Predictions from The Way of Strategy (1994) and their outcomes
Obsolescence of car dealers
The One-Second Television Ad: "We told you so!"
Read the Introduction online
Excerpts from The Architect of Victory
Excerpts from Managing the Organization
Excerpts from Marketing
Way of Strategy
by William A. Levinson
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Back cover, "The Way of Strategy"
In 1831, General Carl von Clausewitz wrote that business is war. Like war, business is a competition between organizations. The Way of strategy is the art and science of managing organizations in competitive situations. People, organizations, and management systems win wars and capture market share. In business today, the marketplace is the battlefield. To win, people and systems must deliver quality products and services to stay competitive. The Malcolm Baldrige National Quality Award, ISO 9000 series of quality standards, and total quality management emphasize the same elements of success: people, organizations, and systems. This book unites the legacies of teachers such as Sun Tzu (The Art of War),Miyamoto Musashi (The Book of Five Rings), Niccolò Machiavelli (The Prince and The Art of War), Carl von Clausewitz (On War), and others. It describes how their strategies and leadership principles produced military victories. Modern business examples show how these timeless principles apply to personal and organizational success. After reading the book, you'll have a clearer understanding of how military strategy can help you become a successful business leader, manager, and tactician.
Looking Back to 1994: Predictions from The Way of Strategy and their Outcomes
Saddam Hussein and Iraq (page 119)
"Recently, political considerations forced General Normal Schwarzkopf to stop short of a decisive victory in Iraq ('Hollow Victory,' U.S. News
& World Report, 1/20/92, pp. 40-44). Another day or so would have allowed American and British forces to surround the Republican Guard.
The Republican Guards escaped with most of their equipment. Saddam Hussein later used them to crush Shiite and Kurdish rebels. We have yet
to learn how much mischief will come from letting Hussein escape total defeat."
The Obsolescence of the Car Dealer (pp. 204-206)
Here is a venture for an
innovative car manufacturer
that likes the Just-In-Time (JIT) philosophy. The idea is to make cars
to order instead of making inventories. The current practice is to make
cars and put them on dealer lots. The manufacturer usually floor plans
the cars. This means loaning the dealer money to carry the inventory.
on the loans adds to the customer's cost. The dealer also must earn a
on each sale. Most of us know about some shady tactics car dealers use
to do this.
(1) It cuts out the salesman's
salary. The only sales cost is the cost of processing the order.
Adopting this JIT strategy could give an automaker a decisive advantage over its competitors. By selling directly to the customer, the manufacturer can offer a lower price and earn a larger gross margin. This money doesn't come from nowhere. It was the middleman's share. General Motors, Ford, and Chrysler should pay attention and consider the following line from the musical comedy Pippin. [King Charlemagne, discussing war plans] "[If the plan works] We won't have just a victory, we'll have ourselves a massacre." [Hirson, 1975]
Levinson (ed.), Leading the Way to Competitive Excellence: The Harris Mountaintop Case Study (1998, ASQC Quality Press), page 296"Car salespeople had better start looking for real jobs. There are already online car brokers that cut the salesperson out of the loop. One buyer saved $4000 off the list price by using Auto-by-Tel (http://www.autobytel.com) (Weiner, 1996). Levinson (1994c, 204-206) recommends just-in-time factory ordering, without a car dealer as intermediary. The author stands by this prediction."
Update, 11/11/98: H. William Dettmer, Breaking the Constraints to World-Class Performance (1998, ASQ Quality Press), page 42(Regarding General Motors' "build to order" strategy for Cadillacs): "The expectation is that most, if not all, cars eventually will be built to order, rather than to a sales forecast. In other words, big year-end unsold inventories would become a thing of the past, and dealers wouldn't have to maintain large on-site inventories. The final result could be a complete conversion of automobile production to a pull system, which could yield savings of up to 20 percent in the cost of providing GM cars to the market."
Update, 12/07/99: Holstein, William J. "Kicking a Virtual Tire," U.S. News and World Report, October 25, 1999"Ford CEO Jacques Nasser, in linking up with Carpoint, argued that changes triggered by the online world could alter the way his company makes cars. In his vision, a consumer should be able to go online and configure a car just the way he or she wants it... That information should go to the factory and even to suppliers, like the companies that make brakes or seats. Nasser foresees huge savings because Ford wouldn't have to build inventory that sits on dealers' lots. It would build only cars individual customers want, the same way Dell and Gateway now make PCs." At this point, who needs the car dealer's showroom or sales personnel?
The One-Second Television Ad
The one-second television ad we are now seeing right before the television program resumes (and possibly one second after it ends) are an opportunity for us to say, "We told you so." The following is directly from the original manuscript of Levinson (1994), The Way of Strategy.
The TV remote control has changed the effectiveness of television advertising. (This is an example of the impact of changing technology on business.) We must seriously consider buying only ad slots that immediately follow or precede the program. Our ad must be either first or last in the series. The first slot is probably better. We assume no one is watching the ones in between. When the first ad appears, they reach for the remote control. When they think the program is ready to return, they switch back. They are likely to see part of the last ad, but we can't count on this. The message, "Our show will return in a few minutes---" is the kiss of death for the next ad. ZAP! goes the remote control.Order Books Online
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