Ordinary Products Can Also Become "Jade".

　　 Procter & Gamble Every year, business departments are required to formulate development strategies, which can not be formulated. reasonable The plan to meet the minimum requirements of the company will become the target of P & G's reduction. In the past 10 years, P & G has sold its brand of ThermaCare bandage, Jeff, krsk and fujue. At the end of 2008, P & G decided to reduce investment in its own R & D products so that the company could concentrate on developing personal health care brands such as Vickers (Vicks).

The big fission means that discussions on cutting or withdrawing from related businesses will happen more and more frequently. Enterprises need to analyze their overall business portfolios on a regular basis and make difficult decisions before they get into trouble.

Explore potential

To determine the potential to be developed, the first factor that needs to be investigated is how much potential a brand, product line, department or enterprise has yet to develop to expand and create profits in the current market.

For example, as of 2008, Google still has potential to tap in its core advertising market. The company's Leaping Development from 1998 to 2008 almost made people forget that most businesses still rely on traditional media, such as print media and television, to advertise, and most small businesses do not advertise at all. As Google continues to improve its products and services, more and more companies are beginning to accept the form of online advertising. Google has also gained a good opportunity to continue to promote the continuous growth of the company's business.

On the other hand, how much longer does the Coca Cola Co's Cola Brand continue to grow? The brand has penetrated all over the world and is facing fierce competition from the global and local enterprises, which means that Coca Cola Co can not expect its flagship brand to promote the future development of the company.

It is very important to improve the potential of market positioning. How big is the share of the potential market? How difficult is it to enter other sectors of the market? The greater the possibility and ability of market positioning, the greater potential we can tap into.

If you draw a long-term development trajectory of a technology into a chart, you will find that it almost always follows a trend similar to the "S" shape. That is to say, after a steady but slow improvement, scientists suddenly found a way to rapidly improve the technical performance, but then they would encounter a technical bottleneck, and the pace of technological upgrading would slow down again. The location of the current business on the "S" curve reveals how much investment is needed to achieve the expected goal of improving the technical performance, thereby turning the potential of improving market positioning into reality.

Traditional competitive strategies help to determine the extent to which enterprises occupy a favorable market position and thus seize any potential opportunities in the market. Of course, never think that competitive advantage will continue, and it is important to understand who will have a competitive advantage in the next stage.

The more subversive enterprises that have successfully foothold in the current market, the more difficult the mainstream businesses will achieve profitable growth. Of particular concern is those who consciously sacrifice their performance for lower prices.

In short, when market penetration is low, products and services can be improved at lower cost, and enterprises still have resources to maintain competitive advantage, this indicates that the market has great potential to be developed.

Value of choice

It is necessary to assess whether a brand, product line, department or enterprise has the ability to create profitable growth in other markets. In other words, does the brand, product line, department or enterprise have a unique asset that can help it grow in another market?

WAL-MART can be said to be an example of a company with a high potential value. WAL-MART's low-cost operation mode and its extensive retail network provide a powerful platform for subverting other markets. Historically, WAL-MART has made great progress in the field of white goods, clothing and groceries. WAL-MART is also exploring opportunities to compete in the field of health care and financial services.

On the other hand, enterprises like delta air lines have relatively few resources to help them enter other markets. Its expertise accumulated in the long term competition in the aviation industry has made it an awesome competitor in the aviation market, but its ability to enter new markets is relatively low.

To judge the value of a company's selectivity, it is necessary to calculate in detail the value of all the assets portfolio of the company, such as brand value, technology, innovation ability, relationships and so on, and assess whether these assets can be transferred to neighboring markets or are used to create new markets.

In assessing, enterprises need to maintain an accurate balance, and consider how much innovation they have, which can be used to develop innovative growth areas. But we must bear in mind the definition of entrepreneurship in Harvard Business School professor Howard Stevenson: do not care about the resources that can be controlled, and pursue the opportunities bravely.

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Enterprises should fully develop their innovative potential when their current potential is high and their choice value is low. They should establish their competitive edge by improving existing products and services to better attract current customers and picky consumers. The focus is on how to better adapt to the rules of the game than other market competitors.

Over the past five years, Google has adopted the potential development mode in its core search advertising business. The core of this model is to improve its ability to lock targets, try various ways to improve its search algorithm and increase its advertising stock. In this way, the company can get more money from advertisers and develop new advertisers.

When the development potential is low and the choice value looks higher, enterprises should actively explore to determine which strategy has the greatest potential and then develop this potential. Exploration means finding ways to change the rules of the current market game, expanding business to existing markets that have not yet entered the company, or creating new growth categories. Exploration activities usually progress slowly at the beginning, until enterprises find a strategy that can promote transformational growth. If we finally find that the new market is not as great as expected, enterprises should consider how to quit the business.

When two factors are relatively high, enterprises need to refine or divert their resources to ensure that development activities do not occupy exploration activities, and vice versa.

Finally, when the potential and the choice value are relatively low, enterprises should manage the cash, close the business or sell the business, so as to rationally arrange the current activities. Any investment should focus on improving the overall profitability of the business sector.

Product mix reduction

A business unit of a well-known consumer durables manufacturer has been performing poorly for many years, and the company has conducted an in-depth analysis of the product mix of the business unit. The company is facing a very fierce market competition environment. Some of its brands do not seem to provide consumers with differentiated value.

The company first launched an in-depth market survey to understand consumers' perceptions of this product category. This study will provide a reference for the company to make decisions in the future to maintain, change, revoke the original brand and create new brands.

After analysis, the company has made some unexpected discoveries. In the product mix of the business sector, those products that create the biggest real profits are not the most potential products in the future, because competition is intensifying and consumer demand is changing. The company plans to abandon some of its brands so as to provide more resources for other projects. Some brands that seem to be stagnant are in fact a piece of "jade". If they can get enough investment, these brands can create very high difference value.

The company has also found some uncommon ways to relocate existing products and link them closely with a particular consumer group. Finally, in a seemingly stagnant commodity category, the company is keen to seize an opportunity - based on the principle of simplification, to create a brand new product platform to attract new consumers to buy the category of products. Eventually, the three month survey brought a new roadmap for the business sector in the coming years.

If you think you have to divest a business, what is the best way to implement it? For those companies that do not have too many experience of divestiture, they naturally ask such a question, and the correct answer to this problem can have a huge impact. Bain's three partners analyzed more than 7000 items of divestiture in the past 20 years, and found the best way of divestiture. The bain triple group listed Weyerhaeuser Co as an example. Weyerhaeuser Co is a forest product company. Since 2004, the company has divested nearly $10 billion of its business and made use of the proceeds from the stripping business to transform the company from a commercial wood paddle and paper company to a more value-added raw material and Real Estate Company.

Following these methods and adhering to this principle will enable enterprises to pass through economic prosperity and recession. Innovation is actually more predictable and traceable than many people's expectations. Nevertheless, prudent reduction of Innovation Portfolio will help you allocate resources effectively.

In addition, the abandonment of business departments, brands or product lines is a key part of the creative destruction process. A study carried out by Richard Foster, a member of the board of directors with innovative perspectives, shows that in any relatively long period of time, almost all companies are below the overall market index. Forster believes that one of the reasons for this result is that the market always likes to create new businesses and eliminate old ones, and almost all of the surviving businesses are excellent companies.