Introducing Assignment 2
? Introduced at this point in order to use and apply learning as we go along
? Adopt an approach of theory into practice
The Strategy Development Process
Source: Sola, Courturier and Borioli, 2013
Round about:
Visual Evidence
? Leadership and role modelling
? Governance and structure
? Stories
? Systems and processes
? From this central core strategists then need to assess the current situation …
Current Situation
• Transfer to slides from Johnson & Scholes for:
• PESTLE analysis
• Porter’s five forces
• Roundabout model – assessing the situation
Competitive Advantage
? Value proposition
– Sum of benefits the organisation promises to deliver to its customers, for which customers are willing to pay
– What is the product’s scope and uses? What are the key features?
– Who is this product aimed at? Where are the customers?
– What need does the product address? What problem is it trying to solve? To what extent does the product address the problem?
– What is the product’s price position? (price versus cost)
Value chain model – developed by Porter
? Primary activities:
– Inbound logistics – receiving, storing, distributing
– Operations – activities to transform inputs into final product, such as assembling, packing, testing
– Outbound logistics- warehousing and external distribution
– Marketing and Sales – means by which customers are made aware of product or service and are able to purchase it
– Service – installation, repair, training, periodic maintainance
Value Chain – Support Activities
1. Procurement – acquiring resources for primary activities
2. Technology – ‘know how’, design, research
3. HR Management – people, recruitment, training, managing, developing, rewarding
4. Infrastructure – systems, routines and structures to support the organization such as finance and information
Resources
Resources – assets the organization possesses or can be called upon – such as a strategic alliance (good examples within the airline sector to use capacity effectively)
Competences – the way assets are deployed – what an organization does well – even unique – they are hard to access or copy
Core competences – used to achieve competitive advantage
Competence-Resource Matrix Application
p.127 Sola, et al
Quadrant Q1 presents all the unique resources and core competences the organization already has
Q2 shows superfluous strengths. For these the challenge is to turn apparently irrelevant strengths into valuable resources and capabilities
Al the resources and competences in Q3 represent the organization’s key weaknesses. Converting weakness into strength is likely to be a long-term task for most organizations and outsourcing may be a solution
Q4 is a zone of irrelevance
Value Network
A value network “is the set of inter-organizational links and relationships that are necessary to create a product or service” (Johnson Scholes and Whittington, 2008:111)
Where are the cost and value created?
Which activities are central to your own strategic capability and which are less crucial?
Where are the profit pools? (different levels of profit available, may differ due to competitive rivalry, but still need ability to support activity)
Make or buy?
Best partners and suppliers?
Relationships – such as strategic alliances (Definition: where two or more organizations share resources and activities to pursue a strategy (J S & W, 2008:360)
Strategic Alliances
? To obtain resources that are required but not possessed
? Sharing or pooling, mechanism of co-operation
? May be complementary, lead to cost-reduction
? Specialisation – concentrate, use knowledge and expertise
? Learning – to develop own competencies
? Types of strategic alliances
? Joint ventures – set up newly created organization
? Consortia – to focus on a particular venture or project (usually large scale)
? Networks – less formal, mutual trust
? What makes them work? Purpose, benefits, compatability
Summary
? The strategic roundabout circulates around the culture of an organization
? Culture is continuous and requires acknowledgement
? Strategic posturing – various routes
? Strategic development process – five stages
? Assess current situation using PESTLE
? Competitive advantage (over competition)
? Value chain and network
? Strategic alliances
Solving the Core Challenge – p.141
• Cause effect approach – seek origins
• Positive effect Negative effect
• Choose one effect
• Identify causes/reasons
• Check existence of core challenge
• Yes – core challenge
Logic Tree Structure
? Ask a series of how questions and alternatives
? Relevance questions – why
? Coherence
? Mutually exclusive – therefore be distinctive
? Collectively Exhaustive – complete coverage
? Assign weightings – for importanc
Logic Tree Structure
1st line 2nd line MECE
Why? Coherence Mutually Exclusive
Core Challenge Relevance
How? Coherence Collectively Exhaustive
Co-Creation (p.165)
• Encourages active involvement of every aspect of the value chain
• Integrates knowledge
• Integrates experience and creativity
• Moves away from passive recipient stance
Blue Ocean Strategy
Chan &Mauborgne (2005)
Applying Blue Ocean Strategy
Eliminate – reduce
raise – create framework
Which features can be eliminated because they are not creating any value in the blue ocean?
Which features can be reduced because they no longer make the product stand out from its competitors?
Which features should be increased or even created?
Seven Degrees of Freedom (Sola, p.172-174
Bagnai, Coley and White (2000)
• New competitive arena
• New industry structure
• New geographic area
• New delivery approaches
• New products and services
• New customers
• Existing products to existing customers
Summing up solutions
• Priority matrix – p.177
• Assign high to low values against specific criteria
• Horizons – may be growth, momentum,
• Ideas that develop, seeds for the future see p.181
• Extend/defend, new business, viable options
Reducing Uncertainty
• State your assumptions
• Test a value hypothesis (p.189)
• Test a growth hypothesis (p.190)
• Test a sustainable hypothesis (p.190)
• (simple, quick and inexpensive)
Ask the question?
• How will the proposed course of action solve the problem?
• Need to be explicit – what is the problem?
• Who faces the problem?
• What price is required to solve the problem
• Scale and growth – will it last?
• Imitation and substitution. Ability to cope
Fishbone Analysis
• Assumptions about value
• Well-tested tool to identify cause of a problem (p.195)
• https://www.isixsigma.com/tools-templates/cause-effect/the-fundamentals-of-cause-and-effect-aka-fishbone-diagrams/
Growth/Cost p.196
• Viral growth – word of mouth, recommendation
• Paid growth – advertising, incentives and new features
• Sticky growth – customer retention, loyalty
Sustainability p.199
• How easy is your product to replicate?
• How adaptable is the organization?
– Add new features
– Intellectual property protection
– Customer lock-in (warranty, servicing)
• Adaptable culture
Test and Learn p.201
• Monitor – awareness of trend changes
• Create a forum for dialogue within the organization to discuss strategic level concerns and initiatives
• Take action in response
Scope of Strategy (Sola, p207)
? Strategy is a lengthy and arduous process
? Strategy is intricate and usually involves several or many people, groups and specialisms – all with their own agendas and priorities
? The most frequently cited reason for partial or total failure of strategic implementation is three factors:
? Culture (the invisible hand)
? Communication (effective)
? Change (there is a difference in activity and outcome)
? Why are these three issues so influential?
Strategic Action (Sola, p.208)
• Needs to be:
– Co-ordinated
– Complimentary
– Mainstream – so there is awareness and insight within the organization https://www.youtube.com/watch?v=NTgJOwa9tZc – Strategic Intent
• Clarity – people are able to state the strategy
• There is a rationale (why – should be an improvements) and an overall purpose
• Which companies are examples of executing these aspects of strategy to a high standard/successfully?
Learning how to change
• Strategy execution is defined as: “a set of actions designed to take you from point A to point B” (Sola, et al. 2013:209) [this is about change]
• Learning is defined as “the acquisition of new, or the modification of existing behaviour, skills or knowledge” (Sola, et al. 2013:209) [this is about change – order to reach point B]
Shared Intentionality (p.211)
• Everyone involved needs a will to act and an appreciation that status quo is not an option
• The intentions need cohesion and direction
• Achieved by: restating strategic objectives
• Mutual reinforcing / interdependence; not conflict
Change Management Architecture
Source: Sola, et al (2013:213)
Accelerating the speed of change Enablers Capability building Reinforcing mechanisms Change of context
Compelling
Story Role
Models
Launching and Spreading Change
Strategic Initiatives
Setting the Scene Clear end state
Shared Understanding of the Need to Change
Setting the Scene (Sola, p.214)
• A cause champion/believer lays the foundations and creates the right conditions (very evident in political scenarios)
• Clear message: doing nothing is not viable
• Link message with benefits to motivate
• How can individuals contribute (tasks/actions)
• Clear end state (visualize)
• What are the benefits of the case study project? What is the end state?
Strategic Initiatives (Sola, p.215)
• Sense of flow/progression/alignment
• What are the proposed actions?
• How will the actions contribute to the strategic objectives? (which need to have been communicated previously)
• Who is the facilitator/project co-ordinator?
The From – to Matrix
Visualise and express key guidelines
FROM: TO: INITIATIVES
Current situation
Core challenges
Prevailing issues
Via openings, opportunities and change What outcome/s will the strategy achieve?
List by importance What
How
Why
Launching and Spreading Change
• What is required:
– Communicate with empathy
– Encourage commitment to change
– Offer support through change
• Persuade, inspire, comfort, co-operate
• How?
Compelling Stories (Sola, p.220)
• https://www.youtube.com/watch?v=KUwavAAUyH8
• Narrative not bullet points
• Ability to locate within the story
• Include examples
• What does it mean for me?
• Easy to recall and retell
Using Role Models (Sola, p.221)
• https://www.youtube.com/watch?v=Kc2lV00LoPo
• Knowledgeable, confident, approachable
• Held in high regard by colleagues
• Practice values of the organization
• Visible, trusted understanding and understandable, personally competent
• Who is your role model and why?
Pace of Change (Sola, p.223)
• Enthusiastic Enablers- use networks and professional status
– Connectors – spread ideas, may be informal
– Experts: very knowledgeable, respected
– Sales People: persuasive, see benefits
• https://www.youtube.com/watch?v=4bkmp6NnkHQ
Capability Building
To address business needs (Sola, p.224)
• Formal training
• On the job practice and coaching
• Involve, experiment, discover
• Develop new skills with confidence and motivation to use them
• Meaningful and relevant – use role models
• Investment in staff – sufficient time
New normality (Sola, p226/7)
• Change the environment – VISIBLE
• In what ways can a workplace change?
• Meaningful – links with change message
• Relevant – has impact on work routines
• Reinforce through recognition and reward
• Visual and linked to change programme
Summary
• Strategy is about change, testing and modifying
• Failure: culture, communication and structure
• People: what, how and why
• From – to matrix
• Compelling story
Assignment
• Link theory into practice
• Use change management architecture model?
