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 - – cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy,
supply chains are disrupted by pandemic , increasing commodity prices, 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 -
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.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Izumi Seidenberg digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Izumi Seidenberg 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.
Successful track record of launching new products
– Izumi Seidenberg has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Izumi Seidenberg 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.
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.
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.
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.
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.
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.
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.
Strong track record of project management
– Izumi Seidenberg is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
Weaknesses iZumi | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of iZumi are -
Increasing silos among functional specialists
– The organizational structure of Izumi Seidenberg is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Izumi Seidenberg needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Izumi Seidenberg to focus more on services rather than just following the product oriented approach.
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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the iZumi 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 Izumi Seidenberg has relatively successful track record of launching new products.
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.
Low market penetration in new markets
– Outside its home market of Izumi Seidenberg, firm in the HBR case study iZumi needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Izumi Seidenberg has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
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.
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.
Aligning sales with marketing
– It come across in the case study iZumi that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case iZumi can leverage the sales team experience to cultivate customer relationships as Izumi Seidenberg is planning to shift buying processes online.
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.
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.
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 -
Developing new processes and practices
– Izumi Seidenberg can develop new processes and procedures in Innovation & Entrepreneurship 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.
Creating value in data economy
– The success of analytics program of Izumi Seidenberg has opened avenues for new revenue streams for the organization in the industry. This can help Izumi Seidenberg to build a more holistic ecosystem as suggested in the iZumi case study. Izumi Seidenberg can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
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.
Leveraging digital technologies
– Izumi Seidenberg 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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Izumi Seidenberg 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.
Loyalty marketing
– Izumi Seidenberg 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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Izumi Seidenberg can use these opportunities to build new business models that can help the communities that Izumi Seidenberg operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
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.
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.
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 -
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.
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study iZumi, Izumi Seidenberg may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
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.
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.
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.
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 .
Technology acceleration in Forth Industrial Revolution
– Izumi Seidenberg has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Izumi Seidenberg needs to keep up with the evolution of technology in the Innovation & Entrepreneurship 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.
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.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Izumi Seidenberg can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
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.
