Tesco's Competitive Advantage

Tesco, one of the worlds largest retailers with 1878 stores worldwide, achieved market dominance through a series of technological and business differentiators.The Tesco competitive advantage lies in one simple truth....innovation through technology. In a nutshell, the company has a long tradition of installing the latest procurement practices, investing in better ways to retain customer loyalty (via the club card program) and investing in one of the world's leading online retail stores via the 60M (GBP) http://www.tesco.com/. These differentitiating factors have helped to ensure Tesco's market dominance in the UK supermarket and grocery space. Today's blog entry will analyze each of these competitive advantages and look at ways that they have used them to combat and compete with other supermarket chains both in the United Kingdom and beyond.

WEB PRESENCE

The Tesco web presence is among the most profitible in the world, generating over 360 (GBP) on the 60M invested in it. Tesco.com is used to buy a variety of goods that move well beyond grocery items. One can now use Tesco.com to purchase electronics and home goods in addition to traditional perishable products such as groceries.

BI - Business Intelligence & Loyalty
The Tesco club card program is among the most well regarded loyalty programs in the world. The program is essentially designed to analyze consumer buying behaviour and then offer custom deals that meet the specific unique needs of the consumer. The program works as follows:

1. Customer signs up for program in order to recieve discounts on goods
   
2. Consumer buying behaviour is analyzed using sophisticated business inteligence software
   
3. An email or letter is sent to the consumer containing discounts on the goods that consumer typically buy and SUGGESTIONS on other products the BI system believes you will like given your buying habits as compared to other like buyers in the market.

This kind of sophisticated system adds RELEVENCY and VALUE to the consumer loyalty program. These factors are key for low margin businesses that require innovative ways to retain customers and keep them shopping at Tesco as opposed to other competitors.

POURING CONCRETE: STUCK WITH YOUR ERP

The old adage that implementing an ERP system (or a specific ERP system which will remain nameless) is like pouring concrete down your hallways has been a fact of life for many years. Companies spend millions to implement brand name ERP systems and then spend millions more (in terms of labor/consultants and opportunity cost) to make it work for them. Why are companies so willing to spend this money? Why are the makers of "best in breed" ERP systems unable to create user friendly solutions that, if not ready to use out of the box, at the very least come with a basic roadmap for implementation? There is perhaps no other corporate systerm that is readily adopted by senior management, understood as neccessary and yet so feared for its difficulty of implementation and potential for failure.

The answer is both very simple and highly complex. To start with the easy answer: ERPs do a hell of a lot of stuff so of course they are complicated. From purchasing, to HR, to supply chain management, to logistics coordination to integration with CRM systems, the ERP system, when effectively constructed, will serve as the nervous system for an entire corporate body. It is perhaps the most powerful set of tools a management team can have to increase transparency and efficiency within an organization.

At the same time, complexities arise for precisely this reason. An ERP systems ability to manage and drive corporate practices and procedures is only as efficient as its ability to meet the needs an objectives of the client organization. For this reason SAP and others are presented with a challenge:

FLUID vs FORM

If an ERP system is to fluid, i.e. highly customizable, then implementation is slow, custom application development is required in order to take the backbone system and design something that meets the individual requirements of a business. This takes both time and money, both of which increase based on the size, complexity and requirements of the companies being sold the system.

On the other hand, a solid form system that does not allow customization is like pouring concrete....into your company!

-Don Simon

Being Michael Dell

It can't be easy...Starting a company, developing one of the most powerful Sales teams the world has ever seen and then creating a revolutionary supply chain that has enabled millions of people to receive personally customized computers. Clearly Michael Dell is a talented man. A talented man with a serious problem.

What do you do when you are Michael Dell and public opinion suddenly begins to sway in an adverse direction? When Jeff Jarvis coined the term "Dell Hell" in 2005, Michael Dell was forced to deal with precisely that. So what would I do if I was Michael Dell....

THE PROBLEM

Jeff Jarvis posts a blog about his issues dealing with Dell customer service. The combination of a catchy name and relevant content sends his blog careening through the blogosphere until it is picked up by main stream news. Soon his blog is being cited by major news organizations like ABC and the NYTIMES. Dell begins to see a slide in public opinion, its stock price and its sales numbers.

PROPOSAL FOR MR DELL

The ideal solution is to make an advocate out of Mr. Jarvis. If this can be done authentically (without a blatent pay off that reaks of corporate corruption) all of the attention Dell Hell has generated can be leveraged as a PR opportunity for Dell.

Step One: Deal directly with Mr. Jarvis problems vis-a-vis customer service, use the Dell Hell blog to create an internal "to do list"

Step 2: Mr. Dell should send a personal letter to Mr. Jarvis. It should say something to the effect of:

Dear Mr. Jarvis,

You have spoken and we have heard you. I want to thank you for bringing to light major issues that had begun to torment our organization. As the recently rehired CEO, Iwanted to write to you personally and outline our plan for how we as a company are addressing your problems. I have also instructed my staff to send you a monthly bulletin explaining where we are in revamping our customer service process to make sure that it satisfies the needs of our valued customers.

We have made mistakes and we are working hard to fix them. While no company wants to go through the kind of PR debacle your blog clearly created for Dell, make no mistake, I personally view this as the best thing that could have happened to the company at this point in time. The efforts of you and your readers will not be in vain. We will overcome these challenges and we will work to earn back our place as your computer seller of choice.

As a further step, I would like to invite you to come to a series of strategy meetings we are having at the end of this month. I would invite you to bring any questions you might have so that we can be sure to incorporate them into our near term planning. In addition, if you have any other requests about ways in which we can provide increased transparency to you and your readers please let me know.

Sincerely,

MD

......

And then Mr. Dell...you would need to follow through!

-Don Simon

Facebook's Two Year Mistake

Facebook's rise as a part of the mainstream has moved from one niche (schools and universities) to pop culture to the parents, uncles, aunts, grandparents and extended family of pop culture. Facebook has propelled itself so far out of any one demographic that it is now almost unfair to provide a comparison between Facebook and its "competitors" like Myspac.com. Instead, Facebook is now competing for for marketshare with those who simply choose to spend their time elsewhere. To Facebook or not to Facebook is barely even a question anymore. The question is simply, how much facebooking should I do? To move this question to the center of the table, we can see what has worked, and what has not worked.

One of the early demographic studies that was done between Facebook and Myspace (when Myspace was a genuine/real competitor) showed that the demographic using Facebook were younger, richer and better educated than Myspace users. Facebook's clean interface and history of signing up only college students likely accounted for this. Then however, the apps store took central stage and suddenly Facebook became a tool for the masses. New settings were put in plac, allowing users to alter what content they were forced to view when they logged in. New privacy settings attempted to mitigate the risks caused when you share all of your personal details, private memories and funny thoughts with 2000 of your closest friends. But where does that leave Facebook? How does it continue to grow, become profitible and maintain its position as king of the hill. A tall order for a company that went viral fast and simply offered better functionality than its chief rival.

WHERE WILL FACEBOOK BE IN TWO YEARS

Two years from now Facebook will have to come to terms with its own identity. Like a teenager warily crossing the border into puberty, Facebook will need to confront its strengths, its weaknesses and become firm in who it wants to be. If the company continues to drift into appstore wasteland, it will be nothing more than a simple mobile platform that competes with superior tools offered by Apple and Google (but with far less revenue to back it).

If the company decides it is just a social networking experiment, it should sell of the pieces to Microsoft, Yahoo and anyone else who wants to buy into it. Mark Z can let the big boys mess it up entirely while he works on a new project.

But if, as I believe is more likely, the company becomes obsessed with holding onto its current social networking platform, with app store, privacy issues and the same old tools and trying to defend its market share, then I think the company has few things to look forward to. What it can expect will be the following:

• Investors who continuosly push for increased means of driving revenue...this will likely encourage a partnership with Google so that the company can install a superior ad sales system.
• A push for either a Sale to Google or an initial public offering. The founder, in this writers opinion will likely opt for the latter in order to maintain control.
• Post IPO lawsuits around privacy, monopolistic activities and sale of data that decrease shareholder value.
• A hostile takeover from Google.

Clearly this author is not a huge proponent of the business of Facebook. In his mind it is simply the world's best social networking tool...at the moment.

Ciao,

Don Simon

Whats Google DOING?!

There are many things that Google is, but if there is one thing Google is NOT its an ordinary, Blue Chip conglomerate. While the company clearly dominates the search space, as well as nearly every other major online vertical trending towards aggressive growth, Google has yet to fall into the trap of complacency.

Google's current product overview includes:

• Search
  
• Browser
  
• Blog Platform (the very one you are reading now)
  
• News
  
• Image Editor (Picasso)
  
• ...The list goes on and on

But where is google going now? Will they continue to dominate the search space? Or will they begin to dilute their brand with their wide range of products?

Over the last few years, Google has had a number of successes. However, as they have moved away from trendy and new technologies like blogging, search and e-commerce they have begun to trend towards direct, one to one competition with the big elephant in the room...Microsoft!

For years, Microsoft has maintained a supreme advantage over the rest of the technology industry, holding the lions share of operating system purchases, web browsing marketshare and consumer/business productivity tools (MS OFFICE). Google's strategy and desire to play in this market is clear. As the world has moved continually online, and the Google brand has increasingly become THE name in online computing, beginning to compete against the big M is a logical next step.

TIMING IS EVERYTHING

Perhaps the greatest challenge facing Google today is not HOW Google will compete with Microsoft but WHEN the time will be right for Google to make its big move. Previous attempts to launch MS killers like Google Docs (which was designed to compete against MS Office) have recieved luke warm reception and low adoption. While reviews have been positive, the reality is that the world is just not yet ready to throw off the mantle of Microsofts dominance in the home and business computing industry.

THE BIG QUESTION

It has been clear for some time the Google will eventually launch its own operating system, a release that will be perhaps the greatest challenge to Microsoft since the company's inception in the 1970's. However, to make it a win, the OS has to be clearly superior to Windows AND present specific benefits that outweight the familiarity and cultural comfort of working with an OS that many people have been using since birth.

CAN IT BE DONE?

APPLE, APPLE, APPLE!!!!!! It can be done, but the "packaging" is key. If Google can present an OS that is so clearly superior, so accessable and so aligned with our daily lives that it is impossible to ignore, then Google may well take the market by storm...and hit the Elephant wear it hurts.....

The Ubiquitous Microsoft

I belong to a generation that grew up alongside the personal computing industry. In the year I was born, Apple computers officially banned typewriters from all offices. While I was taking my first step Atari games like space invaders and frogger were taking the world by storm. And by the time I had uttered my first word, Bill Gates and Paul Allen had signed a joint partnership agreement to form the Microsoft Corporation.

So at age 30, having grown up with the big M, what do I think of it? What subjective, controversial statements can I make about the organization that so clearly epitomizes corporate power, market dominance and monopolistic practices? Frankly, nothing truly disparaging springs immediately to mind.

The fact is that Microsoft and MS Products like Windows, Excel, powerpoint, and Word are not only symbols of corporate greed and a highly valued stock price. These "institutions" have marked our personal and professional growth throughout our lives. Like the door where mom and dad would fastidiously mark down your height year after year, applauding their ability to keep you safe, healthy and growing, so to did each iteration of Windows represent a change in our own lives. In 1990 when I was 11 years old, Windows 3 was released to the masses. In primary school I was proud to tap into the mysterious world of Microsoft Word, and in high school, when I prepared my first XL spreadsheet and powerpoint presentation, I began to understand what would be demanded of me in my future professional career.

Microsoft is a brand that has paved the way for a generation of copycats and naysayers, but it is also a company that has impacted how we work, live and experience information in the modern world. The ubiquitous Microsoft is so ingrained in our habits, our traditions, our daily lives, that it becomes almost impossible to seperate it out and look at it as just another big company.

Does Microsoft seek to help the world through the open exchange of information? No. But through the pure integrity of capitalism, Microsoft has taken our world into a new direction with higher function, providing the human race with tools that have serviced millions of people around the globe.

FOURSQUARE

Foursquare is an app that I have heard a lot about over the last year or so but had yet to check out until this weekend. Essentially, it allows you to log where you are hanging out at any given time, and then upload this information both to Foursquare itself as well as Facebook/Twitter and other social networking sites. In practice, wherever you go: out to a restaurant, to a club etc, you use foursquares mobile app to let other people in your network know what you are up to. The "model" includes promotional offers at certain locations and prizes when you become the most frequent visitor to certain locations. Obviously it has already caught on, with over 1 million users but will it be sustainable as a business? I'm not sure. I think it has great potential for a buyout from Twitter (for example) but I don't see the company growing exponentially and for a long period of time.

Whats my problem?

Two fold!

1) To date the foursquare business model (not customer usage model but its means of generating revenue) is fluid to say the least. While there are a number of avenues they could go down, including payment from the venues they advertise and drive business too, I would much prefer to see the company come up with a long term data aggregation and analysis service. According to some sources the company does plan, to focus on data sales in the future but their is no reliable information on how they will package and sell it.

2) The company offers an application that makes it very challenging to invite new users. As a fairly savvy user of social networking tools, I expected to have no problem with this application. And its true that my initial foray into foursquare was highly intuitive and easy. Unfortunately this was not the case when I tried to invite my friends to join. I found the process so cumbersome that I eventually stopped trying. I simply could not find an easy way to blanket invite other friends to join. In contrast to WhatsApp, the iphones latest hot messenging tool, which automatically picks out the data from your address book and tell you which of those phone numbers belong to active Whatsapp users, Foursquare seems (dare I say it) dumb in comparison.

Where is the Value?

Ok, to be fair, the company currently has over 1MM subscribers, a strong brand, a valuation in excess of 100M and an intuitive product....not to mention Mark Zuckerburg flying in for weekend talks and Yahoo fighting to get a piece of the action. This however does not a good company make. As we saw with the founders previous incarnation of Foursquare...the mobile app Dodgeball was purchased by Google only to be shut down in January of this year. If Foursquare is to do more than become an internet darling that puts money in the pockets of its founders, we need to see an innovative business model that drives revenue and creates a unique mechanism for harvesting, managing and delivering valuable data to clients around the world.

As I have said before, what is probably the most valuable aspect of Foursquare is the data they are collecting. I would love to see them begin aggregating reviews and creating all sorts of "best of" lists for "best brunch spot" or "strangest place to take a date in Madrid". I think that understanding buyers preferences has become such an integral part of marketing that these guys at foursquare should begin looking for ways to harvest more data from their users and then create interesting means of leveraging it. . . Then we will REALLY have something to talk about!

Don Simon

An Introduction

So here we are, starting a new blog in Madrid, Spain. In this blog I will focus primarily on my shift from entrepreneur to student. I'll also post pictures of my past experiences to provide points of reference and maybe throw in a few anecdotes here and there.... but I will primarily write about what its like to go back and get an MBA. *Pic of me and VP JB in '09*

Last year, as those of you who know me may recall, was quite intense. I learned a lot about American politics and spent a good deal of time trying to improve the perception of a certain Eastern European country in the United States. I made some great friends, had some amazing experiences, succeeded in some areas and earned a few bruises along the way. In short, I learned how far the power of networking could take me.


Many of my former colleagues, business partners and clients have asked why I chose now to go back to school. Simply put, I wanted more. Its great to be able to start a company from scratch or build relationships in foreign countries. But the reality is that your ability to add value is tested each and every day with every transaction made and every relationship built. I did not want to find myself in a position in which a hearty laugh and big smile masked a dearth of knowledge. Understand me...I didn't find myself in that situation (hehe how defensive I sound!) but i did find myself wanting to ensure that I could continue to excel in what I do, not just today by 5, 10 years from now. To do that, I felt I had to expand my network outside of Eastern Europe and the United States, and consolidate my skills as a marketing professional. There are many way I could have done this. But I believed (and still believe) that an MBA would strategically place me with people who will effect change for years to come.

OK...I promise this blog will, from this point forward, focus on today and not linger entirely in the past.

Don Simon's First Post

Ready...set...blog...