Case Study Description of Necessary Illusions and Dangerous Delusions
New entrepreneurs are in a tough spot: sixty-five per cent of seed-round startups in North America never make it to the next level of funding, and just 12 per cent end up successfully delivering a product or service. Why even try? "Because my idea is better than all the others, and the numbers don't apply to me." We all have such 'necessary illusions' in our minds, says the author. Dangerous delusions, on the other hand, are just that. The question is, how to distinguish between necessary illusions and dangerous delusions? He argues that the answer is to become an experimentalist about one's own life and business, which forces you to take an outsider's view of it.
Swot Analysis of "Necessary Illusions and Dangerous Delusions" written by Mihena Moldoveanu includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Illusions Delusions facing as an external strategic factors. Some of the topics covered in Necessary Illusions and Dangerous Delusions case study are - Strategic Management Strategies, Innovation, Strategy and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Necessary Illusions and Dangerous Delusions casestudy better are - – increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, increasing transportation and logistics costs, increasing energy prices, there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion,
geopolitical disruptions, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Necessary Illusions and Dangerous Delusions
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Necessary Illusions and Dangerous Delusions case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Illusions Delusions, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Illusions Delusions 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 Necessary Illusions and Dangerous Delusions can be done for the following purposes –
1. Strategic planning using facts provided in Necessary Illusions and Dangerous Delusions case study
2. Improving business portfolio management of Illusions Delusions
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 Illusions Delusions
Strengths Necessary Illusions and Dangerous Delusions | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Illusions Delusions in Necessary Illusions and Dangerous Delusions Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Necessary Illusions and Dangerous Delusions 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.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Necessary Illusions and Dangerous Delusions firm has clearly differentiated products in the market place. This has enabled Illusions Delusions to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Illusions Delusions to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Illusions Delusions in the sector have low bargaining power. Necessary Illusions and Dangerous Delusions has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Illusions Delusions to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Illusions Delusions has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Necessary Illusions and Dangerous Delusions 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.
Learning organization
- Illusions Delusions 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 Illusions Delusions is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Necessary Illusions and Dangerous Delusions Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Illusions Delusions digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Illusions Delusions 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.
Analytics focus
– Illusions Delusions is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Mihena Moldoveanu can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to recruit top talent
– Illusions Delusions is one of the leading recruiters in the industry. Managers in the Necessary Illusions and Dangerous Delusions are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Successful track record of launching new products
– Illusions Delusions has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Illusions Delusions 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.
Superior customer experience
– The customer experience strategy of Illusions Delusions in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Illusions Delusions has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Organizational Resilience of Illusions Delusions
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Illusions Delusions does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Necessary Illusions and Dangerous Delusions | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Necessary Illusions and Dangerous Delusions are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Illusions Delusions is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Necessary Illusions and Dangerous Delusions can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring
– The stress on hiring functional specialists at Illusions Delusions 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.
Interest costs
– Compare to the competition, Illusions Delusions 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.
Increasing silos among functional specialists
– The organizational structure of Illusions Delusions is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Illusions Delusions needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Illusions Delusions to focus more on services rather than just following the product oriented approach.
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 Illusions Delusions supply chain. Even after few cautionary changes mentioned in the HBR case study - Necessary Illusions and Dangerous Delusions, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Illusions Delusions vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Illusions Delusions 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Illusions Delusions 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 operating costs
– Compare to the competitors, firm in the HBR case study Necessary Illusions and Dangerous Delusions 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 Illusions Delusions 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Necessary Illusions and Dangerous Delusions, is just above the industry average. Illusions Delusions 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.
Capital Spending Reduction
– Even during the low interest decade, Illusions Delusions 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.
Need for greater diversity
– Illusions Delusions 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.
Opportunities Necessary Illusions and Dangerous Delusions | 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 Necessary Illusions and Dangerous Delusions are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Illusions Delusions 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.
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 Illusions Delusions in the consumer business. Now Illusions Delusions can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Illusions Delusions 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 Necessary Illusions and Dangerous Delusions - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Illusions Delusions to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Illusions Delusions 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.
Loyalty marketing
– Illusions Delusions 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.
Buying journey improvements
– Illusions Delusions can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Necessary Illusions and Dangerous Delusions 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.
Developing new processes and practices
– Illusions Delusions 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.
Leveraging digital technologies
– Illusions Delusions 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Illusions Delusions can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Learning at scale
– Online learning technologies has now opened space for Illusions Delusions 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 Illusions Delusions 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 Illusions Delusions to hire the very best people irrespective of their geographical location.
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. Illusions Delusions 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. Illusions Delusions 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Illusions Delusions is facing challenges because of the dominance of functional experts in the organization. Necessary Illusions and Dangerous Delusions 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.
Threats Necessary Illusions and Dangerous Delusions External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Necessary Illusions and Dangerous Delusions are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Illusions Delusions 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 Necessary Illusions and Dangerous Delusions .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Illusions Delusions 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.
Environmental challenges
– Illusions Delusions 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. Illusions Delusions can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Stagnating economy with rate increase
– Illusions Delusions 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.
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.
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 Illusions Delusions.
Consumer confidence and its impact on Illusions Delusions 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.
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. Illusions Delusions needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
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 Illusions Delusions 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.
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. Illusions Delusions can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Illusions Delusions has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Illusions Delusions 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Illusions Delusions with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Necessary Illusions and Dangerous Delusions 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 Necessary Illusions and Dangerous Delusions 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 Necessary Illusions and Dangerous Delusions 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 Necessary Illusions and Dangerous Delusions 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 Necessary Illusions and Dangerous Delusions 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 Illusions Delusions needs to make to build a sustainable competitive advantage.
