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Outsourcing: Outsiders Working for You

Outsourcing

OutsourcingOutsourcing feels like it’s been around forever. And doubtless, as an adjunct to business operations, it has. But, as a widely-used business strategy, it really only dates to the 1980s.

Since then, outsourcing has become a vital option for large and small business, and for many public services too.

So, what is outsourcing, why do organisations use it as much as they do, and what are the risks?

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Value Engineering: The Same for Less

Value Engineering: The Same for Less

Value Engineering: The Same for LessHow do some products achieve astonishing quality and functionality at affordable prices? The answer is in the discipline of Value Engineering.

Value Engineering is often tarred with the same brush as ‘cost-cutting‘. Although it has a similar role, it plays to a wholly different business strategy. So, let’s look at what it is and why it matters.

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Franchising: Half-way to Independent Business Ownership

Franchising

FranchisingFranchising is a halfway house between being an entrepreneurial business owner and taking a job with all the certainty and uncertainty that entails.

Franchising is a common next-step for managers who leave their safe employment and want to set up and operate their own business. But they don’t have the ideas or the appetite for a wholly new business of their own. As a business model, franchising offers significant benefits to:

  • the person granting the franchise (franchisor)
  • the person operating the franchised business (franchisee), and
  • consumers

But with benefits come inevitable costs and risks. So, in this article, we’ll look at the Big Idea behind franchising, what it is and what it means for business people on either side of the transaction.

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Key Performance Indicators: KPIs

Key Performance Indicators - KPIs

Key Performance Indicators - KPIsKey Performance Indicators – or KPIs – stem from an insight that is most often attributed to Peter Drucker, in his 1954 book titled, ‘The Practice of Management’:

‘What gets measured gets managed’

That attribution may be contested, but the central assertion seems pretty sound. If your organisation measures performance against a specific metric, then its managers feel an incentive to manage their parts of the business, so that they perform well against that metric. KPIs are nothing more nor less than the key – or most valuable – metrics.

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Multi-Level Marketing (MLM): Pyramid Schemes?

Multi-Level Marketing

Multi-Level MarketingI’m sure Multi-Level Marketing has been around since ancient days. Send out street urchins to sell stuff and take a big chunk of their income. Get them to recruit other homeless kids and let them have a share of what their protegé earns.

But Multi-Level Marketing (or MLM) is big business now, with one estimate* putting it at around the US$200 billion per annum mark, worldwide.

So, we have to ask:

  • What is Multi-Level Marketing?
  • How does it work?
  • Is it a good way to earn a living (here’s a spoiler: no)?
  • And how do you spot an MLM scheme if offered one?

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The Long Tail: Infinite Consumer Choice

The Long Tail

The Long TailThe Long Tail is the other half of the same chart we saw in an earlier Big Ideas article: the Pareto Principle. Vilfredo Pareto took an interest in the head of the chart, where a small number of people accounted for a huge proportion of wealth. In 2006, Chris Anderson published a book that looked at the huge number of products that form the remainder, when you exclude the few that account for the majority of sales.

How many categories of item does Amazon list? I found the statistic from January 2018 that:

Amazon lists more than 3 billion products across 11 marketplaces worldwide.

But most of their sales and revenue come from the top few highest performing goods in each category. A small number of books may sell thousands a month. But there are millions of books that rarely sell any in a given month… or year.

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Blue Ocean Strategy: Winning through Value Innovation

Blue Ocean Strategy

Blue Ocean StrategyLike so many big ideas, Blue Ocean Strategy was not new when its founders conceived it. They just gave it a resonant name and started to flesh out the idea.

In this case, it was W Chan Kim and Renée Mauborgne. They gave their Blue Ocean Strategy concept a set of case studies to tempt new adopters, and some thinking tools to give them confidence. The result is an approach to developing new products and services with a 15-year track record.

If you’ve not yet encountered Blue Ocean Strategy and the concept of Value Innovation, it’s well worth exploring.

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Balanced Scorecard – It’s not just the Money

Balanced Scorecard - Kaplan and Norton

Balanced Scorecard - Kaplan and NortonHow can you be sure that your management team is balancing its attention across all the things that matter – rather than focusing solely on one thing: the money? The answer is that what gets measured gets managed. So you need to score yourself on a balanced scorecard.

That’s the insight that Robert Kaplan and David Norton gave us in a stand-out Harvard Business Review article, ‘Putting the Balanced Scorecard to Work‘. The article may date back to 1993, but it’s still one of HBR’s most-read must-read articles.

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M&A: Mergers and Acquisitions

Mergers and Acquisitions - M&A
Mergers and Acquisitions - M&A
Mergers and Acquisitions – M&A

Mergers and Acquisitions – usually shortened to M&A – are a part of business life. Owners and leaders see them as a way to grow their businesses, with the hope of making them more profitable.

They are intense, hard work, and risky ventures. Half of them fail to deliver the returns that the analysts predict.

So, the only people who can be sure to profit from them are the professionals that move from one M&A engagement to the next, the:

  • lawyers
  • accountants
  • consultants
  • and the analysts themselves

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