Case Study Description of CloudFlare, Inc.: Running Hot?
In July 2012, the cofounders of CloudFlare, a Silicon Valley startup that protects websites and accelerates their traffic, are considering the implications of five employees' resignations over the prior three months. Was this natural attrition for a high-tech venture with a staff of 35 experiencing explosive growth, or were the resignations symptomatic of bigger issues with CloudFlare's culture and management processes? After describing CloudFlare's early history, business model, organization structure, and human resources policies, the case presents first-person accounts from employees regarding their reasons for resigning, and then asks whether CloudFlare's cofounders should take any corrective actions.
Swot Analysis of "CloudFlare, Inc.: Running Hot?" written by Thomas R. Eisenmann, Alex Godden includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cloudflare's Cloudflare facing as an external strategic factors. Some of the topics covered in CloudFlare, Inc.: Running Hot? case study are - Strategic Management Strategies, Change management, Entrepreneurship, IT, Organizational culture, Organizational structure, Professional transitions and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the CloudFlare, Inc.: Running Hot? casestudy better are - – increasing commodity prices, there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion,
central banks are concerned over increasing inflation, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of CloudFlare, Inc.: Running Hot?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in CloudFlare, Inc.: Running Hot? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cloudflare's Cloudflare, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cloudflare's Cloudflare 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 CloudFlare, Inc.: Running Hot? can be done for the following purposes –
1. Strategic planning using facts provided in CloudFlare, Inc.: Running Hot? case study
2. Improving business portfolio management of Cloudflare's Cloudflare
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 Cloudflare's Cloudflare
Strengths CloudFlare, Inc.: Running Hot? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cloudflare's Cloudflare in CloudFlare, Inc.: Running Hot? Harvard Business Review case study are -
Strong track record of project management
– Cloudflare's Cloudflare is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Training and development
– Cloudflare's Cloudflare has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in CloudFlare, Inc.: Running Hot? 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 recruit top talent
– Cloudflare's Cloudflare is one of the leading recruiters in the industry. Managers in the CloudFlare, Inc.: Running Hot? are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the CloudFlare, Inc.: Running Hot? 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.
Organizational Resilience of Cloudflare's Cloudflare
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cloudflare's Cloudflare does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Cloudflare's Cloudflare 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 Cloudflare's Cloudflare is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in CloudFlare, Inc.: Running Hot? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Cloudflare's Cloudflare 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.
Effective Research and Development (R&D)
– Cloudflare's Cloudflare has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study CloudFlare, Inc.: Running Hot? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Cloudflare's Cloudflare in the sector have low bargaining power. CloudFlare, Inc.: Running Hot? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cloudflare's Cloudflare to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Cloudflare's Cloudflare is present in almost all the verticals within the industry. This has provided firm in CloudFlare, Inc.: Running Hot? 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.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– CloudFlare, Inc.: Running Hot? firm has clearly differentiated products in the market place. This has enabled Cloudflare's Cloudflare to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Cloudflare's Cloudflare to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Cloudflare's Cloudflare 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.
Weaknesses CloudFlare, Inc.: Running Hot? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of CloudFlare, Inc.: Running Hot? are -
Need for greater diversity
– Cloudflare's Cloudflare 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.
High operating costs
– Compare to the competitors, firm in the HBR case study CloudFlare, Inc.: Running Hot? 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 Cloudflare's Cloudflare 's lucrative customers.
No frontier risks strategy
– After analyzing the HBR case study CloudFlare, Inc.: Running Hot?, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Skills based hiring
– The stress on hiring functional specialists at Cloudflare's Cloudflare 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cloudflare's Cloudflare is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study CloudFlare, Inc.: Running Hot? 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 to strategic competitive environment developments
– As CloudFlare, Inc.: Running Hot? HBR case study mentions - Cloudflare's Cloudflare 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study CloudFlare, Inc.: Running Hot?, it seems that the employees of Cloudflare's Cloudflare 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Cloudflare's Cloudflare 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Thomas R. Eisenmann, Alex Godden suggests that, Cloudflare's Cloudflare 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.
Interest costs
– Compare to the competition, Cloudflare's Cloudflare 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 decision making process
– As mentioned earlier in the report, Cloudflare's Cloudflare 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. Cloudflare's Cloudflare 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 CloudFlare, Inc.: Running Hot? | 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 CloudFlare, Inc.: Running Hot? are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cloudflare's Cloudflare can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Cloudflare's Cloudflare in the consumer business. Now Cloudflare's Cloudflare can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Cloudflare's Cloudflare 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 CloudFlare, Inc.: Running Hot? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cloudflare's Cloudflare to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Cloudflare's Cloudflare 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. Cloudflare's Cloudflare 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cloudflare's Cloudflare 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, CloudFlare, Inc.: Running Hot?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Learning at scale
– Online learning technologies has now opened space for Cloudflare's Cloudflare 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.
Developing new processes and practices
– Cloudflare's Cloudflare 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.
Loyalty marketing
– Cloudflare's Cloudflare 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cloudflare's Cloudflare 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cloudflare's Cloudflare 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cloudflare's Cloudflare is facing challenges because of the dominance of functional experts in the organization. CloudFlare, Inc.: Running Hot? 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cloudflare's Cloudflare can use these opportunities to build new business models that can help the communities that Cloudflare's Cloudflare operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Cloudflare's Cloudflare to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Threats CloudFlare, Inc.: Running Hot? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study CloudFlare, Inc.: Running Hot? are -
High dependence on third party suppliers
– Cloudflare's Cloudflare 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cloudflare's Cloudflare in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study CloudFlare, Inc.: Running Hot?, Cloudflare's Cloudflare 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 .
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. Cloudflare's Cloudflare can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cloudflare's Cloudflare 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 CloudFlare, Inc.: Running Hot? .
Technology acceleration in Forth Industrial Revolution
– Cloudflare's Cloudflare has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Cloudflare's Cloudflare 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.
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 Cloudflare's Cloudflare.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cloudflare's Cloudflare with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Cloudflare's Cloudflare needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Consumer confidence and its impact on Cloudflare's Cloudflare 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.
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.
Regulatory challenges
– Cloudflare's Cloudflare 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.
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 CloudFlare, Inc.: Running Hot? 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 CloudFlare, Inc.: Running Hot? 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 CloudFlare, Inc.: Running Hot? 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 CloudFlare, Inc.: Running Hot? 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 CloudFlare, Inc.: Running Hot? 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 Cloudflare's Cloudflare needs to make to build a sustainable competitive advantage.
