Saturday, January 21, 2017

Applying Porter's Generic Strategies Model and Mintzberg;s Emergent Strategy model to the space technology market..

In this article, an attempt is made to explain the salient points of Porter's generic strategies model and Mintzberg's emergent strategies model. I am also making an attempt to understand how the dominant space technology players of US and India have grown over the past seventy years and to what extent and scope these strategies have been adopted by both these space leaders.

As per Micheal Eugene Porter's Generic Strategies Model, the 3 generic strategies organisations adopt to gain competitive advantage over their competitors are
I. Cost leadership (no-frills) 
2. Differentiation (creating uniquely desirable products and services) and 
3. Focus (offering a specialised service in a niche market)
Different organisations adopt these three strategies in varying degrees combinedly or stand alone to gain advantage ober their competitors.

I. Cost Leadership strategy refers to increasing profits by 
1. reduced costs of capital, resources, services,
2. having efficient logistics and warehousing where selection of the transportation medium and warehousing done keeping costs in mind
3. low cost base of manpower, materials, facilities, rents etc..
These strategies are available to all the competitors and so it does not differentiate the organisations. However by engaging in excellence programmes like 5S, 5 Whys, Kaizen etc, organisations can get ahead of their competitors.

II. Differentiation Strategy

Differentiation basically refers to how one can make products and services different and more attractive to customers than the competitors by changing or modifying product / process features, functionality, durability, after sales support etc..

It involves
1. having good research and development facilities and innovation base
2. ability and a network to deliver high quality products / services
3. effective sales and marketing team to create awareness of the new products and services with the organisation

An organisation by planning to be agile (able to adapt quickly and easily) with new product and service development processes can offer a differentiation strategy

III. Focus Strategy

This strategy involves concentrating on niche markets and offering products and services of low cost and high quality only to that market.

These niche markets give opportunity for the organisation to study consumer behaviour and adapt their products or service from the valuable customer feedback.

Usually this strategy plan is implemented by first deciding on the focus group, may be a city, a section of the population etc and then trying the cost leadership and differentiation strategy on that focal group.

A Case study on ISRO and NASA

ISRO and NASA have been dominating the space technology market of late, besides the Russians, European Space Agency (the conglomerate that unites all European space efforts), China and to a limited extent Japan. India, besides sharing the reputation of being one among the only four national space agencies (the first four listed above) to undertake successful interplanetary expeditions to Mars, with the unique distinction of being the first in the world to succeed in the very first attempt,  is spreading its wings to fly to Jupiter, the largest of the planets in the solar system in the next few years. 

An effort has been made to study how the above two strategies could be applied to ISRO and NASA who have been trying to hone up their strategies to take space technology leadership of the world.

ISRO has taken the cost leadership approach, (knowing fully well that they at least 15-20 years behind NASA in exploring the deeper confines of the solar system and of outer space) by offering highly reliable missions and launch capabilities at very low costs. As technologies progress, miniaturisation is the norm of the day. Satellites of yesteryears which were weighing tons, are being replaced by smaller satellites weighing anywhere between ten and fifty kgs. India is about to create record for sending a maximum of 103 satellites aboard its PSLV rocket to low earth orbits by the end of January 2017. (click here for more details..)

NASA on the other hand understanding fully well due to high costs inputs, cannot compete with ISRO on cost parameters, have taken on the world by offering innovative and path breaking exploration into the deeper confines of space, rovers on Mars etc with absolutely very low consideration for costs over the knowledge generated.

India has been able to offer leadership and make an impact in the commercial launch services operations area for other countries of the world by sending their satellites to low earth orbits, while US, using the differentiation strategy, has been generating new and exciting knowledge that could be used by future generations to understand and attempt to colonise space in future.

A very significant point that needs to be pointed out is the role of space technology offering telecom satellites and their networks at dirt cheap rates in spearheading the recent extremely disruptive telecommunication revolution happening in India. The competition is so intense that many foreign telecom players, unable to bear the heat are planning to leave the country and move to safer and less competitive environs in their parent countries. Had it not been for the cheap telecom bandwidth provided by these satellites, on the vision of Sam Pitroda and Rajiv Gandhi in the early eighties, such disruptive, cost innovative leadership would not have been possible.

Mintzberg's emergent strategy model states that in the life of a product or service, strategies do emerge as organisations face reality. These set of actions and thoughts were not originally intended or planned but have emerged successful over time and have been accepted as successful strategy for the organisation. 
This implies a set of trial and error methods, performance measurement metrics and effective feedback management and measurement leading to overall organisational performance and development.

Both NASA and ISRO would have wanted total leadership in space technology and not part leadership of the cost leadership model or differentiation model in the space sector respectively, but as technologies emerged and missions succeeded, they have transitioned to these models over time. The increased capability provided by cheaper satellite launches and more telecom satellites in space have seen drop in rates and more space applications like remote sensing, traffic and navigational guidance being the order of the day.

In short, it can be very clearly seen that in the area of space technology, especially in the leadership countries like India and United States, the growth and evolution of space technology has been monumental and all the countries mentioned earlier will continue to come up with innovative applications over time to make this field even more attractive in future. This will spur into action other countries too to explore space and partake in the benefits it can offer mankind.


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