Tony Robbins – Six Human Needs

FOLLOWING on from the theme of my last post, which highlighted Alain de Botton’s kinder and gentler philosophy of success, I think it would be valuable to consider why we do what we do. In an attempt to become “successful” many of us work long hours and sacrifice time that could be spent with friends and family. Why?

Tony Robbins is an American self-help writer and professional speaker who believes that there are six basic human needs, and that people are motivated by their desire to fulfill these needs:

1. Certainty/Comfort

We all require a basic level of certainty that we will be able to avoid pain and obtain pleasure. For example, at a very basic level we want the comfort that comes from having a roof over our head, clean water and three meals a day for ourselves and our family.

2. Variety

If life is completely certain and predictable it is likely to become boring. So, we also require some level of variety.

3. Significance

We all require a feeling that we are unique and important, and that our life has meaning. This need can be fulfilled in various ways, one way might be work in a highly paid, highly respected profession.

4. Connection/Love

We all want to feel part of a community, to be cared for and cared about.

5. Growth

Growth is an important part of life in general. We all want to grow, develop and improve our abilities and position in life.

6. Contribution

On some level, we all want to contribute something of value, to help others, or to make the world a better place.

TEDx Emerald City

LAST night I attended my first independently organised TED event, TEDx EmeraldCity.

The event was organised by the ever dynamic and always delightful Melissa O’Young. The name of the event sounds pretty random, and it is, but it is also quite clever. Since this was an Australian TED event the thinking was as follows: Australia – Oz – Wizard of Oz – Emeral City … but of course!

There were twelve of us at the event, all from a diverse range of backgrounds: artist, journalists, lawyers, bloggers, photographer, fashion design, financier, film producers, travellers, and entrepreneurs.   It certainly was an interesting and unlikely group of people to be assembled in the one place, not your ordinary pizza and beer night.

The evening was driven by the high minded desire to share interesting and important ideas, watch a number of TEDTalks videos, network with people from outside our normal group or friends, and to get inspired by new ideas, projects and opportunities. It was an engaging and thought provoking evening, and I feel lucky to have been a part of it.

Over the course of the evening we watched four TEDTalks videos, all very different, all of them fascinating. If you’re interested, I have linked to each them:

  1. Alain de Botton: A kinder, gentler philosophy of success
  2. Dave Eggers’ wish: Once Upon a School
  3. Rick Smolan tells the story of a girl
  4. Eric Lewis plays chaos and harmony

My personal favourite is the one by Alain de Botton on his kinder, gentler philosophy of success.  This talk is particularly relevant and eye opening to all of us who strive for “success”, what ever that may mean. Check it out!

Porter’s Six Steps of Strategic Positioning

There are six strategic principles which are relevant to any company that wants to be profitable online

Porter Six Steps

IN AN article entitled “Strategy and the Internet” published in the March 2001 edition of the Harvard Business Review, Michael Porter outlined six principles that he believes companies need to follow if they want to establish and maintain a distinctive strategic position in the market place.

Since the internet is a business platform with low barriers to entry, these six strategic principles are particularly relevant to any company that wants to be profitable online:

1. Stand for something

In order for a company to develop unique skills, build the right assets, and establish a strong reputation it is important to define what the company stands for so that the company will have continuity of direction.

2. Focus on profitability

This point seems obvious, however many internet based companies have instead focused on “unique visitors” and “page views” as measures of performance. At the end of the day, sustainable profits will only be possible where goods or services can be provided at a price which exceeds the cost of production.

3. Offer consumers a unique set of benefits

Good strategy involves being able to provide a distinct set of benefits to a particular group of consumers. Trying to please every consumer will not give a company a sustainable competitive advantage.

4. Perform core activities differently

If a company is able to establish a distinctive value chain by performing key activities differently from its competitors, then this will help the company establish a sustainable competitive advantage.

5. Specialise

There is no competitive advantage to being a jack of all trades and a master of none. Porter recommends making trade-offs.  By focusing on certain activities, services or products at the expense of others a company can establish a unique strategic position.

6. Ensure that all activities reinforce the company’s strategy

All of a company’s activities are interdependent and, as a result, they must be coordinated so as to reinforce the company’s overall strategy. A company’s product design, for example, will affect the manufacturing process and the way that products are marketed. By coordinating all of its activities, a company makes it harder for competitors to imitate its strategy.

[For more information on consulting concepts and frameworks, please download “The Little Blue Consulting Handbook“.]

Nissan leads the charge

ON 1 August 2009, at the opening of its new global headquarters in Yokohama, Nissan launched its first fully electric vehicle, the Nissan Leaf EV.

Nissan appears to have made a long term strategic commitment to electric vehicles. According to one source, Nissan has been busy developing electric vehicles since 1992.

Nissan, with alliance partner Renault, has bold ambitions. Toyota and Honda have both produced fuel-electric hybrids, but Nissan is the first car maker with plans to mass produce a fully electric vehicle.  The Nissan Leaf EV will be able to run 160km (100 miles) on a single charge which, according to Nissan, would make it suitable for the daily driving needs of over 80% of Americans.

Fully electric cars are not a new idea but, up until now, there have been a number of factors preventing mass market introduction, including:

  1. limited battery life;
  2. the high cost of battery technology;
  3. inconvenience of lengthy battery charging times; and
  4. lack of supporting infrastructure.

Carlos Ghosn, CEO of Nissan, has responded to these consumer concerns about affordability and convenience.   The Nissan Leaf EV will incorporate two clever innovations:

  1. Battery leasing: Electric cars have traditionally been more expensive than petrol cars, due mainly to battery costs.  Battery costs will most likely fall with mass production. However, Nissan’s key innovation is their plan to lease batteries to customers rather than sell the car at an inflated price. As a result, the Nissan Leaf EV is expected to cost no more than a petrol car.
  2. Quick charge: The batteries will have fast charge capabilities, with a 10 minute quick charge providing an extra 50km of range.

Will cities around the world commit to building the necessary infrastructure to support these new electric vehicles?  If so, the Nissan Leaf EV could be the bright spark we’ve been waiting for.

GE-McKinsey 9-Box Matrix

The GE-McKinsey 9-Box Matrix offers any decentralised corporation with multiple business units a systematic approach to help it decide where to invest its cash

GE-McKinsey 9-box matrix

IN SEPTEMBER 2008, the McKinsey Quarterly published an interactive audio presentation on the GE-McKinsey 9-Box Matrix

An outline of this framework is provided below, but I highly recommend watching the original presentation.

1. Background

The 9-Box Matrix follows in the footsteps of Boston Consulting Group’s growth share matrix which was introduced in 1968.

The 9-Box Matrix was developed as part of work that McKinsey did for GE in the early 1970s. At that time, GE had around 150 business units and was faced with the challenge of how to manage such a large number of business units profitably.

The 9-Box Matrix was developed as a result of the realisation that it is important to separate the ability of a business to generate cash from the decision about whether to put more cash into the business.

2. Purpose

The 9-Box Matrix offers any decentralised corporation with multiple business units a systematic approach to help it decide where to invest its cash.

The 9-Box Matrix solves the problem of trying to compare potentially very different business units: one might be capital intensive; another might require high advertising expenditure; a third might have economies of scale.

Instead of relying on the projections provided by the manager of each individual business unit, the company can determine whether a business unit is going to do well in the future by considering two factors:

  1. attractiveness of the industry; and
  2. the business unit’s competitive strength within that industry.

3. Using the matrix

GE-McKinsey 9-box matrix

(Source: McKinsey Quarterly)

Placing each business unit within the 9-Box Matrix offers a framework for comparison between them.

In order to keep things simple, the framework offers only three investment strategies:

  1. Invest/Grow;
  2. Selectivity/Earnings; and
  3. Harvest/Divest.

Allocating one of these investment strategies to each business unit is a necessary first step. However, it is important to note that two business units that have been given the same strategy will not necessarily be treated in the same way. For example, a strong unit in a weak industry is in a very different situation than a weak unit in a highly attractive industry.

After placing a business unit into one of the nine boxes, there are at least two questions that are worth asking:

  1. If a business unit is in one category, say “selectivity/earnings”, is there anything that can be done to change its position? That is, would it be possible to move a business unit from the “selectivity/earnings” category and into the “invest/grow” category by making any kind of strategic investments?
  2. If a business unit is to receive money, what should it do with that money? It is important that money is given with a purpose in mind because the best use of money will vary depending on the industry and on the business unit. For example, advertising to enhance the brand might work for one business unit, whereas investing to increase research and development might work for another.

4. Axes of the matrix

The 9-Box Matrix places “industry attractiveness” along the vertical or y-axis, and “competitive advantage” (otherwise known as competitive position, or competitive strength of the business) along the horizontal or x-axis.

4.1 Industry attractiveness

Industry attractiveness refers to whether the industry is going to do well in the future. Are most players in the industry likely to do well? How easy will it be for the average company in the industry to make profits over the long run?

There are a number of different factors that affect industry attractiveness and those factors will vary in importance from industry to industry, for example: long run growth rate of the industry, current profitability, etc.

The Structure Conduct Performance model or, its more popular simplified version, the Porters Five Forces model both provide a formal approach to look at industry attractiveness.

4.2 Competitive advantage

According to Coyle, the first formal definition of “sustainable competitive advantage” was not determined until the mid-eighties.

In the early days of the 9-Box Matrix, analysts used proxies for sustainable competitive advantage:

  • Is the business unit’s market share growing? Maybe we can infer from this something about its competitive advantage.
  • How strong is the business unit’s brand equity? That is, how much of a price premium can it charge?
  • Is the company more profitable than its competitors?

A business has a competitive advantage when it is able to achieve profits that exceed the industry average. Competitive advantage may be established by offering consumers greater value by way of:

  • lower prices;
  • differentiated goods or services that justify higher prices; or
  • establishing a market niche and achieving a narrow, rather than an industry wide, competitive advantage.

5. Available strategies

5.1 Invest / Grow

A business unit will be in the “invest/grow” category if the prospects for the industry as a whole are attractive and the business unit’s position in the industry means that it is likely to do better than most of the other firms in the industry.

A business unit in this category should be given as much money as it needs regardless of whether it can generate those funds itself.

5.2 Selectivity / Earnings

Business units in this category are given second priority to those in the “invest/grow” category. So, the amount of money spent on business units in the “invest/grow” category will determine how much money is left over for business units in this category.

When allocating money to a business unit in this category, it is important to be selective about where the money is spent and monitor earnings closely. With the right combination of strategies, it may be possible to move the business unit into the “invest/grow” category.

In this part of the matrix it is a good idea to be careful. If the business unit doesn’t improve then it may be best to invest money elsewhere.

5.3 Harvest / Divest

A business unit will be in the “harvest/divest” category if it is in an unattractive industry and its competitive position is weak.

There are two suggested strategies:

  1. sell the business unit (divest); or
  2. increase short-term cash flows as far as possible, even at the expense of the business unit’s long term future (harvest).

[For more information on consulting concepts and frameworks, please download “The Little Blue Consulting Handbook“.]