Strategy as Strategic Strategy as Strategic Decision Making, Ch. 4Decision Making, Ch. 4

Presented by:Presented by: Nicholas Nicholas KirkwoodKirkwood

Ching LingChing Ling Pichamon Pichamon AdulavidhayaAdulavidhaya

Roar BjordalRoar Bjordal Vegard SandbergVegard Sandberg

Michael Dell’s Michael Dell’s Advice to Advice to

EntrepreneursEntrepreneurs

http://http://www.youtube.com/watch?vwww.youtube.com/watch?v=bBsCZpomy24=bBsCZpomy24

Strategy as Strategic Strategy as Strategic Decision makingDecision making

What is strategy?What is strategy?

• Simple but powerful definition Simple but powerful definition from the “from the “EconomistEconomist”: ”:

- ““Where do you want to go?” and Where do you want to go?” and “How do you want to get there?”“How do you want to get there?”

• Yet in today’s hotly Yet in today’s hotly competitive markets, these competitive markets, these questions are incomplete questions are incomplete

““Competing on the edge”Competing on the edge”

A different perspective on A different perspective on strategy with the following strategy with the following approach:approach:

Combination of the questions of Combination of the questions of “where” and “how” to create a “where” and “how” to create a continuing flow of temporary and continuing flow of temporary and shifting competitive advantagesshifting competitive advantages

Stated by successful Stated by successful CEOs CEOs

““No advantage and no success is No advantage and no success is ever permanent. The winners are ever permanent. The winners are those who keep moving” those who keep moving” John Browne, CEO of British John Browne, CEO of British Petroleum Petroleum

““The only constant in our The only constant in our business is that everything is business is that everything is changing. We have to be ahead of changing. We have to be ahead of the game.”the game.”Michael Dell, CEO of DellMichael Dell, CEO of Dell

Cornerstone of Cornerstone of effective strategyeffective strategy

The ability to make fast, The ability to make fast, widely supported, and high-widely supported, and high-quality strategic decisions on quality strategic decisions on a frequent basis a frequent basis

Four approaches emerged from Four approaches emerged from studies/research on strategy studies/research on strategy

in high-velocity marketsin high-velocity markets

Building collective intuition that enhances Building collective intuition that enhances the ability of a top-management team to see the ability of a top-management team to see threats and opportunities sooner and more threats and opportunities sooner and more accuratelyaccurately

Stimulating quick conflict to improve the Stimulating quick conflict to improve the quality of strategic thinking without quality of strategic thinking without sacrificing significant timesacrificing significant time

Maintaining a disciplined pace that drives Maintaining a disciplined pace that drives the decision process to a timely conclusionthe decision process to a timely conclusion

Defusing political behavior that creates Defusing political behavior that creates unproductive conflict and wastes time.unproductive conflict and wastes time.

Build collective Build collective intuitionintuition

Successful executives use their intuiSuccessful executives use their intuition to make profitable business decition to make profitable business decisionssions• A recent study shows that 62% of CEOs rate A recent study shows that 62% of CEOs rate Gut feelingsGut feelings

as being highly influential in their business decisions as being highly influential in their business decisions

----- 2006, PRWeek/Burson-Marsteller CEO survey----- 2006, PRWeek/Burson-Marsteller CEO survey

The downside of “Gut feeling”The downside of “Gut feeling”

• Anxious people will more than likely Anxious people will more than likely associate all of the bad someone or associate all of the bad someone or something does and totally rule out something does and totally rule out any positive feelings they may have any positive feelings they may have because the “bad” will outweigh the because the “bad” will outweigh the “good” in their minds. “good” in their minds.

Build collective Build collective intuitionintuition

Build collective Build collective intuitionintuition

What makes an effective decision What makes an effective decision

maker?maker?

• Use as much as informationUse as much as information• Hold regularly scheduled meetingHold regularly scheduled meeting• Rely on extensive, real-time informationRely on extensive, real-time information• Avoid accounting-based information and Avoid accounting-based information and predictionspredictions

Sharing informationSharing information

• Sharing information at “must attend” Sharing information at “must attend” meeting is an essential part of meeting is an essential part of building collective intuition.building collective intuition.

• Result in a forum for signaling Result in a forum for signaling collaborative opportunities across collaborative opportunities across business and shaping the collective business and shaping the collective strategy.strategy.

Build collective Build collective intuitionintuition

Why “real-time” information” and Why “real-time” information” and “must attend” meeting matter?“must attend” meeting matter?

• Intense interactionIntense interaction - Short-term vs. Long-term- Short-term vs. Long-term - Status quo vs. Change- Status quo vs. Change

• Develop intuition through experience Develop intuition through experience

• Accelerate decision processAccelerate decision process

Build collective Build collective intuitionintuition

Build collective Build collective intuitionintuition

Intuition Generation

Emotional Intelligence Using intuition

Stimulate quick Stimulate quick conflictconflict

Improve the quality of decision makingImprove the quality of decision making

Conflict stimulates innovationConflict stimulates innovation Conflict creates a fuller understanding Conflict creates a fuller understanding of optionsof options

Conflict improves decision Conflict improves decision effectiveness effectiveness

Effective strategic decision makers Effective strategic decision makers accelerate itaccelerate it

In dynamic markets, conflict is a In dynamic markets, conflict is a natural feature of decision makingnatural feature of decision making

Organizational ConflictOrganizational Conflict

The Good, The Bad & The Ugly The Good, The Bad & The Ugly OpportunityOpportunity Unpleasant, time-consumingUnpleasant, time-consuming Need not be destructiveNeed not be destructive If If conflict is identified and is managed conflict is identified and is managed

properly, it can actually benefit teams properly, it can actually benefit teams Managing conflict effectively Managing conflict effectively requires that all parties understand requires that all parties understand the nature of conflict in the the nature of conflict in the workplaceworkplace . .

Source:http://www.work911.com/articles/organization.htm

Method to stimulate Method to stimulate conflictconflict

Assembling diverse teamAssembling diverse team• AgeAge• GenderGender• Functional backgroundFunctional background• Corporate experienceCorporate experience

A high-growth venture in Silicon ValleyA high-growth venture in Silicon Valley Older executives rely on their expertiseOlder executives rely on their expertise Younger executives bring in fresh ideasYounger executives bring in fresh ideas Alliance decisionAlliance decision

Method to stimulate Method to stimulate conflictconflict

Frame-breaking techniquesFrame-breaking techniques• Create alternatives to obvious Create alternatives to obvious points of viewpoints of view

• Scenario planningScenario planning a a strategic planningstrategic planning method that some or method that some or

-ganizations use to make flexible long ter -ganizations use to make flexible long ter m plans. m plans.

• Role-plays of competitorsRole-plays of competitors A multibusiness technology firmA multibusiness technology firm

Method to stimulate Method to stimulate conflictconflict

Creating multiple alternativesCreating multiple alternatives• Develop alternatives as quickly Develop alternatives as quickly

as possibleas possible• Team can work with an array of Team can work with an array of

possibilities simultaneouslypossibilities simultaneously

The power of multiple The power of multiple alternativesalternatives

• Speed up conflictSpeed up conflict• Provide executives the confidence Provide executives the confidence • Defuse the interpersonal tensionDefuse the interpersonal tension

Resolve Conflict, Boost Resolve Conflict, Boost CreativityCreativity

Consensus decisionsConsensus decisions

At best, conflict provide improved At best, conflict provide improved result result

At worst, conflict destroy individual At worst, conflict destroy individual self-esteem, increase tension, self-esteem, increase tension, decrease participation and decrease participation and productivityproductivity

Company leaders as mediatorsCompany leaders as mediators Enhance understanding Enhance understanding Develop constructive conflictDevelop constructive conflict

Source: HR Magazine

Maintain the paceMaintain the pace

Maintain the paceMaintain the pace

Less effective strategic decision Less effective strategic decision makers: makers:

Believe that every strategic decision is uniqueBelieve that every strategic decision is unique Believe that they must decide as quickly as Believe that they must decide as quickly as

possiblepossible

Effective strategic decision makers:Effective strategic decision makers: Maintaining decision pace, not pushing decision Maintaining decision pace, not pushing decision

speedspeed Cut off debate at the appropriate momentCut off debate at the appropriate moment Use rules of how long a decision should takeUse rules of how long a decision should take

Maintain the paceMaintain the pace

Two-step method called:Two-step method called:

””Consensus with qualification”Consensus with qualification” Bring decision making to a closeBring decision making to a close Managers conduct the decision processManagers conduct the decision process Choice is made when consensus is reachedChoice is made when consensus is reached Use voting if consensus does not emergeUse voting if consensus does not emerge Allowing managers to make the decisionAllowing managers to make the decision

Maintain the paceMaintain the pace

Decision-making rhythm:Decision-making rhythm:

Help managers plan their progress Help managers plan their progress Make the progress more predictableMake the progress more predictable Emphasizes that hitting decision timing is Emphasizes that hitting decision timing is more critical than achieve consensusmore critical than achieve consensus

””The worst decision is no decision at all!”The worst decision is no decision at all!”

Maintain the paceMaintain the pace

Prototyping:Prototyping:

Encourages managers to take actionEncourages managers to take action Removes the probabilities for Removes the probabilities for procrastinationprocrastination

Keeps the managers focused on the goalKeeps the managers focused on the goal Lowers the barriers to choice and spurs Lowers the barriers to choice and spurs the managers toward a conclusionthe managers toward a conclusion

Maintain the paceMaintain the pace

Consensus with qualification:Consensus with qualification:

Maintains the paceMaintains the pace Consensus will still not existConsensus will still not exist Resolve a conflict in a way that team members Resolve a conflict in a way that team members

perceive as equitableperceive as equitable Gives managers a strong voice in decisionsGives managers a strong voice in decisions

””Consensus is nice, but we have to keep up with the train”Consensus is nice, but we have to keep up with the train”

Group ActivityGroup Activity

PolitickingPoliticking

More effective strategic decision More effective strategic decision makers take a negative view on makers take a negative view on politicking.politicking.

Politicking:Politicking: Involves managers using information to Involves managers using information to

their own advantage.their own advantage. Distorts the information base.Distorts the information base. Leads to poor decision making.Leads to poor decision making.

Defusing PoliticsDefusing Politics

Creating common goalsCreating common goals Not homogenous thinking but rather a Not homogenous thinking but rather a

shared vision of where they want to be shared vision of where they want to be and who their competition is.and who their competition is.

Balanced power structureBalanced power structure Each key decision maker has an area of Each key decision maker has an area of

responsibility but in which the leader is responsibility but in which the leader is the most powerful decision maker.the most powerful decision maker.

Defusing PoliticsDefusing Politics

HumorHumor Relieve tension by making business fun.Relieve tension by making business fun. Emphasize the rush and excitement of Emphasize the rush and excitement of

fast paced markets.fast paced markets. Puts people in a positive mood and Puts people in a positive mood and

strengthens the collaborative outlook.strengthens the collaborative outlook.

Less Effective StrategyLess Effective Strategy

Inward/competitive focusInward/competitive focus Lack of teamworkLack of teamwork Dysfunctional power structureDysfunctional power structure