Kenichi Ohmae

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Kenichi Ohmae (born February 21, 1943) is one of the world's leading business and corporate strategists. He is known as 'Mr strategy' and has developed the 3C's model.^[1]. For a period of twenty-three years, Dr. Ohmae was a senior partner in McKinsey & Company, Inc., the international management consulting firm. As a co-founder of its strategic management practice, he has served companies in a wide spectrum of industries, including industrial and consumer electronics, financial institutions, telecommunications, office equipment, photographic equipment, industrial machinery, food, rubber, and chemicals.

Ohmae, formerly head of McKinsey & Co in Japan, graduated from Waseda University and Massachusetts Institute of Technology (Ph.D. in nuclear engineering).

The 3C’s model points out that a strategist should focus on three key factors for success. In the construction of a business strategy, three main players must be taken into account:

A. The Corporation

B. The Customer

C. The Competitors

Only by integrating these three C’s (Corporation, Customer, Competitors) in a strategic triangle, a sustained competitive advantage can exist. Ohmae refers to these key factors as the three C’S or strategic triangle.

1 The Corporation
2 The Customer
3 The Competitors
4 Notes
5 External links

[edit] The Corporation

A. The Corporation needs strategies aiming to maximize the corporation’s strengths relative to the competition in the functional areas that are critical to achieve success in the industry.
- Selectivity and sequencing The corporation does not have to lead in every function to win. If it can gain decisive edge in one key function, it will eventually be able to improve its other functions which are now average.
- Make or buy In case of rapidly rising wage costs, it becomes a critical decision for a company to subcontract a major share of its assembly operations. If its competitors are unable to shift production so rapidly to subcontractors and vendors, the resulting difference in cost structure and/ or in the companies ability to cope with demand fluctuations may have significant strategic implications.
- Cost-effectiveness Improving the cost-effectiveness can be done in three ways. First by reducing basic costs, second by exercising greater selectivity (orders accepted, products offered, functions performed) and third by sharing certain key functions with a corporation’s other businesses or even other companies.

[edit] The Customer

B. The Customer

Clients are the base of any strategy according to Ohmae. Therefore, the primary goal supposed to be the interest of the customer and not those of the shareholders for example. In the long run, a company that is genuinely interested in its customers will be interesting for its investors and take care of their interests automatically. Segmentation is helping to understand the customer.

- Segmenting by objectives The differentiation is done in terms of the different ways that various customers use a product.
- Segmenting by customer coverage This segmentation normally emerges from a trade-off study of marketing costs versus market coverage. There appears always to be a point of diminishing returns in the cost versus coverage relationship. The cooperation’s task is to optimize its range of market coverage, geographical and/ or channel wise.
- Segmenting the market once more In a fiercely competition, competitors are likely to be dissecting the market in similar ways. Over an extended period of time, the effectiveness of a given initial strategic segmentation will tend to decline. In such situations it is useful to pick a small group of customers and reexamine what it is that they are really looking for.

A market segment change occurs where the market forces are altering the distribution of the user-mix over time by influencing demography, distribution channels, customer size, etc. This kind of change means that the allocation of corporate resources must be shifted and/ or the absolute level of resources committed in the business must be changed.

[edit] The Competitors

C. The Competitors Competitor based strategies can be constructed by looking at possible sources of differentiation in functions such as: purchasing, design, engineering, sales and servicing. The following aspects show ways in order to achieve this differentiation:

- Power of image When product performance and mode of distribution are very difficult to distinguish, image may be the only source of positive differentiation.
- Capitalizing on profit- and cost structure differences Firstly, the difference in source of profit might be exploited, from new products sales etc. Secondly, a difference in the ratio of fixed costs and variable costs might also be exploited strategically. A company with lower fixed cost ratio can lower prices in a sluggish market and hence gain market share.
- Hito-Kane-Mono A favorite phrase of Japanese business planners is hito-kane-mono, standing for people, money and things. They believe that streamlined corporate management is achieved when these three critical resources are in balance without surplus or waste. For example: Cash over and beyond what competent people can intelligently expend is wasted. Of the three critical resources, funds should be allocated last. The corporation should firstly allocate management talent, based on the available mono (things): plant, machinery, technology, process know-how and functional strength. Once these hito (people) have developed creative and imaginative ideas to capture the business’s upward potential, the kane (money) should be given to the specific ideas and programs generated by the individual managers.

Born in 1943, he earned a BS from Waseda University, an MS from the Tokyo Institute of Technology, and a doctorate in nuclear engineering from the Massachusetts Institute of Technology, and subsequently worked as a senior design engineer for Hitachi. He then joined McKinsey & Company, becoming a senior partner, developing and running the company's Japan operations for a number of years. He gained an unrivaled knowledge and sensitivity to developments in a wide range of business sectors.

He now lives in Tokyo with his wife and two sons.^[2]