MANTIS - Tools for Managers

Achieving Business Potential

Frequently we are asked by managers how to meet the need to develop sound strategies and reasonably quantify financial results that will provide the earnings and growth required to meet company goals. MANTIS believes that the process of strategy development should include the following:

• In-depth knowledge of the competitive position of your business, and your competitors' businesses.
• An understanding of the economic drivers of your business and its market.
• Insight into motivations, personalities, and likely actions of competitors under various scenarios.
• Utilization of a powerful framework accompanied by analytic techniques that capture the complexity of today’s competitive markets.
• Analysis that provides insight and action steps to implement strategic decisions.

MANTIS brings years of expertise in business and corporate strategy analysis, design & implementation of analytic and simulation tools, combined with consulting expertise with large companies worldwide to assist your team develop sound, successful strategies?

MANTIS’ StratLab is a major step forward in the field of Business Strategy analysis and development. It is a reliable, efficient tool that fosters team building and preparedness by:

• Identifying and quantifying the effect of a wide spectrum of strategic alternatives and underlying economic performance. Based on your current competitive position, it helps identify the tactics and strategies that will drive business success. It will also identify from conflicting and ambiguous possible futures, which are worth worrying about as significant threats or opportunities. It employs a standardized high-level language to structure the management discussion and learning to build a more successful team.
• Identifying pre-emptive counter-measures, by identifying threats you can implement before-the-fact. These enable you to minimize the likelihood of being caught off-guard and minimize the impact of events once they unfold. [Example: Based on its understanding of your and your competitor’s competitive personalities, StratLab might identify the key strategic and tactical conditions which might lead to a price war in the first place.]
• Proposing actions you should implement once the threat unfolds. [Example: If a price war breaks out, how should your business respond to minimize damage to its performance with respect to quality, marketing expenditures, pricing, staffing and performance targets, etc.?]

A cutting-edge, well-tested approach

StratLab™ has been used successfully by major organizations (including Dell, Coca-Cola, Ernst & Young, Digital, IBM, Compaq, Baxter, Corning, Verizon, Yale New Haven Medical Center, Perclose, and AMP). Our approach builds on earlier research conducted at The PIMS™ Program. The program originated at General Electric and later expanded at the Harvard Business School.

StratLab works by incorporating three analytical approaches widely employed in other fields.

• Computer simulation.
• Genetic algorithms (GA) for finding an optimal solution
• Cross-sectional empirical research

Computer simulation pierces the fog of the marketplace

StratLab’s simulation utilizes a common language to streamline the task of describing:

• Your proposed strategy. These are the variables you can control.
• A scenario you might face. The scenario consists of variables you do not control. These include competitors’ strategies, customers’ preferences and investors’ requirements.

Once you describe your strategy and scenario, the simulation projects how each player will likely evolve, quarter-by-quarter, over the next three to five years. It generates various financial performance measures for your business and for your competitors. The process takes but a few minutes, encouraging a “let’s try it and see what happens” approach to planning. The benefit: rapid learning about what is likely to work, and what will not—and why.

Genetic algorithm helps discover superior strategies

One of StratLab’s most valuable features is a proprietary technique called a genetic algorithm that identifies coping strategies to help you deal with potential crises.

How does it work? As a starting point, StratLab’s GA develops a population of randomly-generated strategies. The financial performance of each is evaluated. Next, the better strategies are recombined with each other to form some new solutions. Finally, the new solutions are used to replace the poorer of the original solutions and the process is repeated. Through the processes of breeding, mutation, and natural selection, better and better strategies gradually evolve.

StratLab’s GA has successfully developed novel solutions to some extremely complex problems. One of North America’s largest energy companies used it to “discover” two radically different, but very profitable marketing approaches for participating in regulated/deregulated retail electricity.

The strategies nominated by the GA improve financial returns for most users by at least 30-50% above those projected for their initial business plan.

Cross-sectional empirical research enables you to learn from other firms’ experiences

StratLab has embedded within it the experiences of thousands of real-life businesses, operating under a wide variety of circumstances. So, even though your business may confront a novel situation, the model can apply the experiences of other businesses with a profile similar to yours that have faced something similar.

For example, say that your largest competitor has installed new, capital-intensive, cost-reducing production technology. You are wondering whether to follow suit. You have a weak market share and sell a commodity-type chemical product, in a market growing two percent per year. What would be the effect of such a move on your return on investment and cash flow?

Extensive research indicates that you can get a more accurate answer by examining the effects of capital intensification on businesses outside your industry rather than on those within your industry. One reason: your competitors don’t have your strategic position. What works for dominant competitors often doesn’t work for weaker rivals. The right approach: search for businesses with market positions similar to yours that have already made the move you are contemplating, in other slow-growing, commodity industries. What happened to them is a pretty good predictor of what will happen to you.

Incidentally, for this example, the move is usually contra-indicated. By raising fixed costs you and your competitors will become more anxious about capacity utilization. Therefore, you will more likely engage in profit-destroying price or other types of marketing wars. The usual pattern is that you give up all, if not more, of the cost reductions in the form of price reductions.

StratLab guides you to business strategy success

StratLab investigates how your strategic position and financial results will change if your assumptions about competitors, customers, suppliers or the economy (real activity, money supply, etc) prove wrong. The benefit: You focus on monitoring the things that really matter.

StratLab’s benefits recapped

By combining (a) cutting-edge simulation technology and (b) disciplined empirical, cross-sectional research on the consequences of business strategies, StratLab offers:

• A process that promotes rapid management education about competitive interplay. It encourages rapid experimentation and provides a common language and structure for describing complex strategies and scenarios. The process is valuable for experienced managers dealing with unfamiliar possible scenarios and for new staff, to accelerate learning.
• A tool for realistically (a) quantifying the impact of a wide spectrum of potential strategy risks to your business (b) developing contingency plans (at least in broad outline) for responding to each significant potential crisis and opportunity.
• A comprehensive, empirically tested, understanding of the performance risk profile of your business and your competitors businesses, under current and potential future market conditions and contingencies.
• A “best practice” that can be presented to investors as part of your investor relations program.
• Suitable analytic technology for doing the above quickly and reasonably accurately, without placing undue strain on your resources.

In the end, the real value of StratLab is that it integrates management knowledge and strategic analysis. Aligning the two functions causes your team to focus on events and strategies that really matter. The benefit: a better mix of “expected” results and risk, and thereby an increase in the projected total returns to your company.