Improving the Resilience, Transparency and Sustainability of the Software Supply Chain in the UK

Introduction

Businesses are a series of initiatives (nicholson, 2022). In fact, we might argue that a business strategy is not more than a list of proposed changes to move a company from its current, to its desired state. Nevertheless, whilst a formal corporate strategy is mostly concerned about what should be changed in a business, further considerations must be taken into account to determine how those initiatives should be implemented. In this document, we will make use of several managerial tools to provide a proposal for a new business initiative implementation to Blackwell's, the 19th century Oxford's emblematic bookshop. First, we will perform a contextual analysis of the business for determining the initiative that should be carried out. Having established the objective, we will then proceed to outline its implementation plan, covering development factors such as its technical deployment, the assessment of its value generation, and the final integration of the initiative into the business's operation.

Blackwells Flagship Shop — Blackwell's Flagship Shop

The Initiative

What is Blackwell's?

Blackwell's was founded in Oxford in 1879, when its iconic Broad Street bookshop first opened its doors to the public (blackwell, 2019). Through the years, the company built up a network of 18 bookshops in the UK. In 2022, the business was bought by Waterstone's, another large British bookstore chain, which nevertheless intends to maintain Blackwell's brand due to its high reputation and historic value (johnston, 2022). For instance, Oxford's flagship bookshop has become a famous tourist attraction due to its architectural beauty and its large assortment of fiction and academic books; covering topics like art, music, travel, medicine, fantasy, and science (be, 2000).

The Competitive Landscape

As most industries, the bookselling business has been severely affected by the digital transformation of the world. Since 2007 when Amazon launched its Kindle e-reading device, the demand for digital books has increased steadily thanks to their uncapped supply and immediate availability. This has forced publishers and retailers to rethink their value propositions, become nimbler, and focus on their capabilities for finding, refining, and promoting packages of information (attwell, 2020). Yet, in the UK only 24% of the population prefer digital books over their physical homologous (watson, 2021), and traditional printed books still account for the majority of the revenue generated by publishers (watson, 2022).

The bookselling industry has undergone increased concentration in the United Kingdom, with several acquisitions taking place in the last years (goldfingle, 2022). This dynamic has left 3 main players dominating the book-selling scene: WHSmith, The Works, and Waterstones, Blackwell's parent company. Despite their common affiliation as book retailers, the three competitors display to their customers completely different value propositions, as revealed by the strategy canvas accompanying this document (chan, 2005). The Works is a general purpose retailer that besides books also sells gifts, arts, crafts, toys and stationary (theworks, 2022). WHSmith has the largest and most modern network of shops (1140 in total), but it prioritizes travel retail by locating most of them inside airports and railway stations (whsmith, 2020). Blackwell and Waterstone, for their part, focus on their high street boutique shops, providing an specialized buying experience through their book-savvy and resourceful staff.

Blackwell's Competitive Advantage

Building upon the previous comparative analysis, we might proceed to elucidate Blackwells' competitive advantage. To carry out this task, the VRIO framework is a powerful tool that enables the analysis of a business's strength in terms of how valuable, rare, and organized its offering is (fisher, 2020). In essence, VRIO reveals that what makes Blackwell's special is its commitment to provide an immersive book-buying experience. For doing that, it leverages its network of historic bookshops, gathers a team of book-lovers, and makes use of an integrated information system to ease the customers' purchasing process. Figure 4 depicts each of the factors that make up Blackwell's winning formula.

Blackwell's Valuable-Rare-Organized Analysis

A New Business Initiative: Digitalizing the Book Recommendations

To maximise its impact and success probabilities, any new business initiative such capitalize upon the company's competitive strenghts. That is the reason why we have so far been focused on carrying out an external and internal capabilities assessment. But from the Toyota Production System, we might recall that the best way to identify improvement opportunities is by "going to the spot" (i.e. Genchi Genbutsu) (baldoni, 2014). Thus, we will proceed to evaluate the main insights gathered from a visit to Blackwell's Oxford flagship shop at Broad Street 50.

Namely, the three candidate initiatives resulting from the inspection were: 1) Bolstering Community Events leveraging the available common spaces, 2) Improving Shop Accessibility (especially for people with motion disabilities), and 3) Digitalizing the Book Recommendations put by the staff on most of the shelves. However, as time and resources are scarce in every organization, it is necessary to prioritize the initiatives to be undertaken according to their potential benefit and feasibility (barr, 2019). Although there are several methods to perform this comparison, in this case we will use a core competencies assessment to determine the initiative to undertake according to how well it harnesses the business's competitive advantage. On completion, such analysis yields a singular outcome: because Digitalizing the Book Recommendations is the initiative that scores the highest among all Blackwell's strengths, it is the one that will be chosen to move forward with its implementation.

Blackwell's Initiatives Assessment Upon Core Competencies

The Implementation

The Business Case

The decision to implement any new initiative should be backed by a sound business justification. The benefits and risks of the intended changes should be continuously assessed throughout the lifetime of the implementation project. For the sake of connecting the initiative with the overall corporate strategy, it is crucial to uncover the purpose of the implementation by insistently asking why the organization wants to carry it out (nieto, 2021). In the case of "Digitalizing the Book Recommendations" provided by the bookshop's staff, some strong reasons to undertake such transformation include:

1 - Increase Revenues: by helping customers find books of their interest.

2 - Optimize Inventory Levels: by improving the book demand forecasts.

3 - Generate New Revenue Streams: through advertising or information sharing.

A strong commercial justification also means ensuring that the financial projections of the initiative show a positive outcome as the project develops. To begin, if we consider a 5-year horizon for the investment, an average salary of £70,000 for the team members (butcher, 2022), and a development outsourcing cost of $150,000 (patel, 2022), the project's net present value would be £1,708,287. This if we assume that the initiative can generate a 1% increment on revenue (hofman, 2015), which was £84,000,000 in 2021, and that the annual maintenance cost of the deployed system is going to be 20% of its installation value (chomko, 2012).

Indicator	Value
Discount Rate	22.5%
Discounted Benefit	£2,506,705
Discounted Cost	£798,417
Net Present Value (NPV)	£1,708,287
Return On Investment (ROI)	213.96%

Table: Baseline Financial Indicators of the Initiative

Of course, all of these assumptions must be actively validated as the initiative is carried out to ensure it is kept on track.

Blackwells Digital Recommendations Baseline Financial Projections — Blackwell's 'Digital Recommendations' Baseline Financial Projections

The Measuring System

Once our objectives have been set, we must make sure that we have the right mechanisms in place to measure the benefits generated by the initiative. Our analysis should go beyond tracking traditional financial metrics, as these are generally the consequence of operational and organizational changes (kaplan, 1992). Based on Kaplan's Balanced Scorecard (manacc, 2012) and on Tushman's Congruence Model (tushman, 2007), we might set up a stakeholders-operations-finance (SOF) Scorecard to establish targets for the key performance indicators that measure the extend to which the project's goals are being fulfilled. The stakeholders metrics evaluate people-related factors (e.g. customers, employees, external agents), whereas the operational measurements track the impact of the initiative upon the business's internal processes. Finally, the financial indicators are derived from the effects of the previous ones, and present a monetary summary of the initiative's performance.

Blackwell's Implementation Performance Scorecard

The Product Definition and Development Process

Although Blackwell's digital capabilities are strong, it might be convenient to outsource the product's construction due to its narrow scope; reducing costs and speeding up the process. As the vast majority of software development companies use agile today (digitalai, 2021), we might have to align our periodic quality checks with the incremental delivery cadence of the contractor. The exact product characteristics are expected to change throughout the project, as users and staff members adopt the platform to record their recommendations. What is important is that at each control iteration, measurable acceptance criteria can be validated to meet functional and non-functional requirements (dumke, 2008).

Blackwell's Sample 'User Story' for the Digital Recomendation System

Blackwells Current Recommendation Notes — Blackwell's Current Recommendation Notes

Blackwells Proposed QRCode Recommendation System Schematic — Blackwell's Proposed QRCode Recommendation System Schematic

Blackwells - 'Digital Recommendations' Product Sample Mockup — Blackwell's - "Digital Recommendations" Product Sample Mockup

Assembling the Project Team

Selecting the project's team members is one of the most important activities to undertake for ensuring the initiative's success. We should make sure to have a balanced representation of all stakeholders' interests, and that involved members collectively provide the needed skills in their right proportions (cooper, 2021). If we were to be the project manager of the "Recommendations Digitalization" initiative, the first thing we should guarantee is that it had the support of a senior sponsor, championing the implementation before corporate management and ensuring the resources for its completion. As Blackwell's book recommendations are currently made by the staff (generally on pen and paper), it is vital to include in the team a person that represents such collaborators point of view, and that can exert functional assurance upon the produced system.

The project team should integrate a collaborator from the information technology area as well, who should use his or her technical knowledge to ensure the solution provided by the contractor meets quality expectations. Similarly, constant monitoring of the project's financial projections is also required and someone of the accounting department should be included. As a project establishes a matrix organization (stuckenbruck, 1979), in which some of its members will probably dedicate the majority of their time to their functional roles, special attention must be paid on communicating and coordinating the work to be done to favour maximum collaboration efficiency.

Project Management Triangle (pollack, 2018)

Blackwell's Project 'RACI' Responsibility Matrix — Blackwell's Project "RACI" Responsibility Matrix (kantor, 2018)

Planning the Activities Schedule and Project Costs

Naturally, every initiative implementation requires a series of activities to be performed to build up the project's product. To establish clear managerial decision points, it is best to arrange these work packages (raz, 1998) inside well defined execution stages, each of them yielding an augmented solution (axelos, 2017). As our estimation error overflows the further we look into the future, a detailed plan should be outlined by the project manager only prior to each stage. However, it is crucial to at least count with a project-level product roadmap for communicating to stakeholders the intended logical progression of the implementation, to set milestones, and to make preliminary budgets.

Blackwell's - 'Recommendations Digitalization' Roadmap — Blackwell's - "Recommendations Digitalization" Roadmap

In the case of the "Recommendations Digitalization" initiative, we will assume that the first minimum viable product (becker, 2020) could be obtained after 4 months of development, as it is usual with these kind of applications (spdload, 2022). Moreover, additional 6 months would be required to move past the beta stage (i.e. testing with real customers), finally integrating the system into mainstream production (burenko, 2022). Naturally, at every moment the project team will be gathering feedback and making the needed adjustments, actively evaluating what the software contractor delivers on a continuous basis (pittet, 2018).

Blackwell's - Agile Contractor's Continuous Deployment

Controlling the Project: Communication, Progress & Risk

Making use of the kernel for good strategy proposed by Richard Rumelt (rumelt, 2011), we started by yielding a diagnosis of Blackwell's business situation, therefrom proceeding on the elaboration of guiding measurements and plans. However, the initiative will only become a reality if a set of coherent actions are carried out to enforce those established policies. Central to the execution, the role of the project manager is to maintain a steady communication flow across all management levels, using synchronous and asynchronous channels to inform stakeholders about the outlined plan, and to assign to the team the work that needs to be done.

PAC-MAN: Responsibilities of the Project Manager

Blackwell's - Project Communication Channels

Blackwell's - Project Delegation Chain (axelos, 2017b)

Day by day, moreover, the initiative's leader has to control the proper evolution of the project's scope, time, and cost (pollack, 2018). If it is needed to do changes upon the plan or there are identified risks compromising the initiative's execution, it is the team's responsibility to decide on delegating or escalating the resolution of such issues. Beyond resorting to corrective actions when problems arise, the leader should harness the information that it collects as the project unfolds to proactively design contingency measurements. For instance, analytic techniques such as Monte Carlo Simulation (ibm, 2020) could be periodically run with updated data for the accepted assumptions, to assess how likely it is for the project to yield the expected benefits and retain its commercial justification.

Parameter	Baseline	Minimum	Maximum	Reference
Discount Rate	22.50%	15.00%	30.00%	(eqvista, 2021)
Annual Growth	2.00%	-40.00%	10.00%	(watson, 2021b)
Annual Revenue 2022	£84,000,000.00	£84,000,000	£84,000,000	(bayley, 2021)
Recommendations Effect	1.00%	0.00%	2.00%	(hofman, 2015)
Average Salary	£70,000	£50,000	£100,000	(butcher, 2022)
Team Members	5	3	9	(peceptionbox, 2021)
Maintenance Rate	20.00%	15.00%	25.00%	(chomko, 2012)
Platform Outsource	£150,000	£50,000	£200,000	(patel, 2022)

Table: Financial Model Simulation Parameters

Blackwells Digital Recommendations Financial Simulation Histogram — Blackwell's 'Digital Recommendations' Financial Simulation Histogram

Blackwells Digital Recommendations Financial Simulation — Blackwell's 'Digital Recommendations' Financial Simulation Cumulative Probability

Integrating the Solution: Leadership, Culture & Vision

It might be expected that for a company that has operated in three different centuries, any substantial change upon the way it performs its core business might be taken with suspicion. For that reason, convincing leadership is required for the initiative to overcome its eventual shortcomings. Transparency and interactive communication are invaluable tools to achieve such credibility. Furthermore, it is not only technology what will change, but also the way people undertake their habitual tasks. Many collaborators will have to be trained in the use of the new system and some of them will initially oppose the proposed transformation. Thus, enough time should be granted for the initiative to be imbibed in the company's culture. Once that happens, a new mindset can emerge, looking for opportunities to enhance the process further to derive additional benefits. In particular, the digitalization of book recommendations might in principle strengthen Blackwell's competitive position among its rivals. Yet, it is management's responsibility to come up with a coherent vision for the way such asset could be leveraged.

Conclusion

Every new business initiative transforms the way a company carries out its work during its implementation and upon its adoption by the organization. To ensure its success, the initiative must be aligned with the overall corporate strategy and leverage on the business's competitive advantage. As dealing with uncertainty implies having to face risks that are not seen in the habitual operation, timely planning is required to anticipate threatening issues and establish contingency measures. Permanent communication and active progress control are also crucial. For Blackwell's to effectively digitalize its current recommendations system, the company will have to set up appropriate monitoring mechanisms to support the learning loop needed to get the most out of its people and the technology to be deployed. The result will be a better service for the company's customers, a more efficient operational function, and potential novel business models in the future.