"Is your mother still a woman?": A review of Venkatraman's (2000) dot-com strategy

When I taught Venkatraman's (2000) dot-com strategy framework in 2001, some of my students said that the framework was just common sense; it was, in other words, just like saying "my mother is a woman". If that was the case, I would like to add that many students of mine did not show common sense in their assignment and dissertation reports; very often, the investigation efforts were partial and chaotic.

 

Back to Venkatraman's dot-com strategy framework. It follows, in a rough way, a typical business strategy process, but not sequential. There are five main concerns: (1) What's your strategic vision for the dot-com operations? (2) How do you govern the dot-com operations? (3) How do you allocate key resources for the dot-com operations? (4) What's your operating infrastructure for the dot-com operations? and (5) Is your management team aligned for the dot-com agenda? For each concern, Venkatraman offered a diagram that captured and related the key issues involved. I found these diagrams quite useful to review a business in case study that involves Electronic Commerce pratices. When I teach the subject of ecommerce (EC), I find it very useful to relate other EC articles to Venkatraman's framework. For examples, Gulati and Garino (2000)'s article on brick and click mix could be related to concern (2) in Venkatraman's framework, and Mahadevan (2000)'s article on e-business models is useful for discussion of concern (1) in his framework.

 

As I review Venkatraman's article in 2011, I think his five concerns and the way these concerns are related in his dot-com strategy framework still offer a handy and an appropriate way to review dot-com strategy of business these days. The key issues identified in each of his five concerns are still main issues: for example, in (1) formulating strategic vision, companies still trying hard to figure out the implications of Electronic Commerce (EC), notably on social media activities and tablet-based m-commerce. And, in (3) How to allocate resources for dot-com business, companies very much need to determine how much the companies rely on internal resources or on alliance resources.

The exact details to work on in 2011 are apparently different from that in 2000. These days, reliance on external resource could mean using cloud computing. Thus, to apply Venkatrman's framework in 2011, companies need to be informed on what Internet-based applications, Internet-based business practices and e-consumer behaviour are these days. In addressing Venkatraman's 5 concerns, we most likely will adopt some updated management theories such as Marketing 3.0 and Business ecosystem theory. Nevertheless, I think the overall structure of Venkatrman's framework and the key issues idenfied on the 5 concerns in his framework are still highly relevant.

 

In my opinion, Venkatraman's framework is neat, logical and not too detailed (thus easy to grasp), which enables it to be applied in contemporary EC study by incorporating updated technical and theoretical EC notions into it. Because of that, it is still easy to comment on it as "my mother is a woman", and then dismiss it as failing to provide additional insights to study dot-com strategy. I think this is not a fair comment on Venkatraman's framework.

 

References

1. Gulati, R. and Garino, J. (2000) "Get the right mix of bricks & clicks", Harvard Business Review, May-June, pp. 107-114
2. Mahadevan, B. (2000) "Business Models for Internet-Based E-Commerce", California Management Review, Vol. 42(4), Summer, pp. 55-69.
3. Venkatraman, N. (2000) "Five steps to a dot-com strategy: how to find your footing on the web", Sloan Management Review, Spring, pp. 15-27.

Marketing mix - some advice on its usage

Marketing mix is a key concept in marketing management. There are a number of versions: 4P, 7P, etc. When applied in assignments or dissertation works, students should note a few things:

a. Try not to use it as a checklist just to describe the content of the marketing tactics of a company. If your content is mainly factual and descriptive, it is not a marketing mix  "analysis".
b. Useful to examine how the various Ps are inter-related to each other; they are not separate and  independent variables. Try to consider these factors as making up a systemic, dynamic whole.
c. Examine to what extent these Ps are controllable variables by the company being studied, and in which market segments.
d. A number of departments in a company are involved in formulating marketing mix tactics; besides the marketing dept., R&D, Logistics and Accounting depts are also involved.
e. If your concern is on evaluation of marketing mix of a company, you need to be explicit with your evaluation criteria, e.g. based on certain business performance measures and goals.

There is no scientific reasons on why marketing mix must be 4Ps or 7Ps; the 4P version of marketing mix is popular as a concept in marketing because it is easy for us to remember. It elaborates on the content of marketing tactics of a company; it is not much about marketing strategy which endorses a longer time frame of planning and which deals with topics more strategic, such as strategic priority, strategic positioning, core competence and value chain configuration, etc, see, for instance, Kumar's (2004) 3Vs model of marketing strategy.

While the distinction between strategy and tactics is not totally clearcut, we can say that tactics are concerned with the means to conduct a strategy; that tactics are more concerned with efficiency whereas strategies are more concerned with effectiveness. This point is clear: marketing strategy of a company does drive its marketing tactics.
Useful reading:
Kumar, N. (2004) Marketing as Strategy, Harvard Busines School Press.

Use of theoretical frameworks in dissertation work

In a typical dissertation report structure, the respective chapters are as follows:

1. Introduction
2. Literature Review
3. Research methods
4. Findings and Analysis
5. Conclusions and recommendations
References
Appendix

In a dissertation report, literature review plays a pivotal role; it reviews the relevant literature to gather and, subsequently, to consolidate all the main ideas and approaches from the literature that are then employed to guide the student (as a researcher) to conduct the investigation. The investigation process is thus theory-driven. To to specific, the literature review is likely to produce a theoretical framework that is used to mould the research design, which is mainly explained and justified in Chapter 3 of a dissertation report.

A theoretical framework can be depicted in the form of a diagram that incorporates all the relevant ideas (from the researcher's perspective) that guides the investigation process. The following diagram is an example of a theoretical framework constructed by me for a logistics workshop some time ago:

A theoretical framework explains how and why a theory-driven research process based on it is able to produce valid and relevant knowledge to meet the dissertation objectives. Some of the elements of a theoretical framework are controllable variables in the study; others are uncontrollable variables; some of the elements are intermediate variables; and there are elements that are output, outcome, and systems performance variables in the study. If you type "theoretical frameworks" in google with the option of "images" chosen, you will see some examples of theoretical frameworks. In my project works, some students develop theoretical frameworks such as a consumer behavior model for purchase of properties in Hong Kong, marketing strategy framework for a medium-sized bank in Hong Kong, etc.

Being able to formulate a theoretical framework in literature review itself is a concrete achievement in the exercise of literature review. Once constructed, students can also indicate in the theoretical framework how the various data gathering efforts (e.g. interviews, observations, document studies, etc) are related to which parts of the theoretical framework that you produced. In this case, the theoretical framework is used as a roadmap of the theory-driven research process adopted in the dissertation work. Such a diagram facilitates the dissertation markers to comprehend your dissertation report and it also helps you (the student) to organize your thinking and report content better.

I highly recommend students in dissertation works to formulate and employ theoretical frameworks.

Related study note

References

1. Cycle of theory-building: http://www.innosight.com/documents/Theory%20Building.pdf
2. On conceptual framework: http://en.wikipedia.org/wiki/Conceptual_framework

Use Business model concept to examine a business: how?

You probably have come across the term "Business Model" in your study of Strategic Management or Electronic Commerce (which tends to use the term e-business model more). When you examine the business model of a company, essentially, you ask the following questions about the company:

Level 1: Surface level
a. What are the products that you offer to customers and what value propositions do you make to customers?
b. What are the mechanisms by which you generate revenue for your business? Is it subscription fee, selling price of your product, etc.
c. What are the main roles/ functions of your company in the supply chain that your company is a member of? Is your company a manufacturer? a retailer? etc.
d. What are the cost structure, revenue and profit of your company?

Level 2: Deeper level
a. How does your company acquire, organize and utilize resources to run the business?
b. What are the natures of your relationship with your business stakeholders?
c. How does your company compete in the marketplace?

The concept of business model itself does not directly address a number of vital strategic management questions. It is not a sophisticated analytical tool. Thus, to answer the questions more satisfactorily in levels 1 and 2 above, you need to consider 5-force model, value chain analysis, core competence theory and stakeholder analysis. These theories provide more and better analytical guidelines that can help you to answer your business model questions at levels 1 and 2 above with more theoertical vigor.

In brief, the concept of business model is a crude analytical tool and it prompts us to ask a set of questions about a business that are partial in its coverage of enquiry. Its analytical deficiency can be addressed when it is employed together with other strategic management theories - with skills.

Useful readings:

1. On business model: http://en.wikipedia.org/wiki/Business_model
2. Hedman, J. and Kalling, T. (2003) "The business model concept: theoretical underpinnings and empirical illustrations", European Journal of Information systems, Vol. 12, pp. 49-59
3. Johnson, M.W., Christensen, C.M. and Kagermann, H. (2008) "Reinventing your business model", Harvard Business Review, December, pp. 51-59
4. Mahadevan, B. (2000) "Business Models for Internet-based E-Commerce: An anatomy", California Manaagement Review, Vol 42(4), pp. 55-69.

PEST analysis as an analysis

PEST stands for Political, Economic, Social and Technological; these four aspects largely cover the scope of a macro-environmental assessment in a case study in strategic management. Other terms such as PESTEL and SLEPT are about the same. Students can easily find examples of PEST as well as worksheet of conducting PEST in textbooks or doing simple internet search. In actual applications by students, most PEST analysis exercises are not analysis: they are just a list of examples as related to the external environment that are groupded into 4 categories, ie. P, E, S. T.. Very often, students are not able to highlight the main implications of their "PEST" analysis.

I would like to suggest a few points to bear in mind when conducting PEST analysis (aslo refer to the PEST diagram below):

a. Be aware of what and why the management team (or you as an analyst) are concerned about certain items in the PEST list.
b. Try to relate the various PEST items together in the form of a cognitive map (a soft OR technique) you could label the items as a P, E, S, or T item. With that, you are able to comprehend the systemic nature of the macro-environement facing the company being studied.
c. Try to group the items in the PEST cognitive map into a number of key themes; that help you to identify and understand the key topic areas and themes that emerge from your PEST analysis.

From your PEST cognitive map, you identify trends and events that could be considered as strategic issues for the company's management to review. You could also compile your specific strategic issues list after you have conducted a SWOT analysis.  At this stage, I suggest you provide some overall assessment viewpoints based on your PEST analysis, e.g. the external environment facing the company is very dynamic, complex, uncertain, and/ or hostile, etc.

Based on your understanding of the macro-environment facing the company, you can now focus on analysing the micro-environment (industry-specific environment) in the case study with the 5-Force model of Porter (if this is indeed what you intend to do).

Another lecture note on the PEST analysis as related to Industry analysis and SWOT analysis:

Electronic commerce: 2001 vs 2011

When I take up teaching of Electronic Commerce (EC) this year (2011), I have the impression that 2011 is a year of watershed in EC. This is not obvious to my students, and I need to justify my viewpoint more explicitly. To start with, I referred to Michael Porter's article "Strategy and  the Internet" in Harvard Business Review, 2001 March. In this article, Porter argued that his famous theories of 5-Force Model and Value Chain analysis published in 1980 remained relevant for anaylyzing ecommerce in 2001 and that many dotc-com businesses failed because their strategies were seriously flawed. Porter also pointed out a few major observations: (a) very often Internet complemented business models practised by companies; business model/ practice cannibalization were not common at all; (b) there were lots of distorted market signals, for examples, in the form of cost, revenue and share price distortions; sustainable competitive advantages have to be established that respect business logic as explained in strategy management literature, notably Porter's writings in this subject domain.

This is not a place for me to explain all the ideas behind in the form of detailed lecture notes. I want to point out a few contemporary developments (2011) in Electronic Commerce theories and practices that, together, create a watershed in EC practices, the implications of which will become clearer as time goes by. They are:

a. Industry convergence negates the idea of distinctive industry which is a key concept in 5-Force Model analysis; strategy management theories such as hypercompetition and business ecosystem explicitly give up the idea of a clearly delimited industry boundary. Industry convergence, including digital convergence, is common these days.
b. The prevailing social media-based virtual environment has made a tremendous impact on the PEST (ie political, economic, social and technological) environment in many parts of the world which is also more globalized. One has to note the revolutions in North Africa, in which social media played a vital role. Social networking has had major impacts on people's life styles, including consumer behaviours in societies. Social networking activities generate lots of digital data that need to be analyzed to uncover valuable customer knowledge from these resources on a quite real0-time basis.
c. The PEST environment has also been much affected by the 2008 financial crisis and the natural disasters in different parts of the world, e.g. Japan. The environment in 2011 is very different from 2010. Talking about EC, EC in BRIC and Africa is now not a minor topic (as was in 2001), but a key topic in EC in 2011. EC in developing countries is different from that in developed countries.
d. Advancement in IT such as cloud computing, PC tablets and smartpones, social networking and location-based services, etc are interacting with each other to create a very different EC environment that enables many businesses to change rules of the games now and in the near future.

I am not arguing that EC practices, eBusiness (EB) models and the underlying Internet technologies are very totally new; however, as business phenomena to study, all these prevailing EC practices and in the near future are innovative, thus I consider there is a EC watershed in 2011. In 2011, we are still figuring  out ways to cope with EC phenomena, e.g. how to measure ROI on social networking-based marketing intiatives, how to apply EC to serve the consumers in the bottom of the pyramid markets in emerging countries and how to develop relevant marketing tactics in the social media-based virtual business ecosystem.

My view on EC watershed does not invalidate our existing EC/ EB theories. Transaction cost theory, core competence model, and, Porter's theories, etc remain power conceptual models to study EC/EB in 2011. However, they need to be critically reviewed and reconfigured by us to conduct proper EC/EB analysis in 2011. Learning these EC/EB theories from intelligent theorists improve our intellectual/ analytical capability so that we will not apply these theories in a rigid way. By studying these theories in the past and more updated theories made available to us from time to time, e.g. Marketing 3.0, we should be able to cope with business and social challenges arsing from the major changes taking place in EC/EB in 2011 and beyond.

Though our external environment and EC practices have been moulded by various forces/drivers that have been around for quite some time, quite a number of dramatic events, both natural and man-made, have taken place in 2011 (up to August). When all the EC and non-EC forces interact together, this creates buttefly effects and open up new possibilities in EC innovations. Due to this, I think 2011 is a watershed in EC.

Further readings:

1. Social media 2011: http://www.youtube.com/watch?v=uxzQPmrkCyM&feature=related
2. Mobile technology 2011: http://www.youtube.com/watch?v=orPYB741sqY&feature=related

How to achieve high marks in academic study

"How to achieve high marks in academic study?" This is the question from students that I have  got from time to time as a teacher. Sometimes, the question is more specific: "How to achieve a merit grade for my dissertation report given that I have one more week to write up my dissertation report and it is only 40% done at this stage?" Students expect me to give them some feedbacks so that they can respond in a day or two via some enhancements of their assignments or dissertation reports, and as a result, they are able to achieve their targeted performance, such as obtaining a merit grade. Things are not that straightforward in practice, though I can explain my understanding on this topic. A student's academic performance is affected by four types of factors:

(a). Direct factors (an operational concern): teachers' and classmates' support in specific course works/ examination preparation.
(b). Micro-environmental factors (a tactical concern): mental stress arising from study and other activities (e.g. investment in Stock Market), sufficiency of rest, study room environment/ library support.
(c). Macro-environmental factors (a strategic concern): your life-goal, which affects your mindset on study, your social network quality, specific stage in life (age range from 20-35; 36-50; 51-65); mental/ physical/financial health; access to library facility/ internet; finally, intellectual ability and writing skill.
(d). The e-factors: these could be bad things like death of relatives or good things such as winning mark six.

I call factors (b) and (c) environmental factors because they are outside my control as a teacher on this topic; they are not totally outside students' control.  These environmental factors act as significant constraints on academic performance of students in the short run.

As a teacher, I could provide support to you, which can be considered as a direct factor (a). I could give you some advice on  how to manage the micro-environmental factors (b). If you are willing, I could give you some advice also on how to deal the macro-environnmenal factors (c), probably as a mentor. Maybe, as a friend or mentor, I could also give you some advice on how to cope with the e-factors (d). The key point is: achieving good performance in academic study does not solely depend on the direct factors (a). Thus, just do not expect that, just by responding to my brief feedbacks via email or phone chats, you, as my students, are able to substantially improve your academic performance by spending several hours or a few days more in your study.  The environmental factors (b) and (c) take much longer time to address, and these environmental factors are more personal in nature; study room and library are provided by educational institutions and the government; their availability is outside the control of teachers. If you want to achieve high marks in study (and in fruitful professional development), you'd better work on factors (b) and (c) on a persistent and sincere basis.

Sometimes, I am a bit more generous in my assessment of students' works but I will not elaborate on it in this article.