Copyright 2002 Alex Coman FAST FocusedArenaStrategy The ARENA

Copyright 2002 Alex Coman FAST: Focused-Arena-Strategy The ARENA Genome: Harmonic Strategic Planning. . . ויעמוד העם על משה מן הבוקר עד הערב. וישב משה לשפט את העם : שמות י"ח נבל תבל גם אתה גם העם אשר עמך כי. לא טוב הדבר אשר אתה עושה. ויאמר חותן משה אליו . . . כבד ממך הדבר לא תוכל עשהו לבדך והיה כל הדבר הגדול יביאו. . . יראי אלהים אנשי אמת שונאי בצע Refinement אנשי חיל Stages: ואתה תחזה מכל העם Arena, Focus, Action. הקטן ישפטו הם והקל מעליך ונשאו אתך אליך וכל הדבר Create Strategy. ויבחר משה אנשי חיל מכל ישראל ויתן אתם ראשים על העם Arena Layers: Corporate, Business Function. Define Hierarchy n. Corporate Layer: Portfolio Businesses Maximize Value n. Business Layer: Positioning Products by Market Strategy A R E N A FOCUS A C T I n. Function Layer: O Process, Project and Product N Agile value drive n. Arena actors: Partners, Threats; Current, Future Tailored Patterns. n. Filter Criteria Prioritize attention Manage Control span n. Dynamic Vectors: Change, Vision, Scenario. Guru 2 Gorilla “The Fox Knows many tricks. The Hedgehog knows one big trick”: Isaiah Berlin Alex@Coman. org Tel: (972)3 -510 -1768 -1 - WWW. Coman. Org FAST: Focused-Arena-Strategy

Copyright 2002 Alex Coman FAST: Focused-Arena-Strategy Nortel: from End-To-End solutions to Focus n. Nortel 2001 crisis: n. Share price drops from $80 to $6, n 2000 sales: $31 B; John Ross: Up 30%; 2001: $20 B n. Backbone optical 2000 sales: $10 B; 2001: $1 B. n. Most profitable product line: sales>$1 M/day now<$1 M/week. n. Margins: 30% -> 7%-10% n. Optical component lead times: 6 -12 months… n. End 2000: 96, 000 workforce; 2001: <50, 000 n. Lucent: Discontinued 300 of 600 products. Optical IP Enterprise Wireless Networks Backbone Technologies Legacy Sales > $1 Billion/Year Last time buy Products System houses -> Value Added Reseller: n. High development & customization abilities n. Marketing, Sales and System engineering abilities n. Technical support and subcontractor management abilities. n. Local presence and working relationships. Alex@Coman. org Tel: (972)3 -510 -1768 -2 - South EMEA NAmerica Africa America East Europe Countries WWW. Coman. Org 50 Only Customers FAST: Focused-Arena-Strategy

Copyright 2002 Alex Coman FAST: Focused-Arena-Strategy Stan Shih: Navigating the PC Industry’s Value Curve “The PC industry’s profit pool”, HBR “Going Global: Lessons from Late Movers”, HBR, March-April, 2000 ASIC LCD DRAM CPU Software 35% 15% Monitor Motherboard 10% Local Assembly 2. 5% Local Assembly Local Sourcing Marketing Distribution Alex@Coman. org Tel: (972)3 -510 -1768 -3 - E-commerce 15% WWW. Coman. Org FAST: Focused-Arena-Strategy

Copyright 2002 Alex Coman FAST: Focused-Arena-Strategy Channel Bottleneck: Edutainment to Content Edutainment Development $100 K-$10 M: $1. 5 M Enabler ’ 96=20 M MMPC $2 K, +50%@97 Drugs/ Aviation Chemicals/ Fabs Research Content Development 20 MX 5 CD/PC/Year. X$40=$4 B #2, 700/’ 95 The Content Bottleneck Manufacturing Programming Backbone Distribution Producer + Distributor=$2 $1 M/$2=0. 5 M Make it<200 Distribution Retail<1% Retail: $8 Retail Set-Top Box Customer $40/Unit; Myst: 2 M Copies $1 b<’ 96 Average: $10 Access Media: Turner (MGM), Sony(Columbia) Rock’s Law: The cost of building a fab doubles every four years > $50 B end of decade Alex@Coman. org Tel: (972)3 -510 -1768 -4 - WWW. Coman. Org FAST: Focused-Arena-Strategy

Value Copyright 2002 Alex Coman FAST: Focused-Arena-Strategy Accomplishments Assets Focused-Arena-Strategy: FAST Vision Core Strengths/ Weaknesses Vision: Cyclone Core Competence Cyclone n. Contained n. Compound Action n. Resources n. Mission n. Milestones n. Real Options Action Focus Arena: Opportunities/Threats Core: Root-Cause-Analysis Focus Value Oyster Pearl Core-Competence-Tree Current-Reality-Tree Assets Undesirable-Effects UDE Economic Value Causality White Added Core Competencies Root Problems Elephant Fruit Ease Arena: PEST Stakeholder Analysis Ansoff: Matrix Porter: Risk Scenario Critical-Success-Factors Alex@Coman. org Tel: (972)3 -510 -1768 -5 - Core Competencies Critical-Success-Factors Root Problems WWW. Coman. Org Gap Analysis FAST: Focused-Arena-Strategy

Copyright 2002 Alex Coman FAST: Focused-Arena-Strategy: FAST Vision Core Focus Action 16% Arena IBM: Services 51% 62% Accomplishments Assets Software Over 400 M V o I P mi n Over 40% Global I P C a rri e r T ra f f i c Market Share ‘ 99&’ 00 22% Technology 1994 Chips 1995 Modules 2000 Boards 1998 Systems 2001 Value Core Competence Cyclone 16% Hardware 33% ‘ 93 ‘ 95 ‘ 97 ‘ 99 ‘ 01 ‘ 03 Credit Suisse First Boston UPS - $30 B Global business: n 1907 -Local messenger service n 1920 -Retail delivery consolidator n 1950 -Common carrier (postal) n 1975 -National company n 1986 -Global company n 1988 -Airline (fastest startup) n 1992 -Information business (world’s largest package tracking system) Alex@Coman. org Tel: (972)3 -510 -1768 -6 - n 1993 -3 rd party logistics provider n 1994 -a Dot-Com n 1995 -a same-day delivery service n 1997 -e-commerce facilitator (delivers>50% online purchases) n 1998 -a financial services company UPS capital n 1999 -a public company n 2000 -an integrated global supply chain company WWW. Coman. Org FAST: Focused-Arena-Strategy

Copyright 2002 Alex Coman FAST: Focused-Arena-Strategy Vision Internal Scoreboard: FAST 1 Core Focus Action Arena Root Cause Analysis: Corporate Scoreboard Core-Competence-Tree - CCT Current-Reality-Tree - CRT Accomplishments - External Challenges: External Strengths: Assets Internal+Stakeholder Weaknesses: UDEs Undesirable-Effects Internal+Stakeholder Root Problems Core Competencies Outsourcing Positive Reinforcing Cyclone Value Products Quality Negative Reinforcing Loops Projects Rework Margins Accomplishments Assets Core Competence Cyclone Alex@Coman. org Tel: (972)3 -510 -1768 -7 - WWW. Coman. Org FAST: Focused-Arena-Strategy

Copyright 2002 Alex Coman FAST: Focused-Arena-Strategy Fast 3: Arena Scenarios Vision Action Core Focus Arena Value Accomplishments Assets Core Competence Cyclone Ansoff M New A R K E T Old Product Line Old Market Development: Corporate Layer The Firm Old New Old Market Penetration: Functional Layer The Firm Old Market Penetration Market Development Boutique Breadth New Diversification: Corporate, Business &Function Firm Old New Market Product Development: Business Layer Firm New Old Market Product Development Depth Diversification Vertical Alex@Coman. org Tel: (972)3 -510 -1768 -8 - WWW. Coman. Org FAST: Focused-Arena-Strategy

FAST: Focused-Arena-Strategy Vision Fast 4: Action Core Focus Given Arena 1. 2. Copyright 2002 Alex Coman Value Gap 2 -Analysis Competencies a Scenario and a Vision: Trump factor: Will competencies trump the scenario? Thrust factor: What’s the scenario’s thrust at vision? Accomplishments Assets Core Competence Cyclone Core-Competencies 1. Trump Factor : מקדם שליטה n. Window-Of-Opportunity n. Entry Barriers n. Stakeholders n. Key Value Drivers Critical-Success-Factors Root-Problems Alex@Coman. org Tel: (972)3 -510 -1768 -9 - WWW. Coman. Org FAST: Focused-Arena-Strategy

FAST: Focused-Arena-Strategy Copyright 2002 Alex Coman Business Action: Komatsu’s strategic Roll-out – Skinning the Cat n. Maru-C: “Encircle Caterpillar” n. Protect home market against Caterpillar (’ 81: 50% world earth-moving equipment vs. 16%) n. Licensing deals with: Cummins Engine, International Harvester. n. Acquire technology and establish benchmarks. n. Project Ace: Advance quality of small and medium-sized bulldozers above Caterpillar’s n. Quality Circles companywide to provide training for all employees n. Reduce cost while maintaining quality n. Cost Down n. Total Cost Down n. Make Komatsu an international enterprise and build export markets n. Develop Eastern bloc countries n. Komatsu Europe marketing subsidiary established n. Komatsu America established n. Project B to improve durability and reliability and reduce cost of large bulldozers n. Project C to improve payloaders n. Project D to improve Hydraulic excavators n. Establish presale and service department to assist construction projects in newly industrializing countries n. Respond to external shocks that threaten markets n. V-10 program to reduce costs by 10%; reduce parts by 20%. n¥ 180 program to budget companywide for ¥ 180/$ when exchange rate was ¥ 240/$ n. Response to Oil Crisis: Project E establish teams to redouble cost and quality efforts. n. Create new products and markets n. Accelerate product development to expand line. n. Future and Frontiers program to identify new businesses based on society’s needs and company know-how. n. EPOCHS: reconcile greater product variety with improved production efficiencies. n(’ 84: Caterpillar=43% world earth-moving equipment vs. Komatsu=25%) Alex@Coman. org Tel: (972)3 -510 -1768 -10 - WWW. Coman. Org FAST: Focused-Arena-Strategy

Copyright 2002 Alex Coman FAST: Focused-Arena-Strategy Fast 1: Core-Competence-Tree - CCT Owner Value was created High Sales Growth rate Sales to Market Leaders Strong Sales Department Good Engineering And Production Technological Innovation and Professionalism Sales and Partnership with Leading Firms Rapid multidisciplinary System view Development Influence in Standards Committee Good Inter-functional High employee Motivation Communications Choice People working in an atmosphere of excellence Technological Leadership Vision, Leadership and Managerial Ability Alex@Coman. org Tel: (972)3 -510 -1768 -11 - WWW. Coman. Org FAST: Focused-Arena-Strategy

Copyright 2002 Alex Coman FAST: Focused-Arena-Strategy Fast 1: Current-Reality-Tree - CRT Firm’s Market Value is Insufficient No Exit The Firm is Losing Money No Awareness to M&A Objectives Product Over-Specification and Over-Design Must Sell More Not enough Strategic Product No access to Gating in R&D Differentiated Enough The end User Excessive Technology Orientation New markets Require “Education” High Burn Focus on single Small Player Rate New Technology In Giants’ Arena A Firm with Technological and Tactical Excellence Lacking Financial Market Expertise and Backing Alex@Coman. org Tel: (972)3 -510 -1768 -12 - WWW. Coman. Org FAST: Focused-Arena-Strategy

Copyright 2002 Alex Coman FAST: Focused-Arena-Strategy Fast 4: Market-Gap-Analysis Core-Competences 1 st Tier Customers Partnership with Market Leader Excellent R&D Technological Leader Rapid Product Development Critical-Success-Factors Size Brand recognition Challenges Focus on a single New Technology Alex@Coman. org Small player in giants’ Arena Root-Problems Tel: (972)3 -510 -1768 -13 - High Burn Rate WWW. Coman. Org FAST: Focused-Arena-Strategy

Copyright 2002 Alex Coman FAST: Focused-Arena-Strategy Fast 5: Action-Focus-Analysis Partnership with Market Leader Strategic Develop new Product line Importance to the firm Establish Brand Recognition Tactical Strategic Grid Alex@Coman. org Cost Reduction Weak Tel: (972)3 -510 -1768 -14 - Strong Ease to Implement WWW. Coman. Org FAST: Focused-Arena-Strategy