Понятие "инструментальное хозяйство" повсеместно применяется в специальной технической литературе [8] и практической деятельности. В его состав входят (рис. 17):
отдел или бюро инструментального хозяйства (ОИХ или БИХ);
инструментальный цех;
центральный инструментальный склад (ЦИС);
инструментально-раздаточные кладовые (ИРК) в цехах с заточными участками;
общезаводской или цеховые участки ремонта и восстановления инструмента.
Основные задачи инструментального хозяйства:
бесперебойное обеспечение высококачественным инструментом, оснасткой и приспособлениями всех производственных подразделений и рабочих мест; контроль за правильной эксплуатацией инструмента, оснастки и приспособлений и сокращение их расхода; уменьшение затрат на изготовление, приобретение, хранение, ремонт и восстановление инструмента, оснастки и приспособлений; поддержка минимально необходимых запасов инструмента, оснастки и приспособлений.
Структура и материальная база инструментального хозяйства определяются масштабом, характером и организационным типом основного производства, а также степенью применяемости инструмента, покупного или изготовленного на самом предприятии. Общее руководство, организацию и планирование инструментального хозяйства на крупных предприятиях осуществляет отдел инструментального хозяйства, подчиненный главному инженеру, на небольших — бюро инструментального хозяйства в составе планово-производственного отдела.
От организации инструментального хозяйства во многом зависят степень использования производственных мощностей, ритмичность работы предприятия, качество и трудоемкость продукции.
База инструментального хозяйства
Укрупненные расчеты базы инструментального хозяйства ведутся по двум основным направлениям:
техническая оснащенность (потребность в оборудовании);
объем производства технологического оснащения (специнструмента, штампов, приспособлений, оснастки и т. п.).
Потребность в специальном оборудовании устанавливается, как правило, в процентном отношении к количеству обслуживаемого оборудования основного производства (табл. 5). Конечно, эти нормативы весьма условны, но они дают общее представление о потребностях базы инструментального хозяйства предприятия.
Таблица 5
Отношение количества основных станков ОИХ к количеству обслуживаемого оборудования производственных цехов на предприятиях машиностроения, %
Характеристика выпускаемой продукции
Тип производства
массовое
серийное
единичное
Сложная
12-14
11-12
10-11
Средней сложности
11-12
10-11
9-10
Простая
10-11
9-10
8-9
Для полного и своевременного обеспечения рабочих мест инструментом на предприятиях рассчитывается расходный фонд по каждому типоразмеру номенклатуры на 1000 станко-часов работы либо на 1000 единиц готовой продукции. Как пример в табл. 6 приведены формулы для определения расхода инструментов и приспособлений.
Использование инструмента
Одна из основных задач инструментального хозяйства — организовать рациональное использование инструмента. Для этого осуществляется ряд мер:
нормализация инструмента и сокращение на этой основе номенклатуры изготовляемого инструмента;
многократное восстановление изношенного инструмента;
организация централизованной заточки инструмента, что способствует повышению качества заточки, уменьшению преждевременного износа;
организация планово-предупредительного ремонта оснастки и ценного инструмента;
организация регламентированной подачи инструмента из ИРК к рабочим местам, т. е. замена затупившегося инструмента в соответствии со специальным графиком, что предупреждает его полный износ, снижение производительности, брак обрабатываемых деталей;
организация рационального хранения, учета и контроля за расходованием инструмента.
Центральный инструментальный склад (ЦИС). Основные функции ЦИС — приемка, хранение, учет и выдача инструмента цехам. Весь поступающий инструмент принимается по сопроводительным документам и проверяется по количеству работником ЦИС, а по качеству — мастером ОТК в ЦИС. Громоздкая оснастка передается непосредственно в цех с соответствующим оформлением документов через ЦИС.
Для бесперебойного обеспечения цехов инструментом применяется система, позволяющая поддерживать его запасы в ЦИС на определенном уровне. Пополняются запасы по принципу "минимум — максимум", а по оснастке — "на заказ". Объем запаса в ЦИС, при достижении которого выдается заявка на очередную партию инструмента, называется точкой заказа. Она должна превышать минимальный объем запаса на величину, за время расхода которой можно поставить новую партию инструмента. Цехи снабжаются инструментом по лимитным картам.
Инструментально-раздаточная кладовая (ИРК). Основные функции ИРК — получение инструмента из ЦИС, его хранение и учет, выдача на рабочие места, приемка с рабочих мест, отправка в переточку, ремонт, списание изношенного инструмента. Непосредственно к ИРК должно примыкать заточное отделение, что упрощает передачу инструмента в переточку и последующую его приемку.
Инструментальный цех (ИЦ). На крупных предприятиях для обеспечения основного производства специальным инструментом и оснасткой создается ИЦ. Производство такого инструмента относится к единичному и мелкосерийному типу. Это существенно влияет на структуру цеха, состоящего из большого количества участков: заготовительного, механического, слесарного, кузнечного, термического, штампов и пресс-форм, модельного и др.
Техническая подготовка производства инструментального цеха, как правило, сосредоточивается в отделе главного технолога предприятия. Программа выдается в натуральном и денежном выражениях.
Необходимо отметить, что инструментальное хозяйство — дорогое и ответственное подразделение на любом производстве. Поэтому анализировать его работу необходимо комплексно по следующей схеме:
затраты на инструмент, приходящиеся на 1000 грн валового объема выпуска продукции;
доля затрат на инструмент в себестоимости единицы продукции;
объем запасов инструмента и технологической оснастки в процентах к месячному расходу.
По результатам анализа разрабатываются необходимые мероприятия.
The digital revolution is well under way for pharma companies. We spoke with 20 leading executives to find out how they cope—and what they do to stay ahead.
byDavid Champagne, Amy Hung, and Olivier Leclerc
The digital revolution continues to transform healthcare fundamentally, and many people believe that a tipping point is finally within reach. In 2014, digital health investments topped $6.5 billion, compared with $2.9 billion a year earlier.1
The critical question now for pharmaceutical companies is how to stay ahead of these changes. To answer it, we sought to learn the trends and implications of digital health by interviewing 20 thought leaders across a variety of segments, including analytics, biotech, data, pharma, providers, technology, and venture capital. The consensus is that as healthcare continues to digitize, pharma companies must transform themselves in basic ways to stay competitive. Successful ones will rethink their business and operating models, transform their cultures and capabilities, and adopt a new, longer-term mind-set that fosters innovation and bold strategic moves.2 These conclusions stem from three important themes that we took away from our conversations:
Dramatic changes in the traditional roles and dynamics of healthcare stakeholders have fundamental implications for pharma companies.
It is time to reimagine them as solutions companies, not asset companies.
The technology is ready, but pharma companies must change if they are going to enable and harness it more successfully.
These themes strongly suggest that success in the new digital environment will require three big shifts: forging ahead beyond the pack mentality and embracing experimentation and risk taking, developing a collaborative culture and challenging barriers to sharing, and reinventing companies by building capabilities beyond traditional healthcare and updating the operating model.
Emerging themes
Dramatic changes in the traditional roles and dynamics of healthcare stakeholders have basic implications for pharma companies. The digital revolution has spawned a consumer revolution symbolized by an increasing demand for connectedness and information. Consumers with new technology tools are becoming more active and self-directive, which changes their interactions with providers, payors, and pharma companies. As a result, new and unfamiliar forms of behavior will fundamentally affect the pharmaceutical business:
Individuals are starting to control their own health treatments. Patients are becoming more than just passive recipients of therapies. “Healthcare will be driven much more by consumers than physicians, with patients increasingly coming to their doctors with more information, parameters they measured at home, and an informed opinion about how they should be treated,” says Dr. Bertalan Mesko, medical futurist and author of My Health: Upgraded (Webicina, September 2015) and The Guide to the Future of Medicine (Webicina, 2014). Dan Goldsmith, the chief strategy officer of Veeva Systems, a cloud-based life-science business-solutions company, takes the idea further. “In the next three to five years,” Goldsmith says, “instead of patients just being informed and more inquisitive, they will be actively designing the therapeutic and treatment approaches for themselves with their physicians.”
As patients assume greater control over their own health, including the therapeutics they take, pharma companies must recognize this new decision-making power and develop better ways to engage them. That’s not easy. Li Ma, vice president of strategy and investment at Alibaba Health Information Technology, says that “many pharmacos are trying to engage patients. But it is difficult because they often don’t know exactly who their patients are and also have a hard time determining exactly what engagement model resonates with their patients.”
Some pharma companies already recognize the growing importance of connecting with patients and are doing something about it. As the customer-experience director at one top pharma company says, “We use different approaches, depending on the target audience, to reach patients across a number of channels that relate specifically to their preferences. We observe patient behavior via online communities, participate in dialogues on research communities, have in-home visits, observe patient–physician interactions, and use quantitative methods to analyze trends and adjust content as needed to drive better engagement.”
If pharma companies want to go beyond engagement and truly encourage changes in health behavior, they will need to create different kinds of solutions. Although many solutions, particularly apps, have been developed in the past few years, not all can be adopted. As Dr. Todd Johnson, the CEO of Noble.MD, puts it: “Apps that face the patient but are designed to solve pharma-company business needs should never exist. Conversely, the market desperately needs apps that focus on patient and/or provider needs—real needs with a measurable impact on health quality and cost. If those apps also meet business needs—as a secondary or tertiary outcome—they have a chance of being adopted.”
The clinical environment will change fundamentally. As consumers become more engaged and care environments more complex, physicians will need new skills and tools. “How doctors spend their time will change dramatically,” says Vinod Khosla, founding CEO of Sun Microsystems and founder of Khosla Ventures. “They will shift to spending a smaller proportion of it ordering diagnostics and interpreting results, and much more on the social elements of healthcare—helping patients and families think through treatment options.”
Physicians will also have to integrate increasingly massive quantities of traditional and nontraditional health data—for example, hundreds of fragmented electronic health records, as well as data from thousands of wearable devices and other “quantified self” technologies. This advance is crucial because “wearable devices that today are still in the more recreational-grade state are changing incredibly rapidly into research-grade and, ultimately, clinical-grade” tools, notes Dr. Eric Schadt, founding director of Icahn Institute at Mount Sinai.
In the near future, physicians may receive a constant, daily stream of data from some patients. The Diovan hypertension pill, with the embedded Proteus chip, is already in trials, with stellar patient-compliance results.3 The chip records the time when the patient takes a pill and transmits this information from inside the body to a patch the patient wears. (The patch also captures other physiological data.) This information can be shared with a smartphone, a laptop, and the cloud, so the patient and provider can access it. Such developments have prompted Dr. Krishna Yeshwant, general partner at Google Ventures, to conclude that “physicians need to operate in a more complex environment with an ever-growing range of tools. Physicians need a package of solutions to navigate this environment.”
Patients’ brand loyalty dwindles as cost consciousness rises. People are now much less loyal to brands and companies—both their insurance companies and the pharma companies that make their medicines. “The average tenure for a member to be on an individual insurance plan is now something like two to three years,” says Sanjay Mathur, CEO of Silicon Valley Data Science. The reasons vary, from more frequent job switching to employers that adopt new plans to cut costs, he notes. “In the future, no one will care what brand of drug they will take. And with device, behavior, and health-proxy data available, their method of selecting drugs will change dramatically.” The increased cost consciousness of patients exacerbates this tendency: they compare what they would pay for different plans and the efficacy and price points of different treatments.
Pharma companies will lose exclusive control over their value stories. As the lines among payors, providers, and pharma companies blur, carefully controlled trial data will no longer be the sole source of outcome data. The dynamics between players are evolving: payors are expanding into areas that providers and pharma companies traditionally owned (for example, payors are in some cases excluding drugs completely from their formularies). “With health data becoming more readily available in a more digestible form, payors and providers alike will have more information to link drugs to outcomes and inform value-based pricing,” says Amy Abernethy, MD and PhD, the chief medical officer and senior vice president of oncology at Flatiron Health. “The healthcare industry will start to merge, and the lines across stakeholders will blur very quickly,” adds Dr. Wolfgang Lippert of Salesforce.com’s Healthcare and Life Sciences Industry Business Unit. “Payors will become increasingly like providers in offering interventions and home care, and increasingly like pharma in analyzing data and pressure-testing value,” he predicts.
For pharma companies, it will not be enough to accept that they won’t continue to fully control their product data. To access real-world data from many sources, they will also need to provide others with more access to their own trial data and to collaborate as appropriate. As Neeraj Mohan of Blackstone Group says, “Pharma companies may think they need to keep their data secure, but not being transparent about clinical trials will in fact put them at a perilous disadvantage in front of patient groups and, eventually, regulators.”
Reimagine pharma players as solutions companies, not asset companies
As healthcare start-ups and technology giants move into what was traditionally the pharmaceutical domain, pharma companies will need to revamp their value propositions significantly. Dr. Krishna Yeshwant of Google Ventures pinpoints the challenge in this potential future: “For pharma, there comes the question of whether they can tie digital to the assets they have. There is an interesting broader conversation to have with pharmacos about moving from a products-and-pills company to a solutions company.” The associate director of US medical affairs at one global pharma company agrees, adding, “One of the most exciting values of digital to the pharmaceutical industry is how technology may be able to supplement or support pharmacological therapies to more effectively address the problem of suboptimal outcomes.”
The Diovan–Proteus chip combination for hypertension, mentioned earlier, is one example. Another comes from Google and its partnerships with DexCom, Novartis, and Sanofi to combat diabetes. Among the approaches is uploading glucose and insulin levels to the cloud in real time through contact lenses (worn by the patient) that measure glucose levels in tears; a bandage-sized sensor sends the data to the cloud. This technology can greatly improve the quality of diabetic care and help prevent complications through the real-time detection of any aberrations in glucose and insulin levels, which would trigger the right type of medical attention.
Beyond partnering with technology players, if pharma companies provided solutions that combined different therapeutics from different manufacturers, they could also add an enormous amount of value. In oncology, there is a growing movement to combine novel immune and targeted therapies with market-leader PD-1s from Merck and BMS.
To develop the most promising combinations efficiently, these pharma companies need to access and share early data and improve their digital infrastructure to manage complex trials and submissions jointly. If intercompany combos are to move beyond HIV and oncology, pharma companies must realize that they themselves, and not only patients, can benefit from partnering and combo solutions. For example, they can mitigate the risk and cost of clinical trials for combo therapies and leverage the strengths of each partner for what it does best.
Chris Geissler and Sanjay Mathur of Silicon Valley Data Science stated the case for reimagining pharma companies in even stronger terms: they say it could actually make the difference between success and failure. Big Pharma, they add, may be doomed to fail unless it transforms itself, and what such a transformation looks like is an open question that depends on several factors. For instance, Mathur argues that pharma companies will have to build “trust and form personal relationships with the consumer.” Such a transformation may be difficult for big pharma companies “mired in traditional approaches and legacy organizational structures.” These companies would not be able to compete effectively with nimble, small to midsize rivals that “have nothing to lose. Change and survive or be acquired,” says Mathur.
Finally, certain disease states are ripe for the introduction of comprehensive solutions or systems. Diabetes, which affects 387 million people around the world and consumes one in nine ($612 billion) US healthcare dollars today,4 is an area ready for an end-to-end solution.
As pharma companies shape their purpose and future direction, the insights from our interviewees suggest that fundamental change is needed. Companies must redefine the space they play in. They must get more specific information about their customers to identify the solutions and experiences—not just the products and drugs—those customers really need. They also have to understand precisely how such solutions will capture the most value. Then they will need to reconfigure their organizations to capture this value and realize their new approach to the business.
Technology is ready, but pharma companies must change to enable and harness it
Our interviewees agreed that technology itself is not what hinders the pharma companies’ full-scale adoption of digital health technology. “Lots of people say there are technical challenges to integrating different medical-record systems, but I don’t think that’s true,” says Dr. Krishna Yeshwant of Google Ventures. “I struggle to see what the tactical limitations are from an IT perspective.”
That said, new technology often faces strong organizational barriers, such as mind-sets that resist IT change and conservative cultures that base decisions on perceived risks. These cultures often lack compelling incentives that reward employees for behaving in new ways by moving beyond the core. Their business structures discourage risk sharing among stakeholders. The performance metrics of most pharma companies connect directly with the bottom line and the current P&L, not with innovation, customer engagement, and future strategy.
As a result, these companies generally try new approaches or technologies only when they see their peers doing so. Most of the digital leaders we interviewed, like Kara Dennis, managing director of Medidata’s mHealth unit, believe that “every one of the required technologies exists or is almost there and largely good enough. The challenge is in pulling the new technologies and processes together for an integrated clinical trial, and this will require life-science companies to remove organizational barriers to change.”
Take data transparency and data aggregation, for example. Multiple third-party players are aggregating health data and making the data and insights available to providers and payors. “If I were a life-science company, I would want to know what the story about my drug is going to be before it’s told by others,” says Dr. Amy Abernethy of Flatiron Health. “I would want to know what adverse events there are before others surface this for me. With constant monitoring, you will find a lot of signals, and you will need to learn how to handle these signals with respect to reporting to the Food and Drug Administration. But this is not a reason to stick your head in the sand; this is how drug development is going to be done in the 21st century,” Dr. Abernethy predicts. A director at a top 20 pharma company adds, “There’s a lot of alarm around utilizing social-media data for fear of discovering adverse events. Ignorance is not an excuse. A company like ours would like to be responsible for understanding what is being said.”
Many companies come at this issue backward, according to Sanjay Mathur of Silicon Valley Data Science. The story should be “about the technology second”—not first, he says. “Companies are so consumed with what technology to use they forget that the most important thing, to start with, is to ask the right questions. You don’t need real-time insight if you don’t have a place for real-time action.”
Pharmaceutical companies must also determine what they will need to uncover distinctive insights. These insights will drive their technology strategy, which will help them to integrate vast amounts of data from disparate sources and to use analytics or other tools that support the entire business.
Three fundamental shifts
To achieve all of these goals, pharma companies must fundamentally shift their mind-sets, cultures, and capabilities. Only then can they transform themselves into the agile, experimentally minded solutions providers they need to be. The themes emerging from our interviews suggest strongly that companies must make three strategic shifts to succeed:
Go beyond the pack mentality by embracing experimentation and risk. Pharma companies must now meet the consumers’ higher expectations, which stem from their experiences with other industries. “We have seen significant evolution in the consumer-electronics space,” says Dr. Krishna Yeshwant of Google Ventures. “Now if we turn to the medical-software and device space, we can push more evolution—for example, user-friendly devices or user interfaces. Users of pharmaco products are comparing them with those of the best consumer-electronics brands. That’s the new standard.”
A lack of risk appetite appears to thwart this evolution. “There is a strong pack mentality. Organizations don’t change unless they see everyone else change at the same time,” says Dan Goldsmith of Veeva Systems. “This has resulted in slow advances and a lack of innovation across the industry for years. In essence, pharma wants to be in control and avoid the risk of standing out.” Now, despite the fact that patients are taking back control over their own health, “How many pharmacos do you see out there engaging with patients?” he asks.
Some interviewees feel that there will be action if experimentation takes place in the right place and is both encouraged and rewarded. Today, different departments in pharma companies have different appetites for “radical novelty,” says Johan Grahnen, formerly the principal data scientist at Ayasdi, an advanced-analytics company specializing in machine intelligence. “It is difficult to encourage experimentation in departments that are driven by compliance. Strong leadership buy-in and support is required to set a unified vision,” he adds.
Embrace a collaborative culture and challenge barriers to sharing. A collaborative approach is necessary if pharma companies are going to stay ahead of healthcare digitization. Significantly, some have already recognized the need to stimulate, connect, and support innovative ideas across business units and geographies. “It is critical to have grass-roots experimentation,” says Bruno Villetelle, chief digital officer at Takeda Pharmaceuticals. “We set up an internal digital accelerator and innovation fund to stimulate this, and we run a regular Dragons’ Den competition to identify and fund development and pilots for the best ideas. The competition helps us avoid waste and bring speed, focus, and energy into digital innovation. When a pilot proves its value, we stand ready to put in the resources to scale the idea up quickly to the rest of the enterprise.”
As we mentioned earlier, pharma companies should also recognize that they must contribute data if they want to see what data others have. However, as Sanjay Mathur and Chris Geissler admit, “no real mechanism or incentives currently exist to foster” this kind of sharing behavior.
Inder Singh, CEO of Kinsa, suggests another requirement. Pharma companies must “reimagine their legal and compliance organizations to work more closely with regulators as companies creatively think about how to enable new business-model innovation,” Singh says. “Health information is highly regulated, and the regulatory context has not always kept up with the pace of innovation. Pharmaceuticals will need to actively work with regulators to find a path forward.”
Kristy Junio, senior director of Healthcare & Life Sciences for Oracle Marketing Cloud Industry Solutions, argues that pharma companies need to build novel, trust-based personal relationships with consumers. These ties “replicate the experience and trust that providers were able to build with patients.” Technology, she says, is one way to create this bond—for example, by providing patients with more personalized information about their health and treatment.
Finally, pharma companies have a choice between developing digital solutions in-house or through partnerships. Some of our interview subjects, including Dr. Todd Johnson of Noble.MD, believe it would be better for these companies to partner with third-party technology providers through innovation funds or joint ventures. “With pharmacos’ solutions often offered and marketed in providers’ offices, third-party partners offer more objective, unbiased representation,” Johnson observes. He believes that objectivity and a lack of bias are critical for providers to build relationships of trust with their patients.
Reinvent companies by building nontraditional capabilities and embedding them in new operating models. Attracting, engaging, and delighting consumers requires a deep understanding of how to deliver a customer experience—far beyond just selling a product, pill, or diagnostic test. The problem is that “most healthcare innovation gets smothered in preference for something that drives the bottom line immediately,” says Aimee Jungman, who has worked at companies including Frog Design, Genomic Health, and Pfizer. “There’s a lack of commitment to building something new, which could disrupt current cash flows, and something lasting, for the patient and physician to improve care,” she says. Neither of these aims will be realized unless pharma companies build new capabilities and revitalize their existing business and operating models to foster greater experimentation and bolder strategies.
Going from selling products to selling digital solutions demands completely new processes and ways of working. As Dan Goldsmith of Veeva Systems says, “In some ways, it is easier to talk about the technology, data, and analytics aspects of the digital revolution. But the harder question is, really, what are the fundamental organizational changes that will need to occur? With great advances in technology over the past five years, technology change is the easy part.”
Our conversations and client experience reveal a widespread perception that C-suite executives have not fully embraced digital. Their incentives typically reward them for taking a “wait and see” approach, which can stifle innovation and hinder change across the organization.
Nevertheless, virtually all of the thought leaders agreed that pharma’s old model must change and new blood must enter the system. The good news is that they see some pharma companies starting to value nontraditional skill sets—hiring marketers from other industries, such as retail, and building strategic relationships with creative agencies.
Dr. Amy Abernethy of Flatiron Health says that pharma companies need to double down on talent that truly understands science and health data. Some examples? “People like clinical informaticists who know how to work with electronic health-record data, clinicians who understand the science and didn’t just drop out of academia, or data scientists who aren’t just the IT guys in the basement but are business partners with the senior leaders.” Whether pharma companies choose M&A, strategic partnerships, or organic incubation and experimentation, they must find a way to adapt and evolve quickly. If they don’t, third-party players more willing to take risks, chart the course, and listen to consumers could supersede them.
The digitization of healthcare, even in the early stages, is having a real impact on how not only doctors but also patients manage those patients’ health and how pharma companies need to do business. Digital innovation still faces challenges, such as the lack of clarity about who pays for digital solutions, but digital and data analytics should certainly be high on the C-suite agenda. Pharma companies that want to keep up—or move ahead—must be bold and adopt an act-now mentality. They must build innovative business models, invest in new capabilities, and transform their organizational cultures.
In a recent article, Paul Leinwand, Cesare Mainardi, and Art Kleiner presented some survey findings underscoring the well-established fact that few leaders (only 8%, according to their study) are good at both creating good strategies and putting them into practice. But they seemed to almost completely ignore a really interesting finding from their research, which is thatleaders who are good at strategy are nearly always also good at execution — to the extent that making a distinction between the two is futile.
Let’s take a look at the findings presented:
In this table, the vertical “execution” axis represents the respondents’ assessment as to whether good stuff actually happened in the marketplace. The horizontal axis measures whether respondents believe that leadership provided a useful starting point in that effort. The survey presupposes, therefore, that whatever happens in execution can be meaningfully separated from strategy.
The problem with making this distinction is that a mere 1% of leaders were characterized as great strategists who execute poorly. The finding for executors of strategy is identical: only 1% of leaders are great at execution and poor at strategy making. If there were a meaningful distinction to be made between strategy and execution, you would expect bigger numbers in those cells.
Looking more closely only confirms suspicions that strategy and execution are not distinguishable. Of the 11% of leaders who were great “executors” (the top row), 73% (8% out of the 11%) were also great strategists, and just 9% were poor strategists. Of the 13% of leaders described as great strategists (the right hand column), 62% (8% out of 13%) were also “great executors,” while only 8% were “poor executors.”
In fact, the respondents link strategy and execution at all quality levels, which means that the diagonal line dominates the responses: a full 35% of respondents in the poor-poor box, another 23% in the average-average box, and 8% in the great-great box, for a total of 66% of the responses.
Clearly, in the minds of most respondents, greatness in strategy and execution are synonymous, not independent variables. And that is interesting precisely because so many experts (including, maybe, Leinwand, Mainardi, and Kleiner, given how they designed the survey) seem to assume that the two are different and go on to give advice on better “execution” based on that assumption.
I believe that we would get better “execution” if we stopped using the term and instead recognized that everybody in the organization makes choices as to what to do and what not to do. Calling some of those choices “execution” is at odds with the facts and may lead to counterproductive conclusions because — as I argue elsewhere — it could distract people from thinking in terms of choices.
The very best strategic leadership helps the entire organization understand that all of its choices result in the strategy that customers experience, creating a framework by which every person in organization makes the choices he or she needs to make.
Experimentation, iteration and improvisational change are all the rage in today’s dynamic business environments. But when evaluating new business opportunities, there’s a paradoxical tension between strategic focus and flexibility that can define or break your business. Christopher B. Bingham, Nathan R. Furr and Kathleen M. Eisenhardt
Capturing new growth opportunities is fundamental to strategy, innovation and entrepreneurship. But how can managers best meet this challenge? With flexibility or focus? The answer, as it turns out, can be more complex and more crucial to a company’s success than previously thought. Our research on mature corporations, growing businesses and new ventures suggests a paradoxical tension between focus and flexibility that can define or break your business. In this article, we explore when and where to be focused and disciplined versus when to be flexible and opportunistic.
Experimentation is a familiar innovation tool, but some industry pundits suggest that planning rarely succeeds in dynamic environments; instead, they argue for a rapid cycle of experimentation and pivoting.1 Such an approach holds both intuitive and rational appeal in a world characterized by uncertainty, where the flow of opportunities is swift yet unpredictable, where market boundaries are shifting and where competitors are constantly changing. Given the new competitive environment that promotes change and flexibility, is the old strategic emphasis on focus less relevant? We argue it is not. In fact, we discovered in our interviews with a wide variety of managers that focus may be just as important as flexibility, and, counterintuitively, a company’s focus may even influence its flexibility and vice versa. (See “About the Research.”)
Opportunities Are Complex
Opportunities are more complex than people recognize. Few managers recognize that there are two components to capturing a new business opportunity: opportunity selection and opportunity execution. Opportunity selection involves determining which customer problem to solve, whereas opportunity execution deals with solving the particular problem chosen.2 Most books, articles and thought leaders studying opportunities focus heavily on opportunity execution — how to create value by developing a solution for customers. But research suggests that most innovation efforts move so quickly to identify a solution that they have to cycle back to figure out what problem they are actually solving.3
We found that opportunity selection appears to matter as much as opportunity execution, the place where most companies spend their time. More importantly, how you approach opportunity selection (whether with flexibility or with focus) has a critical impact on how successful you are at opportunity execution.
Opportunists vs. Strategists
We observed that managers and entrepreneurs tend to fall into two groups that we label opportunistsand strategists. The opportunists relied on a less scripted and more flexible approach to opportunity selection. Instead of mapping out ahead of time which opportunities they would pursue and then letting the map be their guide for subsequent action, opportunists let emergent customer inquiries shape opportunity selection. For example, one U.S.-based security software company made the choice to enter the German market because a German customer was interested in its security-monitoring services. Likewise, the software company’s decision to go to Switzerland was based on unforeseen customer demand in the country, not a deliberate plan to enter Switzerland. As one company executive stated about that decision, “It was more like we were drawn in rather than a conscious decision.”
On the surface, these managers and entrepreneurs felt they were cherry-picking low-hanging fruit and taking advantage of narrow windows of opportunity before those windows closed or before competitors captured the opportunity. Rather than wasting time developing and then executing detailed plans that might be flawed or outdated or both, they took advantage of what emerged. Overall, this flexible approach to opportunity selection is consistent with the broader strategy and entrepreneurship literature, which argues that the dynamic nature of the markets in which many companies operate lowers the benefit of pre-action deliberation, and that ambiguity is not necessarily a bad thing. Indeed, many business leaders make better decisions as they go along, rather than beforehand through focused planning.4
Strategists followed a different pattern. Since a central threat facing companies that capture emergent opportunities is the lack of focus associated with trying to address the needs of multiple markets, strategists constrained the selection of opportunities to particular markets in order to help their companies channel efforts toward opportunities that were more likely to result in success. As a result, rather than taking advantage of unforeseen emergent opportunities, strategists were more disciplined. They began by studying the nature of opportunity capture in their market. Once they had done this, they created a focused plan that riveted attention on what they believed was the best opportunity (not just the easiest) and that would allow them to capture several opportunities in a row versus one in isolation. For example, at a Finland-based company that helps organizations manage inventory through point-of-sale software solutions, leaders selected their first international market, Sweden, based on what they could learn — not just on their ability to get a sale. Although not a large market, Sweden was both culturally similar and geographically close. This reduced the risk that the company’s Finnish leaders would be overwhelmed with regional differences and increased the likelihood that they would be able to learn how to do business abroad. As the CEO explained, “We were quite conservative in this process because we didn’t know much about international business. So we started with Sweden.” After Sweden, the company chose Norway, then France, Germany, the United Kingdom and then the United States. It was able to gain experience in progressively bigger markets and exploit its growing knowledge. Overall, by being more focused in opportunity selection, companies can start with easier opportunities or opportunities that are advantageous to pursue earlier; those initial opportunities then provide the foundation for subsequent opportunities. Thus, just as the order of assembly is key when building a bridge or assembling a computer, the order of experience appears critical for effective opportunity capture.
Flexible Selection and Inflexible Execution
So how do these different patterns for opportunity selection unfold? Although flexibility can be extremely useful, we found that the opportunists who had been the most flexible in the opportunity selection phase tended to be the least flexible in the execution phase. In other words, although these managers were adept at flexibly responding to emergent opportunities, once they started to execute the opportunities, many became surprisingly inflexible. For example, at a U.S.-based medical imaging software company, leaders were very flexible about the selection of opportunities. One cofounder noted, “We were trying to get something going in Europe, so we looked for opportunities and we cherry-picked.” The company decided to enter Sweden based on some interest from local doctors there. Yet, after the company entered Sweden, the doctors appeared reluctant to use what they viewed as a new technology for an established method of mammography. Importantly, instead of flexibly executing the opportunity and changing their solutions to meet local market needs, the software company attempted to sell Americanized products everywhere. Executives selected their second country, Norway, in the same flexible fashion. When sales there didn’t materialize, executives believed the targeted customers didn’t understand the product. Rather than adjusting their approach, they pushed existing solutions. The pattern of being more flexible in opportunity selection but less flexible in opportunity execution often led to poor results. For example, commenting on their entry into Sweden, executives at the medical imaging company remarked, “We could not sell into Sweden” and “They ran off a cliff. They went nowhere.” Performance in subsequent countries was much the same.
Focused Selection and Flexible Execution
Companies that were more focused in opportunity selection were generally more flexible in opportunity execution. This pattern surprised us because although these companies showed a consistent, focused pattern of disciplined search for opportunities, they were also remarkably flexible about how they pursued the selected opportunity. For example, the founders of a Singapore-based company that develops content for wireless providers thought long and hard about which markets to enter. Based on customer interviews and market observations, management outlined the best way to tackle multiple markets, concluding that they needed to start with the Japanese market, given that consumer trends appeared to diffuse from Japan to the rest of Asia. After entering Japan, leaders started selling digital content to Japanese wireless providers. But this required going head-to-head with Japanese content providers, who were technically competent and entrenched in the market. In light of these challenges, management decided to stop trying to sell their own company’s content in Japan and instead allied themselves with Japanese content companies to sell their partners’ content in Asia. As the chairman explained, “Instead of competing with them [Japanese content companies], we decided to partner with them and take their products and sell in Hong Kong, China and Japan. So we decided to change our strategy.” The outcome from flexibly executing the opportunity in Japan was greater success. As one leader remembered, “Once we decided to partner with [Japanese companies to start selling their content outside Japan], within three months we signed up quite a lot of very reputable content makers.” We observed a similar pattern with other companies in our study: Increased focus on opportunity selection meant increased flexibility in opportunity execution. (See “Focus and Flexibility in Opportunity Capture.")
Lessons About Opportunity Capture
Our research revealed two lessons about opportunity capture that are fundamental for growth in new markets: (1) Although opportunists can be flexible in selecting opportunities, they are less flexible in executing them; and (2) longer-term success partly depends on sequencing opportunities for learning.
Cognitive Lock-In
We observed that once opportunists started to execute opportunities, they often became less flexible. Our research suggests that opportunistic managers fell into what is called a cognitive dissonance trap — a psychological pattern wherein individuals who make a decision contrary to a prior belief set experience discomfort that leads them to reshape their beliefs and perceptions to match the discordant decision.5 Not surprisingly, we observed that opportunists (like strategists) generally believed they were careful decision makers. When opportunity selection was flexible and emergent, opportunists subsequently rationalized their opportunity choices, often focusing only on the positive aspects of the opportunity and ignoring the negative. In a similar vein, they tended to blame bad events associated with the selected opportunity on external circumstances beyond their control rather than questioning the way they chose the opportunity in the first place.
For example, executives at the Finland-based security software company flexibly selected opportunities. Entry into the first country, Sweden, was not planned out in advance. As the chief financial officer noted, “Sweden was very much ad hoc.” But this view was not consistent with the rationale managers gave later, when they suggested that Sweden was purposely selected as a location where employees could “cut their teeth.” When sales in Sweden fell short, leaders began placing the blame on external sources, such as their customers’ financial positions, rather than on internal ones, such as faulty strategy. Because the weak sales were attributed to external factors, leaders did not alter their method of executing opportunities. A senior leader described how the company worked with an outside lawyer to develop a standard template: “We just would not budge on that,” he said. These restrictive policies interfered with the company’s ability to work out agreements with several major customers when it was attempting to enter the United States. The experience underscores a paradox of opportunity capture: The more that leaders attempt to control opportunity execution, the less control they seem to have. The lack of control stems, in part, from trying to standardize solutions for opportunities that are inherently unique. Among opportunist companies, greater company maturity and increased executive experience seem to further decrease the chances of flexible opportunity execution. This may be because prior patterns for executing opportunities that have proved successful become increasingly rooted and institutionalized in company practices and executive actions.
A different pattern was evident among strategists. Particular opportunities within the broader set of possibilities were viewed ahead of time and found to be more attractive than others. As leaders selected the most attractive opportunities, this reduced the need to justify choices and therefore made leaders more likely to flexibly execute opportunities. As a result, they tended to improvise and experiment during the execution of opportunities, sometimes initiating radical changes to their product or business model. For example, one company we studied provided IT security software. After carefully studying its opportunity set, it decided to enter China. To management’s surprise, Chinese customers were suspicious about paying for software — they expected software to be free. So the team leading the effort switched gears and developed a hardware solution, which ended up selling very well. As the CEO recounted, “They [Chinese customers] only pay if they see hardware. It becomes an appliance … basically it’s a PC, and then they sell it to the customer.” In general, the strategists were more likely to pivot and change than opportunists when it came to opportunity execution. They were better able to abandon existing products and practices designed for opportunity execution and adopt new, more appropriate ones.
Sequencing Opportunities
On the surface, being more flexible would seem to help managers learn and adapt. However, we found that many of the managers and entrepreneurs who were the most flexible discovered an important lesson: It’s difficult to learn if you are always changing course. Sustained business success appears to depend not just on capturing one opportunity but also on stringing multiple opportunities together. Hence, longer-term success hinges in part on sequencing business opportunities: Understanding how to capture one discrete opportunity prepares managers and the organization to capture others.
Because opportunists often took advantage of the most immediate opportunities from the flow of possibilities, they found it very difficult to learn from and build off of their efforts. Managers of more established businesses often expressed confusion about the connection between the different opportunities they were chasing and uncertainty about the lessons learned. Managers of newer businesses complained that chasing multiple markets suggested a lack of vision. These executives had a morass of data — customer needs, feedback and product features — that pulled them in many directions. As a result, it was hard to know what was most important to do to succeed. For example, the CEO of the security software developer based in Finland described the difficulty his team had applying the lessons they learned, lamenting, “We should have had more focus and more country-by-country-specific plans rather than just trying to cover all the bases in a shotgun approach.” Similarly, a U.S. entrepreneur developing and testing tools for professionals recalled, “We were doing so many things — so many different tools and quiz formats — that it wasn’t clear what we were learning from any of it. Every time we made a change, we changed so many things [that] it wasn’t clear what caused what.”
By contrast, strategists who were more disciplined in opportunity selection also paid attention to how their opportunities were sequenced. They often selected smaller or more difficult markets, which allowed managers to learn from the opportunities. For example, an entrepreneur developing learning tools in the United States decided to eliminate nearly all of the solutions he had developed and focus instead on delivering quizzes to the education market. When asked why, he said, “By focusing on a single problem for a single market, we could actually really start to learn what solved customers problems … It was the best decision I ever made. We began to really understand what educators needed and what would lead to more revenue.” By narrowing his focus, the entrepreneur was able to increase revenue 400% in the next year before moving into the testing market for business enterprises, where he found even greater success.
Focus and Flexibility in Opportunity Capture
More focused opportunity selection appears to lead to more flexible opportunity execution. However, more flexibility in opportunity selection often leads to less flexibility in opportunity execution.
In other cases, we found that strategist managers sequenced opportunities to improve their legitimacy and credibility in the marketplace. Sometimes, managers of unproven businesses attempted to establish themselves with third-tier customers and then tried to move to second-tier customers and eventually to first-tier customers. For example, a provider of semiconductor solutions for wireless devices had aspirations to sell in the U.S. market but recognized that it first needed to establish a track record. To do so, it began selling to customers in Taiwan, then leveraged those sales to win customers in Korea, and eventually lined up customers in the United States, Germany and Japan. Depending on the circumstances, the pattern can also operate in reverse and involve starting at the high end and then expanding to the broader market. For example, Tesla Motors Inc. of Palo Alto, California, which designs and manufactures electric cars, decided that selling high-end electric vehicles would promote the sale of electric vehicles in other parts of the market.
Overall, creating a sequence for opportunity capture permits leaders to bring the present and future together in a way that facilitates team alignment and channels the energy and attention of geographically dispersed employees and managers. This helps organizations get into a rhythm and move forward in a synchronized fashion. Sequencing therefore provides an order for opportunity selection (that is, where organizations are now, where they want to go and the path to get there) that serves as a counterpoint to the more freewheeling manner of selecting opportunities based on emergent customer demand. More broadly, the use of sequencing reflects increased cognitive sophistication, as it takes time for individuals to gain insight about how opportunities can and should be ordered. This is perhaps one reason why the use of sequencing seems to occur more in older companies or in companies where founders have greater experience.
Managing the Opportunity Paradox
Leaders who acted more flexibly during opportunity selection (Which problem should we tackle?) tended to be less flexible during opportunity execution (How do we solve the problem?). Conversely, leaders who were more focused during opportunity selection tended to be more flexible in executing those opportunities. Focused selection and flexible execution lead to better outcomes than the reverse. The pattern of flexible opportunity selection leading to lower-performing, less flexible opportunity execution suggests another paradox for companies pursuing new avenues for growth and profitability. While being open to selecting new opportunities based on emergent customer demand appears attractive because it offers the promise of an immediate reward, that very openness may prevent the reward from being realized.6 A key implication for entrepreneurs and managers is that they should be disciplined in seeking to understand the nature of opportunities and linkages among them and then focus their resources on the opportunities that will help them move in a sequenced fashion from their current state to a desired end state.
How to Select Opportunities
At the start of the process, there are a few rules of thumb to guide you in choosing an opportunity. To begin with, resist jumping at the first potential opportunity or customer. Showing restraint may not be easy when cash is limited and the opportunity appears to be reasonable. Nevertheless, it’s important to focus on the longer term rather than the shorter term. What does the right opportunity look like, and how will it set you up for future opportunities? Remember the lessons on sequencing: Try to see if there is an internal sequence to a series of opportunities. Will one opportunity position you for another one? Will this opportunity help you learn about another one? Will it give you the legitimacy to capture future customers? The founders of a digital gaming company applied these criteria when they assessed their opportunities for building their consumer business in Asia. In their case, it meant starting in Japan and then progressively moving to Taiwan and Hong Kong before going after other markets. One founder remarked: “The digital content business is really a consumer business, and looking at Asia’s development for consumer business — whether it’s fashion or electronics or whatever, the trend always starts in Japan and progressively moves to Taiwan and then to Hong Kong and then to the rest of the market. I mean, this trend has been like that for the last 50 years. So when we pushed consumer-based, consumer-oriented digital products, that’s the same thing we did. We started by securing deals in Japan and pushed to the next most obvious market, which is Taiwan. Once [the] consumer products were accepted in Taiwan, then we progressed even more to other markets.”
Second, think about the full portfolio of choices before you, taking into account such criteria as the opportunity size (Is it large enough to be worth your time?); reachability (Does the company have or can it develop capabilities to capture the market?); and competition (How crowded is the field of competitors?). Many managers make the mistake of chasing small opportunities that are not worth the time, big opportunities that are out of reach or moderate opportunities that are too competitive.
Finally, we note that being strategic about which opportunities make the most sense may be particularly important for younger businesses. By considering the unique characteristics of each opportunity and its link to other opportunities, entrepreneurial companies can more easily and rapidly overcome inherent liabilities of newness (such as lack of resources and track record)7 by accumulating experience in a manner that builds on the past, while simultaneously increasing credibility.
How to Execute Opportunities
Once you have selected an opportunity, remember that opportunity execution requires having a flexible, rapid and iterative learning cycle. Therefore, while emphasizing common products and practices is important for capturing efficiencies, too much emphasis on routine actions can make it hard for companies to adapt or to walk away from losing situations in the future. Leaders should begin by designing a series of experiments to test what customers want and then rapidly adjust the offerings to meet their needs. Many of the companies we studied made radical changes to their products and business models (sometimes as significant as changing from selling software to selling hardware or from being content providers to being content resellers) upon entering a new market. Some of the most successful companies walked away from what seemed like an attractive opportunity after their initial experiments. In most cases, successful execution depended on regular interaction with customers and an openness to seeing negative results and adapting, rather than blaming negative results on someone else or firing salespeople.
The Opportunity Audit
How should you proceed if you suspect you have been too opportunistic in selecting new projects and too rigid in executing those opportunities? What should you do in that situation? In our view, you should conduct an opportunity audit built around the following questions:
How did you choose the opportunities you are currently pursuing?
If you could start over, which opportunities would you choose? Which opportunities make the most sense in terms of building a powerful sequence?
What are the results of your current efforts? What excuses have you made for negative results that place the blame externally? What could you be missing by doing this?
If the company were threatened with bankruptcy today, what one opportunity would you keep and which opportunities would you give up?
After answering these questions, don’t be afraid to make substantial changes to what you are doing. Throwing good money after bad is a common trap: People tend to increase their commitment to a failure they feel responsible for when, in fact, the most rational choice may be to simply let it go and adopt a more disciplined process for opportunity selection in the future. Although this may seem counterintuitive, it will help foster the flexibility you will need for opportunity execution.
Although flexibility in opportunity capture is extremely popular these days, few recognize that opportunity capture is a two-phase process involving opportunity selection and opportunity execution. Greater focus and discipline during opportunity selection through sequencing can increase effective flexibility during opportunity execution. By contrast, a lack of discipline in selecting opportunities can result in reduced ability to learn and adapt, which in turn can hurt chances for success. Overall, what appears to be at the core of successful opportunity capture is the intended capture of the expected along with the emergent capture of the unexpected. While the former is more controlled, future-oriented and top-down, the latter is more spontaneous, action-oriented and bottom-up. Moving back and forth between focus and flexibility during opportunity capture allows companies to glean the benefits of efficiency while still allowing room for change.
REFERENCES (7)
1. E. Ries, “The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses” (New York: Crown Business, 2011).
2. C.B. Bingham, “Oscillating Improvisation: How Entrepreneurial Firms Create Success in Foreign Market Entries Over Time,” Strategic Entrepreneurship Journal 3, no. 4 (December 2009): 321-345.
This is an interesting way to describe a market by showing visually both the size of the various customer segments as well as the market share (segment by segment) of key competitors. One can even add a growth dimension by adding +/- signs, or up/down arrows.
As usual, the trick is how to define the segments. The recommendation is generally to look at end users, not necessarily the purchasing decision makers or the distribution channels. Doing this at a fairly detailed level is often time consuming and difficult (lack of reliable data). But it tends to reveal interesting insights in terms of market penetration and growth opportunities.
