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The main benefit of strategy is that it should provide organizational focus and clear direction.
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Strategy Provides Focus and Course Objectives
Michael McDermott
1 © McDermott, 2014; [email protected]
Strategic Planning Process
2
• Strategic Analysis
• Strategic Choice
• Strategic Implementation
© McDermott, 2014; [email protected]
Focus
3
• In my experience, the biggest problem companies face is that they suffer from a lack of focus
• Why is this the case?
• It’s because the do not have a strategy
© McDermott, 2014; [email protected]
Focus
4
• It is precisely because they focus upon strategic choice and implementation
• But refuse to commit to strategic analysis
• Even when they are presented with analysis, they often lack the courage to follow through
© McDermott, 2014; [email protected]
Lack of Focus: The Critical Issue
5
• Companies do themselves a huge disservice • They often do not understand the nature of their own
business • They fail to recognize their:
– core competences – strongest product(s)/service(s) – Market segment with greatest potential due to buyer
preferences and nature of competition – International markets where the chances of success are
greatest
© McDermott, 2014;
Explaining The Essence of a Company
• Imagine this challenge to a business owner:
• “Explain the essence of your company in plain English that any one can grasp”
• You would think that they could all do that?
• Many cannot!
© McDermott, 2014; [email protected] 6
Failure to Explain The Essence of a Company
• Arises from an “inside-out” perspective where the company focuses upon what it sells and often gets weighted down in technical details;
• Give an executive a few minutes to do this, and then ask the audience if they understood, and often they are totally “lost”;
• The audience is not stupid;
• The executive’s description is complicated and is product-oriented
© McDermott, 2014; [email protected] 7
Success in Explaining The Essence of a Company
• Arises from an “outside-in” perspective where the company focuses upon what its customers buy (i.e the solutions they seek);
• Force an executive to do this, and the audience always “gets it”;
• The executive’s description is simple and is
customer-oriented, or solutions-oriented
© McDermott, 2014; [email protected] 8
Comparison: which is the most helpful description?
Inside-Out • “We sell software based upon
proprietary programming that incorporates Java programming that uses RSx technology that offers optimal memory utilization. We sell our software to a diverse range of customers such as surveying, construction companies, road builders, and waste management companies”
Outside-In • Our software enables users
to move and bury dirt optimally.
© McDermott, 2014; [email protected] 9
10
Strategic Analysis
Strategic Choice
Strategic Implementation
Genuine Strategy: Becoming Focused
© McDermott, 2014; [email protected]
11
Knowledge = Strategic Analysis
Courage = Strategic Choice
Discipline = Strategic Implementation
Becoming Focused
© McDermott, 2014; [email protected]
Paying Lip-service to Strategic Analysis
• Often organizations undertake an exercise in SA
• However, this tends to be a self-congratulatory exercise
• Challenging and critical contributions are dismissed
• This is a futile exercise 12 © McDermott, 2014;
13
• Most companies turn the recipe for focus on its head;
• They begin with Strategic Implementation, and then are bewildered when success is elusive;
Lack of Focus
© McDermott, 2014; [email protected]
14
Strategic Implementation = Confusion
Strategic Choice = Panic
Strategic Analysis = Fire-fighting
Lack of Focus: The Causes and Results
© McDermott, 2014; [email protected]
Misguided Approach to Strategy: Putting the cart before the horse
© McDermott, 2014; [email protected] 15
Most companies think the above is the starting point.
This comes after you answer
the “strategic five”
The “Strategic five” is the starting point
16
Course Objectives
• The primary aim is to develop your ability to develop your skills in key aspects of strategic thinking
• The aim is to develop your ability to think in a highly analytical and logical manner
© McDermott, 2014; [email protected]
17
Course Objectives
• This ability can only be developed through practice
• Therefore the emphasis in this class is to encourage you to apply your newly developed skills in this classroom, but that you apply your skills through observation as you go about daily life
© McDermott, 2014; [email protected]
18
Course Objectives
• Sports people can only improve through regular practice
• ….not simply reading about their sport
• And it’s the exact same in terms of students of
business strategy
© McDermott, 2014; [email protected]
19
Course Objectives
• This class is a paradox
• My aim is to help you develop a key skill that will be with you for life
• So I want to keep it simple
• But at the same time be very challenging in terms of pushing you to ‘raise your game’
© McDermott, 2014; [email protected]
20
Course Objectives 1. To develop a clear understanding of the nature of strategy
2. To get you thinking strategically!
– You do not obtain this by memorizing textbook definitions – It would be a mistake to believe that this Course is about
research
– You will have to undertake a minimal amount of research, but the primary purpose is to then allow you to think about the information that you collect, not simply reproduce such.
© McDermott, 2014; [email protected]
21
Course Objective 1: Develop a clear understanding of the nature of strategy
• This is a knowledge-based learning objective
• You can actually achieve this independently
• The Course website provides you with the necessary resources to be “self-taught”
• The Course will begin by focusing upon this learning objective
© McDermott, 2014; [email protected]
22
Course Objective 2: To get you thinking strategically
• This is a skills-based learning objective
• You are not expected to achieve this independently
• The Course provides you with the necessary opportunities to practice this skill
• The majority of the Course will focus upon this learning objective
© McDermott, 2014;
Course Objectives
• Knowledge-Based Learning • Can be achieved
independently • Easy
Course Objective 1
• Skill-based Learning • Requires instructor guidance • Challenging
Course Objective 2
© McDermott, 2014; [email protected] 23
Skills-based Learning
• Some of you may be very accomplished at sports?
• I would very much like to be a good golfer;
• Despite lessons, I am a very inconsistent golfer;
• Why is this the case?
© McDermott, 2014; [email protected] 24
Why am I an inconsistent golfer?
1. I have gone to a poor instructor? 2. I have not understood the instructor? 3. I get frustrated and sometimes abandon the
instructor’s guidance as I am ‘more comfortable’ with my bad habits?
4. I struggle to apply his advice to good effect on a regular basis?
5. I do not practice enough? 6. I do not approach golf with the right attitude, and
recognize that I need to be focused and concentrate?
© McDermott, 2014; [email protected] 25
The True Reasons that I am an inconsistent golfer?
1. I get frustrated and sometimes abandon the instructor’s guidance as I am ‘more comfortable’ with my bad habits?
2. I struggle to apply his advice to good effect on a regular basis?
3. I do not practice enough? 4. I do not approach golf with the right attitude,
and recognize that I need to be focused and concentrate?
© McDermott, 2014; [email protected] 26
Course Objective 2
• You will be afforded plenty of opportunity to develop this skill; – We will begin on the “par 3” – And then progress to the “golf course”
• But it helps if you are prepared to “practice” on your own;
© McDermott, 2014; [email protected] 27