Decoupling strategy and derisking tactics explained

Of late, political leaders and business captains are talking about two fancy words: decoupling and derisking. Enlightened debate is going on in public domain about what these words actually mean, and who adopts what. Let me give a broad brush stroke of decoupling & derisking:

Decoupling is there for sometimes. Functioning as business strategy this concept entails a situation where two or more activities are separated or not allowed to progress in similar and uniform manner. Simply put, it aims to separate one from another in terms of resource allocation & management attention. The obvious goal is to make a gap between the two so that that intention and outcome are co-ordinated seamlessly.

In business relationship this means one part disengages from another so that disadvantages emanating from such relationship eliminated, losses reduced, cash-flow improved and the leverage one has over the other is secured. While decoupling works best as business strategy where the dependency syndrome is imperfect, so to speak. It could turn out to be a major failure where dependency syndrome is perfect, that is to say one cannot disassociate with the other without incurring loss of income and profit. So both of them are in bind. Both rise and fall together.

Derisking is a business tactics. Its primary aim is to avoid risk rather than manage risk. Every business has a risk profile that need to be managed well to succeed in the market place. Restricting or in the worst case terminating a successful business relationship could bring negative results. Having said that, relationship between two parties need to be revisited on and off in order to protect distinct advantages one party has over the other. The scope of such restrictions would hover around financial flow and critical technologies that afford one party the edge over the other.

Joe Biden is right in saying that derisking China trade involves protecting technologies that are critical for national security from falling onto the hands of Chinese manufacturers. Opting for derisking business tactics is a moderate way to bring about a balance between America and China. But the whole issue rests on cause and effect theory. Nobody can easily predict how derisking would proceed and what consequences it would entail. Confusion is compounded because uncertainty apart there is ambiguity as to the meaning and content of a derisking formula.

Therefore America views that both decoupling and derisking must go together as strategy and tactics in order to get the best results. EU differs on this score. EU cannot take up decoupling business strategy vis-à-vis China as she depends more on the latter regarding economic recovery post Ukraine war. Indeed it is right and proper decision. EU places much hope and trust on China trade and investment. Say no to decoupling and yes to derisking. Evidently, a milder version of de-risking is what EU has in mind!

 

Cheers!

 

Muthu Ashraff

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist

 

 

Business tactics, horse’s head on the bed

An interesting and at the same time alarming business tactics was showcased in the movie “The Godfather”. That is placing the horse’s head on the bed. This business tactics is used as an effective method to get the opponent to agree to your terms. Details follow:

The legend: In the movie “The Godfather”, Don Corleone as “Capo dei Capi”, meaning boss of all bosses was approached by Johnny Fontane to get the leading role in a movie that is being planned by Jack Woltz. Whereupon the Don sends his enforcer, Luca Brasi to have a chat with Woltz. The latter declines the request. So, Luca Brasi, arranges a horse’s head, that resembles one of the prized possession Woltz has in his stable. Getting up in the morning, Jack Woltz is terrified to see the horse’s head and agrees to go by what Luca Brasi suggested.

The lesson: Placing horse’s head on the bed is a sure fire business tactics that can bend the back of anyone. Seeing blood spluttered on the bed is frightening not to mention as a bad omen starting the day; to add to this is the grief of loss of your own horse.

The use: There are three ways this business tactics can be put into action:

1. In a lopsided business negotiation, where your chips are down forcing the counter party to give unwillingly what he does not want to give at all

2. In intense high stake business negotiation where the counter party is left with few moves that are advantageous to him, sweetening the deal on offer to place him at a point where he could either accept and play ball or refuse and incur colossal loss 

3. In broader business competition canvass, bringing the opponents into pragmatic compromise where both you and other parties stand to gain across the board!

Cheers!

Muthu Ashraff

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist

 

Ambush attack: military manoeuvre turned business tactics

In military ambush is an occupational hazard. This threat is ever-present so that soldiers are trained to encounter it any time while on duty. Creeping into business ambush has become one of the un-conventional business tactics. Here is a comparison of ambush in military theatre and business field:

Military

There are seven elements:

1. Attack only the un-suspecting enemy

2. Attacker is often concealed and never visible until action begins

3. Speed & surprise are Siamese twins in every ambush

4. Ambush can be executed by even solo soldier well-armed

5. Often, the terrain is difficult to negotiate by enemy such as an alley or mountain pass where the surrounding heights are under the control of ambusher

6. Kill zone is selected by the process: Observation, reconnaissance, detection, execution and review (ORDER)

7. Escape route, if any is totally sealed.

Business application

Mainly ambush attack is used in marketing/advert called as “Ambush Marketing” a term coined by marketing strategist Jerry Welsh, while he was working as the manager of global marketing of American Express in the 1980s. There are seven elements:

1. Ambush attack takes place only against opponents in the same field. Sports, fashion, finance, consumer retail are fields where threat of ambush is present

2. Await enemy undertakes marketing/advert campaign. Be ready to hijack his campaign by broadcasting weaknesses of his new product

3. Pre-emption is the driving theme. Before enemy gets his foot-space come with counter-campaign so that firm nullifies enemy’s ‘first mover advantage”. In other words firm is set to “steal the thunder” so to speak

4. End-result is to bring confusion in the minds of prospective customers as regards to the intent and purpose of enemy company and the new product he is going to unveil into the market

5. Now firm takes the moral high-ground and tries to clear the confusion created in the minds of customers by organizing its own campaign where its product is introduced and explained in lucid manner without marketing jargons.

6. Subsequent to this firm organizes panel discussion where so-called independent analysts air their reviews highlighting weaknesses of enemy product and eulogizing the features of firm product. This is termed as indirect attack.

7. Reviewing the results after panel discussion,  if need arises to vanquish the enemy totally, firm mounts a direct attack on the enemy and his products  using own logo and name manned by the so-called experts who  air their views couched in neutrality using impartial language but with the intention of showing the firm in favourable light. 

 

Cheers!

 

Muthu Ashraff

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist