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Written by ZOOZ consulting and training | (972)-9-9585085 | info@zooz.co.il | www.zooz.co.il

| Issue 82 |


Hello!

We are pleased to send you the new issue of LaZOOZ.
This monthly newsletter is sent as a free service to thousands of senior executives.
It features different sections each time, and does not include advertisements.

 

We have tried to keep it brief, knowing that your time is precious and your work is plentiful. Those who wish to learn more can find links to articles and sources of relevant information. We hope that you will find the newsletter useful. We would be happy to receive any comments and suggestions.


Pleasant reading!
Ari Manor, CEO, ZOOZ

 

P.S. We would appreciate if you could complete a survey about LaZOOZ newsletter (in Hebrew) to help us improve it.


Focus

On strategic development in practice

Cash Cows and Stars

 

When you manage a business portfolio that includes several business industries, you have to decide which ones you will invest in more, less, and not at all (or to liquidate). You have probably already seen the matrix below, developed by the Boston Consulting Group. This matrix makes it possible to classify the organization’s business portfolio according to four categories:

1. Dogs – Businesses in a low-growth market, where we have a small market share

2. Cash Cows – Businesses in a mature, slow-growing market, where we have a large market share

3. Question Marks – Businesses in a high-growth market where we only have a small market share in for the time being

4. Stars – Businesses in a high-growth market where we have a large market share


BCG Matrix – Dogs, Cash Cows, Question Marks, and Stars

 

When the market is mature and slow-growing – If we don’t have a significant presence in it (dog), do not invest in it. It’s best to liquidate the business, which probably isn’t profitable. On the other hand, when the market is mature and we are among the leaders in it (Cash Cow) it is better to continue with the business (which is probably profitable), and to reap handsome profits (in other words, to “milk” the market).

 

When the market is still in its infancy and slow-growing – If we don’t have a significant market share in it (question mark) we must check it carefully, and decide whether we can achieve a significant market share in it within a reasonable time frame, and by wisely investing our resources. When the market is fast-growing and we are leading it – we must continue to invest so that we can pick the fruits expected to ripen later.

 

In order to maintain continuous growth in the long term, our money should flow from the Cash Cows to the promising Question Marks and Stars. We should “milk” the Cow. In other words – invest less in it and amass the profits to feed investments in growing markets – in suitable Question Marks and Stars. This is where the theory ends.

 

In practice, it is very difficult to implement, mainly because we are emotionally attached to the Cow, to our profitable and well-established business industry, which is our source of pride. Most of our employees – in sales, service, operations and marketing, are accustomed to nurturing the Cow. Our reputation is mostly associated with the Cow. Most of our customers, with whom we have developed important relationships, are only with us because of the Cow. How can we invest less in the Cow? How can we milk it and the customers that are attached to it? How can we invest the Cow’s milk in industries that we have not yet established our success in, where our revenues are still small, where we do not yet have a lot of customers, experience, or a reputation? Even if these steps make some business sense for the long term, they go against our intuition and extensive experience.

 

For example, many local companies considered leaders in Israel, encounter immense difficulties when they try to expand their business to other countries. These companies have an established reputation and extensive experience in Israel, good relationships with customers, strong brands, high revenues and reasonable profitability. Even if the market in the target countries abroad is much larger, faster growing and more profitable, these companies need to invest a great deal of resources to succeed there. The transition from a situation where the majority of sales are in Israel to one where the majority are abroad, is generally an investment with an uncertain outcome. For example, it will be very difficult to convince the local marketing manager to reduce his marketing budget to free up budgets for the investments required abroad.

  

In the interim, when the organization is starting to export but has not yet attained significant success abroad, the chairperson, the company management, and especially the CEO and CFO, must allocate appropriate and realistic resources for business abroad. If they do not have available sources of funding, they must insist on doing it at the expense of the local market, to “milk the cow”, and to persist until the desired change occurs, until the Question Mark turns into a Star, and even afterward (since Stars also require investment). Only when approx. 50% or more of the sales and revenues come from abroad will the internal mood of the organization change, knowledge will be gained, significant connections and experience abroad will be secured, and everyone will start feeling that developing the markets abroad justified the effort and the investment.

 

In summary: You will definitely need to milk the Cows so that you can reach the Stars and keep on growing. This is neither easy nor simple. You will have to overcome internal resistance but that’s how it is when you want to change, develop, and grow. Success has a price. No pain, no gain…. 

 

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Futurism

Innovation ideas not yet realized

Ideas for innovations in the Israeli government

 
The following ideas were developed using various thinking tools, and do not exist at present (to the best of our knowledge):

  1. A government with a minimal and pre-determined quota of ministers (for example – up to twelve ministers)
  2. A government with high admission requirements, where only parties with 5 MKs or more can participate
  3. An approved government – where you need a majority in a referendum to approve the composition of the governmen
  4. Anonymous government – whose members are elected by the Knesset and serve covertly (like the head of the Mossad in situ)
  5. A transparent government – where aside from security-related discussions, all of its discussions are open to the general public
  6. A pair of equal-authority ministers for each portfolio (that must make consensual decisions), but less portfolios
  7. A government with representation that takes affirmative action for minorities (women, the elderly, secular, religious, Arabs, etc.)
  8. A government that commits to clear guidelines and principles upon its establishment (and cannot transgress these)
  9. A government with a built-in rotation and turnover (all of the ministers switch jobs once a year)
  10. A government without a Prime Minister (important decisions are made together, according to a majority opinion)
  11. A prerequisite for appointing a minister: at least two years experience as an MK, and passed at least two laws
  12. Professional training course for ministers (similar to a Directors course) – one day per year during the first year in their position
  13. Attendance clock: Attendance of all the ministers is compulsory in at least 80% of the government’s assemblies
  14. If you have additional ideas – send them to us and we will gladly publish them next time

 

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Efficiency

A tip on effective management

What Customers Think


Do you want to know what your customers are thinking? To understand what they think about you and the competition? To learn how they make decisions and what their preferences are? To get to know their purchasing and consumption patterns?


The SurveyMonkey site will let you create and conduct online surveys, quickly and for free. For no cost, you can create surveys with up to 10 questions, send customers a link to the surveys, receive responses from up to 100 customers per survey, and see the results in real time, online. For a fee, you can ask an unlimited number of people an unlimited number of questions, receive Excel reports about the results, brand your surveys, and benefit from a variety of additional options, outlined here.

 

The survey for LaZOOZ subscribers that we mentioned at the top of the newsletter took us less than an hour to prepare. We would very much appreciate if you could answer it so that we can improve the newsletter for you. Take a look at this survey to get an impression of how surveys like these look in Hebrew.

 

SurveyMonkey’s surveys can be used for additional purposes as well, such as checking the desires, preferences, and satisfaction of employees, suppliers and investors. In fact, it is very easy to use SurveyMonkey to create different types of computerized forms, in addition to surveys. For example – a form where you can fill in a CV, a form to test employee knowledge, a comments and suggestions for improvement or optimization form, a form to submit ideas for innovations in a product and service, etc.

 

And finally, we would like to thank Marketing Consultant Simcha Seegan, a friend and colleague, who directed our attention to this site in his excellent newsletter, TRENDS, which deals with marketing trends.

 

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  • To prepare online surveys, register for free at: SurveyMonkey 
  • Detailed information about Concept Testing appears in the following links: 1 | 2 | 3
  • For an article about gathering extreme ideas: Click here
  • Read a recommendation about the book: How Customers Think


Published by ZOOZ | +972-9-9585085 | info@zooz.co.il | www.zooz.co.il

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