- 1. STRATEGIC THINKING Jim Clawson University of Virginia
2. STRATEGIC ISSUES AStrategic Issue is any issue that
significantly influences a persons, a work groups or an
organizations ability to develop and maintain a competitive
advantage. 3. STRATEGIC DOMAINS
4. COMPETITIVE ADVANTAGE A competitive advantage has three key
characteristics: 1.it providessuperior valueto customers 2.it
ishard to imitate 3.it enhances ones ability torespond to changesin
the environment. Adapted from George Day (1994) 5. SOURCES OF
COMPETITIVE ADVANTAGE
- Government subsidy or support
- Established or monopolistic markets
- Process innovation, Cost efficiencies
- Human Resource Management
6. Every CEO has to spend an enormous amount of time shuffling
papers.The question is, how much of your time can you leave free to
think about ideas?To me the pursuit of ideas is the only thing that
matters.You can always find capable people to do almost everything
else. Michael Eisner,Fortune , December 4, 1989, page 116. 7.
Strategy is the art of creating value.It provides the intellectual
frameworks, conceptual models, and governing ideas that allow a
companys managers to identify opportunities for bringing value to
customers and for delivering that value at a profit.In this
respect, strategy is the way a company defines its business and
links together the only resources that really matter in todays
economy:knowledge and relationships or an organizations
competencies and customers . Normann, R. and Ramirez, R., From
Value Chain to Value Constellation:Designing Interactive
Strategy,Harvard Business Review,July-August 1993, p.65. 8. Ten
short years.... the one thing that we have done consistently is to
change .... It may seem easier for our life to remain constant, but
change, really, is the only constant.We cannot stop it and we
cannot escape it.We can let it destroy us or we can embrace it.We
must embrace it. Michael Eisner Disney 1994 Annual Report 9. WALT
DISNEY Productions
- Innovative service and technology
- Synergism between lines of business
- Learning from each experience
- Strong organizational culture
- Strong, complementary leadership
10. STRATEGIC FITMODEL Strategic Mindsets STRATEGIC INTENT MODEL
Source, Hamel and Prahalad,Strategic Intent , HBR Strategic
thinking is driven by the match between current capabilities and
existing opportunities Searching for sustainable advantages Finding
protected niches Strategic thinking is driven by bridging gap
between todays reality and tomorrows vision Finding ways to
leverage resources Outpacing competitors in building new advantages
Making new industry rules 11. WHATMIGHT WE DO? (external
opportunities and threats) WHATCAN WE DO? (strengths and
weaknesses) WHAT DO WE WANTTO DO? (organizational and individual
values) WHAT DO OTHERS EXPECTUS TO DO? (stakeholderexpectancies)
Four Questions that Guide Strategic Choices STRATEGY 12. WHATMIGHT
WE DO? (external opportunities and threat) WHATCAN WE DO?
(strengths and weaknesses) WHAT DO WE WANTTO DO? (organizational
and individual values) WHAT DO OTHERS EXPECTUS TO DO?
(stakeholderexpectancies) Four Related Questions that Guide
Strategic Choices STRATEGY What do weneed tolearn to care about?
Whatnew capabilitiesdo we want to develop? How do we createnew
possibilities ? How do we partner to buildshared expectancies ? 13.
Porters Five Forces Model NEWENTRANTS BUYERS SUBSTITUTES INDUSTRY
COMPETITORS SUPPLIERS 14. Porters Generic Value Chain
InboundLogistics Oper- ations Out- boundLogistics Market- ing &
Sales Service Adapted from Michael Porter,Competitive Advantage ,
Free Press, New York, 1985, p. 46 FIRM INFRASTRUCTURE TECHNOLOGY
DEVELOPMENT HUMAN RESOURCE MANAGEMENT PROCUREMENT MARGIN MARGIN 15.
GENERAL VALUE CHAIN Raw Materials Transport Processing Forming
Assembly Distribution Sales Service Whats your value chain? What
are the margins in each link? Where are your competitive strengths?
Where is your strategic intent? 16. Creating Core Capabilities
- The building blocks of corporate strategy are not products and
markets butbusiness processes .
- Competitive success depends upon transforming a companyskey
processes into strategic capabilities that consistently provide
superior value to customers
- Companies create these capabilities by makingstrategic
investmentsin a support infrastructure that links together and
transcends traditional functions.
- Capability-based strategies, because they cross functions, must
bechampioned by senior leadership .
Stalk, Evans, and Shulmand (1992) 17. Broadening the Pond Every
Business is a Growth Business , Ram Charan and Noel Tichy, Random
House, NY, 1998 18. Defining Growth Trajectories NEEDS CUSTOMERS
Existing New Existing New Charan and Tichy A B C D 19. Defining
Growth Trajectories NEEDS CUSTOMERS Existing New Existing New
Charan and Tichy A B C D Push Past Response Quantum Leap $XB Global
YourShare 20. Organization Charters
21. ORGANIZATION CHARTERS Mission Vision Values Goals LEADERSHIP
1.Mission Statement 2.Vision Statement 3.Values Statement
4.Strategy 5.Operating Goals and Milestones 6.Leadership Strategy
22. PROBLEM LEADERSHIP LEADERSHIP ACTIVITY Questions Answers
Problem Solving Old New Problem Finding New Old Problem Creating
NewNew Adapted fromPathfindingby Harold Leavitt, 1995 23. SECOM,
KK
- Investing in core capabilities
- BUT reinventing the future?
24. Indirect Influenceon Outcomes Culture Environ- ment Leader-
ship Design Decisions Results 25. Competitive Advantage Through
People
- Selectivity in Recruiting
- Participation and Empowerment
Jeffrey Pfeffer,Producing sustainable competitive advantage
through the effective management of people ,Competitive Advantage
through People , HBS Press, 1994, (AME, 1995, V. 9. N. 1
- Training and Skill Development
- Cross Utilization and Training
26. FMC ABERDEEN
- Leaderships indirect influence on outcomes
- Importance of interaction of all design elements
- Human Resource Management as a competitive weapon
- Importance of strong, consistent leadership in culture
building
27. Leading Strategic Change is choosing to influence others to
alter their long-term competitive capabilities willingly. 28. There
are always two parties, the party of the past and the party of the
future;the establishment and the movement. Ralph Waldo Emerson. 29.
In the traditional planning process, outcomes are likely to cluster
around senior managers prejudices; the gap between recommendations
and pre-existing predilections is likely to be low. Hamel 30.
Khrushchev, once criticizing Stalin, was asked, You were there.Why
didnt you stop it?Khrushchev angrily asked, Who said that?And then
he ordered the man shot. As they were taking him out, he said,
Wait!Now you know! 31. Strategy as Revolution
Strategy as Revolution , Gary Hamel, HBR July-August, 1996,
96405, p. 69 32. Strategy as Revolution
- Strategy making must be subversive.
- The Bottleneck is at the top of the bottle.
- Revolutionaries exist in every company.
- Strategy making must be democratic.
- Change is not the problem, engagement is.
- Anyone can be a strategy activist.
- Perspective is worth 50 IQ points.
- Top down and Bottom up are not alternatives.
- You cant see the end from the beginning.
33. Revolutionizing Strategy
- Radically improving the value equation
- Separating form and function
- Pushing the bounds of universality
- Striving for individuality
- Compressing the Supply Chain
Strategy as Revolution , Gary Hamel, HBR July-August, 1996,
96405, p. 69 34. Strategy is revolution; everything else is
tactics. In industry after industry the terrain is changing so fast
thatexperienceis irrelevant and even dangerous. The objective is
not to get people to support change but to give them responsibility
for engendering change, some control over their destiny. Hamel 35.
Who Should Be Involved in Democratic Strategy Making?
- People geographically on the periphery
36. Change the Rules The future is not the result of choices
among alternative paths offered in the present -- it is a place
that is created -- created first in the mind and will; created next
in the activity. 37. One must care more for ones community than for
ones position in the hierarchy. Top down process achieves unity of
purpose, Bottoms up can achieve diversity, but we need to balance
the two so we need deep diagonal slices in the strategy making
process. Hamel 38. To invite new voices into the strategy making
process, to encourage new perspectives, to start new conversations
that span organizational boundaries, and then to help synthesize
unconventional options into a point of view about corporate
direction, those are the challenges for senior executives who
believe that strategy must be a revolution. Hamel 39. Democratic
Strategy Making
- Look for potential discontinuities
- Define and elaborate core competencies
- Ferret out corporate orthodoxies
- Search for unconventional options
40. CHICAGO PARK DISTRICT
- Immense historical momentum
- Consistency of mission and strategy
- Value of Information Technology
- Decentralizing the process
- Responding to the End User
41. STRATEGIC THINKING
- Systems Perspective (Interconnections)
- Focus on Intent (Vision and Capabilities)
- Intelligent Opportunism (Whats there?)
- Thinking in Time (Past, present, future)
- Hypothesis driven (If A, then B?)
Adapted from Jeanne Liedtka, Elements of Strategic Thinking 42.
CONCLUSION
- What competitive advantage will achieve your charter?
- Are you internally consistent?
- Nurture your revolutionaries.
- Create problems that build the future.
43.
