Cycles

(Temporal range)

 

 

The Cycles: when the activity of the organization takes place, with regard to existing cycles of the business environment.

 

Defining the Cycles of the Business Activity is defining the "Business Velocity": deftermining, for each major process:

  • Synchrony: the alignment of operations' timing regarding relevant business cycles.
  • Frequency: the rate at wich business processes are run; their level of recurrence.
  • Parallelism: the ability of different business processes to be run simultaneously.

 

Different levels of cycles should be considered when defining the Velocity of a business in a given "Business Phase":

  • Macro-Cycles (Cycles whose period is long compared to the duration of the Business Phase): The business activity takes place at a given moment of the Macro-Cycles (ex: launch phase of a low-cost airline during an economic crisis). Synchrony of the business activity with regard to macro-cycles can be considered as "business timing".
  • Meso-Cycles (Cycles whose period is comparable to the duration of the Business Phase): The business activity may be related to some Meso-Cycles (ex: phone manufacturers developing products according to the availability of new processors or new OS). Synchrony of the business activity with regard to meso-cycles can be considered as time-wise "business coupling".
  • Micro-Cycles (Cycles whose period is short compared to the duration of the Business Phase): The business activity may be tailored to adapt to, or take advantage of, Micro-Cycles (ex: purchasing activity adapted to raw material seasonal availability). Synchrony of the business activity with regard to micro-cycles can be considered as time-wise "business tuning".

Cycles are associated with each Super-Process, and can therefore be split in 3 categories:

  • Market Cycles: velocity for Value Generation & Delivery (VG&D)
  • Capture Cycles: velocity for Value Contracting & Capture (VC&C)
  • Industry Cycles: velocity for Value Integration & Maintenance (VI&M)

 

(click on the following elements for more details)

> Market Cycles

(Temporal range for VG&D)

 

Synchrony:

  • Macro Cycles (Timing): Tesla Motors started delivering its electric cars in a period of great public concern about fossil fuel consumption and protection of the environment.
  • Meso Cycles (Coupling): Nikkor lenses factories have to synchronize their production process with the product introduction curve of new categories of Nikon digital cameras.
  • Micro Cycles (Tuning): Part of Time magazine’s redaction process is directly dependent on international political or economic news.

 

Frequency:

  • Broad Sustainable Building Co. Ltd., a Chinese construction company, can deliver its product, a 30-storey building, in 15 days to its customers (thanks to pre-fabricated components).
  • Google provides its services to its users on a continuous basis, but at user’s request. With Smartphones or Smartwatches, Google is willing to increase the recurrence of its service process by enabling user’s requests all along their day.
  • Ryanair is famous for its ability to optimize the number of flights per day per plane, increasing therefore the frequency of its service to passengers.

 

Parallelism:

  • Facebook delivers services to its users through the different online tools it provides. During the same process, Facebook also acquires user-linked information to build its databases: users are not asked to stop enjoying Facebook's services for that.
  • Independent consultants try to spend their time providing consulting services to their customers. But they also have to look for new ones. Finding a way to do both in parallel is key for their overall performance.

 

> Capture Cycles

(Temporal range for VC&C)

 

CAPTURE ON CUSTOMERS’ SIDE:

 

Synchrony:

  • Macro Cycles (Timing): Amazon increased its sales process regarding its Amazon Web Services offer when the trend of cloud computing became strong (“time to market” synchrony)
  • Meso Cycles (Coupling): Doctors without Borders donation campaigns are strongly related to sporadic events around the world, such as wars or natural disasters. Toys "R" Us sales cycles must follow demand seasonality, with a strong focus on the Christmas period.
  • Micro Cycles (Tuning): Independent cereal producers in developing countries now synchronize their sales process to market price fluctuations.

 

Frequency:

  • In several European countries where commerce is restricted on Sundays, stores implanted in touristic areas benefit from exemptions. They can therefore increase the recurrence level of their sales process.
  • With its S+S (Software plus Services) solutions for its Office suite, Microsoft switched from a one-shot sales process to a recurring revenue model.
  • After it introduced its breakfast offer, McDonald’s was able to get much more customers in the morning, therefore increasing its sales frequency through diversification.

 

Parallelism:

  • BtoB software vendors sometimes propose to install their product for free at the customer’s facility for a testing period. This way, in some cases, the initial configuration process can be performed during the sales process and does not require waiting for the actual contract.
  • In supermarkets, the money reception process can take time, while people are waiting in line. In some of its stores, Tesco performs digital out-of-home (DOOH) targeted advertising during this time.
  • Amazon, with its “anticipatory” shipping system, is planning to initiate delivery process of goods that might be ordered by customers, before they do so. This is a way to actually run the delivery process in parallel with the sales process.

 

CAPTURE ON SOURCES’ SIDE:

 

Synchrony:

  • Macro Cycles (Timing): Zynga started “acquiring” users in a period of strong development of the Facebook platform.
  • Meso Cycles (Coupling): Champaign producers synchronize their purchasing processes with period of grapes availability (supplies seasonality). In Europe, football clubs have to wait for the official transfer period to hire new players.
  • Micro Cycles (Tuning): Barilla pasta distributors have to somehow synchronize their purchasing processes with demand fluctuation from retailers.

 

Frequency:

  • By using purchasing intermediates who have contractual relations with many suppliers, local grocery stores speed-up their sourcing process.
  • Deezer, a web-based music streaming service, partners with digital distribution platforms like Awal to contract with independent labels. Thus, Deezer does not have to engage in a long sourcing process for each one of those labels.

 

Parallelism:

  • In the movie industry, a company like Warner Bros. can run its sourcing process in parallel with the different steps of the production process: most sourcing does not have to be completed before starting the production.
  • Toyota was a leader in the “just-in-time” manufacturing process: by setting-up frame agreements and EDI systems with its parts suppliers, it was able to run the sourcing process and the manufacturing process in parallel (and therefore to drastically reduce the amount of parts stock).
  • Many retail web site actually parallelize their sourcing process with their sales process, to avoid the burden of inventory management: they order products to warehouses as soon as the customers pass their own order.
  • Thanks to the crowdfunding website Kickstarter acting as a pre-ordering platform, Pebble Technology was able to run its sales process in parallel with its new product development process for it smartwatch.

 

> Industry Cycles

(Temporal range for VI&M)

 

Synchrony:

  • Macro Cycles (Timing): Nest Labs, start-up founded in 2010, started developing Internet connected thermostats and smoke detectors, in a period of growing interest about Internet Of Things.
  • Meso Cycles (Coupling): Lenovo’s product development cycle must be synchronized with the development cycles of Intel (processor) and Microsoft (OS).
  • Micro Cycles (Tuning): Symantec’s R&D process regarding its antivirus requires adaptation to the appearance of new viruses on the Internet.

 

Frequency:

  • Thanks to rapid prototyping and thanks to CAD software solutions, carmakers such as Honda have drastically shorten their product development process.
  • Autolib’, a car rental company, uses simple electric cars that have low rates of mechanical failures, and therefore increases the speed of the maintenance process for its fleet.

 

Parallelism:

  • Tata Motors ran part of the design process, for the development of its Nano low-cost vehicle, in parallel with the design process for the manufacturing plant itself.
  • The “Lean startup” method encourages startup managers to run their sales process and product delivery process in parallel with their product development process: they should start with a minimum viable product (MVP) that they will then improve, taking into account customers’ feedback.
  • A large part of the MSC Cruises’ ship maintenance process is designed to be performed during exploitation time, so that it does not require too many immobilizations.

 

 

 

 

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