnected (although it wasn’t always quite clear how they might interact), and corporate decision making was increasingly constrained by fiercer capital markets and upstart technologies.
When intuitively obvious decisions fail, people yearn for better guidance. Thus, starting in the mid-1960s, the idea of strategic planning, with echoes of Napoleon, Carl von Clausewitz, and Sun Tzu, evolved into an irresistible business management fashion. In its pure form — as delineated by Kenneth Andrews and Igor Ansoff, the premier authorities on business strategy at that time — a strategy was an overarching plan for growth, usually written up in a formal document and endorsed by the CEO, aimed at creating an unassailable position for the company in the marketplace.
These early efforts by the position (or positioning) school assumed that the right to win would be held by companies that comprehensively analyzed all critical factors: external markets, internal capabilities, and the needs of society. Although Andrews said the goal should be a simple “informing idea” about the direction of the business, it inevitably became a complex checklist of strengths, weaknesses, opportunities, and threats (the origin of the SWOT analysis still prevalent today). This was long before the invention of the spreadsheet program, so big companies hired armies of planning staffers to compile all this data into elaborate documents, which were debated in annual strategy sessions that became exercises in bureaucratic complexity. Only gradually did it become clear that the plans did not correlate with real-world performance or issues.
A breakthrough in the position school occurred in 1966 when Bruce Henderson, founder of the Boston Consulting Group (BCG), began to market services based on what he called the “experience curve.” Analyzing cost and price data across companies and industries, Henderson showed that as experience with operations led to greater proficiency, the capacity to produce increased and costs dropped. The phenomenon was hardly noticeable month by month, but every few years, capacity doubled and costs dropped 10 to 30 percent, so reliably that many companies could plan their investment cycles and competitive marketing accordingly. For example, Texas Instruments Inc. (TI) cut the prices of its semiconductor chips and electronic calculators every few months. Sales rose as customers switched to TI from competitors, and production costs then fell further, which allowed TI to drop prices even more. Even the billing procedures and advertising budgets became more efficient as those departments managed greater volumes.
To Henderson, the right to win went to companies that made the best use of the experience curve by holding the leading position in market share for their sectors. This meant emphasizing the value of some divisions over others, basing those judgments on the dynamics of each business’s customer base (Henderson was an early proponent of market segmentation) and on its competitive position. The famous growth-share matrix divided a company’s businesses into “stars” (high growth and market share), “dogs” (low growth and share), “question marks” (high growth, low share) and “cash cows” (low growth, high share), thus providing a clear rationale for reallocating investment. For instance, it was worth borrowing money to keep a star shining, because a star might end up dominating its market niche.
The experience curve and growth-share matrix rapidly became popular because they worked powerfully well — at first. But in practice, these tools had a serious flaw: As retroactive analyses of a company’s past success, they made it irresistible to continue that same behavior into the future, even when circumstances changed (for example, when competitors began to apply the same approach). This led many companies into counterproductive strategies. Some, including Texas Instruments, got caught up in ruthless price wars that contributed to the commoditization of their own products.
More generally, many business leaders became disenchanted with the idea of formal strategic planning. It was expensive, and it didn’t necessarily make companies profitable. For example, Ford and General Motors experienced losses of more than US$500 million in 1979 and 1980 — their first such losses in decades. In the aftermath of these and other sharp reversals, mainstream business leaders began to question the wisdom of the position school, and its claim on the right to win.
Execution Strikes Back
Those most annoyed by the position school tended to be in production and operations. No wonder, then, that the first great contrary reaction came from operations; specifically, from the Harvard Business School’s (HBS) operations management department, which had been gradually losing status to finance. Two members of the faculty found themselves in Vevey, Switzerland, during the summer of 1979: William Abernathy, the HBS expert on auto manufacturing, and Robert Hayes, known for his studies of assembly lines. Researching the differences between European and U.S. multinationals, Hayes visited a small machine tool manufacturer in southern Germany. Sophisticated Americans barely understood computer-aided manufacturing software, but this firm of 40 people was using it on a daily basis, and producing custom-made tools. Other plants in Germany, Switzerland, France, and even eastern Europe were using machine tools in ways that the Americans couldn’t match.
At a seminar that summer, a European businessman asked Hayes why American productivity had declined so much during the past 10 years. Hayes hauled out the standard answers: organized labor, government regulations, the oil crisis, and the attitudes of the younger generation (which, at the time, meant the baby boomers). The attendees looked at him with polite amusement. “We have all those factors here,” one said, “and our productivity is increasing.”
Confused and shaken, Hayes began taking regular hikes and having long conversations with Abernathy, who had just arrived in Vevey and saw similar stagnation in the U.S. auto industry. Only one explanation made sense to them: The reliance on market share and financial growth as strategic objectives was crippling U.S. industry. For example, many companies had cut back any initiative that didn’t seem to guarantee rapid returns, and the entire U.S. economy was suffering as a result.
Abernathy and Hayes wrote up this conclusion in an article for the Harvard Business Review (HBR) called “Managing Our Way to Economic Decline,” published in July/August 1980. It is still one of the magazine’s most requested reprints, and one of the most controversial articles in its history. They had introduced another school of strategic thought, based on the idea that the right to win came from execution and operational excellence: the development and deployment of better practices, processes, technologies, and products.
The execution message was bolstered by companies such as General Electric and Motorola, which provided influential examples of operations-oriented strategies with their reliance on executive training and such practices as Six Sigma.
Operational excellence was also a basic tenet of the quality movement — the continuous improvement practices that were developed at the Toyota Motor Corporation and a few other Japanese companies in the 1950s and ’60s and are now generally known as lean management. Of the many people associated with the quality movement, including Toyota’s influential chief scientist Taiichi Ohno, the most significant for corporate strategy was W. Edwards Deming. Deming was an American statistician born in 1900. He began consulting regularly in Japan just after World War II, helping Japanese companies develop their production systems. Ignored in the West at first, he became prominent in the United States after 1980, and actively taught and consulted with many of the world’s leading companies until his death in 1993. Deming saw his methods as critical for escaping economic malaise (his most prominent book was titled Out of the Crisis [MIT Press, 1986]). In his view, the right to win was held by companies that honed and refined their day-to-day processes and practices, eliminating waste, training people throughout the company to use statistical methods, and cultivating the intrinsic “joy in work” that people feel when they are truly engaged in their jobs.
Although the execution school would be frequently challenged, it continued to gain influence through the early 1990s — especially after it was adapted by Michael Hammer, an MIT computer science professor, into an approach called “reengineering.” According to Hammer, the right to win went to companies that looked freshly at all their processes, as if redesigning them from scratch. Unfortunately, many companies used reengineering as a launching pad for across-the-board layoffs that left them weaker, and operational excellence couldn’t compete with the exuberance of the high-tech bubble. By the end of the 1990s, execution-based strategy had been largely relegated to the production side of the business.
The idea of building value through managerial methods returned to strategic relevance after the dot-com bubble burst. Its return was symbolized by the business bestseller Execution: The Discipline of Getting Things Done, by strategy expert Ram Charan and then Honeywell CEO Larry Bossidy, a well-known GE alumnus (with Charles Burck; Crown Business, 2002). Many leaders now understood, through experience, both the value of improving execution and its challenges. It generally required major changes in managerial and employee behavior. As BCG strategist George Stalk complained to Walter Kiechel, “That was a lot more difficult than just ‘buying a concept off a shelf.’”
Michael Porter’s Advantage
The other major limit of the execution school was best articulated by HBS professor Michael Porter — probably the most influential thinker on corporate strategy in the institution’s history, and a source of new vitality for the position school. In his early publications, from the late 1970s to the early 1990s, Porter brought positioning to a level of unprecedented sophistication. He recast the turbulence of a company’s business environment into a “value chain” and “five forces” (competitors, customers, suppliers, aspiring entrants, and substitute offerings): two frameworks that could be used to analyze the value potential and competitive intensity of any business.
Then, in his flagship HBR article called “What Is Strategy?” (November/December 1996) Porter pointed out that operational excellence could guarantee competitive advantage for only a limited time. After that, it too would lead to diminishing returns as other companies caught up. (Indeed, most observers believe that Ford, GM, and other Western automobile manufacturers have done exactly that between 1980 and 2010; it may have taken them 30 years, but the quality and resale value of their motor vehicles is, as a whole, rising to meet that of Toyota and Honda.)
To Porter, execution-oriented ideas like reengineering, benchmarking, outsourcing, and change management all had the same strategic limit. They all led to better operations, but ignored the question of which businesses to operate in the first place. Porter argued for picking industries or markets where either overall conditions were favorable — where most companies were relatively weak, suppliers had relatively little clout, and aspiring entrants were few — or where a company could differentiate itself. In “What Is Strategy?” Porter used Southwest Airlines Company as an example of differentiation in a relatively unattractive industry. Southwest’s market power came from the choice not to follow the spoke-and-hub routing model of other airlines, but to offer “a unique and valuable strategic position” — flying only direct routes, with one type of aircraft, using automated ticketing and limited services (for example, no assigned seats). These and other strategic choices allowed the airline to operate a different type of flying business, one that could offer attractive prices and convenience even when compared with travel by bus, train, or car. Sure, operational excellence was involved: Southwest had perfected fast turnarounds and friendly customer service. But the core strategic decision was the pursuit of simplicity through a clear market strategy.
The position school became a major driver of the resurgence of corporate competitiveness in the West during the 1980s and ’90s. W. Chan Kim and Renée Mauborgne took the position argument to its extreme with Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant (Harvard Business School Press, 2005). Big companies, they advised, should look for new upstart positions themselves, in places where there were no competitors already, breaking out of conventional ways of looking at their industry. The popularity of that approach demonstrated the pressure that business leaders felt to break free of established practices and find a niche that they could dominate with first-mover advantage.
The limits of the position school became evident in the 1990s and 2000s. Although Michael Porter took pains to explain that industry structures can change and can be shaped by the actions of leading companies, he was interpreted as saying that some industries are innately good and others are irredeemably bad. To many corporate leaders in tough businesses, or in highly regulated industries like electric power generation, there was no real advantage to developing distinctive capabilities or facility with execution. Some companies tried to escape by entering new businesses where they had no distinctive capabilities, “blue oceans” where they didn’t know how to swim. These efforts generally failed. And as the 2000s unfolded, companies with enviable market positions, such as Microsoft, also saw their advantage fade when new competitors, such as Google, emerged. This didn’t disprove Porter’s hypothesis, but it gave others an opening to criticize his thinking.
Adaptation and Experimentation
Starting in the 1990s, another group of strategy thinkers provided an alternative to the position and execution schools. This was the idea of strategy as perpetual adaptation, best represented by Henry Mintzberg, professor of management studies at McGill University. In his history The Rise and Fall of Strategic Planning: Reconceiving Roles for Planning, Plans, Planners (Free Press, 1994), Mintzberg dismissed the position school (which he called the design school) as formulaic. He acknowledged that execution was important, and much of his work was dedicated to analyzing what managers did in practice, but, like Porter, he felt execution was insufficient for success. His strategic approach centered on finding a more creative, experimental approach to executive decision making.
Thus, instead of analysis and planning, executives in the adaptation school (or, as Mintzberg called it, the learning school) sought to gain the right to win by experimenting with new directions. In Mintzberg’s words, they “let a thousand strategic flowers bloom...[using] an insightful style, to detect the patterns of success in these gardens of strategic flowers, rather than a cerebral style that favors analytical techniques to develop strategies in a hothouse.”
Adaptation has helped many companies; it’s been the source, for example, of the vitality of the Chinese manufacturing industry. It’s also been the most central guiding theme of Tom Peters’s work. The companies applauded by Peters — starting with his seminal business bestseller, In Search of Excellence: Lessons from America’s Best-Run Companies (with Robert Waterman; Harper & Row, 1982) — have varied enormously in their industries, approaches, and philosophies, but they all share a willingness to experiment with new ideas and directions, discard those that won’t work, and adjust their efforts to meet new challenges.
But the adaptation school is also seriously limited, because its freewheeling nature tends to lead to incoherence. A multitude of products and services that all have different capability needs and different market positions cannot possibly be brought into sync. The more diverse a company’s efforts become, the more it costs to develop and apply the advantaged capabilities they need. Letting a thousand flowers bloom can lead to a field full of weeds — and to businesses that can’t match the expertise and resources of more focused, coherent competitors.
Concentration at the Core
Hence the appeal of the fourth group of strategy thinkers — the concentration school. Its forerunners were Gary Hamel and C.K. Prahalad, authors of Competing for the Future (Harvard Business School Press, 1994), who argued that the most effective companies owed their success to a select set of “core competencies”: These were the bedrock skills and technological capabilities (such as new forms of hardware, software, systems, biotechnology, and financial engineering) that allowed companies to compete in distinctive ways. Companies that focused on these, and used them to develop a long-range “strategic intent,” would claim the right to win.
Chris Zook of Bain & Company, drawing on his firm’s experience with private equity, has been the most prominent recent exponent of this school. In his book Profit from the Core: A Return to Growth in Turbulent Times (2001, with James Allen; Harvard Business Press, 2010), he argues that the right to win tends to accrue to companies that stick to their core businesses and find new ways to exploit them for growth and value. This means differentiating a company by starting with its central capabilities: Enterprise, Dollar/Thrifty, and Avis all prospered by focusing on, respectively, rentals for people with car repairs, vacationers, and business travelers.
However, in practice, the concentration strategy often becomes a way of holding on to old approaches, even when they become outdated. Many companies (and private equity firms) translate this strategy into slash-and-burn retrenchment. They cut costs and minimize investments in R&D and marketing to create a pared-down company that produces more profits at first, but that can’t sustain the growth required for a healthy bottom line. When they seek to grow, it’s through “adjacencies”: products or services that seem related to their existing core businesses. But many adjacencies are less profitable than they were expected to be, in part because they may require very different capabilities — and in part because the truly successful game-changing leaps, like Apple’s into consumer media or Tata’s into the inexpensive Nano automobile, can’t be managed from a concentration strategy alone.
Strategy as a Way of Life
It’s important to note that most of the thinkers who introduced these strategies to business leaders saw the challenges and limits of their approaches, and even warned against misapplying them. But businesspeople misapplied them nonetheless. Each theory thus backfired, and created opportunities for the next.
How can your company gain the most from considering all these theories of the right to win? Only by stepping back, away from any particular answer, to look at your company’s identity as a whole, encompassing the way you expect to compete, the capabilities with which you will compete, and the portfolio decisions that fit. In fact, that’s exactly what happens with the packaged-foods company described at the beginning of this article.
The CEO’s question about the right to win has sparked many levels of discussion. For several more days, spread over a few weeks, the executive team talks through its three proposed strategies in detail: the estimated market value of each, the risks involved, and the capabilities required. All three strategies have roughly the same potential for increasing enterprise value, but the differences among them become clear when the functional leaders speak.
For example, the head of operations explains that the three strategies would require completely different investments. Becoming an innovator would mean configuring a flexible value chain to launch new products rapidly and economically. The closer-to-customers option would mean selling more food at different temperatures: some frozen, some fresh. It would also mean building a more direct, collaborative relationship between operations and R&D. And the category transformation strategy would require new process technologies, economies of scale, and deftly managed acquisitions.
The head of marketing and sales has a similar presentation. As an innovator, the company would focus advertising and promotion on new products, while ensuring rapid, widespread retail distribution. Being a solutions provider would move the company directly into engagement with consumers, through websites, social media, and better in-store displays. As a category leader, the company would seek to own the grocery shelf through “sharp pencil” tactics (in other words, tactics tailored to each brand and geographic region) for pricing, promotion, and merchandising.
The company executives ultimately settle on the category leader strategy. It fits best with the capabilities that they already have. Another company, even with the same market dynamics, might choose differently — appropriately so, because of very different capabilities and customs.
A capabilities-driven strategy process, like this one, takes into account “market back” aspirations (the position the leaders want to hold) and “capabilities forward” concerns (the company’s ability to deliver). In the course of discussion, ideas from all four schools of thought come forward: ideas about holding an unassailable position, executing with new capabilities, adapting rapidly to competitive pressures, and focusing on the core business as a platform for growth. It takes time to complete this process, and it is very difficult and stressful at times, but the company gains, in the end, from a far higher level of coherence.
It’s taken 50 years for the field of business strategy to reach the point at which many companies can conduct this kind of conversation effectively. Most companies have relied on business strategists for strategic answers. But now we see that we have to generate our own answers — our own theory of the right to win for each company, with its unique identity and circumstances — and that we have the tools to do so. Given the pressures that business continues to face, this leap in knowledge is coming just in time.t
The Real Das Auto
2010 was a good year for the Volkswagen Group, which shifted more than seven million vehicles for the first time ever. In total, the Group delivered 7.14 million vehicles to customers, a 13.5% increase of 2009′s 6.29 million units. Since the global auto market grew only 11.3%, VW increased its share of the pie.
Deliveries in China grew 37.4% to 1.92 million units, a new record. India paled in comparison with just 53,300 units, but that’s still a 181% growth. The Group delivered 888,000 vehicles to South Americans (+8.9%) and 360,300 units in America (+20.9%). Western Europe (excluding Germany) recorded 1.85 million sales, which is +11.6% in a market that only grew 1.9% for the year. Russian sales were up by 39.5%.
The only market to show a decline is VW’s home market of Germany, where the Group delivered 1.04 million vehicles, down by 16.8%. Still, it wasn’t too bad since the market contracted by 23.4% due to scrapping premiums, so it’s a market share expansion.
Divided by marques, the Volkswagen brand also broke a new record last year with deliveries growing 13.9% to 4.5 million units. China (VW’s largest market), USA and Russia saw growths of 35.5%, 20.3% and 49.1% respectively.
Premium brand Audi broke its own personal records with 1.09 million vehicles sold in 2010, up by 15%. The four rings did well in America and China. Czech outpost Škoda delivered 762,600 (+11.5%) vehicles while Spanish brand SEAT did 339,500 (+0.8%) vehicles in 2010.
Wednesday, January 12, 2011
Malaysia car sales 'will peak to new high'
BUSINESS research and consulting firm Frost & Sullivan expects Malaysia's automotive industry to reach an all-time high this year, selling up to 623,000 units of vehicles.
The growth will be spurred by new model launches, stable economic outlook, greater employment stability and marginal impact of the expected interest rate hike.
In 2010, the domestic total industry volume is likely to hit 598,200 units, a growth of 11.4 per cent over 2009, Kavan Mukhtyar, Frost & Sullivan partner and head of the automotive and transport practice for Asia Pacific, said.
The Malaysian Automotive Industry is set to announce the sales data for 2010 in the middle of this month.
"The record vehicle sales in 2010 were mainly attributed to the improved economic sentiment and spillover sales from new models launched in 2009," Mukhtyar said at a media briefing on Frost & Sullivan's Malaysian annual automotive industry outlook in Kuala Lumpur yesterday.
Perodua will continue to hold a leading position, commanding an expected 34.6 per cent market share last year due to robust sales of Alza and Myvi models, while Proton will have an estimated 29.3 per cent market share.
Rising oil prices in 2011 could present a renewed challenge but Mukhtyar is optimistic that the impact will be minimal as rises in the country are marginal, and it would not hurt the industry that much.
"As long as the increase in fuel prices is reasonable, there will be no dramatic impact on vehicle sales. This is more so in a country where public transportation service still has some gaps. Consumers do not really have an option, as they need vehicles as their means of transport," he said.
While hybrid car sales in Malaysia are likely to take off in 2012 and beyond, sales this year will likely be more than double to 3,400 units as compared to an estimated 1,500 units sold in 2010.
This is due to the excise duty exemptions on hybrid cars below 2,000cc until the end of 2011.
"This depends on the government's commitment to ensure the development of hybrid vehicles. Incentives given by government are likely to generate high interest on the likes of Honda Insight and Toyota Prius. Proton is also likely to launch a hybrid model for Exora by end of 2011," Mukhtyar said.
This year, small and compact cars will continue to be the fastest-growing segment, increasing 14 per cent year-on-year to 91,044 units in 2011 due to launch of new Perodua Myvi, which will likely receive good response.
The growth will be spurred by new model launches, stable economic outlook, greater employment stability and marginal impact of the expected interest rate hike.
In 2010, the domestic total industry volume is likely to hit 598,200 units, a growth of 11.4 per cent over 2009, Kavan Mukhtyar, Frost & Sullivan partner and head of the automotive and transport practice for Asia Pacific, said.
The Malaysian Automotive Industry is set to announce the sales data for 2010 in the middle of this month.
"The record vehicle sales in 2010 were mainly attributed to the improved economic sentiment and spillover sales from new models launched in 2009," Mukhtyar said at a media briefing on Frost & Sullivan's Malaysian annual automotive industry outlook in Kuala Lumpur yesterday.
Perodua will continue to hold a leading position, commanding an expected 34.6 per cent market share last year due to robust sales of Alza and Myvi models, while Proton will have an estimated 29.3 per cent market share.
Rising oil prices in 2011 could present a renewed challenge but Mukhtyar is optimistic that the impact will be minimal as rises in the country are marginal, and it would not hurt the industry that much.
"As long as the increase in fuel prices is reasonable, there will be no dramatic impact on vehicle sales. This is more so in a country where public transportation service still has some gaps. Consumers do not really have an option, as they need vehicles as their means of transport," he said.
While hybrid car sales in Malaysia are likely to take off in 2012 and beyond, sales this year will likely be more than double to 3,400 units as compared to an estimated 1,500 units sold in 2010.
This is due to the excise duty exemptions on hybrid cars below 2,000cc until the end of 2011.
"This depends on the government's commitment to ensure the development of hybrid vehicles. Incentives given by government are likely to generate high interest on the likes of Honda Insight and Toyota Prius. Proton is also likely to launch a hybrid model for Exora by end of 2011," Mukhtyar said.
This year, small and compact cars will continue to be the fastest-growing segment, increasing 14 per cent year-on-year to 91,044 units in 2011 due to launch of new Perodua Myvi, which will likely receive good response.
Environmental Statistics 2010 for Malaysia
Population, total (millions) 27.0
Urban population (% of total) 70.4
GDP (current US$) (billions) 221.8
GNI per capita, Atlas method (current US$) 7,250
Land area (sq. km) (thousands) 329
Agricultural land (% of land area) 24.0
Forest area (% of land area) 62.7
Bird species, threatened 42
GEF benefits index for biodiversity (0 = no biodiversity potential to 100 = maximum) 14
GDP per unit of energy use (constant 2005 PPP $ per kg of oil equivalent) 4.7
Energy use (kg of oil equivalent per capita) 2,733
Combustible renewables and waste (% of total energy) 4.0
Energy imports, net (% of energy use) -30.0
Electric power consumption (kWh per capita) 3,667
Electricity production from coal sources (% of total) 29.5
CO2 emissions (kt) 187,729
CO2 emissions annual growth rate 2
CO2 emissions (kg per 2005 PPP $ of GDP) 0.6
CO2 emissions (metric tons per capita) 7.2
PM10, country level (micrograms per cubic meter) 23
Passenger cars (per 1,000 people) 225
Renewable internal freshwater resources per capita (cubic meters) 21,470
Annual freshwater withdrawals, total (% of internal resources) 2
Annual freshwater withdrawals, agriculture (% of total freshwater withdrawal) 62
Improved water source (% of population with access) 99
Improved water source, rural (% of rural population with access) 96
Improved water source, urban (% of urban population with access) 100
Improved sanitation facilities (% of population with access) 94
Improved sanitation facilities, rural (% of rural population with access) 93
Improved sanitation facilities, urban (% of urban population with access) 95
Mortality rate, under-5 (per 1,000) 6
Adjusted savings: gross savings (% of GNI) 38.4
Adjusted savings: consumption of fixed capital (% of GNI) 11.9
Adjusted savings: net national savings (% of GNI) 26.9
Adjusted savings: education expenditure (% of GNI) 4.0
Adjusted savings: energy depletion (% of GNI) 13.1
Adjusted savings: mineral depletion (% of GNI) 0.1
Adjusted savings: net forest depletion (% of GNI) 0.0
Adjusted savings: carbon dioxide damage (% of GNI) 0.7
Adjusted savings: particulate emission damage (% of GNI) 0.0
Adjusted net savings, including particulate emission damage (% of GNI) 19.2
Urban population (% of total) 70.4
GDP (current US$) (billions) 221.8
GNI per capita, Atlas method (current US$) 7,250
Land area (sq. km) (thousands) 329
Agricultural land (% of land area) 24.0
Forest area (% of land area) 62.7
Bird species, threatened 42
GEF benefits index for biodiversity (0 = no biodiversity potential to 100 = maximum) 14
GDP per unit of energy use (constant 2005 PPP $ per kg of oil equivalent) 4.7
Energy use (kg of oil equivalent per capita) 2,733
Combustible renewables and waste (% of total energy) 4.0
Energy imports, net (% of energy use) -30.0
Electric power consumption (kWh per capita) 3,667
Electricity production from coal sources (% of total) 29.5
CO2 emissions (kt) 187,729
CO2 emissions annual growth rate 2
CO2 emissions (kg per 2005 PPP $ of GDP) 0.6
CO2 emissions (metric tons per capita) 7.2
PM10, country level (micrograms per cubic meter) 23
Passenger cars (per 1,000 people) 225
Renewable internal freshwater resources per capita (cubic meters) 21,470
Annual freshwater withdrawals, total (% of internal resources) 2
Annual freshwater withdrawals, agriculture (% of total freshwater withdrawal) 62
Improved water source (% of population with access) 99
Improved water source, rural (% of rural population with access) 96
Improved water source, urban (% of urban population with access) 100
Improved sanitation facilities (% of population with access) 94
Improved sanitation facilities, rural (% of rural population with access) 93
Improved sanitation facilities, urban (% of urban population with access) 95
Mortality rate, under-5 (per 1,000) 6
Adjusted savings: gross savings (% of GNI) 38.4
Adjusted savings: consumption of fixed capital (% of GNI) 11.9
Adjusted savings: net national savings (% of GNI) 26.9
Adjusted savings: education expenditure (% of GNI) 4.0
Adjusted savings: energy depletion (% of GNI) 13.1
Adjusted savings: mineral depletion (% of GNI) 0.1
Adjusted savings: net forest depletion (% of GNI) 0.0
Adjusted savings: carbon dioxide damage (% of GNI) 0.7
Adjusted savings: particulate emission damage (% of GNI) 0.0
Adjusted net savings, including particulate emission damage (% of GNI) 19.2
Frost & Sullivans Car of the Year..
Maruti Suzuki Swift was awarded the Frost & Sullivan 2010 Aspirational Car of the Year Award in Segment B. The award was received by Mr. Shashank Srivastava, Chief General Manager Marketing, Maruti Suzuki India Limited.
The Frost & Sullivan ?Aspirational Car of the Year? Award is conferred to a manufacturer based on a structured research process and by evaluating the performance of its products by end users. The ?Voice of Customer? survey recognizes an OEM that has launched the best models across various segments of passenger vehicles, satisfied aspiring needs, and been rated high for its achievement in ?Excellence in Technology and Innovation?.
In addition to the methodology followed, specific criteria were used to determine the final ranking of competitors in the industry. The recipient of this Award had to excel in one or more of the following criteria:
? Improvement in customer satisfaction levels
? Reduced churn rate
? Reduction in operational costs while maintaining high levels of satisfaction
? Imitation by competitors
The recipient company is known for the economical pricing of its vehicles and fuel efficiency, and the Award-winning model is no exception. The Award has been conferred upon the smart and compact hatchback ?Maruti Suzuki Swift? for its outstanding contribution to the industry as the most ?Aspirational? car under the Segment B category.
Maruti Suzuki Swift is a truly global vehicle. It is built with typical Japanese precision, attention to detail, tested for unique Indian road conditions and customer requirements. Maruti Suzuki Swift is an example of the growing recognition for Indian intellectual and engineering capabilities. Maruti Suzuki's R&D capability, evident time and again in its efforts to upgrade existing models, has attained a new definition with Maruti Suzuki Swift.
Maruti Suzuki Swift gives the feel of a sporty drive, has excellent engine responsiveness, handles well, and has shock absorbers built exclusively for Indian road conditions. The front end of the car features vertically stacked headlamps, a raised bonnet line that meets new pedestrian safety norms, well-defined muscular wheel arches, a waistline that runs through the length of the car, and chunky C-pillars that make the car look like a state-of-the-art design as it gets closer.
Maruti Suzuki?s Swift diesel model houses a next generation DDiS engine with a 16-valve cylinder head for more power and higher engine response, leading to a smoother drive. It boasts of a combination of Turbocharger, Intercooler, and a Double Overhead Camshaft for high performance. Swift houses the latest Chain Drive Timing System engine, which is maintenance-free for its entire life cycle.
Presenting the award, Mr. V.G.Ramakrishnan, Senior Director, Automotive and Transportation, South Asia, Middle East & North Africa, Frost & Sullivan, said, ?Maruti Suzuki Swift?s concept-car-like styling with an excellent build quality influences the purchase decisions of Indian vehicle owners. Its low maintenance cost and active safety features make it an attractive buy and value-for-money, despite close competition from various other models in the same price and segment.?
Receiving the award Mr. Shashank Srivastava, Chief General Manager Marketing, Maruti Suzuki India Limited said, ?Swift is one of the most important brand for us. It has been a great success story for Maruti Suzuki and the Indian Automotive Industry. With its radical styling, sporty drive and advance features it has taken the customer expectations to a new level, creating an all new segment. It is heartening to see Swift get this most ?Aspirational? car award. The Swift continues to be the most popular and aspirational car for the customers.
Maruti Suzuki India Limited a subsidiary of Suzuki Motor Corporation, Japan, has been the leader of the Indian car market for over two and a half decades. The company has two manufacturing facilities located at Gurgaon and Manesar, south of New Delhi, India. Both the facilities have a combined capability to produce over a 1.2 million (1,200,000) passenger car units annually. The company plans to expand its manufacturing capacity to 1.75 million by 2013. For this the company will be investing around 35 billion yen over the period till 2013.
The company offers 14 brands and over 150 variants - Maruti 800, people movers, Omni and Eeco, international brands Alto, Alto-K10, A-star, WagonR, Swift, Ritz and Estilo, off-roader Gypsy, SUV Grand Vitara, sedans SX4 and Swift DZire In an environment friendly initiative, recently Maruti Suzuki introduced factory fitted CNG option on 5 models across vehicle segments. These include Eeco, Alto, Estilo, Wagon R and SX4.
In fiscal 2009-10 Maruti Suzuki became the only Indian company to manufacture and sell One Million cars in a year. Maruti Suzuki has employee strength over 7,600 (as at end March 2010).
The company is listed on Bombay Stock Exchange and National Stock Exchange. The Government of Japan has honoured Maruti Suzuki with the METI Award for promotion of Japanese brand in India. Maruti Suzuki is one of the six companies, as also one among two outside Japan, to have received this prestigious award.
The Frost & Sullivan ?Aspirational Car of the Year? Award is conferred to a manufacturer based on a structured research process and by evaluating the performance of its products by end users. The ?Voice of Customer? survey recognizes an OEM that has launched the best models across various segments of passenger vehicles, satisfied aspiring needs, and been rated high for its achievement in ?Excellence in Technology and Innovation?.
In addition to the methodology followed, specific criteria were used to determine the final ranking of competitors in the industry. The recipient of this Award had to excel in one or more of the following criteria:
? Improvement in customer satisfaction levels
? Reduced churn rate
? Reduction in operational costs while maintaining high levels of satisfaction
? Imitation by competitors
The recipient company is known for the economical pricing of its vehicles and fuel efficiency, and the Award-winning model is no exception. The Award has been conferred upon the smart and compact hatchback ?Maruti Suzuki Swift? for its outstanding contribution to the industry as the most ?Aspirational? car under the Segment B category.
Maruti Suzuki Swift is a truly global vehicle. It is built with typical Japanese precision, attention to detail, tested for unique Indian road conditions and customer requirements. Maruti Suzuki Swift is an example of the growing recognition for Indian intellectual and engineering capabilities. Maruti Suzuki's R&D capability, evident time and again in its efforts to upgrade existing models, has attained a new definition with Maruti Suzuki Swift.
Maruti Suzuki Swift gives the feel of a sporty drive, has excellent engine responsiveness, handles well, and has shock absorbers built exclusively for Indian road conditions. The front end of the car features vertically stacked headlamps, a raised bonnet line that meets new pedestrian safety norms, well-defined muscular wheel arches, a waistline that runs through the length of the car, and chunky C-pillars that make the car look like a state-of-the-art design as it gets closer.
Maruti Suzuki?s Swift diesel model houses a next generation DDiS engine with a 16-valve cylinder head for more power and higher engine response, leading to a smoother drive. It boasts of a combination of Turbocharger, Intercooler, and a Double Overhead Camshaft for high performance. Swift houses the latest Chain Drive Timing System engine, which is maintenance-free for its entire life cycle.
Presenting the award, Mr. V.G.Ramakrishnan, Senior Director, Automotive and Transportation, South Asia, Middle East & North Africa, Frost & Sullivan, said, ?Maruti Suzuki Swift?s concept-car-like styling with an excellent build quality influences the purchase decisions of Indian vehicle owners. Its low maintenance cost and active safety features make it an attractive buy and value-for-money, despite close competition from various other models in the same price and segment.?
Receiving the award Mr. Shashank Srivastava, Chief General Manager Marketing, Maruti Suzuki India Limited said, ?Swift is one of the most important brand for us. It has been a great success story for Maruti Suzuki and the Indian Automotive Industry. With its radical styling, sporty drive and advance features it has taken the customer expectations to a new level, creating an all new segment. It is heartening to see Swift get this most ?Aspirational? car award. The Swift continues to be the most popular and aspirational car for the customers.
Maruti Suzuki India Limited a subsidiary of Suzuki Motor Corporation, Japan, has been the leader of the Indian car market for over two and a half decades. The company has two manufacturing facilities located at Gurgaon and Manesar, south of New Delhi, India. Both the facilities have a combined capability to produce over a 1.2 million (1,200,000) passenger car units annually. The company plans to expand its manufacturing capacity to 1.75 million by 2013. For this the company will be investing around 35 billion yen over the period till 2013.
The company offers 14 brands and over 150 variants - Maruti 800, people movers, Omni and Eeco, international brands Alto, Alto-K10, A-star, WagonR, Swift, Ritz and Estilo, off-roader Gypsy, SUV Grand Vitara, sedans SX4 and Swift DZire In an environment friendly initiative, recently Maruti Suzuki introduced factory fitted CNG option on 5 models across vehicle segments. These include Eeco, Alto, Estilo, Wagon R and SX4.
In fiscal 2009-10 Maruti Suzuki became the only Indian company to manufacture and sell One Million cars in a year. Maruti Suzuki has employee strength over 7,600 (as at end March 2010).
The company is listed on Bombay Stock Exchange and National Stock Exchange. The Government of Japan has honoured Maruti Suzuki with the METI Award for promotion of Japanese brand in India. Maruti Suzuki is one of the six companies, as also one among two outside Japan, to have received this prestigious award.
ETP in a nut shell
About 4,000 people thronged the ETP’s open at Putra World Trade Centre in Kuala Lumpur on 21Sep. The government has announced the Economic Transformation Programme (ETP) to realise Malaysia’s ambition to turn the country into a high-income economy by 2020.
Idris Jala, the CEO of the Government’s Performance Management and Delivery Unit (Pemandu), view his role as that of facilitator.
“This is a private sector-led initiative…. If we fail, the private sector has failed,’’ he told the packed audience at Putra World Trade Centre. Idris Jala said the ETP will help Malaysia triple its Gross National Income (GNI) from RM660 billion (2009) to RM1.7 trillion in 2020.
This translates to an increase of GNI per capita income from RM20,770 (US$6,700) to at least RM46,500 (US$15,000), meeting the World Bank’s high-income benchmark. To help achieve this, the government aims to sustain 6% GNI growth between 2011 and 2020.
A total funding of over RM1.4 trillion is required for the duration of this economic push, with 92% of the funding expected to come from domestic investments and public funding expected to take up the remainder.
In his presentation, non government-linked companies (GLCs) are expected to fund 60% or RM824 billion with GLCs funding 32% or RM446 billion. Public spending is estimated to be around RM105 billion.
According to Idris, the targeted 60% private sector funding will be a significant increase from 37% in 2008, and is consistent with the 12.8% per annum private investment growth noted in the 10th Malaysia Plan.
During his hour-long presentation, it was noted that the total private investment from 2005 to 2010 was RM410 billion or an average of RM68 billion per annum.
“Malaysia needs to increase this average annual private investment level in the next 10 years by about 60% more than historical average to around RM120 billion per annum for 2011-2020,” said Idris.
Private investment-led growth will cut government funding, which is constrained by the need to improve the nation’s fiscal position, said Idris.
“As such, government funding will be targeted at initiatives that will maximise GNI impact for every ringgit of public money spent, with heavier emphasis on development expenditure over operational expenditure,” said the former Malaysian Airlines Bhd CEO.
“Malaysia has no time to lose. We need a complete, radical economic transformation. The days of depending on traditional growth engines are over. If we continue on the current model, we risk getting stuck in middle-income trap and lose out on talents necessary to support a high-income economy,” he added.
Idris Jala, the CEO of the Government’s Performance Management and Delivery Unit (Pemandu), view his role as that of facilitator.
“This is a private sector-led initiative…. If we fail, the private sector has failed,’’ he told the packed audience at Putra World Trade Centre. Idris Jala said the ETP will help Malaysia triple its Gross National Income (GNI) from RM660 billion (2009) to RM1.7 trillion in 2020.
This translates to an increase of GNI per capita income from RM20,770 (US$6,700) to at least RM46,500 (US$15,000), meeting the World Bank’s high-income benchmark. To help achieve this, the government aims to sustain 6% GNI growth between 2011 and 2020.
A total funding of over RM1.4 trillion is required for the duration of this economic push, with 92% of the funding expected to come from domestic investments and public funding expected to take up the remainder.
In his presentation, non government-linked companies (GLCs) are expected to fund 60% or RM824 billion with GLCs funding 32% or RM446 billion. Public spending is estimated to be around RM105 billion.
According to Idris, the targeted 60% private sector funding will be a significant increase from 37% in 2008, and is consistent with the 12.8% per annum private investment growth noted in the 10th Malaysia Plan.
During his hour-long presentation, it was noted that the total private investment from 2005 to 2010 was RM410 billion or an average of RM68 billion per annum.
“Malaysia needs to increase this average annual private investment level in the next 10 years by about 60% more than historical average to around RM120 billion per annum for 2011-2020,” said Idris.
Private investment-led growth will cut government funding, which is constrained by the need to improve the nation’s fiscal position, said Idris.
“As such, government funding will be targeted at initiatives that will maximise GNI impact for every ringgit of public money spent, with heavier emphasis on development expenditure over operational expenditure,” said the former Malaysian Airlines Bhd CEO.
“Malaysia has no time to lose. We need a complete, radical economic transformation. The days of depending on traditional growth engines are over. If we continue on the current model, we risk getting stuck in middle-income trap and lose out on talents necessary to support a high-income economy,” he added.
Das Auto
Well, it looks as if the premium segment passenger car market in the country is well and truly alive, if the numbers are anything to go by. Both BMW Group Malaysia and Mercedes-Benz Malaysia have just released their 2010 sales figures, and both German brands have returned record performances.
Last year, BMW Group Malaysia sold a grand total of 4,509 vehicles in the country, consisting of 4,006 BMW vehicles, 222 Minis and 281 Motorrads compared to 3,990 vehicles nationwide in 2009 – these being 3,564 BMW vehicles, 201 Minis and 225 Motorrads.
Aside from registering record performances for the current variants of the 3 Series and 7 Series, the successful year was also achieved through the introduction of several new key models such as the new F10 5 Series, X1, X5, S1000RR Superbike, the new Mini Cooper range as well as the significant milestone of local assembly operations for the X1 at the company’s assembly facility in Kulim, Kedah, the first new BMW model series to be assembled in the country in 27 years.
Meanwhile, the improved economic climate in 2010 helped the Malaysian automotive industry attain sales figures achieving pre-downturn levels, and Mercedes-Benz Malaysia was another company which benefited from this upswing, closing the year by surpassing the 5,000 premium passenger cars mark for the first time in Malaysia.
Sales improved by an impressive 28.2% from the year before, with 5,003 passenger car units sold compared to 3,903 in 2009. In total, with commercial sales thrown in, the company registered 6,970 vehicles delivered, surpassing the previous best of 6,146 in 2008.
The main performers in the passenger car segment was led by the ninth-generation W212 E-Class, with 2,152 units sold, an increase of 75.2% over the previous year; of this, 1,112 were of the locally-assembled E 200 CGI Elegance Blue Efficiency that was introduced in January last year. This was followed by the W204 C-Class, which registered 1,956 units, up 9.4% from 2009′s 1,788 units.
Last year, BMW Group Malaysia sold a grand total of 4,509 vehicles in the country, consisting of 4,006 BMW vehicles, 222 Minis and 281 Motorrads compared to 3,990 vehicles nationwide in 2009 – these being 3,564 BMW vehicles, 201 Minis and 225 Motorrads.
Aside from registering record performances for the current variants of the 3 Series and 7 Series, the successful year was also achieved through the introduction of several new key models such as the new F10 5 Series, X1, X5, S1000RR Superbike, the new Mini Cooper range as well as the significant milestone of local assembly operations for the X1 at the company’s assembly facility in Kulim, Kedah, the first new BMW model series to be assembled in the country in 27 years.
Meanwhile, the improved economic climate in 2010 helped the Malaysian automotive industry attain sales figures achieving pre-downturn levels, and Mercedes-Benz Malaysia was another company which benefited from this upswing, closing the year by surpassing the 5,000 premium passenger cars mark for the first time in Malaysia.
Sales improved by an impressive 28.2% from the year before, with 5,003 passenger car units sold compared to 3,903 in 2009. In total, with commercial sales thrown in, the company registered 6,970 vehicles delivered, surpassing the previous best of 6,146 in 2008.
The main performers in the passenger car segment was led by the ninth-generation W212 E-Class, with 2,152 units sold, an increase of 75.2% over the previous year; of this, 1,112 were of the locally-assembled E 200 CGI Elegance Blue Efficiency that was introduced in January last year. This was followed by the W204 C-Class, which registered 1,956 units, up 9.4% from 2009′s 1,788 units.
ZF develops 9-speed auto tranny – when eight isn’t enough..
Bigger, better, faster, more. Such is the world we live in now that something like the automatic transmission for the passenger car has a composed madness about it. 6-speed? Antiquated. Seven? Passe, man. 8 then? Acceptable enough, sure, but how about nine, eh?
That’s the number ZF Friedrichshafen has come up with for its spanking new nine-speed gearbox, developed for vehicles with a transverse engine, which it says will significantly improve fuel economy in front-engined cars.
The company had already presented the case for the box as a concept study at the 2009 IAA in Frankfurt, and now that box has been announced in Detroit as a reality for series development – it will be produced at ZF’s new US plant in Greenville, South Carolina. Chrysler has been named as one of the tranny’s first customers, with the company set to equip its minivans with the gearbox in 2013.
Packaged in a size similar to its eight-speed automatic transmission used in longitudinal installations, ZF says the new nine-speeder ensures extremely short response and shifting times below the threshold of perception, and makes seamless double shifts and direct multiple gearshifts possible. The modern shock absorber systems in the torque converter, which make a rapid lock-up of the converter clutch possible, also mean better fuel economy and lower CO2 emissions.
So, money’s on to see when 10 becomes the new black. Can we expect a day when we’ll have a passenger car with 18 forward and three reverse gears then?
..Perodua shows how its done..
We just got back from Perodua’s headquarters in Sg Choh, where the carmaker released its sales figures for 2010. And it comes as no surprise that Perodua has ended last year as Malaysia’s best selling brand, something it has achieved for five consecutive years. The 188,600 vehicles sold in 2010 is also breaks the company’s all time record of 176,400 units from 2008.
To cap off a great year, the Myvi, in its fifth and possibly last full year in service, ended 2010 as the best selling car in Malaysia. Perodua’s MD Datuk Aminar Rashid Salleh was in good spirits as he unveiled the figures, but wasn’t keen on revealing when the “new Myvi” was going to debut, although he did say that a new model will be launched this year, following Perodua’s trend of one new model every two years. The Alza was launched in late 2009.
Perodua shifted over 77,000 units of the Myvi in 2010, and amazingly against the usual trend, registrations peaked in the last quarter of the year. The B-segment hatchback contributed 41.2% of Perodua’s total sales. With 69,000 units sold, the Viva was responsible for 36.6% of the pie. The rest of it belongs to the Alza, which found nearly 42,000 buyers to be Malaysia’s best selling MPV.
“We broke two records in 2010, the first with the highest ever yearly registered sales. Last December, Perodua also achieved its highest monthly sales registration of 19,400 units, beating our previous record of 18,500 units achieved in March 2010,” Aminar revealed.
Perodua’s market share of the Malaysian auto market stands at 31.2% of a forecasted total industry volume of 605,000 units. The company’s TIV prediction for 2011 is 610,000 units, and it wants to sell 4% more cars, or 195,000 units. This year’s market share target is 32%.
Besides the new model launch, 2011 will see Perodua open a new E-AT (electronic automatic transmission) plant that will churn out automatic gearboxes. A ground breaking ceremony will happen in March or April, and the RM250 million plant is expected to start operating next year. Initially, it will churn out 130,000 units per year before achieving 200,000 units annually. With this, Perodua will not need to import gearboxes from Japan anymore, and exports are likely.
To cap off a great year, the Myvi, in its fifth and possibly last full year in service, ended 2010 as the best selling car in Malaysia. Perodua’s MD Datuk Aminar Rashid Salleh was in good spirits as he unveiled the figures, but wasn’t keen on revealing when the “new Myvi” was going to debut, although he did say that a new model will be launched this year, following Perodua’s trend of one new model every two years. The Alza was launched in late 2009.
Perodua shifted over 77,000 units of the Myvi in 2010, and amazingly against the usual trend, registrations peaked in the last quarter of the year. The B-segment hatchback contributed 41.2% of Perodua’s total sales. With 69,000 units sold, the Viva was responsible for 36.6% of the pie. The rest of it belongs to the Alza, which found nearly 42,000 buyers to be Malaysia’s best selling MPV.
“We broke two records in 2010, the first with the highest ever yearly registered sales. Last December, Perodua also achieved its highest monthly sales registration of 19,400 units, beating our previous record of 18,500 units achieved in March 2010,” Aminar revealed.
Perodua’s market share of the Malaysian auto market stands at 31.2% of a forecasted total industry volume of 605,000 units. The company’s TIV prediction for 2011 is 610,000 units, and it wants to sell 4% more cars, or 195,000 units. This year’s market share target is 32%.
Besides the new model launch, 2011 will see Perodua open a new E-AT (electronic automatic transmission) plant that will churn out automatic gearboxes. A ground breaking ceremony will happen in March or April, and the RM250 million plant is expected to start operating next year. Initially, it will churn out 130,000 units per year before achieving 200,000 units annually. With this, Perodua will not need to import gearboxes from Japan anymore, and exports are likely.
Sunday, January 9, 2011
When Tun Talks, We still listen..
More news has emerged about Proton’s anticipated move into the Indian market – the company is said to be in talks with Hindustan Motors, India’s oldest automaker, to sign a contract manufacturing deal in which it will be using HM’s platform to assemble its portfolio cars in India.
Reports indicate that an announcement regarding the tie-up is likely to be made by around end of February, and Proton is expected to use HM’s Chennai plant, which was initially established for the assembly of the Mitsubishi Lancer. It has also been speculated that the new contract manufacturing tie-up might be extended to HM’s ailing plants that are located in Indore and Uttarpara.
The Proton models that are expected to be initially launched in the Indian market are the Saga, Persona, Exora and Emas hybrid models.
According to an Indian daily, Hindustan Motors’ MD Manoj Jha was qouted as saying otherwise recently. “In the automobile business, there are all kinds of discussions with all sorts of companies at all points of time, but the discussions with Proton that you are talking about is not taking place.”
It has been more than a year since Proton has been mulling to enter into a contract manufacturing tie-up with an Indian firm. In previous years, the company had been in talks with the likes of Mahindra & Mahindra and the Hero group.
According to news reports, Proton says it is hoping to conclude defining the strategies needed for its business expansion into India’s automotive market by the first quarter of this year.
Currently, Proton has identified the local OEM company it plans to work with – with a contract assembly and joint venture on the cards – as well as the models it would be entering the market with, said managing director Datuk Syed Zainal Abidin. The Exora, Persona and the company’s first global car, the Emas, have been pinpointed as the brand’s pathfinders in the Indian market.
He said that the plan will be presented to the board, and an annoucement made once approval had been given, adding that the company viewed India as a very important market for the brand.
Reports indicate that an announcement regarding the tie-up is likely to be made by around end of February, and Proton is expected to use HM’s Chennai plant, which was initially established for the assembly of the Mitsubishi Lancer. It has also been speculated that the new contract manufacturing tie-up might be extended to HM’s ailing plants that are located in Indore and Uttarpara.
The Proton models that are expected to be initially launched in the Indian market are the Saga, Persona, Exora and Emas hybrid models.
According to an Indian daily, Hindustan Motors’ MD Manoj Jha was qouted as saying otherwise recently. “In the automobile business, there are all kinds of discussions with all sorts of companies at all points of time, but the discussions with Proton that you are talking about is not taking place.”
It has been more than a year since Proton has been mulling to enter into a contract manufacturing tie-up with an Indian firm. In previous years, the company had been in talks with the likes of Mahindra & Mahindra and the Hero group.
According to news reports, Proton says it is hoping to conclude defining the strategies needed for its business expansion into India’s automotive market by the first quarter of this year.
Currently, Proton has identified the local OEM company it plans to work with – with a contract assembly and joint venture on the cards – as well as the models it would be entering the market with, said managing director Datuk Syed Zainal Abidin. The Exora, Persona and the company’s first global car, the Emas, have been pinpointed as the brand’s pathfinders in the Indian market.
He said that the plan will be presented to the board, and an annoucement made once approval had been given, adding that the company viewed India as a very important market for the brand.
Proton Perdana replacement is the Nissan Fuga – only for top level government use
The identity of the model that will form the basis of the Proton Perdana replacement has been talked about not only at the mamak, but in the motoring circle as well. We’ve heard of this before, but the news is now out. Berita Harian Online reports that the Nissan Fuga will be the Perdana replacement model.
The Fuga is a large rear-wheel drive sports sedan that is sold as an Infiniti M outside of Japan. It sits on the Skyline platform and BH’s report says that the car will be brought in CBU with 2.5-litre engines. The current gen Fuga 250GT is the 2.5L V6 unit from the VQ HR series with 225 PS and 258 Nm.
However, before you think of another “Inspira style” deal, the report’s source reveals that the first shipment of 150 units will be brought in as official cars for top ranking government officials. We presume that this will phase out the stretched Perdanas that ministers currently use. The Fuga will be used exclusively by the government, although the source added that if Proton gets encouraging market feedback, it will consider sales to the public.
There’s no mention whether the Fuga in question is the muscular bodied latest version that debut in late 2009 or the previous gen car, which still looks handsome today. Also not revealed is Proton’s name for the car and the level of differentiation, which we guess won’t be much other than some badge swapping. And if the Fuga is for high level officials, what will be the replacement for the standard wheelbase Perdana currently in service?
This move marks Proton’s first collaboration with Nissan. Will there be more on the way? The report’s source says that it is possible that some Nissan models will be made at Proton’s Tanjung Malim plant as there’s excess capacity there. This statement however ignores the fact that long time Nissan brand guardian Tan Chong has its own facility in nearby Serendah, which rolls out cars like the Teana, Sylphy and Grand Livina.
The Fuga has plenty of presence in the flesh, and Infinitis have received lots of praise for how they drive in the West – it’s a pity that none of us will experience this, unless you’re a senior government chauffeur! What do you think of this move and the choice of car?
yummy..yummy..yummy..
Prodrive has developed a supercharged 5.0-litre V8 engine for the Australian Ford Falcon, a full sized RWD rival to the Holden Commodore. There will be two states of tune for this ‘Miami’ engine – 422 hp in the Falcon GS and a 449 hp version in the Falcon GT, GT-E and GT-P.
“The old 5.4-litre ‘Boss’ unit used by Ford Performance Vehicles was a tough act to follow but it had reached the limit of its emissions development and mechanical strength,” explains Bryan Mears, MD of Prodrive’s Asia Pacific division. “It took three years and AUD 36 million but the result is a new benchmark for a high-performance V8.”
Following the downsizing trend, the Miami replaces a 5.4L NA V8, saving 47 kg yet providing more power. The supercharger also delivers more torque at lower rpms. The 449 hp/570 Nm (from 2,200-5,500 rpm) unit does 0-100 km/h in under five seconds. 47 kilos is quite a lot saved, and it allows a more neutral front/rear weight bias, according to Ford.
The Miami started life as a ‘Coyote’ V8 block and DOHC cylinder heads from America’s 402 hp Mustang. By optimising the supercharger installation, especially the drive ratio and intake runners, it was possible to reach targets without an intercooler. “This leaves untapped potential for future upgrades using higher boost levels with an intercooler,” Prodrive says.
New parts include uprated exhaust valves, pistons, connecting rods, the complete intake and exhaust system, a high-capacity sump and oil cooling jets to control piston temperature. Parts that were carried over from the Mustang’s 5.0 have been optimised for this application and to gel with the new bits. Unlike a ‘bolt on’ supercharger conversion, long term reliability is ensured here.
All engines are hand-built at FPV in Australia and they’re expecting to churn out 1,500 of these brawny Miamis per year.
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