MBA 705 Milestone One Guidelines and Rubric Overview: For the capstone assessment, you will create a business implementation plan and audiovisual presentation for the product, service, or idea you have been developing throughout your MBA coursework

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MBA 705 Milestone One Guidelines and Rubric Overview: For the capstone assessment, you will create a business implementation plan and audiovisual presentation for the product, service, or idea you have been developing throughout your MBA coursework. In Milestone One, you will submit the justification for your idea or concept. You will connect entrepreneurship or intrapreneurship with organization change and survival. This milestone lays the foundation for the rest of the project by outlining the justification of an idea or concept. Ultimately, the justification in this milestone will provide much of the reasoning that decision makers will use to determine if they will fund your idea or concept. Critical Elements: ? Rationale: Lay out the rationale for the idea or concept. ? Problem or Opportunity: Identify the problem or opportunity that the idea or concept addresses. ? Market: Analyze the market for the product or service. ? Competition: Analyze the key features that set the product or service apart from the competition. ? Company: Explain how the concept fits with the mission, vision, and priorities of the company implementing the product or service. ? Innovation: Discuss how or why the product or service is innovative. Academic Honesty and Plagiarism Throughout this capstone you will draw from many of your previous courses, including assignments and artifacts. You will continue to build upon these projects and ideas throughout the capstone. This is an essential part of your academic career, so it is important to avoid plagiarism, specifically self-plagiarism. Please review the Academic Honesty and Plagiarism Library Guide as well as the article What Is Considered Plagiarism And How to Avoid It for more information on the proper steps to take for citation. Southern New Hampshire University requires all students to adhere to high standards of integrity in their academic work. Activities such as plagiarism and cheating are not condoned by the university. Review the full Academic Honesty Policy for more information. Guidelines for Submission: Your draft must contain all of the elements listed above. It should be 5 to 8 pages in length (excluding the title page and references) using 12-point Times New Roman font, with one-inch margins. You may include summary pictures, charts, graphs, or other explanatory diagrams as needed to successfully explain the concept and implementation, but should use appendices for detailed supporting documentation. Your paper should follow APA guidelines. You must include at least 5 scholarly sources. Cite your sources within the text of your paper and on the reference page. Critical Elements Main Elements Critical Thinking Rationale Proficient (100%) Includes most of the main elements Provides logical conclusions and defends with examples Provides rationale and thoroughly defends it Not Proficient (0%) Does not include any of the main elements Does not provide logical conclusions Does not provide rationale Value 15 15 10 Critical Elements Problem or Opportunity Market Competition Company Innovation Articulation of Response Proficient (100%) Identifies the problem or opportunity and includes a detailed description of how the idea or concept addresses the problem or opportunity Analyzes the market for the product or service and quantifies market size Analyzes key features, outlines how these meet unmet customer needs, and explains how the key features set the product or service apart from the competition Explains how the concept fits with the mission, vision, and priorities of the company implementing the product or service, and connects this information with long term organizational strategy Discusses how or why the product is innovative and situates the product or service within the implementing company’s larger product or service portfolio Submission does not have critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas Not Proficient (0%) Does not discuss the problem or opportunity Value 10 Does not analyze market for product or service Does not provide key features 10 Does not explain how concept fits with the mission, vision, and priorities of the company implementing the product or service 10 Does not discuss how the concept or idea is innovative 10 Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas Total 10 10 100% Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. CHAPTER 2 Foundation for the Entrepreneurial Model Plans are only good intentions unless they immediately degenerate into hard work. —Peter F. Drucker The environment of the 21st century is about innovation and change. The focus of strategic management is to adapt to change and more importantly it is about initiating change. At one time General Motors (GM) was the largest corporation in the world and it failed because it did not recognize this very simple dictum. Firstly, they did not listen to the customer, the source for much change. In 1970 U.S. auto manufacturers owned 87% of the American light trucks and car market and by 2005, their market share had fallen to 57%. They had lost almost one third of their market to foreign competitors and leading the decline was GM. In 2002 GM1 held 32% of total market share; by 2007, it had fallen to 22%. They let things happen in a world where the old rules no longer applied and the 21st century brought on a new set of guidelines for businesses and organizations. If there was a case of blind insensibility, it surely can be seen in the case study of GM. Perhaps it began with their denigration of Peter Drucker and his concepts on management.2 Here we see an historical denial of change and unwillingness to accept it. One can only wonder what would have happened had GM embraced Drucker’s concepts of management. What might have happened had they had been more entrepreneurial? The new economy is about entrepreneurship. Peter Drucker declared, “Because the purpose of business is to create a customer, the business enterprise has two—and only two—basic functions: marketing EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 24 ENTREPRENEURIAL STRATEGIC MANAGEMENT and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.” Here we see a robust reference to the need for entrepreneurial action in knowing one’s customer, finding an opportunity, a new product, or innovative new service, and exploiting it. Strategy in a Changing Environment But let’s take a few minutes to really understand what business is about and the role that strategy takes in directing where it goes. The business world and in fact the economy is about people: people acquiring goods and services, making decisions about goods and services, and planning their organizations and lives around goods and services. We are a consumer society in which products and services play an integral part in our business and social development. Obviously, the degree to which we let consumption direct our affairs is a personal choice and we would hope it is guided by good intentions and outcomes, but the reality is that we make an economy happen. That being so then all economic behavior is a manifestation of human behavior. The way in which people, either acting alone to their own purpose or working in corporations and institutions as decision makers to acquire goods and services, are directly responsible for the direction of the economy. It is no coincidence that the GDP and Consumer Confidence Index (CCI) correlate almost exactly, which is to say that as the CCI improves so does consumer spending and the domestic output. As consumers gain confidence in the economy, they spend more on goods and services, which in turn expands the production system. Governments often take their cue from economists, which likely accounts for the many ways governments screw up. Perhaps that will change with more attention being paid to the diseconomies of economics and such texts as “Economyths3 that tells us how government gets thing wrong.” To this we might add that the media are prone to report on changes in the economy by adding their own emphasis and emotions. Most often, they lend more color to events than is warranted and it would seem they encourage swings in economic activity. More than one analyst has commented that before the media paid much attention to the EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. Foundation for the Entrepreneurial Model 25 financial markets there were virtually few large fluctuations in market performance. Economists maintain that an economy is the result of business and government action. In other words, if you want to improve an economy, the levers that need pushing are those that will benefit business, particularly big businesses by providing tax cuts and government spending. In his new book, The Origin of Wealth, Eric Beinhocker4 proposes that business leaders are key to revolutionizing the process of wealth creation within their organization and that by working hand in hand with government they will all create economic well-being. He is wrong, of course. Institutions, governments, and Wall Street do not create wealth for the nation: only for the players themselves. Economic national wealth is created by entrepreneurs, entrepreneurial managers, and productive organizations responding to the needs of the customer. The business environment is based on economic principles going back to Adam Smith and his contemporaries of the 18th century. Here’s what Smith said: Man does not labour for the public interest but for his own purpose in which he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.5 To which one might add government and corporations. History and latter day economists have overlooked Smith’s original observation and missed the importance of the individual in creating and sustaining an economy. It is the creativity of the entrepreneurial person that produces the wealth of a nation, not big business and government. For good or bad, economics has become the expression of the organized system. But it has wandered from the original concept. The result EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 26 ENTREPRENEURIAL STRATEGIC MANAGEMENT is a whole cadre of economists in government and business who make observations that are confusing and often misleading. The 2008 financial crisis for example was a failure of economics:6 Few economists saw our current crisis coming, but this predictive failure was the least of the field’s problems. More important was the profession’s blindness to the very possibility of catastrophic failures in a market economy. So it is that economics is revealed for what it is—an ineffectual tool in the business of management. It is not a useful consideration in understanding the dynamics of strategic planning. Nor is the use of economic forecasting7 a choice since it is proven unreliable and cannot be used in developing management strategies with any degree of confidence as to outcomes. We can only refer to the discipline as a belief system that has no basis in fact. The foundation of economic thinking comprises propositions supported by assumptions and as such they form the foundation for a dogmatic belief system. The Origin of Business Demand is not a curvilinear glyph posted on a graph. It is people who create demand. In his development of iTunes—followed by the iPod, and then the iPhone—Steve Jobs perceived in the community an emerging market with consumer demand. In each case he grasped the opportunity, often accompanied by questioning if not scepticism by the media, and successfully launched these new products. In answering his critics, Jobs8 would declare: There’s an old Wayne Gretzky quote that I love. “I skate to where the puck is going to be, not where it has been.” And we’ve always tried to do that at Apple. Since the very, very beginning. And we always will. Jobs saw customers where no one else saw them. The development of a strategic model must therefore begin with the customer. What do customers look for in products or services, not only now, but in the future? What are the decision criteria they bring into play? EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. Foundation for the Entrepreneurial Model 27 What are the important determinants that influence them? An understanding of basic customer behavior is fundamental to understanding strategy and the development of any strategic template. Otherwise, we are caught up in the age-old problem of second guessing what people want. Classical economists employ a demand curve to presume their understanding of the marketplace; they force-fit a number of assumptions into a procedure that is unreal and implausible. They conclude that people only buy on price or cost and so the measure of satisfaction or demand is related solely to price. At best this is a naïve consideration. At worst it has been remarkably misleading. More astonishing is that businesses and governments have accepted the premise for centuries. People purchase goods and services for many reasons and not just price. Above all they must feel a real need to have them. The average consumer is exposed to hundreds of advertising and promotional cues each day to buy one product or another. Individuals in a large city, for example, may be hit with as many as a thousand impressions displayed in newspapers, on TV and radio, on billboards among others, but there is no rush to go out and acquire these goods. They have no need for them. The Drivers of Market and Economic Activity The underlying demand that powers economic activity comes from consumers, institutions, and industries that acquire goods and services to their own purpose and desires. Their motives are based on internal needs, wants, and desires that include psychological, anthropological, and social drives as well as economic considerations. Their motives are not purely cognitive in nature, which is the underlying principle that defines classical economics. People have emotions and these come into play in economic behavior. It also refutes Lord Keynes’s theory about supply side economics where government action is claimed to be the key determinant for economic stimulation. What is factual is that an economy is based on people or customers satisfying their needs. We all look to improve our state of satisfaction. Our needs might be physical in nature as in obtaining satisfaction from eating or it may be something more intangible as in receiving comments or praise for a new garment we’ve just bought. In the first case an individual looks to satisfy a utilitarian need where we want to gain a simple functional or practical EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 28 ENTREPRENEURIAL STRATEGIC MANAGEMENT benefit. On the other hand, the second form of need satisfaction is more personal where we look for an experiential or an emotional benefit. So we look for a range of experiences through consumption.9 All of the decision criteria and all of the motivations in purchasing a product or service therefore come to center on two aspects: a physical characterization that implies a promise of performance and a second aspect that addresses the perceived worth or value of the item. In the first case, the customer is concerned that the product will perform as it should. Will it fit comfortably if it is a dress? Will it shape steel if it is a manufacturing tool? At the simplest level there is the need for an item to perform a simple utility function, doing the basic job expected of it. On the other end of the scale, there is an expectation that the item has a number of features and benefits that beyond the single, parsimonious utility function. There is a range of expectations that go from a very basic expectation of performance all the way up to an expectation of many benefits that can be psychological, sociological, as well as physical. The second aspect is an estimate of what the service or product is worth. Obviously, you have to pay something for it, but will it be a low price, which says it does not have much worth or does it have a worth more than just a perception of cost and to the buyer it takes on a higher value? Here again we have a range from low to high. The Real Origin of Demand So it is with the factors that tell us why people make their final judgment when it comes to making a purchase.10 These two principal dimensions summate all the motivations that drive a person to purchase goods and service coming to rest in two variables; the expectation of performance and the perception of worth.11 In the first case there is a range of expectations as to what a product or service will provide from a very basic or utility function to a whole hosting of benefits. On the other hand, the perception of what a product or service is worth ranges from a minimum cost level to an expectation of high value for the item. The final decision to purchase, of expressing economic behavior, is vested in the evaluation between these two constructs as seen in Figure 2.1. They constitute a paradigm that identifies the basis for consumer choice and is the foundation for the EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro 29 Benefits Expectations Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. Foundation for the Entrepreneurial Model R2 = 0.788 0 0 Utility Cost Perception Value Figure 2.1 Demand behavior paradigm behavioral economic and strategic macro-model. Empirical research12 has established that a correlation exists between the two subsets and it sets the framework for a new brand of economic thinking called “marconomics.”13 The argument is that low or zero expectations about a product or service offering is matched by a low determination as to worth and therefore the price one would pay for that item. A commodity such as salt, for example, would have a minimal cost associated with it. The homemaker purchases salt from the supermarket as a matter of course and with little regard, except that it is of nominal cost. However, should none be found in the home and while the utility remains the same, there is a higher value attached to the product given the urgency in needing it to cook a dinner. In this case, one is willing to pay the higher price by going to the convenience stores. This is the purview of marketing where conditions of urgency or other techniques such as the use of brand names stimulate the creation of additional value and encouraging a higher price. Associating the salt with a well-known object, calling it sea salt for example, may elicit a higher market price in which case the buyer perceives and accepts the implied additional value. When there is the perception of a number of benefits tied to a product or service, there is also the acceptance of a higher value and price. A Mercedes Benz is essentially an automobile that is valued on reputation rather than the fact it likely costs no more to produce than a high-end consumer sedan. But the buyer has the perception of status and prestige attached to this automobile and so pays more for it. EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 30 ENTREPRENEURIAL STRATEGIC MANAGEMENT In the same manner, innovation and new technology have the effect of commanding a higher order of benefits and consumers perceive the higher values and prices. The higher the perception of benefit, which may be psychological as well as physiological, the higher the acceptance of the perceived value, and therefore price. Strategic Entrepreneurial Economic Model Economic activity then is determined by market forces with the two variables of a cost-value range, and performance as defined by a utility– benefit range (Figure 2.2). These two spectrums can be aligned on two axes that would see cost and utility connected at the zero point and value and benefits orthogonal to each other and they produce four uniquely different fields, each having very different economic and strategic implications. The given is that the lines meet at a midpoint where cost becomes value and where utility becomes a benefit. The first in the benefit–value quadrant is indicated by the entrepreneurial quadrant. Here we find innovation and new technology, for example, that offer a product or service that is unique and appeals to individuals who seek those norms. The buyer of innovative products and services wants to enjoy the benefits of new technology even though it is above the price that might exist for conventional, standard products. She or he perceives a value here and they are willing to accept and pay for it. This quadrant is also the early stage of the product life cycle (PLC) where Benefit Entrepreneurial 1 4 α New growth markets Cost β Older mass market Decline Value 2 3 Utility Figure 2.2 The entrepreneurial economic model EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. Foundation for the Entrepreneurial Model 31 the product or service is seen to be new and different, thus not in demand by the general population but only to a narrow, small, or niche market for which the item has a particular appeal. The need for new software is associated with the need for better performance or increased output and a higher price is justified. On the other hand, the old software is standard material and while large numbers of buyers may want the product, they do so only at a significantly lower price since all that is of value is the utility of the product. It has little to offer the buyer neither in terms of new knowledge nor innovation and thus contains lesser intrinsic value; it is purely functional. At the onset of a new product offering, a small number of buyers will respond to the innovation. These are the niche innovators in society who quickly adopt new technology. They are the trend setters and they influence others to purchase the new offering and are characterized as “the early adopters of new technology or innovation.”14 Should the item appeal broadly to the market then in a comparatively short order it becomes well known, popular, and in demand with a resulting growth phase, which is the growth stage of the PLC. Earlier in the 20th century, the adaptation process took place over a few decades. The adoption of the telephone in the early part of the 20th century took half a century to reach maturity. More recently the adaptation to wireless technology has only taken a few years. It is a fact of the entrepreneurial revolution now taking place that innovation is the driving force of economic growth. Will Baumol15 clearly makes the point that it is the entrepreneur who by exploiting the new technologies, the inventions perhaps of others, sees their applicability to the marketplace and commercializes them to his profit and advantage. It is this commercialization within a free enterprise society that stimulates growth and improves an economy. Improving on Innovation or Not At some point, competitors become aware of the new product and they worry about the effect it may have on their own revenue. They may begin to revive their “old product” even as other companies come out with new products. In time, this places the innovator in a challenged position and he begins to reduce price or finds new ways to cut costs as the demand EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 32 ENTREPRENEURIAL STRATEGIC MANAGEMENT for his product repositions into the cost–utility sector of the marketplace (2) (Figure 2.2) where the primary advantage is price leadership and cost reduction. By this point the customer sees the product or service in a lesser performance, which again serves to lower expectations and perception of worth. As the market perception of value for a product or service slides down the product life cycle (PLC) the firm keeps working on price or cost adjustments in an effort to stay in business. It will likely turn to offshore sourcing in a final effort to put off the final shift to decline. Eventually, there is no longer sufficient economic incentive to maintain the product, or the business and the operation contracts, closes down or is acquired. GM’s problems and the elimination of 30,000 jobs in the United States is a manifestation of this stage. The subsequent move for GM is to employ offshore manufacturing to enable competitiveness in the home market. Moreover, the company has lost its brand name advantage because its products were not as well built as others like Toyota and Honda, causing the company to lose customer satisfaction and much of the loyalty it once had. In those conditions where brand loyalty still remains strong, the value is maintained and this is exhibited in the value–utility quadrant (3) (Figure 2.2) where the continued strength of the brand continues to shore up the product in the marketplace. Here we see the role of marketing in economic activity. The strategy of the organization is to move the customer expectation upward toward the higher benefit position. Of course, the product or service must meet or exceed these expectations to remain credible. The result is an increase in the perception of value and the acceptance of a higher price for the item. It is this reality of human behavior that sets in place the basis for marconomics16: market-driven economics. The Four Quads of Strategic Management Here’s where the rubber hits the pavement. The foregoing discussion is based on published papers and empirical testing. It tells us that demand, as determined by the customer (or the marketplace), is different in each of the four sectors and each responds differently to strategic effort (Figure 2.3). In the innovation strategy quadrant, the market is defined as a unique and very EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. Foundation for the Entrepreneurial Model 33 Expected benefits Product line strategies quad Innovation strategies quad Pure cost Perceived value Cost-price leadership strategies quad Brand strategies quad Pure utility Figure 2.3 The four quads of business strategy specific quadrant that has high expectation of performance and there is a willingness to pay whatever is asked. It may be products that are the newest in technology or an innovative service—both appealing to a smaller, innovator segment. As the product or service goes through a period of growth, it follows the profile of the PLC to maturity and then on to the saturation where we see it has achieved a position in the larger, mass-market costprice sector. This is the Abernathy-Utterback17 specific stage where process innovation and cost cutting are the essential strategic variables. So as the product or service moves in due course down to the beta sector the usual effort is to try to sustain the life cycle with one or all of three strategies. The first is to expand the product range with a number of offerings to appeal to a broader portion of the market using product line strategies. Companies expand their product lines by varying the sizes or modifying features in an incremental fashion hopeful of appealing to a broader market or taking a commanding share of retail shelf space. Or they might enter into exporting to new markets that have yet to see the goods. The second choice is to create a brand strategy that stabilizes product or service usage in a satisfaction-loyalty cycle. The intent is to create a strong position that will appeal in a competitive manner so customers will prefer the brand. Or they may change the product or service as they introduce new, innovative products with the same brand name. It is this constant need for innovation that marks the future for successful companies. Here we see the problem with a single product company, which has only one way to go and that is into corporate decline. EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 34 ENTREPRENEURIAL STRATEGIC MANAGEMENT The Innovation Quad The sector is characterized by Schumpeter’s turbulence zone where disequilibrium is the constant force. It is also and more importantly the entrepreneurial zone where new opportunities and technologies are introduced and commercialized. The strategy in any case is one that employs a niche approach directed at the innovators and early majority of the adoption process or to customers in need of particular product and service solutions. The creation of new jobs and growth in the economy is dependent on the entrepreneurship that powers the system and offsets the decline taking place in the Price Leadership Quad. The Innovation quadrant represents the dynamic sector of Innovation and Entrepreneurial Strategies. It is where technology and new concepts flourish in meeting and exceeding the needs of customers. Companies operating in this field would include Intel, Apple, Oracle, Boeing, and Magna International where Apple and Magna’s strategies rest on customer cocreation and innovation. The Cost-Price Leadership Quad This quad is governed by economies of scale and productivity issues. Products in this sector take on the nature of a commodity where the determinant of purchase is generally on price. The low-cost leader in any market gains competitive advantage from being able to produce at the lowest cost. Factories are built and maintained, and labor is recruited and trained, to deliver the lowest possible costs of production; cost advantage is the focus. Costs are shaved from every element in the value chain. Products tend to be no frills. However, low cost does not always lead to low price. Producers could price at competitive parity, exploiting the benefits of a bigger margin. Some organizations, such as Toyota, are very good not only at producing high-quality automobiles at a low price, but have the brand and marketing skills that allows a premium pricing policy. The Cost-Price Leadership quad is the battleground of titans and companies with deep pockets offering products and services that are comparatively without strong value and are generally sparse in the utility or service provided. Consequently, consumers look at price as the EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. Foundation for the Entrepreneurial Model 35 determining factor in the purchase. In order to meet that requirement, companies strive to increase productivity and cut expenses. The move for many consumer goods to outsourced supply from China, Thailand, and others is a direct response to that strategic requirement. Even brand name companies such as Levi Strauss, Tommy Hilfiger, the Gap, and many others have moved offshore to keep costs and prices in line. Of course, in their case it has resulted in staggering profits too. The Managed Sector: Product Line and Brand Strategies The strategies in the second and third quadrants and some of the fourth quadrant are used to manage the products in larger, multiproduct organizations. This provides a supply of differentiated goods and services to satisfy the needs of customers by using competitive techniques in the managed sector. It allows companies to desensitize prices and focus on innovation value that generates a comparatively higher price and a better margin. The benefits of differentiation require producers to segment markets in order to target goods and services at specific segments, generating a higher than average price. The differentiating organization will incur additional costs in creating their competitive advantage. These costs must be offset by the increase in revenue generated by sales. Costs must be recovered. There is also the chance that any differentiation could be copied by competitors. Therefore, there is always an incentive to innovate and continuously improve. Two sectors comprise the managed economy, the cost–benefits Product Line Quad (3) and the Brand Quad (2). The Product Line Quad provides different segments in the market with variations in the product that are principally cosmetic and appeal to the combination of packaging aspects and lower cost. The variety of breakfast cereals, automobile variations through accessories, and merchandizing concepts are manifest in this sector. The Brand Quad provides value and enhanced pricing (profits) through branded offerings whereby the item has an intrinsic value beyond cost factors, Crest toothpaste exhibits the case where higher prices are paid to specific markets (the worriers of cavities) in the sector. Highpriced vehicles such as Rolls Royce and Porsche vehicles command higher than usual margins because of the identification attached to the product. EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 36 ENTREPRENEURIAL STRATEGIC MANAGEMENT Corporate managers may apply one or both of the techniques in an effort to sustain the PLC through an extended saturation stage of the PLC. The battle of brands as in beer and cola drinks is a sustained saturation stage powered by advertising and marketing applications. It should also be noted that brands and product line goods can be improved through incremental innovation where changes are introduced to stimulate application and sustain the life of the product. Tide laundry detergent has been modified or changed dozens of times to accommodate new washing machine designs, fabric texture, and colors. Corporations have created brand identification of such strength that customers perceive higher value in the offering than what might otherwise be the case. A firm in a community might have a solid reputation for good service, and people deal with them in the knowledge they are receiving value for their money. The Coca-Cola Corporation has created such high equity in its brand name that it is valued at $79.2 billion (Interbrand, 2013) and is first among brands worldwide. Executives recognize that all products are subject to PLC action and eventually decline in the view of customers. Thus, building a brand image extends the life cycle and improvements and innovations recycle the brand, keeping it on top of share of mind cognition. The third quad, calling for Product Line Strategies, applies the principles of broadening the product offering in a variety of configurations to appeal to more segments or to occupy shelf space. When combined with brand strategies the merchandizing strategy can enjoy a long life. But, it also eventually requires rebirth and some of the range may need to be eventually discontinued. Cycles in the Economy The American economy can be looked on as the cumulative effect of the oscillating effect of technology. New technologies become the compensating activity (born from the technologies of the Information Age, biology, electronics, medicine, and of nanotechnology, to name a few) that come into the market and overcome the losses of declining industries. The resulting new, innovative companies redefine the economy and create a new class of labor, the knowledge worker. EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. Foundation for the Entrepreneurial Model 37 Larger enterprises, particularly those with commodity type products, are able to globalize their reach and become even larger, at least for a period of time. The expansion of soft drink, fast-food chains, and other consumer goods is a mark of the effort to extend the life of products about to reach their mortality. Unless innovation is applied to these items, thus increasing their value, they will in time decline. What transpires then is a continuous process of innovation and improvement to products and services in response to competitive pressures and market demand. New firms or divisions in existing firms create new products to meet demand; they progress through a life cycle to a point of maturity. They may be recycled for a time but eventually they die. It is this continuous change to products and services in response to market demand that power the growth of the economy based on new venture formation. But larger enterprises have a difficult time adapting to change and some are unable to thrive except through market extension and incremental innovation, or buyouts and acquisitions. The real creativity is existent within smaller firms and individuals and there is a growing realization that, since the end of World War II, small entrepreneurial firms have been responsible for most of the innovation in the American economy. Developing strategies depends on where you want to go or where you have been. Often both are called into play. The goals and objectives put in motion the forward thrust of the company’s plans to win market share through, for example, the introduction of innovative new products and services in which case the attack will draw on the deployment of sales force and promotional programs. The past is also an indicator of success in that if the company has in place a winning strategy the edge will be to improve on it. Or it may not have been a good strategy and now there are changes to be made. The Impact on Your Business? What we have is a framework against which you can examine your business strategy. The four quads tell us what the customer is looking for. Now the question is: What are you offering? What are your strategies? How will they be carried out? As Michael Fullan declared, “Good ideas with no ideas on how to implement them are wasted ideas,”18 so too EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 38 ENTREPRENEURIAL STRATEGIC MANAGEMENT with strategies, they must be applied and revised in the application to be effective. Many organizations fail in the execution of their plans and depending on your source as little 10% and as much as 30% succeed in translating strategic plans into action. It is at this point that companies, your company, must be entrepreneurial in applying the strategic plans laid out in the planning process. Entrepreneurial implementation is needed to overcome four issues that impede the execution process.19 First managers must overcome the culture of the organization, if not change it. You cannot assume other managers in the company will share the new vision, so to speak and persuasion is needed up and down the chain of command to reach the new position. Secondly, the structure and the decision-making process are related. A silo structure precludes any hope of quickly reaching the desired goals, if they are to be reached at all. The entrepreneurial approach demands a singularity of action from all levels and functions in the company to the purpose of the company’s desired position. Companies are often encouraged to engage a matrix approach to structure a project and perhaps even the attainment of strategic goals. It may temporarily prove encouraging but often the structure runs out of steam because of interdepartmental issues or it becomes simply a tiresome procedure. Thirdly, entrepreneurial action assures success in capturing the strategic ends as with a quarterback and a charged up football team. The common theme is the strategy and it must be ingested, assimilated, and translated into action in an entrepreneurial creative fashion by all members of the team. A fourth aspect is the importance of engaging the entire organization in the strategic undertaking. People make things happen and people are creative. In today’s new environment of innovation and change, there is the emergence of knowledge workers across the organization who are better equipped than management to implement many of the details inherent in strategic plans. Implementing strategies through action plans and programs requires the intervention by entrepreneurial people in changing organizational procedures to facilitate the desired end goals. Bureaucratic administrators in a structured organization cannot do that and the end goals become lost dreams. Entrepreneurial people on the other hand are able to convert strategic objectives into operating plans because they are able (or are EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. Foundation for the Entrepreneurial Model 39 permitted) to select from alternatives and make decisions on the ground, hopefully consistent with the same strategic outcome in mind. The Need for Controls Implementation demands feedback and feedback demands controls. You don’t know if a strategy is working if there is no measure of its effects and how well the programs have worked to produce the desired results. Controls take the form of setting standards against which the outcomes can be measured, analyzed, and corrected or modified. In the entrepreneurial firm controls take on a heuristic role that allows management to learn from the past and regroup to the future. When Jeff Bezos founded Amazon.com in 1995, his strategy was to deliver a book-selling model unlike the conventional book stores of the time. But when he found he was not going to be as profitable as he had hoped, he added to the model by including sales of CDs, videos, and other items. He modified his strategy. The income statement and balance sheet told him he had to change; that selling books alone did not cut it and so profitability was assured when additional items were put on the website. Controls are usually budget and financial reports of one form or another. They can include market research feedback as to changed awareness levels in the case of advertising or it can be measured in the increase in customers, acquisition of larger territories, or improved productivity. Feedback should also include a flow of intelligence back from the environment as to governmental, economic, demographic, and technological (PEST) changes taking place. Many companies subscribe to media clipping services that scan news items in print, online, in radio, television, and so on with information that might impact on the company’s strategy. One of the larger agencies is The International Association of Broadcast Monitors (IABM), a worldwide trade association made up of news retrieval services that record, monitor, and archive broadcast news sources including television, radio, and Internet. It acts as a clearinghouse or forum for discussion on topics of collective concerns and acts as a united voice for the news monitoring industry. A very important and growing function is that of monitoring customer satisfaction. In the last few years managers have come to realize that EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 40 ENTREPRENEURIAL STRATEGIC MANAGEMENT it is far easier to keep old customers than it is to gain new ones and there has been a rush of papers, conferences, and texts on the subject. It is a thesis of this text that a linchpin of building a strong entrepreneurial strategy is to include customer satisfaction and measurement of that expression as a part of the control and replanning activity. Summary The chapter develops the basis for the entrepreneurial strategic management model. It is an empirically proven principle that identifies the purchase activity as an economic activity for all human transactions. It develops the performance expectation–value perception correlate, which explains the buying process. It transcends the assumed demand curve used by economists to explain economic activity. It disproves the validity of that artifice and instead tells us that marketing and innovation are the drivers of economic activity. The paradigm leads to the creation of a new way to look at economic or market functions in the construct of a four-quadrant playing field. Each of these is unique. Each requires a differing strategic approach if one is to succeed in that market space. The emphasis in the analysis is on the marketing side. This is where all strategic analysis begins. It leads to the allocation of resources in operations, manufacturing, finance, administration, and HRM. Resource allocation is developed in Chapter 9. Organizations and your company too need to build an entrepreneurially responsive organization to implement the plans you make. In effect, you will determine where your organization is today—is it in the good quad or bad quad. Then you will set out the objectives and goals you wish to attain by moving toward a more positive quad or strengthening your position in the quad you find yourself in. Then you will go down into the organization and develop the strategies you will need to achieve those goals by involving literally everyone in the operation: managers, supervisors, shipping clerks, and machine operators. With their inputs in hand you will develop the company’s strategy and then return components of the strategy to your key people for execution. They will implement it because they are stakeholders—they are empowered through the process to achieve the objectives they themselves have had a hand in crafting. Chapter 10 develops the process that begins the creation of your entrepreneurial organization. EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. PART 2 Where Do You Want to Go? EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. CHAPTER 3 Business Conditions The Way Ahead It is not the strongest of the species that survive, nor the most intelligent, but the one that is most responsive to change. —Charles Darwin Now that we understand the foundation of the Entrepreneurial Strategic Management model, let’s look at what is ahead. Creating a strategy is hard work. You will need to muster all your resources to deal with business conditions that are constantly shifting in an environment of technological, political, social, and economic change. It will take a concentrated focus to deal with those business conditions that are going to impact on your business. Will the dynamics of new cultural, social, and demographic shifts bring on new opportunities or threats to your market? And what new innovations will come along to assist you in gaining market share, or losing it if you don’t respond? The combined effect of these major issues and changes in your markets on both the global and local fronts will demand a new dynamic within the company if you hope to thrive. Then there is the growing need to not only know you customers but also to retain them for life. Indeed, all strategic planning begins with the customer who is truly the source for the company’s purpose and profit. What Lies Ahead The future is never easy to predict. Most forecasts are inaccurate and changes can be imposed from any part of the globe. It is probable there will not be much improvement in the world economy until after 2015. EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 44 ENTREPRENEURIAL STRATEGIC MANAGEMENT The European Union is problematic with some parties calling for dissolution of the union. Asian exports to North America have dropped. On the other hand, domestic expansion in China and India seems promising as they experience a surge in the growth of their newly emerging middle class. North America remains locked in a stagnant economy with higher than usual unemployment. Has the decrease of the middle class sucked out the potential for growth or renewal of the economy? Some believe that is so and are talking about protectionism as a means of repatriating the economy. After all, goes the argument, at one time the United States consumed over 95% of its production. It was virtually self-sustaining and growth came from exporting goods and services abroad. A more realistic avenue will see entrepreneurship blossom as new technologies develop and are introduced into the global community. At the same time, there is the realization that outsourcing is not as attractive as it was when energy costs and transportation costs were lower. Should oil prices rise so will the urge to produce more at home. A Deloitte article shows the trend is reversing. “Six percent of U.S. manufacturing firms in the northeast moved outsourced jobs back to the States last year.1 And it will continue to reverse. U.S. policy makers know manufacturing is critical to long-term economic prosperity.” To that observation we can add the latest study from the Boston Consulting Group2: “We estimate that the United States is poised to add around $100 billion in manufacturing output in this decade through higher exports and the return of production work from China in a range of industries that have historically experienced offshore outsourcing. This added production could create 600,000 to 1 million direct factory jobs and 2 million to 3 million jobs in total putting a significant dent in the U.S. unemployment rate and trade deficit.” Large Corporations Fail The business economy is a paradigm3 in four sectors as we discussed in Chapter 2. There is an Innovative sector comprised of entrepreneurship with new, emerging products and markets. This playing field thrives on introducing innovation. It is the region of new tech and high-performance companies whose managers carefully target their markets and strive to EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. Business Conditions 45 establish a close bond with the customer. It is the realm of Proctor & Gamble, Google, and 3M who have mastered the strategy of positioning their goods to this sector. The next two sectors are what can be seen as managed quads. They comprise the growing and competitive companies whose cachet is a mix of (a) brands and (b) product lines and bundled merchandise. There is a nominal amount of innovation in the strategic mix for these groups. They choose to ride on their brand equity and ability to accessorize their product offerings until they are spurred to reinnovate and move their strategies back toward the alpha sector. We’ll discuss this strategy in more detail in later chapters. The fourth sector is a declining sector. It is a demanding place to be. It shows little creativity except in the ability to offer low-priced products and services. It is the realm of mass production and economies of scale but it also gives answer to the question: Why is it that General Motors and others to come, as with the airlines and a number of industry giants have had and continue to have a hard time of it? The answer is that many larger companies have been reluctant to adapt innovatively to the markets they serve, compounded by a failure to truly understand the changes taking place in those markets. For example, the BlackBerry was once high in the market with its executive version of the smartphone. But, the company ignored the market, and the needs were responded to by Samsung and Apple, causing BlackBerry’s share of the market to fall dramatically. Large corporations have a shortage of the elements needed in the new economy to survive and succeed. Initiative, flexibility, creativity, and entrepreneurial leadership do not long survive in a stifling corporate culture. Consequently, these handicapped organizations find themselves poised on the cusp of a declining life cycle with nowhere to go. One has but to compare the Fortune 500 list of today with that of, say, 1990 to realize the extent of corporate decline. Alvin Toffler, the well-regarded futurist, once observed that within any one decade as many as a quarter and more of these corporations will not be found on the list. Late in 2008 GM and Chrysler were in discussion about a possible merger still looking to old, tired strategies to survive. And there’s even more bad news for the big guys. Based on studies of the S&P 500, Fortune 500, and Forbes 100, it’s likely that only about a third of today’s major corporations will survive as significant businesses EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 46 ENTREPRENEURIAL STRATEGIC MANAGEMENT over the next 25 years.4 To this we can add research from Kaplan and Foster5 who tell us the average life span of a major corporation isn’t very long; most will not reach their 40th anniversary. If current trends hold, only one-quarter of today’s S&P 500 companies will be part of the index by 2020 and the other three quarters probably don’t even exist yet. Who says they are too big to fail? Six New Dimensions of the 21st Century Environment The new economy is characterized by intense and rapid change. Company business models need new information and a new understanding of these changes and what they mean to the business. When we see the profound effects that globalization, new technologies, market shifts, and the extraordinary dynamics of the changing workforce has on industry and commerce, we can only realize there is a very challenging vista ahead. It has produced an atmosphere of continuous revolution that really supersedes anything we have seen in the past. The introduction of the telephone and all the new services it provided to businesses and organizations is as nothing compared to the impact of the PC and Internet. The telephone took over 50 years to come to maturity in providing services to the world. The Internet has taken less than 20 years and has done so to three times the population. Forty years ago, Alvin Toffler6 said “Change is not merely necessary to life—it is life.” A major issue is that the new century is powered by a new demography pushing the demand for goods and services toward new segments of the market. Not only that but the expectation is for growth in the North American population of only 27% by 2050. This hardly compares with the booming 76% increase in the previous half century and it foretells of smaller increased markets but with more competition in those markets. New populations of immigrants, legal and otherwise, will stimulate the demand for goods and services. The maturing rush of baby boomers will add their liquidity to the flow of cash in the system from 2010 and onwards. The population is getting older and, by some measure, perhaps better and wiser in seeking out quality goods rather than the cheapest available. The decrease in the youthful population with a commensurate retention of older citizens will move the demographic profile from that EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. Business Conditions 47 of a pyramid to a rectangular shape. The new mix will see a demand for value in services and goods: quality versus quantity. A positive issue, one hardly mentioned in the press, is the dramatic emergence of smaller, entrepreneurial companies that are being created by what is referred to as involuntary entrepreneurship, when older people are let go or laid off. Tens of thousands of new ventures are being formed in this upheaval where individuals are either starting their own companies or they become contractors providing their specialized skills to the marketplace. Downsizing, layoffs, and outright firings, according to Capital Match Point,7 who note they “have created thousands of small businesses and a huge market for skilled, freelance labor, all with the information technology world at their fingertips, waiting for the next clever idea, perhaps in the very industries they have recently, but not so voluntarily, left. We see it every day, gaining more steam and frankly, the pace and breadth of innovation is stunning. The crisis may have turned our economy into fragmented arenas, but the actions of bright, well equipped entrepreneurs may render the big box companies irrelevant in the not too distant future.” To this can be added a recent Bloomberg Blink video8 that shows how people are creating new enterprises that will have enormous impact on the way we obtain automobiles, consume food, and create new products. But while there is a promise of growth, that growth will be different. Businesses will face considerable challenges in the future centering on the need for faster reallocation of resource. If there is one word that will describe the new economy, it’s speed, or specifically, the faster reallocation and rationalization of human, financial, and physical resources. Competitors will force pressures on their industries to act quickly with improved outputs in productivity, quality, and value. If anything, the by-word in business in the future will be value, value, value. And company operations will need to build on the growing importance of intangible assets; intellectual property, marketing communications, and communal goodwill. These issues will require that managers become knowledgeable in and master six areas: 1. The global environment—cycles and structure 2. The changing marketplace—in particular the customer 3. Innovation—the need for constant renewal and product improvement 4. The Internet and Digital Age—to enhance business strategies EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 48 ENTREPRENEURIAL STRATEGIC MANAGEMENT 5. Productivity—in people and processes 6. A knowledge-based workforce—both the future and strength of a company The Global Environment: Cycles and Structure The financial effects of the American “meltdown” were felt by most countries but some were impacted more than others because of trade relations and associated infrastructures. The common issue in these cases is the American dollar; Asia, the Middle East, and most developed nations hold large chunks of U.S. currency in reserve or debt instruments as collateral. Any changes in the dollar will have consequences to their financial institutions and so on. Notwithstanding the ongoing dilemma, Carolyn Corbin9 points to a number of structural trends that will have an impact on business conditions in this century and there are two factors that you will need to appreciate for your business. The first is cyclical. We are most aware of cyclical change. It’s the boom and bust situation. For almost two decades proceeding from the bust of 1987 and Black Monday to the high stakes period of the 2007 to 2008 housing boom and the escalation of energy costs, we ran through a business cycle that some economists were able to predict, or at least thought they could. Then there is the well-known Kondratieff cycle of economic activity that spans 60 years in a continuous rhythm, going from peak to peak; from 1870, 1929, to the present there has been an expected nadir of economic activity that is followed by increased growth and prosperity. We are about to enter the sixth wave of new and dynamic growth. If structural change is the first emerging trend, the second is that changes are taking place at an increasing rate of speed. Ray Kurzweil10 is an inventor, an entrepreneur, an author, and a futurist. Ray is the creator of the first reading machines for the blind, speech recognition technology, and many other innovations that help shape the future. He is one of the most innovative creators of our time. He pictures the rate of change taking place in the IT world as stages of humankind’s development. It took tens of thousands of years for human-directed technology to advance. The stone tools used by humankind spanned thousands of years and the EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. Business Conditions 49 wheel, a more recent invention has been evident for only a few thousand years. In the last millennium a paradigm shift has taken place within only a few hundred years. In the last century, the paradigm has accelerated and today with the World Wide Web it is measured in only a few years’ time. Kurzweil notes that “the first computers were built with screwdrivers and were designed with pencil and paper, and today we use computers to create computers. A computer-aided design (CAD) operator will sit down and specify a few high-level parameters, and 12 different layers of automated designs will be done automatically.... And because of the explosive power of exponential growth, the 21st century will be equivalent to 20,000 years of progress at today’s rate of progress.” Competition The new drama of changing industry conditions is even more pervasive in the competition that businesses will face in the next few decades. Kirk Tyson, author11 of a recent book on the subject, tells us the business world is changing with breakneck speed and only those companies that adapt to change will continue to exist. He coins the phrase “Evolve or Dissolve” as the new business mantra. He stresses the importance of creating a company intelligence system that continuously acquires information and upgraded data on one’s competitors in a Competitive Knowledge Base. Obviously, as the business environment emerges in an incessant, regenerative process where new products, services, and technologies are the norm one needs keep a sharp eye on the competition. We will need to keep abreast of all the changes in our markets and in the environment too. Emerging Economies The emerging economies of Brazil, Russia, India, and China and now South Africa (the BRICS nations) will have an effect on all business activities in the years to come. India and China will doubtlessly compete for the world resources to fuel their growing middle classes, which may raise inflationary pressures. But even so these nations will more likely pay EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 50 ENTREPRENEURIAL STRATEGIC MANAGEMENT attention to the needs of their own domestic markets than they will in competing for other global markets, except through the multinational corporations who will use lowcost labor to supply their own product needs. Levi Strauss, the auto makers, and electronics producers, will continue for a few years to support their beta sector companies until they decline and fade from the world scene, or innovate and return home. The miracle of China and its creative evolution into a free enterprise economy is now turning toward improving the state of its own rural people. They are moving to elevate the well-being of the nation to equate what has occurred with the 20% who live in the rich cities of the nation. If anything, there may be increased export opportunities to these countries for innovative and aggressive SMEs. Here we see in India and China huge markets that account for 40% of the world’s population and a quarter of its GDP starting to rise on the business horizon with the promise of new opportunities but also the challenge of competing for global resources. In the years ahead, the global economic growth is expected to go from 3.6% to 3% after 2017. However, the emerging economies will continue at 5% to 6% and then slow to 3.3% after 2017.12 The Changing Marketplace The integration of Canadian-U.S. business relations will continue to provide a continental market with a combined population of 313 million souls as we entered the 21st century, growing to 462 million by 2050. This compares with European markets where they expect to see population declines even as South America and Asia realize a considerable expansion of numbers. The North American market will continue to grow and expand but more modestly than it did in the past. When we compare what happened in the previous 50 years with future population growth, we see a dramatic difference and this will have a definite impact on the way we do business. From the 1950s to the present, the North American population more than doubled and grew at an average rate just under 2% per annum. These were the boom years as the population expanded with increased family production and waves of new immigrants (Table 3.1). However, the years ahead will not be so dramatic and in fact markets will grow at about one quarter the rate of the last century. The new market EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. Business Conditions 51 Table 3.1 North America population by age groups, 1950–2050 Age/Year 1950 1975 2000 2025 2050 Total 166,000 387,300 461,700 0–19 33.9 35.0 28.5 26.3 26.0 20–64 57.9 54.5 59.0 55.5 53.4 8.1 10.5 12.4 18.2 20.6 Number (In thousands, rounded) 239,100 313,000 Percent in age group 65+ The Changing Demographic Profile of the United States, May 2006, Laura B. Shrestha, Domestic Social Policy Division, CRS, Library of Congress. Canadian data has been added-in. place will be an older market place. What is significant about the over-55 older population is they are active, healthier, and wealthier. This group comprises a third of the consumer market, control 70% of the net worth of all households, represents $1.2 trillion in annual income, and will inherit more than $11 trillion in the next two decades. Consumers will be looking for a new genre, a new way of living. According to Faith Popcorn, (www.faithpopcorn.com) eminent U.S. trend expert, “Life after 2000 is going to be primarily focused on living and being rather than buying and having.” There is a growing spirituality in people and a need for more durable and quality goods and services. Many are becoming sensitive to the environment with the likelihood of moving to a green lifestyle, which would include electric vehicles, less waste production from packaging, better foods, and durable products. A surprising result is that many seniors remain in the family home, choosing not to downsize or move into retirement communities. In many cases, they have gone on to build their dream home for their retiring years. Innovation in the Market The new economy will demand continuous innovation and improvements to products and services. But not just cosmetic improvements! Not more shiny incremental innovation. For decades, the American auto industry, for example, gave the consumer a continuous supply of what might be termed smarmy cosmetic changes. The most serious disrespect to sensible choice was the development of fins over the rear wheel wells EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 52 ENTREPRENEURIAL STRATEGIC MANAGEMENT of the Plymouth, Chrysler, and Cadillac line from 1957 into the 1960s. Since that time we have seen a plethora of interesting to trivial options ranging from power seat adjustments, motor size, GPS finder, to cup holders, and seat warmers. These may have created a sense of difference to buyers, but they were really not all that innovative. In the same industry, the internal combustion engine remained almost unchanged for 40 years, again modified weakly to give a sense of change without really changing much. It wasn’t until fuel injection, a feature used in Europe for a couple of decades, was introduced to North American markets that we saw a serious effort to provide innovation. Innovation in Two Varieties and Why We Do It Innovation comes in many forms and processes but we can identify two important sectors that clearly are different and imply different market impacts. Firstly there is incremental innovation, a quasi step above or beyond some conventional level and then there is radical innovation that upsets the status quo and possibly advances a whole new industry. Much of the commercial activity during the last quarter of the 20th century was all about incremental innovation, about changes that built on the established tableau. Managers simply made cosmetic changes to existing services and products. But eventually, this approach ran out of steam and those still applying this technique literally found themselves standing still, which allowed their competitors the opportunity to enlarge market share as they came out with truly innovative products or procedures, or both— radical innovations. Toyota’s quality and efficient methods for example gave it the edge over General Motors. The need for change and new product offerings is an inherent aspect of social and human existence. Factually, we do not need many of the things we buy. What is the sense in buying, say a Pet Rock? What does it serve that could not be satisfied with any old rock off the beach? Indeed, many socially conscious people deplore the consumer commercialization that seemingly pushes sensible people into insensible purchasing. Dr. Michael Solomon, professor of marketing at St Joseph’s University,13 explains that people don’t buy things because of what they do; they buy things because of what they mean. “Our choices of products and services, whether food, EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. Business Conditions 53 furniture, or fax machines, reflect a pattern of consumption that jointly defines a lifestyle,” he explains; as in the saying, “You are what you eat (or drive or wear).” And this will continue to drive demand in the years to come. The Internet and the Digital Age In his book about the new digital economy, Kevin Kelly14 makes a very bold statement. “The new economy deals in wispy entities such as information, relationships, copyright, entertainment, securities, and derivatives. The U.S. economy is already demassifying, drifting toward these intangibles. The creations most in demand from the United States (those exported) lost 50% of their physical weight per dollar of value in only 6 years. The disembodied world of computers, entertainment, and telecommunications is now an industry larger than any of the old giants of yore, such as construction, food products, or automobile manufacturing. This new information-based sector already occupies 15% of the total U.S. economy.” The Internet and the Web are more and more becoming the focus of business activities and functions in this century. In 1998, there were 102 million people accessing the Internet worldwide, up from 57 million and an increase of almost 100% in just a year and a half. As of March 2012, there were over 2.3 billion users, a sixfold increase in 9 years with one in three people on earth with access to the Internet.15 The growth in the Asian market is huge with China making giant gains, followed by India. Over one quarter of the people on the Internet use English followed by Chinese and together they make up half the users on the “Net.” To this, we can add the global trends according to the Budde Group,16 the largest telecommunications research site on the Internet, who advises us that there are billions of mobile and online Internet users around the world who are creating huge opportunities for the development of e-commerce and m-commerce (mobile e-commerce). This movement will expand the Internet to international proportions and open up even more opportunities. Budde sees all of this opening up government activities—e-government, e-health, e-education, social media, and e-science as becoming important elements of a digital economy. EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 54 ENTREPRENEURIAL STRATEGIC MANAGEMENT The Wireless World of Tomorrow The introduction of wireless technology is greatly expanding all e-commerce capability. David Mock,17 author of the Qualcomm Equation, reflected on what wireless communications looked like back in 1985. In those days, it was a cumbersome system with a three-pound brick mobile “phone” and at least 30 pounds of equipment in a car trunk. Today one’s communications take place through a small earpiece with a wired connection to a cellular clipped to the belt. Mock suggests in the future that “wireless technology will ensure everything is accessible immediately upon payment for service or transmission of identity. It will speed your way into work, VIP parking areas or any other areas restricted on the basis of identity. Hopefully, it will also do something to improve long lines at government offices and the airport, though I’m not holding my breath.” This opening up of the Internet as a free-ranging business facility will see great advances in three areas. It is expected that online advertising will grow by 10% to 20% annually. We’ll see new methods for payment that will replace credit cards and we’ll continue to see growth if not a large shift in social media markets, all of which will encourage more direct services in mobile or m-commerce and m-payments. Adaption of Social Media An important characteristic shared by both social media and industrial media is the growing capability of reaching small to large audiences. A blog post as with a television show, for example, will be able to communicate with intimate or huge numbers of people. What gives the social media even more importance is the fact we can reach millions of people with little cost and if we want to be creative in what we present we can do this with easily obtained programs and again at little cost. And it can be done quickly and with nominal effort. A great example of the power of social media was the Obama campaign for the U.S. Presidency in 2008. The Internet has created a number of social networks that are organized into six forms.18 These are 1. collaborative projects (e.g., Wikipedia); 2. blogs and microblogs (e.g., Twitter); EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. Business Conditions 55 3. content communities (e.g., YouTube); 4. social networking sites (e.g., Facebook); 5. virtual game worlds (e.g., World of Warcraft); and 6. virtual social worlds (e.g., Second Life). In addition, there is the application of blogs, picture-sharing, blogs, wall postings, e-mail, instant messaging, music-sharing, crowdsourcing, and voice over IP, to name a few. Most companies employ the social networks to help their marketing efforts.19 Already a majority of U.S. companies use social networks—66% have a Facebook page, 51% have a Twitter account, and 44% have a LinkedIn page—but only 16% say their social marketing efforts are fully integrated across the organization. Productivity The 21st century will usher in one of the most productive periods for commercial output in the annals of world history, bar none. The implementation of new technologies, the overlay of IT systems, and the new demands of the marketplace will compel entrepreneurs and managers of all stripes to create new ways, better ways of supplying customers with products and services. The push to improve productivity goes hand in hand with the push for innovation and the transforming of goods to meet the new and changing needs of customers who themselves are under the gun to improve output and deal with competitive forces. Technology and innovation is the fountainhead that provides the increases in productivity that a nation needs if it is to be competitive. A recent study by Jorgenson et al.20 reveals that innovation accounted for most of the growth of U.S. agricultural output with only a minor role for information technology. There is an imminent need for productive output in both the manufacturing and services sectors. Global success and local capability demands a competitive edge if your company is to succeed against global competitors. The Chief Economist of World Economic Forum21 made the observation that, “The United States is technologically pre-eminent among nations in the world, both in terms of research prowess and its ability to commercialize innovations.” The amount of technological capability that a country has in its productive system is a fundamental building EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 56 ENTREPRENEURIAL STRATEGIC MANAGEMENT block in the ability to trade and do business. Your company will only be able to maintain position by innovating and introducing productive process improvements. An interesting note is that smaller firms seem more capable in this than larger corporations. The increase of productivity takes place in two areas. The first is in the use and application of information technology as in the Internet, software applications, and such. The second is in the innovation and new technologies applied to the process-production system. Most companies have improved their productivity just by being active on the Web. What is exciting is the new vista the Internet provides for small and medium-sized businesses to compete in a global market.22 It is in the second area that we find a more dynamic, fragmented, and compatible production system referred to as agile manufacturing. What makes it unique is the ability to link the physical side of production with software- and IT-driven systems. The result is a highly flexible and efficient manufacturing system that is competitive with large economies of scale operations. Agile manufacturing is a new “innovative alliance between suppliers, customers and manufacturing systems in pursuit of values… and … unique concepts of technology enabled agility.”23 The combination of solid supply chain management (SCM) and customer relations management (CRM) breaks the dependency on scale and economies of scale. It enables lower costs and the opportunity to relocate production closer to the customer. It is a new direction for manufacturing. Applying Technology to Increase Productivity MIT24 reminds us of an old proverb that states “You can’t cross a chasm in two steps.” The Internet and the new advances in information technology along with a rising competition demands that we adopt new ways of doing our work in one step. It will not be successful if we try to make the changes incrementally. We really need to create total new ways of enfolding the digital systems into our organizations. If we do, the resulting gains can be substantial. Hallmark, for instance, used to develop their card in a sequential process. They revised their thinking and applied a more entrepreneurial approach using cross-functional teams and were able to save new product introduction time on one card by 75%. EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. Business Conditions 57 Recent studies in agile25 and lean manufacturing clearly point to the opportunities available to companies to be competitive and satisfy customer demand. In an effort to compete on price margins during the 1990s, Levi Strauss closed most of their production units in the United States and sourced their jeans and other wares from Asia. Had they applied the latest in technology, computer-assisted sewing operations, and strategic policies, it is likely they could have avoided the decline and even expanded operations with new productive innovations. Of course, we need to mention the potential impact that 3D printing will have on business. Authorities now claim it will revolutionize manufacturing. It will be possible to produce goods without the need for huge factories and assembly lines. A few employees working on 3D printers that can apply concrete, steel, as well as plastics to produce houses, auto parts, and prosthetic devices using programmed computers will have no need for huge buildings and workforces. This technological innovation will allow localized production and customized designs to meet consumer needs. “Customized, no-ship manufacturing will one day be as common as desktop printing26. When that happens, and factories without factory floors are the norm, it will be hard to imagine how companies and consumers once lived without 3D printing.” A Knowledge-based Workforce Along with everything else, the managerial environment is changing and continues to change. The combination of new pressures from globalization, information technology, socioeconomic change, and emerging geopolitical forces in Asia is forcing a whole new evolution that will affect every manager on the globe. But what will be even more dramatic is the pressure that many are now beginning to experience is the change of attitudes, availability, and retentive ability of firms in selecting, training, and keeping a stable workforce. Smaller firms in particular will begin to realize as perhaps more important than everything else the need to develop a positive work team. Work Is an Attitude Today’s workers are generally happy with their jobs but they are moving up the Maslow27 hierarchy. They now hold a different view of themselves EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 58 ENTREPRENEURIAL STRATEGIC MANAGEMENT and are beginning to seek more fulfillment, internal satisfaction, and connectedness on the job. The same might be said of management who, while closer to self-actualization on the Maslow scale, are looking for more involvement and control over their role in the workplace. Carolyn Corbin tells us that the idea of a set workplace with its regular paycheck was historically a rather new idea when it was introduced in the industrial revolution back in the early 19th century. Before that time, most of the First Wave agricultural society did not have the security of a regular paycheck. The Second Wave Industrial Revolution changed that. We are now in the Third Wave’s knowledge or information age. Just as the industrial model altered where and how people performed work, this new structure is changing and modifying “the content, place, manner of compensation, and tasks performed when people are considered to be working.” All this change is happening as the world moves to create a society where people’s social value will be based on performance. This new rating system will challenge most accepted concepts such as university tenure and organizational seniority and union power. Such concepts will go the way of the dinosaur within the next 25 years.”28 The Emerging Workforce The job descriptions of the old days spelled out—often in rigid detail the steps a worker had to follow in the discharge of his or her duties. It was demeaning and often constrictive, so much so that it actually inhibited the worker from doing a good job. Today the knowledge worker has a different job description from that proscribed for the manual worker on a production line. Drucker set out a number of important dimensions for the knowledge-worker job and the potential that there is to improve productivity: • Knowledge workers have to manage themselves and have autonomy. • Continuing innovation has to be part of the work, the task, and the responsibility of knowledge workers. • Knowledge workers must be treated as “assets” rather than as “costs.” They must prefer to work for the organization, over all other opportunities. EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. Business Conditions 59 • Knowledge work requires continuous learning and continuous teaching by knowledge workers. The managerial environment in the new century has changed dramatically and will continue to change. The combination of pressures from globalization, information technology, socioeconomic change, and emerging geopolitical forces in Asia is forcing a workforce evolution with profound effect on all managers. A recent study29 finds that American workers are losing faith in the American Dream. More than half of those surveyed believe it no longer is attainable and almost half as many more declare that it was more attainable 8 years ago. Most of them, 77% blame the political system for their concern, citing health care, retirement, and fuel price concerns. However, people in smaller firms are happier with their jobs. Just over 41% expressed satisfaction compared to 28% for those in larger firms. The finding is pretty well consistent with sociological observations that smaller firms allow more participation and feeling of involvement. At the heart of their discontent is the realization that things have not really improved that much in the last 20 years. They see a greater discrepancy in the system where senior executives are no longer held in esteem, but are viewed with a mixture of resentment and dislike. Executive income has increased a hundredfold30 compared to a bare tripling of the common income. The Aging Workforce But discontent is not the only issue managers must address in crafting their strategies. The “aging boomer” brings another dimension to decision making. Twenty percent of the workforce will be 65 years and older by 2026 compared to 12% in 2001. By 2011 over 40% will fall into the 45 years to 64 years category, against 29% in that group for 1991. The workforce is aging and this will affect human resources management in demands for flexibility and motivation. The AARP31 points out that in 1910 only 13% of the population was over 50 years of age. Today twice as many fall into that category increasing to over 35% by 2020. EBSCO Publishing : eBook Collection (EBSCOhost) - printed on 5/9/2021 11:35 AM via SOUTHERN NEW HAMPSHIRE UNIV AN: 1055550 ; Ken R. Blawatt.; Entrepreneurial Strategic Management Account: shapiro Copyright © 2014. Business Expert Press. All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law. 60 ENTREPRENEURIAL STRATEGIC MANAGEMENT The need to revamp the workforce has been evident for over a decade. An earlier study of workforce deployment in 1992 concluded that executives are going to need a more open and innovative approach to the hiring, firing, and managing process. Towers Perrin32 concludes that, “Human Resources management is in the throes of a radical transformation where HR policies will have to be responsive to market conditions and global business conditions. They will need to be closely linked to strategic business plans conceived and implemented jointly by line and HR managers and focused on quality, customer service, productivity, employee involvement, team work and workforce flexibility.” In the next decade the U.S. Bureau of Labor Statistics predicts there will be 151 million jobs in the economy but only 141 million people in the workforce to fill them. Prime age employees, those between 25 and 54 years will be in short supply, projected to fall from 19 million coming into the 21st century to 11 million over the subsequent two decades. At the same time the number of college graduates will remain static at 29% of all 30-year-olds. The new workforce will be very much different from those of the past. There will be a shortage of the traditional worker. Moreover, employees will be more demanding and expect more from their employers. What Does All This Mean for Businesses Today? The new environment presents a great challenge to you and your company. First the environment, market size, the shape of the market and global forces are all posing new opportunities and barriers to company success. Your target markets are no longer standing still but are being stimulated, shifted, and repositioned by an exceptionally active business environment. On top of that there is the pressing need to make changes, to innovate. A paper by Robert Cooper33 raises the point that the need for product innovation is critical in any company today. He tells us that product life cycles have shrunk by 400% across a broad array of product categories in the last 50 years. The cause for this is the globalization of markets, technological advances, and everch...