Archives for posts with tag: Business Strategy

by Merlin Hernandez

Consumers today want a more seamless delivery interface, a more personalized and simplified process, and a valued-customer experience but most of all they want it quickly. According to a Cisco Customer Experience Report, the most important attributes in the consumer interface are access/availability of the desired product or service, knowledge and competence in delivery, and efficiency in meeting their individual needs. In this mix what a business needs to survive the far-reaching changes in the contemporary consumer culture is a more specifically customer service orientation for a more satisfied and loyal customer.

Contemporary market leaders typically have narrowed their business focus to deliver superior customer value in one of the three value disciplines – cost leadership (best prices), product leadership (highest quality), customer intimacy (most responsive service culture) – while maintaining industry standards in the other two. Companies like FedEx and Home Depot that outstrip the competition in terms of profitability tend to excel in more than one value discipline. A firm’s relative position within an industry is given by the type(s) of value discipline chosen for competitive advantage e.g. cost leadership vs customer intimacy. Dual value disciplines as the strategic focus for a service business can become the basis of sustained market leadership. But for a small business especially a start up operating in the service sector, cost and product leadership within limited resource capabilities may not be possible. There can thus be no compromise on the customer focus.

What does this say about the business of service in the SME sector? In a nutshell, a service experience that is so remarkable that it stands out from the competition. But even more important, it is burned into the memory of the customer. The service business, by its very nature, is one of fulfilling customer expectation which intrinsically entails a value discipline of customer intimacy. The emphasis is on attention to customer detail and customer service, customization, CRM efficiencies, surpassing customer expectations, timely delivery, reliability, and lifetime value. But the same can be said for a consumer product. Companies like Apple and Nike have so surpassed industry standards as to have raised customer expectations with superior products that set a higher standard which competitors are not easily able to reach. This requires intimate and detailed customer knowledge with the kind of operational flexibility that allows fast response to changing customer needs and preferences.

Small businesses are at a distinct advantage for that kind of flexibility and intimate relationships. They are not structurally distant from the customer and bogged down by multi-tiered delivery systems and processes. In factoring customer needs into the strategic mix, businesses need to identify value-creating strategies that are most appropriate. The target market remains the most influential stakeholder around which to structure a business, and customers buy value. Market leaders are adept at understanding the value drivers that motivate their customer base. And small businesses remain closer to the ground. This does not mean that there is no need for rigorous market assessment before embarking on a small business venture. But shaping the service to more closely fit customer need brands the business as customer-focused and builds customer loyalty.

Assessment of the target market, however, should present a customer that would be more interested in a best total solution that meets their needs where quality delivery is the primary consideration. A business servicing this market segment needs to be immersed in continuous delivery process innovation and improvement to both satisfy and anticipate customer needs. This would reflect the value discipline of customer intimacy which places a stronger emphasis on more esoteric and long-lasting value e.g. organic food and good health, hypo-allergenic natural cosmetics, recycled gift paper and cards, customized cooking oils or jams natural raw materials, locally grown, chemical-free, non-GMO product etc. Value here is described as relevancy and engagement in response to long term need and wider societal benefit. Strong value added strategies and deeper customer relationships might be critical for a new small business. It can bring the solid market differentiation that gives the new business the lead time for developing brand awareness and customer loyalty. This will consolidate the market presence and establish a customer base before the competition comes knocking.

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Merlin Hernandez is an entrepreneurial development and management consultant who operates mainly in the small and medium enterprise sector. For more information on this and other topics, please send enquiries to




I find that many employers do not have an up-to-date understanding of some of the real job requirements in their businesses. There is a strong reliance on the job description as the measure of productivity but an absence of the understanding that jobs are more organic that they used to be in a fast changing economic climate. Employees are more often than not required to think on their feet and do that little bit extra to ensure that the job gets done. Job execution is now more of a feature of on-going trouble-shooting, system adjustments, and even fire-fighting to remain ahead in the very dynamic competitive game.

Productive efficiencies and employee morale can be seriously eroded when employer expectations do not match the needs of job execution. This has implications for broad-based job analyses so that businesses have a real time appreciation of what it takes to remain competitive and what employees are actually being asked to do. New acquisitions, diversifying, attrition, or sometimes a simple move to a new space may warrant some re-structuring. This brings the possibility that the current situation may now require new inputs and methodologies. The job analysis bares gaps in expectations and resource allocation for early intervention to improve efficiencies.

 A job analysis documents the requirements of a job and the work to be performed. It is a developmental instrument that encompasses the job definition and description, measures for performance appraisals, selection systems, promotion criteria, training needs, and compensation plans. Job analyses should be revisited every few years to remain relevant. Keeping the job requirements current would require an employer to actively seek employee input that will inform the systems and practices adopted. This makes the practice an important feature in risk reduction.

My preferred method of information gathering for analysis is the worker interview in a standardized format, which would provide subjective information from workers about standard and non-standard aspects of the job, as well as a range of regular worker inputs that may be outside of the standard but perhaps need be included. The requirements of a job are constantly evolving in a dynamic economic environment, and very often these activities are not legitimized. This can play havoc with established management structures and lead to conflicts and employee dissatisfaction.

Because the information provided will be subjective, and interviewer’s questions could be misunderstood, there is the possibility of distortion to the analysis. Selecting experienced and knowledgeable workers and trained interviewers could mitigate some of the potential bias. But sometimes new employees see things with fresh eyes and have much to offer. Unskilled workers who operate at the tail-end of productive processes can also bring some meaningful insights to bear on improving those processes. I find this aspect of the job analysis crucial so that systems remain grounded in the reality of the job both ideal and actual. Interviewing several workers engaged in the same activities will allow the analysis to abstract and categorize the information based on similarity of responses. This cumulative dimension will give greater stability to the results.

To further insert objectivity into the analysis, I often combine interviews with a web-based structured questionnaire. This would tend to remove possible interview ambiguities, and allow for a wider coverage of participants at a lower marginal cost, with less work disruption. It would also facilitate quicker analysis and feedback. Using company intranets for web-based analyses would afford easy access to the final product across the board. But for small businesses without intranet facilities, an e-mail questionnaire will suffice.

The face-to-face process of the interview will lend credibility to the information which could then be used as a baseline measure in the structuring of the questionnaire. The disadvantage of questionnaires is that they are time consuming and expensive to develop, and the impersonal approach may be a demotivating factor for respondents. But the utility and reach of questionnaires, their long term application, and cost savings in administering them would outweigh such concerns.

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Merlin Hernandez is an entrepreneurial development and management consultant who operates mainly in the small and medium enterprise sector. For more information on this and other topics, please send enquiries to


by Merlin Hernandez


If only I had a dollar for every time I’ve heard someone sing the praises of some great widget and how much money there is to be made if the creator should go into business. Without trying to diminish the value of innovation, by itself it may not provide the most solid foundation required to make a success of a business venture. There is an old adage that a superior product has a good chance of doing well in the marketplace but a mediocre product with a well-defined strategy will perform far better. Many brilliant and talented innovators never make it in business because they do not have a full appreciation of the business dimension to their work. This is to emphasize that regardless of how good the product is, it is the application of sound business strategies that will bring success.

In developing the business idea, it is necessary to first determine the core benefit to be provided to the consumer. This would come from market research that identifies a basic need. Too often in the small business sector, product development is a feature of the notion that a good product will create its own market – the idea of selling what is made rather that making what the market needs. But businesses need to be market-driven with customer satisfaction as the primary focus. A viable product is a result of information on marketplace trends, customer needs, wants and preferences, customer consumption patterns, and the activities of competitors so that the right marketing mix can be developed. The product idea will therefore be defined by the targeted market segment and the client profile.

To screen and select the idea that has the greatest potential for market success, the idea is also measured against resource capabilities to be applied to production and marketing. The ability to successfully develop, produce, and market a product depends on having the right mix of available resources. The business must be sufficiently capitalized to support key research, the right personnel, the most suitable raw materials, manufacturing equipment, processes, and marketing strategies that would bring desired returns. These elements need to operate in a delicate balance – I have seen a great marketing strategy realize sales volumes that could not be fulfilled on time because of inadequate production capacity leading to cancelled orders and low profitability. The other side of the coin is strong manufacturing capabilities and a weak marketing budget which can result in poor sales, high inventory, lower prices, and financial loss.

The process of developing the full product concept will be more meaningful through consultations with potential customers to better understand the benefits they value and the necessary product attributes for market viability. This kind of partnership culture opens up a first level commitment to the idea from the customer. It is also useful at this stage to engage professional advisors, potential partners, suppliers and other stakeholders in the process for feasibility and logistic input. The concept development phase is probably the most important exercise as it introduces the product idea to the potential market as well as explores the company’s ability to make the product available. Any negatives emerging from this phase would be a clear indication that the product does not have the potential for success.

Before any commitment to the idea, an analysis of the costs of bringing the product to market should be measured against the potential contribution to sales and profits. Furthermore, an in-depth market analysis should explore the competitive environment and other environmental factors – like the climate of innovation which might put an investment into the new product at risk. For existing businesses, possible new marketing strategies should be integrated into existing marketing objectives using channels and tactics that have demonstrated success. The rationale is to diffuse the cost and structure of marketing the new product throughout the marketing system in order to achieve cost efficiencies. R&D can now be charged with developing a prototype based on product attributes identified in the market intelligence and resource capabilities, with special attention to consumer contributions obtained at the concept development phase.

The market testing phase is aimed at collating customer responses to prototypes. It provides information for product modification and refinement, as well as full development of the marketing plan. Market testing could also determine whether the product should be abandoned due to poor consumer interest. Once results of testing are favorable, the business idea has been effectively developed and the product may now be ready for commercialization and the introduction to the market. Commercialization is the action plan for introducing the product to the market. It includes timing, pricing, distribution, budget, advertising and promotion, launch impact, and adoption by the target market, along with strategies to incrementally increase sales volumes and build the brand. The process is meant to leverage the effects of marketing strategies on ROI and optimize market spend in relation to competition.

Market success does not begin with a product but with the way it delivers value and benefit to the end user. Many businesses are incorporating the customer as a partner to their product development initiatives as a way of building strong external partnerships, demonstrating the value of the customer to the organization, ensuring delivery efficiencies based on articulated customer need, while availing themselves of a ready market down the line. In developing the product idea it is also important to differentiate the product by finding new ways to extend product value beyond expectations through the addition of new layers of customer satisfaction to the development matrix.

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by Merlin Hernandez

Strategic objectives clearly enunciate what an organization wants to accomplish within a given time-frame, usually the financial year. The strategic plan will lay out the pathways and processes to achievement. Defining the organizational culture as an important element in developing ways to direct the business strategy is often overlooked. The beliefs, attitudes, and values that permeate the organization will ultimately determine the quality of relationships among employees and between employees and outside stakeholders. Good employee morale, exemplary customer service, and supplier support will flow from shared beliefs and values among leaders, managers and employees about the importance of collaborative relationships to business goals.

Workforce size, skills mix, and job functions are key areas of planning, and would include standards for productive efficiencies, performance standards, and benchmarks. Selection for an optimal match of skills to organizational needs may be achieved through any combination of cognitive tests, work samples, situational tests, personality inventories, background checks, or follow up interviews. Performance is evaluated for impact on stated objectives in terms of results, cost-efficiency, value to the strategic direction, and best practices in the industry.

In many instances, however, staffing is a feature of matching skills and experience to job requirements with little emphasis on strategic fit to the corporate vision as articulated by the culture of the organization. But employee recruiting and selection are critical components to strategic management as businesses need to identify and hire the people most qualified to execute their plans. An appropriate selection method is where there is an optimal match of skills to the job but just as important is a personality and character fit. An employee who is a good cultural fit works well within existing organizational values.

The organizational culture refers to the general consensus about goals, and pathways to achieve them within the context of the environment in which the organization exists. It may be seen as an amalgam of differentiated perspectives with the corporate will to establish harmony. But organizations are living, breathing organisms, more especially so in an era of global interactions. Ambiguity is therefore inevitable and pervasive, change is constant, and consistencies are problematic. Underlying this is the understanding that relevance is often subject to interpretation and ambiguity. In order to attain clarity of purpose, the norming factor might be to channel ambiguity outside of the core values of the organization through consensus i.e. to develop a consensual matrix of attitudes and beliefs that serve as a common motivational base for members.

In a culture of diversity, this has strong significance as each perspective tends to be well-defined and finding consensus becomes a real challenge. Moreover, consensus tends to be a feature of shifting paradigms. This might be somewhat mitigated by a structural overlay that imposes some kind of stability. The organizational structure is thus an outgrowth of the organizational culture and is really the hybridization of perspectives harnessed for operational efficiency. The structure is then the engine through which work is coordinated by methods that include lines of authority, span of control, areas of autonomy, specialization, work teams, cross-functional channels etc.

Furthermore, there needs to be the recognition that organizational culture is a fluid concept and that structural change should always remain a strategic option. Globalization has forced many companies to recognize that what goes on in Tokyo, Dubai, Beijing, or London affects currency exchanges, the cost of raw materials and energy, competitiveness, and profit potential. They are thus compelled to do business with one eye on global changes while utilizing different skill sets in order to maintain competitive edge. Holding on to old ways of doing business, or to an organizational culture that is not responsive to these changes would prove detrimental.

Business strategies for goal achievement will then need to emanate from both pragmatic and contextual considerations and all the elements and processes to successful goal attainment must be aligned. Staffing decisions is one of the key elements to strategic alignment.  The people who will execute strategic plans must fall within the person-environment fit to the corporate vision in order to maintain coherence with its structures.

A major issue is that the recruiting function is not seen as strategic and HR is not typically invited to contribute to business strategy. But recruiting the right candidate to meet strategic goals needs a keen understanding of corporate goals and priorities. A people strategy is an integral part of overall strategy. It synthesizes corporate values with core competencies to create a performance culture where financial, operational and people assets converge to achieve corporate goals. A stronger argument for staffing fit would be that staffing should be the bridge that spans culture, structure and strategy.

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Merlin Hernandez is an entrepreneurial development and management consultant who operates mainly in the small and medium enterprise sector. For more information on this topic, please send enquiries to