McKinsey on Strategy. Services and Product
By DaveLevy on Feb 25, 2006
The most recent McKinsey Quarterly is pretty relevant. The keynote article, "Distortions & deceptions in strategic decisions" looks at the flawed human values often inserted into major business decisions. They quote a major aquisition decision taken by a dominant player and suggest that the major advocate of the merger wanted it for personal political gain. They look at ways in which these human factors can be brought into the open and evaluated in the decision making process. Despite identifying over-optimism as a frequent occurence once a proposal has been made, the decision not to proceed is often taken in private and so collaborative decision making cannot neutralise these human shortcomings. One suggestion is to ask the proposer, what their next best proposal is.
The second article of interest is entitled "The right service strategies for product companies". I last wrote about this subject last year, when I reviewed Gordon Moore's article "Don't shoot the messenger", where he talks about aligning service offerings with the product life cycle. The McKinsey article offers a two by two matrix. The goal of the services business is either to enhance or enable product sales or to deepen the value proposition to the customer (and hence earn money). The service vendor can then seek to leverage economies of skill or scale. Like most strategy analysis, its important to understand your choices and then focus on that choice. The choices affect pricing, sales, delivery and organisation. This varies from some of the things covered in my previous reviews in that they have reduced the choice to a 2x2 matrix and conern themselves with questions of strategy.