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 energy prices, technology disruption, wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, there is backlash against globalization,
increasing household debt because of falling income levels, geopolitical disruptions, 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 -
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.
Superior customer experience
– The customer experience strategy of Cloudflare's Cloudflare in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
Innovation driven organization
– Cloudflare's Cloudflare is one of the most innovative firm in sector. Manager in CloudFlare, Inc.: Running Hot? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Cloudflare's Cloudflare has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cloudflare's Cloudflare 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.
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.
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.
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.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Cloudflare's Cloudflare digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cloudflare's Cloudflare 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.
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.
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.
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 -
Lack of clear differentiation of Cloudflare's Cloudflare products
– To increase the profitability and margins on the products, Cloudflare's Cloudflare needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Cloudflare's Cloudflare 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study CloudFlare, Inc.: Running Hot?, is just above the industry average. Cloudflare's Cloudflare 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.
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.
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.
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.
Aligning sales with marketing
– It come across in the case study CloudFlare, Inc.: Running Hot? 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 CloudFlare, Inc.: Running Hot? can leverage the sales team experience to cultivate customer relationships as Cloudflare's Cloudflare is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Cloudflare's Cloudflare 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 Cloudflare's Cloudflare 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 - CloudFlare, Inc.: Running Hot? should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Cloudflare's Cloudflare, firm in the HBR case study CloudFlare, Inc.: Running Hot? needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
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 -
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.
Better consumer reach
– The expansion of the 5G network will help Cloudflare's Cloudflare to increase its market reach. Cloudflare's Cloudflare 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.
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.
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.
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.
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.
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.
Leveraging digital technologies
– Cloudflare's Cloudflare 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.
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. Cloudflare's Cloudflare can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Cloudflare's Cloudflare 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.
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.
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.
Creating value in data economy
– The success of analytics program of Cloudflare's Cloudflare has opened avenues for new revenue streams for the organization in the industry. This can help Cloudflare's Cloudflare to build a more holistic ecosystem as suggested in the CloudFlare, Inc.: Running Hot? case study. Cloudflare's Cloudflare can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 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.
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 Cloudflare's Cloudflare business can come under increasing regulations regarding data privacy, data security, etc.
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 .
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology 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.
Environmental challenges
– Cloudflare's Cloudflare 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. Cloudflare's Cloudflare can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
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.
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 wage structure of Cloudflare's Cloudflare
– 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 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.
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.
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.
Shortening product life cycle
– it is one of the major threat that Cloudflare's Cloudflare is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.