Winning Strategy

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Winning Strategy

John Viljoen (PhD)

19 October, 2012

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Presentation overview

1. The impact of volatility on strategy2. Four keys to a winning strategy

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Volatility

Economic / GFC

New or game changing

Technologies

Increased customer churn

Increased or unexpected Competition

Local, regional, global regulations

Increased employee churn

Shorter product life cycles

Changed distribution channels

Number of volatility factors

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Volatility causes reduced business predictability

• Forecasting errors– Contingency planning and scenarios, “what if….?”

• Reluctance to invest at scale– Less product testing /smaller production trials

• Customer base uncertainty – Build brand equity, how do we become “first choice”?

• Unexpected competitors – How can we build barriers to entry?

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Vision

What we aspire to be

Values

The approach we will take to running our

businessGoals

What we want to achieve – the

specific targets

Strategies

Actions we will take to achieve our Goals

Purpose

What we will do achieve our Vision

Volatility affects every aspect of “Strategy”

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Winning strategies are clear and simple

1. Strategy produces business transformation

RUN – ENHANCE – TRANSFORM• Big fixes, big innovation, big change

2. Keep strategy simple• Strategic plan-on-a-page• Simple does not mean “easy”

“Sir, I am writing you this long letter because I didn’t have time to write a short one”

Sir Winston Churchill

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Our Strategic Plan-on-a-PageStrategic Goals

GrowthQuality at

feasible costSkilled

employeesCustomer

satisfaction

Strategic Priorities

Partnerships

Technical innovation

Easiest to work with

Distribution channels

Tasks and accountabilities

Strategic KPIs

Revenue increaseIncrease incustomer

satisfaction

Quality improvement

Lower employee turnover

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Four Keys to a winning strategyThink & Analyse Act

Key 1 Manage the present from the future

1. Business scope2. Pilot projects

Key 2 Challenge conventional wisdom

1. Differentiation & innovation

Key 3 Think through to the finish line

1. Balanced implementation plans

2. Clear accountability

Key 4 How will we lead this transformation?

1. Strategic leadership audit

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Key #1 to a winning strategyThink & Analyse Act










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• Efficiency (doing things right)

• Effectiveness (doing the right things)

Managing the present from the future builds effectiveness

“There is a propensity in most organisations to do better and better that which should not be done at all”

Peter Drucker

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Corporate Strategy

What lines of business should we

be in?

SCOPE

Business Strategy

In each of these lines of business, how can we be as successful

as possible?

OPTIMISE

Increased “Scope” helps businesses cope with volatility

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Scope change can also put your winning strategy at risk

Ansvar: A specialist insurance business– Churches– Heritage buildings– Museums– Private schools– Global operations – The “general insurance products” decision

• Home and content• Motor cars• Income protection

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Markets

ProductsEXISTING NEW

EXISTING

NEW

Market Penetration Product/service development

Market development Diversification

What opportunities lie here?

Priorities for scope increase

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Risk filterGo

Present Future

Ongoing core

businessoperations

Scenarios & detailed data

analysis

Exhaustive options & risk

analysis

Unexpected “+” or

“-”

Rapid assessment

Select preferred

option

Traditional strategy development cycle (stability)

Strategy development under volatilityOptions for

test selected

Test / pilot / roll-out

• By distribution channel

• By region• By product• By service• By technology• Decide “go / no go”

No G

o

Direct transition

Volatility requires more “live” testing of strategy

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Challenge conventional wisdom

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Why we need to challenge convention

We “lock-in” strategies that work for us,

through structure, systems and expert

staff

The business environment of is characterised by constant change

Strategists “zero base” their decisions

We create convention

In the face of change

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Strong

Differentiation

Weak

Low cost

Perf

orm

an

ce

Stuck in the middle(No added value & no low cost)

“Gravitypull”

Strategy

Str

ate

gy

: C

ut

cost

s

Str

ate

gy

: A

dd

valu

e

Question: Is your business “stuck in the middle”?

Convention creates “stuck-in-the-middle”

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Winning strategy creates “patterns of investments”

Differentiation• Add product features• Build product and

business brand profile• Heavy customer focus • Service support – nothing

is too difficult

Do whatever it takes to support a price premium

Low cost• Scalability • Process integration• Streamlining• Reducing input costs• Mass distribution• Just-in-time

Get the quality & features right and then “squeeze”

Mutually exclusive “patterns of investment”

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Protect your differentiation• Creates value as defined by the customer (revenue

impact)

• Difficult to copy (barrier to entry by competition)

• Sustainable in the longer term (time to generate ROI) Differentiating raw sugar (commodity)

Technical differentiation

(Brazil)

Customer service

differentiation

(Australia)

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2“What is it we currently can’t do, but if we could,

wouldn’t that be something?”

Work on your business not in it

3“If we weren’t already doing this, would we bother to

get in to it now”?

1Find a way to differentiate, or fail.

“I am famous because everyone understands me, Einstein is famous because nobody understands him” Charlie Chaplin

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Strategy development

Strategy Implementation

Leadership

You are only as

strong as your

weakest link

A Winning Strategy will fail if it is poorly

managed

AN

D A

ND

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For each manager…..

I am accountable for this strategy

My part of this strategy

is…..

My supporting role for this

strategy is….

Single point accountability

I have no role in this

strategy

Manager’s Performance Agreement

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“Hard” levers “Soft” levers

Structure Systems Capabilities Culture

• Roles/teams• Authority levels• Business,

Functional & Horizontal integration

• Performance management

• Risk management

• People management

• IT systems• Reporting• Communication

• Staff skills• Flexibility of

people resources

• Capability gaps

• Workforce planning

• Values & Behaviours

• Leadership• Quality• Professionalism• Teamwork

Defining the future

Delivering the future

Ou

rV

isio

n,

Valu

es,

Goals

&

Str

ate

gie

s an

d

fun

din

g p

lan

Financial management

Balanced strategy implementation plans

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Strategy Implementation

Leadership

You are only as strong as

your weakest link

Strategy development

A Winning Strategy will fail if it is poorly managed

AN

D A

ND

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Volatility and leadership

1. How many squares are there?

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1. How many squares are there?

2. How can we win the next T20 World Cup?

Volatility and leadership

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Pro

ble

ms

Pre

dic

amen

ts

Complex

issues

Right/wrong

solutionsVersus

Many possible solutions

Complicated

issuesVersus

Leadership to inform & implement

Leadership to build agreement

Versus

Strategy solves problems that have no solution

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1. “Is sought out for advice on big business issues”

2. “Knows when to make a decision – not too early, not too late”

3. “Is original and value-adding”4. “Looks for clear, straightforward solutions”5. Excels when business issues get really

complex or difficult”

Leadership for a winning strategy in Pernod Ricard

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Four Keys to a winning strategyThink & Analyse Act










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Thank you.

Documents

Winning Strategy