Building Watson: Not So Elementary, My Dear! SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Building Watson: Not So Elementary, My Dear!
To maximize their effectiveness, color cases should be printed in color.This case is set inside IBM Research's efforts to build a computer that can successfully take on human challengers playing the game show Jeopardy! It opens with the machine named Watson offering the incorrect answer "Toronto" to a seemingly simple question during the championship match. Was the answer a reflection of a strategic weakness, or was it actually consistent with design principles established by the development team? The case seeks to expand students' view of the product development process. Traditional software development projects begin with the gathering of requirements and analysis of the problem, and the writing of a detailed specification. The Jeopardy! problem is different - it requires a probabilistic approach where there is no closed form solution. Instead statistical patterns in the data are important and there is no obvious mapping to the way queries are expressed. Such problems are increasingly common in data mining, optimization problems, or Internet applications where the goal is to find an acceptably good solution in a short amount of time, when a deterministic approach might be less fruitful or impractical. We aspire for students to recognize that product development can take many forms, and that these are enabled by creativity and the right organizational flexibility and mindset. The case highlights the key role of performance metrics in building a flexible system that could be refined through experimentation and testing, steadily improving performance with the incorporation of new algorithmic ideas and new data sources. The case then delves extensively into the analysis of the "Toronto" failure and why the answer that Watson produced was a rational product of a sound strategy. This leaves students to judge the generality of the strategy and its applicability to important business problems.
Swot Analysis of "Building Watson: Not So Elementary, My Dear!" written by Willy Shih includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Watson Answer facing as an external strategic factors. Some of the topics covered in Building Watson: Not So Elementary, My Dear! case study are - Strategic Management Strategies, IT, Operations management, Research & development and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Building Watson: Not So Elementary, My Dear! casestudy better are - – there is increasing trade war between United States & China, there is backlash against globalization, increasing household debt because of falling income levels, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy,
wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Building Watson: Not So Elementary, My Dear!
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Building Watson: Not So Elementary, My Dear! case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Watson Answer, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Watson Answer operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Building Watson: Not So Elementary, My Dear! can be done for the following purposes –
1. Strategic planning using facts provided in Building Watson: Not So Elementary, My Dear! case study
2. Improving business portfolio management of Watson Answer
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Watson Answer
Strengths Building Watson: Not So Elementary, My Dear! | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Watson Answer in Building Watson: Not So Elementary, My Dear! Harvard Business Review case study are -
Organizational Resilience of Watson Answer
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Watson Answer does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Watson Answer digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Watson Answer has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to lead change in Strategy & Execution field
– Watson Answer is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Watson Answer in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Strategy & Execution industry
– Building Watson: Not So Elementary, My Dear! firm has clearly differentiated products in the market place. This has enabled Watson Answer to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Watson Answer to invest into research and development (R&D) and innovation.
Analytics focus
– Watson Answer is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Willy Shih can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Low bargaining power of suppliers
– Suppliers of Watson Answer in the sector have low bargaining power. Building Watson: Not So Elementary, My Dear! has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Watson Answer to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Watson Answer is one of the leading recruiters in the industry. Managers in the Building Watson: Not So Elementary, My Dear! are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Successful track record of launching new products
– Watson Answer has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Watson Answer has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Operational resilience
– The operational resilience strategy in the Building Watson: Not So Elementary, My Dear! Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Innovation driven organization
– Watson Answer is one of the most innovative firm in sector. Manager in Building Watson: Not So Elementary, My Dear! Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Watson Answer is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– Watson Answer has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Watson Answer to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Building Watson: Not So Elementary, My Dear! | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Building Watson: Not So Elementary, My Dear! are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Building Watson: Not So Elementary, My Dear! HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Watson Answer has relatively successful track record of launching new products.
Products dominated business model
– Even though Watson Answer has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Building Watson: Not So Elementary, My Dear! should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Watson Answer has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High operating costs
– Compare to the competitors, firm in the HBR case study Building Watson: Not So Elementary, My Dear! has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Watson Answer 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Watson Answer, firm in the HBR case study Building Watson: Not So Elementary, My Dear! needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Watson Answer is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Watson Answer needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Watson Answer to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Building Watson: Not So Elementary, My Dear!, it seems that the employees of Watson Answer don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Building Watson: Not So Elementary, My Dear!, is just above the industry average. Watson Answer needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Watson Answer supply chain. Even after few cautionary changes mentioned in the HBR case study - Building Watson: Not So Elementary, My Dear!, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Watson Answer vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Willy Shih suggests that, Watson Answer is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Capital Spending Reduction
– Even during the low interest decade, Watson Answer has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Opportunities Building Watson: Not So Elementary, My Dear! | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Building Watson: Not So Elementary, My Dear! are -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Watson Answer can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Watson Answer can use these opportunities to build new business models that can help the communities that Watson Answer operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Watson Answer can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Watson Answer can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Watson Answer can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Creating value in data economy
– The success of analytics program of Watson Answer has opened avenues for new revenue streams for the organization in the industry. This can help Watson Answer to build a more holistic ecosystem as suggested in the Building Watson: Not So Elementary, My Dear! case study. Watson Answer can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Watson Answer can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Manufacturing automation
– Watson Answer can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Using analytics as competitive advantage
– Watson Answer has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Building Watson: Not So Elementary, My Dear! - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Watson Answer to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Watson Answer can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Loyalty marketing
– Watson Answer has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Leveraging digital technologies
– Watson Answer can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Watson Answer is facing challenges because of the dominance of functional experts in the organization. Building Watson: Not So Elementary, My Dear! case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Watson Answer can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Threats Building Watson: Not So Elementary, My Dear! External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Building Watson: Not So Elementary, My Dear! are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Watson Answer with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Watson Answer.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Watson Answer in the Strategy & Execution sector and impact the bottomline of the organization.
Increasing wage structure of Watson Answer
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Watson Answer.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Watson Answer in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Stagnating economy with rate increase
– Watson Answer can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Watson Answer can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Watson Answer needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Watson Answer can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology acceleration in Forth Industrial Revolution
– Watson Answer has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Watson Answer needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Consumer confidence and its impact on Watson Answer demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
High dependence on third party suppliers
– Watson Answer high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Watson Answer can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Building Watson: Not So Elementary, My Dear! .
Weighted SWOT Analysis of Building Watson: Not So Elementary, My Dear! Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Building Watson: Not So Elementary, My Dear! needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Building Watson: Not So Elementary, My Dear! is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Building Watson: Not So Elementary, My Dear! is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Building Watson: Not So Elementary, My Dear! is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Watson Answer needs to make to build a sustainable competitive advantage.
