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 - – supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, technology disruption,
banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, 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 -
High switching costs
– The high switching costs that Watson Answer has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
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.
Superior customer experience
– The customer experience strategy of Watson Answer in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Watson Answer is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Watson Answer is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Building Watson: Not So Elementary, My Dear! Harvard Business Review case study emphasize – knowledge, initiative, 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.
Diverse revenue streams
– Watson Answer is present in almost all the verticals within the industry. This has provided firm in Building Watson: Not So Elementary, My Dear! case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Highly skilled collaborators
– Watson Answer has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Building Watson: Not So Elementary, My Dear! HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
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.
Training and development
– Watson Answer has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Building Watson: Not So Elementary, My Dear! Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
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.
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.
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 -
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Building Watson: Not So Elementary, My Dear!, in the dynamic environment Watson Answer has struggled to respond to the nimble upstart competition. Watson Answer has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
Interest costs
– Compare to the competition, Watson Answer has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to strategic competitive environment developments
– As Building Watson: Not So Elementary, My Dear! HBR case study mentions - Watson Answer takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Need for greater diversity
– Watson Answer has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
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.
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.
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.
Slow decision making process
– As mentioned earlier in the report, Watson Answer has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Watson Answer even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
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.
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 -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Watson Answer can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Building Watson: Not So Elementary, My Dear!, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Watson Answer to increase its market reach. Watson Answer will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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.
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Watson Answer to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Watson Answer to hire the very best people irrespective of their geographical location.
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.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Watson Answer to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Watson Answer in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
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 -
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Watson Answer needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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! .
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.
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.
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.
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.
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.
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.
Shortening product life cycle
– it is one of the major threat that Watson Answer is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Watson Answer needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
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.