Presents the issues faced while building an innovative company in an emerging space with new intellectual property from the perspective of a venture capitalist. Beth Seidenberg, a partner at the venture capital firm Kleiner Perkins Caufield & Byers (KPCB), had helped create iZumi Bio, a company with ambitious prospects which she believed had the potential to become "the" definitive stem cell company. iZumi sought to bring under its banner key intellectual property (IP) from the nascent field of stem cell technology. As such, iZumi would need to acquire the rights to several groundbreaking scientific developments that had recently occurred in labs around the world. Seidenberg needed to decide whether to commit to the next major tranche of the investment. Charged with finalizing her decision in less than 24 hours, Seidenberg weighed the pros and cons of the next round of financing. Was it really possible to pull together such a broad range of IP under one umbrella? Was the international mix of IP going to be too difficult to manage? Was it too early for stem cell technology to be successfully commercialized?
Authors :: Robert F. Higgins, Jacob Broder-Fingert, Eliot Sherman, Sidhartha Palani
Swot Analysis of "iZumi" written by Robert F. Higgins, Jacob Broder-Fingert, Eliot Sherman, Sidhartha Palani includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Izumi Seidenberg facing as an external strategic factors. Some of the topics covered in iZumi case study are - Strategic Management Strategies, Intellectual property, International business, Venture capital and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the iZumi casestudy better are - – supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, geopolitical disruptions, there is increasing trade war between United States & China, technology disruption, increasing commodity prices, central banks are concerned over increasing inflation,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in iZumi case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Izumi Seidenberg, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Izumi Seidenberg 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 iZumi can be done for the following purposes –
1. Strategic planning using facts provided in iZumi case study
2. Improving business portfolio management of Izumi Seidenberg
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Izumi Seidenberg
Strengths iZumi | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Izumi Seidenberg in iZumi Harvard Business Review case study are -
Training and development
– Izumi Seidenberg has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in iZumi 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.
Innovation driven organization
– Izumi Seidenberg is one of the most innovative firm in sector. Manager in iZumi Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Izumi Seidenberg
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Izumi Seidenberg does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Innovation & Entrepreneurship field
– Izumi Seidenberg 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 Izumi Seidenberg in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Izumi Seidenberg are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Learning organization
- Izumi Seidenberg 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 Izumi Seidenberg is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in iZumi Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Izumi Seidenberg 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 iZumi HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the iZumi 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.
Superior customer experience
– The customer experience strategy of Izumi Seidenberg in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Izumi Seidenberg is one of the leading recruiters in the industry. Managers in the iZumi are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Izumi Seidenberg in the sector have low bargaining power. iZumi has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Izumi Seidenberg to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Izumi Seidenberg 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.
Weaknesses iZumi | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of iZumi are -
High operating costs
– Compare to the competitors, firm in the HBR case study iZumi 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 Izumi Seidenberg 's lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Izumi Seidenberg needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study iZumi, it seems that the employees of Izumi Seidenberg 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.
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 Izumi Seidenberg supply chain. Even after few cautionary changes mentioned in the HBR case study - iZumi, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Izumi Seidenberg vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As iZumi HBR case study mentions - Izumi Seidenberg 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.
Products dominated business model
– Even though Izumi Seidenberg 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 - iZumi should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Izumi Seidenberg 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study iZumi, in the dynamic environment Izumi Seidenberg has struggled to respond to the nimble upstart competition. Izumi Seidenberg has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Izumi Seidenberg is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study iZumi can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Izumi Seidenberg 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. Izumi Seidenberg 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.
Capital Spending Reduction
– Even during the low interest decade, Izumi Seidenberg 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 iZumi | 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 iZumi are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Izumi Seidenberg is facing challenges because of the dominance of functional experts in the organization. iZumi 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Izumi Seidenberg can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Izumi Seidenberg 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.
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. Izumi Seidenberg can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Izumi Seidenberg in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Izumi Seidenberg to increase its market reach. Izumi Seidenberg 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Izumi Seidenberg 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 Izumi Seidenberg to hire the very best people irrespective of their geographical location.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Izumi Seidenberg in the consumer business. Now Izumi Seidenberg can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Izumi Seidenberg 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 iZumi - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Izumi Seidenberg to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Izumi Seidenberg can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Izumi Seidenberg 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. Izumi Seidenberg 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.
Building a culture of innovation
– managers at Izumi Seidenberg 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 Innovation & Entrepreneurship segment.
Buying journey improvements
– Izumi Seidenberg can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. iZumi suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Threats iZumi External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study iZumi are -
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 Izumi Seidenberg.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Izumi Seidenberg with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Shortening product life cycle
– it is one of the major threat that Izumi Seidenberg is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Izumi Seidenberg 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. Izumi Seidenberg can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Consumer confidence and its impact on Izumi Seidenberg 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Izumi Seidenberg 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 iZumi .
High dependence on third party suppliers
– Izumi Seidenberg 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.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Izumi Seidenberg business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Izumi Seidenberg 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 Innovation & Entrepreneurship industry regulations.
Stagnating economy with rate increase
– Izumi Seidenberg 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.
Increasing wage structure of Izumi Seidenberg
– 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 Izumi Seidenberg.
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 Izumi Seidenberg in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Weighted SWOT Analysis of iZumi 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 iZumi 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 iZumi 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 iZumi 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 iZumi 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 Izumi Seidenberg needs to make to build a sustainable competitive advantage.