strategy slides

8/6/2019 Strategy Slides

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Objectives1. Improve your skills in

strategic thinking

2. Understand the

8 essential steps in

building a strategy

3. Develop your

understanding of what is

required to make strategy

happen by closing the

strategy to performancegap

4. Analyse of the

Case Study


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One day Alice came to a fork

in the road and saw a

Cheshire Cat in a tree.

Would you tell me which

way I ought to go from here?

asked Alice.

That depends a good deal on

where you want to get to,

said the Cat.

I really dont care where,

replied Alice.

Then it doesnt much matter

which way you go,

said the Cat.Lewis Carroll

Alice in Wonderland (1865)


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Strategy is a

deliberate search for a

plan of action that will

develop a businessscompetitive advantage

and compound it.

Bruce HendersonFounder, Boston Consulting Group

What is Strategy?


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What is the benefit of making

strategic decisions?

Strategic decision-makingis a tool to evaluate and

select opportunities, clarify

existing priorities, andlearn to say no to the

distractions that can blowyou off course

Spain and WishnoffStrategic Insights


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Where are we now?

Where do we want to be?

How will we get there?


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Stage 1: Strategic AnalysisWhere are we now?

Stage 3:

Strategic Implementation

& Continuous ReviewHow will we get there?

Developing Strategy

Stage 2: Strategic Choice

Where do we want to be?


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1. Strategic Analysis

2. Establish Purpose

3. Determine Strategic Elephants

4. Formulate Vision5. Agree Strategic Objectives

6. Define Strategies/Actions

7. Set Measures, Targets, Timesand Responsibilities

8. Implementation

Steps in Building Strategy

Steps


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Strategic Key Issues

What are the key strategic issuesaffecting your organisation?


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The World of Strategy is Changing


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A Lesson from

MicrosoftIBM was more dominant than

any company will ever be in

technology, and yet they

missed a few turns

in the road.

That makes you wake up

every day thinking,

Hmm, lets try to make suretodays not the day we miss

the turn in the road.

Bill Gates, Microsoft


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Advances in Strategy:

Managing the Value Chain

A value system is:

A connected series of

organizations,resources, and

knowledge streams

involved in the

creation and deliveryof value to end

customers.


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Michael Porters FrameworksThe Value Chain

Primary Activities

Inbound Logistics Operations

Outbound Logistics

Marketing and Sales

Service


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Michael Porters FrameworksThe Value Chain

Support Activities

Firm

Infrastructure

Human Resource Management

Technology Development

Procurement


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Porters Value ChainSupport and Primary Activities

Firm

Infrastructure

Human

Resource

Management

Technology

Development

Procurement

Inbound

Logistics

Operations Outbound

Logistics

Marketing

and Sales

Service


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Porters Value Chain

Examine each of the activities in the value chain: If it has value, from the perspective of the

customer, charge for it (i.e., the basis for apricing strategy)

If it does not, investigate to see if it can bemade valuable, again from the perspectiveof the customer, and thus charge for it.

If it cannot be made valuable, can it be

eliminated all together? If it can, do so. If it cannot be eliminated, outsource it.


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Porters Value Chain

Examine how the activities can be linkedtogether (i.e., the chain)

Well linked (or chained) activities aremuch harder for the competition to match;and you will have an advantage, even if acompetitor is better than you in one or two

activities.


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How do supply chainscreate value?

The Lean Machine.We want

value not fat!


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Value Chain Analysis

What is a value chain?

Linked set of custom-value creating activities Vertical in nature (supply chain) Value is anything the customer is willing to pay for

Value Chain Analysis Margins = perceived value (what are customers willing to pay for

the value-add?) Competition (R FQ) establishes worth or value Center of gravity primary value adding activity Margins = Cost of value add (labor & equipment) + Profit + Waste

LumberCost - $.05/lbSell - $.15/lbMargin - $.10

PulpCost - $.15/lbSell - $.30/lbMargin - $.15

PaperCost - $.30/lbSell - $.35/lbMargin - $.05

RetailCost - $.35/lbSell - $.45/lbMargin - $.10

*Note:T

he margins and costs are for demonstration purposes only and do not reflect true industry costs.

Value Chain


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Gary Hamel:

The World's

ReigningStrategy Guru

The Economist


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In a big organization, the only way to change how

managers work is to reinvent the processes that govern

that work.

Management processes such as strategic planning,

capital budgeting, project management, hiring and

promotion, employee assessment, executive

development, internal communications, and knowledge

management are the gears that turn managementprinciples into everyday practices.

They establish the recipes and rituals that govern the

work of managers. While operational innovation focuseson a companys business processes (procurement,

logistics, customer support, and so on), management

innovation targets a companys management processes.

Source: Hamel, G., 2006,THE

WHY

, WHAT

,AND

HO

WOF

MANAGE

MENT

INNOVAT

ION

,Harvard Business Review, Feb 2006, Vol. 84, Issue 2


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Under Andy Grove'sleadership,

Intel has become the

world's largest

chipmaker,the fifth-most-admired

company in America,

and the seventh

most-profitablecompany among the

Fortune 500


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Strategic Inflection PointsWhat happens to a business when a major change takes

place in its competitive environment. introduction of new technologies introduction of a different regulatory environment

simply a change in the customers' values

a change in what customers prefer

Almost always it hits the organisation in such a waythat those of us in senior management are

among the last ones to notice

..But what is common to all of them and what is key is that they

require a fundamental change in business strategy, and that'salmost a definition of a Strategic Inflection Point.

A Strategic Inflection Point is that which causes you to

make a fundamental change in business strategy.

Nothing less is sufficient.

Source: Andrew S. Grove (1998) Chairman of the Board, Intel Corporation


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Inflection Curve

Inflection Point

Business rises to new

heights

Keeping Your Strategic Eyes on the Radar

When to transform?

Strategic InflectionPointswhat happens to abusiness when a major change

takes place in its competitiveenvironment.

An event that changes the way we think and act.

Andy Grove, Founder of Intel


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Strategic Analysis

Scan Environment:

PESTel

SOAR

Stakeholder Analysis

Competitor Analysis

SustainableCompetitiveAdvantage


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Forces Governing

Competition in an Organisation

The IndustryBargainingPower of

Suppliers

Bargaining

Power of

Customers

Threat of

New Entrants

Threat ofSubstitute

Products or

Services

Jockeying forPosition

Among Current

Competitors

Porter 1985


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Porters Five Forces


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Strategy: The direction and scope of the company

over the long term.

Structure: The basic organization of the company, its

departments, reporting lines, areas of expertise, and

responsibility (and how they inter-relate).

Systems: Formal and informal procedures that

govern everyday activity, covering everything from

management information systems, through to the

systems at the point of contact with the customer

(retail systems, call centre systems, online systems, etc).

The Hard Ss


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Skills: The capabilities and competencies that exist

within the company. What it does best.

Shared values: The values and beliefs of the

company. Ultimately they guide employees towards

'valued' behaviour.

Staff: The company's people resources and how

they are developed, trained, and motivated.

Style: The leadership approach of top management

and the company's overall operating approach.

The Soft Ss


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Who are yourStakeholders

and yourCompetitors?

Who are yourStakeholders

and yourCompetitors?Who are those

agencies or people thatcould impact on your

business?


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Simply rates a stakeholders power or interest

Some stakeholders may have the power either to block

or advance the growth of the organisation / entity

Some stakeholders may be interested in what you

are doing, others may not care.

A powerful stakeholder with only a small or negligiblestake in your project probably isnt going to waste

his/her or your time but would like to keep abreast of

progress.

Mapping Your Stakeholders

- P

ower v Interest Method


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Stakeholder

Power /

Potential

Low Stake

/ Importance

High Stake

/ Importance

High Influence

/ Power

Keep Satisfied -Useful for decision

and opinion

formulation,brokering: mitigate

impacts.

Manage Closely

Most critical

stakeholder group:collaborate with

closely.

Low Influence

/ Power

Monitor (minimaleffort) - Least prioritystakeholder group:

monitor or ignore.

Keep Informed -Important stakeholder

group, in need of

empowerment: involve,

build capacity and

secure interests.


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Low Stake

/ Importance

High Stake

/ Importance

High

Influence

/ Power

Keep Satisfied Manage Closely

Low

Influence

/ Power

Monitor (minimal

effort)

Keep Informed

StakeholderPower / Potential


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Built to Last

The Importanceof Vision


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The Questions to ask.. Does the Vision provide a beacon for guiding the

kinds of adaptation and change required forcontinual growth?

Does the Vision describe a future that is moreattractive than the present?

Will the Vision challenge you?

Can the Vision serve as the basis to formulatestrategy that can be acted on?

Will the Vision serve as a framework to keepdecision making in context?

Lipton,M. Chair of the Organisational Change Management Program

Milano Graduate School.


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A Useful Rule of Thumb

If you cant communicatethe Vision to someone in

five minutes or less and

get a reaction that

signifies bothunderstanding and

interest, you are not yet

done with this phase of

the transformationalchange process

Kotter 2007


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The Group Challenge..discuss:

1.How can we build a strategic organization?

2.How can we make rule-breaking innovation a

systemic capability?

3.How can we give everyone the chance to be

an innovator?

4.How can we create work environments that

inspire individuals to give their very best of

themselvesthat truly inspire human

beings?


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What must wedo to execute

the strategies?

What are the

priorities?


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Turning Great Strategy into

Great PerformanceCompanies typically realise only

about 60% of their strategies

potential value because ofdefects and breakdowns

in planning and execution

Mankins and Steele

Harvard Business Review July 2005


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Closing the Strategy-to-Performance Gap

1. Keep it simple, make it concrete

2. Debate assumptions, not forcasts

3. Use a rigorous framework, speak a commonlanguage

4. Discuss resource deployments early

5. Clearly identify priorities; track real-timeperformance; build into meeting agenda

6. Continually monitor performance

7. Reward and develop execution capabilities

7Rules

Harvard Business Review:TurningGreat Strategy into Great Performance (2005) Mankins and Steele


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We have aStrategic Plan .

Its called

DoingThings

Herb Kelleher

SouthwestAirlines


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Project Teams

and Project Tasks


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Reviewing your

learning

Harvard Business Review:

Turning Great Strategy into

Great Performance (2005)Mankins and Steele

Tomorrows Managing

Organisational Change and

Transformation Session


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Pulling it all together.


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