20 Jul Market Share Growth – Getting It Right Through Strategic Acquisition
The Internalized Strategic Planning Process Dilemma – Opportunity Lost
A well integrated Strategic Planning Process for ‘performance companies’ has always been the hallmark of strong Company earnings and positive market share growth among industry leaders. Conversely a Strategic Planning Process that has become too focused on the ‘now business’ and too process driven is a spawning ground for missed opportunity. Under this type of scenario, it is an all too common occurrence for a company President/CEO, at the launch of the annual Strategic Planning Process to secure a genuine ‘outside-the-box’ commitment from Senior Management when it is generally agreed that outside-the-box thinking by a well established Senior Management Team (SMT) is actually an oxymoron, particularly when dealing with non traditional market share growth.
An internalized Strategic Plan is only capable of incremental market share growth and in fact planned growth in corporate revenue usually just keeps pace with the growth in market size at best. For any growth oriented organization, a traditional industry acquisition or far more probably a non-traditional acquisition, particularly in these market conditions, represents one of the key building blocks of tomorrow. And lets agree, opportunities absolutely abound within the realities of a down market economic structure, better known as a recession.
As a case-in-point lets look at A T & T, the seven US Regional Bells, Bell Canada, Rogers among many others and opportunity lost. While these organizations were immersed in internalized, traditional strategic planning that was primarily focused on ‘baby steps’ market share growth through incremental technological innovative gains, along came Skype. So let’s talk about Skype, eBay and PayPal (part of eBay) and the fit with electronic voice communication market share.
Skype is a software application that allows users to make telephone calls to other Skype users routed over the internet. In some countries Skype users can also place calls to free-of-charge numbers while calls to landlines and cell phones can be made for a fee that equates to discount calling card rates. Skype also has some expanded functionality that includes instant messaging, file transfer and video conferencing.
Skype was founded in 2002 and then acquired on September 12, 2005 by eBay for $2.6 billion to expand their eBay/PayPal e-commerce global footprint. In terms of growth, Skype is exploding – adding 150,000 users per day. Skype announced on October 3, 2008 they had over 338 million users worldwide. In fiscal 2008 Skype had $500 million in annualized revenue with 14.8 billion free Skype-to-Skype minutes worldwide per quarter and 1.8 billion worldwide revenue generating minutes. eBay saw the opportunity and it could be argued virtually snapped up Skype from under the noses of A T&T, the US Regional Bells, Rogers, Bell Canada among others. Skype is the internet voice communications world leader and in early 2010 plans are in place to separate Skype from eBay and PayPal.
When Skype initially exploded onto the market it was primarily used to place international calls for free to other Skype users or to landlines at reduced rates that were on a par with a calling card. If you had family and friend living abroad it was a no-brainer. From there the applications as often as not were market driven. On the subject of market Driven, Skype usage is also rampant in Eastern European countries and many other countries around the world where internet connectivity is well ahead of telephone landline services.
Some examples of Skype innovative advantages; if you lived in a weak cellular signal area but an area that had a strong Wi-Fi, or as a user if you eat through your free-talk minutes a low rate VoIP service like Skype would be much less per minute than the excess minutes charges on your standard cell or land line plan.
Also, don’t forget that Apple iPod Touch owners can use Skype and other VoIP applications (like Truphone and Fring) to make calls, even though iPod Touch has no telephone hardware – you just need earphones equipped with a drop down mic. The Skype Apple iPhone advantages are rather limited but when you Skype from an Apple iPod Touch, you basically use it as a free phone when calling other Skype users. You can also add free SMS (Short Message Service) to your iPod Touch so that it would do all of the same things as a phone but only cost a couple of dollars per month with the restriction for most people that it would only work in a wireless hotspot. It’s all about calls-on-the-cheap and pulling market share (otherwise known as revenue) away from AT & T, the Regional Bells, Bell Canada or Rogers.
As for Skype on your computer, direct computer-to-computer calls to other Skype members are free and you can call landlines and mobile phones throughout North America at very low rates. If your desktop or laptop computer comes with a Webcam then it really gets sexy; through Skype and the internet you can then talk and see one another or even do video conferencing with some limitations. Dropped calls are infrequent and are more attributable to increased network traffic than to Skype functionality. Call quality you ask? International overseas computer-to-computer call quality is generally better than cell phone quality although bandwidth is important and they are only free on Wi-Fi not 3G networks.
Is it possible that A T & T, the Regional Bells, Rogers or Bell Canada felt that a Skype acquisition was either off strategy or might just cannibalize their traditional businesses? Probably, so it’s now a competitor rather than a Division or Subsidiary Company.
In conclusion the message is simple. A steady diet of non-traditional ‘outside-the-box’ thinking may not be a particularly good idea, particularly if the downside may represent a negative impact on the ‘now’ business(s). But as President/CEO or the individual responsible for driving the Strategic Planning Process you know when the time is right to breathe new life and new thinking into your organization or process. It is all but impossible to quantify the negative impact of opportunity lost; nobody is keeping score of those numbers. If the skill set doesn’t reside within your organization there is no need to buy it, just ‘rent it’. The downside is minimal, Skype is an upside example.
Bob Ferguson – President/CEO Business Transitions Group Inc.
By Bob Ferguson