1、Review:Session 1What is strategy?Making strategic choices is hard:Some quotes from annual reports“Our company has made a conscious choice to be the preferred employer and the leading competitor in its field”“Our objective is to maximize our market share while increasing our margins”“We will continue
2、 covering the needs of a broad spectrum of customers,and strive to be the top choice in all the segments we serve”Summary:What have we learned todaynStrategy is an ongoing quest that is particular to each actor and context.There is no universal formula for success.nEach such quest involves:nGetting
3、the toolsnBreaking the rulesnMaking a differenceStrategy:Making difficult choicesnThey are difficult because of:nThe need to be internally consistent yet allow for flexibilitynOrganizational inertianThese are choices about:nWho is the customernWhat is the value propositionnHow do we deliver itnThese
4、 kinds of choices allow a company to gain and sustain a competitive advantagenChoices are about the journey to Ithaca-not Ithaca alone.nExperimentation may be necessary to arrive at robust choicesnExperimentation involves an ongoing negotiation among key constituenciesnStrategy success is measured b
5、y more universal ex post measures(e.g.profitability)and more idiosyncratic ex ante metrics(e.g.employee morale).A key question is to identify the right measures.What are the difficult choices MCC is facing?nService or carnWhat segment:corporate or leisurenNorth or southnSubcontract or integrateIs MC
6、C Smarts strategy working?nSales below expectationsnSales comparable to other“similar”initiativesnIs helping achieve CAF objectivesnIs providing valuable data about a new segment therefore,worth the price“Get the tools,break the rules,make a difference”:A conceptual map of the courseDefinition and D
7、ynamics of Strategy1.What is strategy?2.How can you be sure you are asking the“right”strategy questions?3.How strategy develops:Context,Role-playing,Mental models,and MetaphorsStrategy Content4.Competitive Forces in an Industry 5.Industry Evolution 6.Valuing Firm Resources 7.Capabilities for positio
8、ning Strategy in Action8.Implementing Strategy 9.Institutional strategy:Can strategy make a difference?Review:Session 2Problem Structuring“We need professional managers who can analyse a problem,put together a strategy and communicate it to employees,shareholders and the financial community”Kouji Oh
9、boshichairman NTT DoCoMoFinancial Times 2001You cannot strategize if you dont askn the right questions!nIf you get this right,you can:nMake sense in everyday lifenMake decisionsnWrite good papers and reportsnLearn from a coursenHandle job interviews betternMake strategy!The Pyramid Principle approac
10、hEach layer contains the necessary and sufficient conditions for the layer aboveGoverning thoughtSynthesises the recommendation or finding in one statementKey line supportSupportFurther supportTradeoffs of a structured approach:BenefitsnRigorous thinkingnExperiment with multiple optionsnLogically co
11、herent argumentnEasy to communicateDownsidenIn practice,it is hard to structure a problemnIs there room for intuition and creativity?Strategic Management,Session 3Developing strategyWhy develop our existing strategy further?nSometimes,our strategy might not worknEven worse,we might not have a strate
12、gy and this makes us vulnerablenOr,we might have no intention of changing our strategy but a competitor just didnSo,we often need to develop our strategy further.What are the obstacles in developing strategy?nCreativitynMental modelsnContextnRole-playingnMetaphors nAnalysisnSessions 4,5,6,and 7The m
13、echanics of strategy-makingGenerate as many ideasas possible about:Who to target What to offer How to do itEvaluate theseideas andchoose whatto doand what not to doImplementthese choicesand remainalert tochangesin contextAnalytical frameworksAsk:“Why”to question the organizationssacred cowsCreate a
14、questioningcultureCreate variety in the thinking process usedin formal planningsessionsCreate processes tomake strategy-makingdemocratic and participativeConsultingAsk:“Why not”to explore the validity of patterns,similarities,analogies,and metaphorsNecessary ingredients for idea generation:Generate
15、as many ideasas possible about:Who to target What to offer How to do itA context in which to play a role A motivation to look at the world differentlyContext Creates BehaviourThe underlying structure of a systemThe underlying Organizational context of a companyCreates the Behaviour in that systemDet
16、ermines the daily behaviours adopted by employees which can support or undermine the firms strategyThe Organizational Context Supporting StrategyCultureIncentivesStructurePeopleStrategyMcKinseys 7 Ss:Another way of describing organizational context Super-ordinateGoalsStructureStaffSkillsStrategyStyl
17、eSystemsUGM:Still another way of describing context:FRAMES PROCESSESCOMMITMENTSVALUESThe Organizational Context at 3MCULTURE 3M has an informal norm that employees can use 15%of their time to develop projects of their own choosing Employees are encouraged to take the initiative and are empowered to
18、make decisions Failure is accepted and the culture that pervades is“you have to kiss a lot of frogs to find one prince”The flat hierarchy makes people feel that they are responsible for everything going on in their divisionsINCENTIVES The company has established career ladders for scientists which a
19、re separate from those for managers Teams that introduce successful new products are rewarded through the Golden Step Program Successful new products can be spun off as separate divisions with their own profit and loss statements.The original product champion becomes divisional president 3M has set
20、a formal goal of having 25%of sales come from new products.Managers are measured and rewarded according to this goal.STRUCTURE 3M utilises cross-functional teams to work on projects Each team is headed by a“product champion”who is responsible for building a team culture One of 3Ms top managers becom
21、es a“management sponsor”to help the team secure resources and overcome bureaucratic obstacles Divisions within 3M are run as separate companies Divisional VPs have the same responsibility as a CEO in many other companies Hierarchies within divisions are kept flatPEOPLE By virtue of its incentives an
22、d culture,3M attracts top scientists and engineers The company is able to recruit and retain creative people with entrepreneurial mindset Because of its dual career ladder,top scientists can coexist with top managers without internal competitionStrategySome of the many possible roles to playnScout:“
23、I bring little known information from the field”nE.g.Intels venture into microprocessorsnRebel:“This is an idea I have tested with a few other people”nE.g.Monsantos venture into biotechnologynResource acquirer:“This new initiative should really be part of our organisation”Motivations for idea genera
24、tion in strategynWe have a problemn compared to our past performancenE.g.Vodafone market cap has tumbledn compared to our stated objectivesn because others like us did much betternE.g.IBM and AppleHow do we find out what the problem is?nMetaphors and analogiesnE.g.Vodafone is like a utilitynCurious
25、patternsnOther“telecom-related”companies have also stalledHow do we find out what the solution is?nUnderstand limits of current way of looking at the world.Can you think of a word?_ ANYCan you think of a word?MANYCan you think of a word?MANY_ENYAntony and CleopatraAntony and Cleopatra are lying dead
26、 on the floor in an Egyptian villa.Nearby is a broken bowl.There are no marks on the bodies and they were not poisoned.No person was in the villa when they died.How did they die?ExercisenArm-wrestle for 30 seconds.The winner will be the one that manages to push his/her opponents hand down most times
27、 in the 30 seconds.Mental models or sacred cows are not necessarily bad.They simply act as the filters through which information passes.As a result,they determine what we“hear”or“see”and so influence how we behave.Summary so far:What do you see?Strong Mental ModelsSHelp us decide quickly(and act)SMa
28、ke us think passivelySMake us reject new information that does not fit what we already believe in30 SECOND EXERCISEIf I count between 1 and 100,how many times will I find a number that has a 9 in it?So we need to learn to recognise our mental modelsnHOW?nBy asking:“why”Adopt the attitude that no rig
29、ht answers last for everThe British created a civil-service job in 1803 calling for a man to stand on the cliffs of Dover with a spyglass.He was supposed to ring a bell if he saw Napoleon coming.The job was abolished in 1945.How can knowledge of our mental models help us generate ideas?nWe can now a
30、sk“why not”nYou see things as they are and ask,Why?I dream things as they never were and ask,Why not?“-George Bernard Shaw n“If Vodafone is a utility,are there profitable utilities we can emulate?”nMore broadly,“Is there another business model we can adopt?”nIn general:nUse several metaphorsnSearch
31、for multiple cues and data:benchmarkn“Test”alternative hypothesesnSegway is more than a“scooter”nFords product is more than a“horse-less carriage”nAn elephant is more than four“columns”and a“rope”nSyphillis is a particular form of“a venereal disease”nEnvironmental issues is more than“safety”,“produc
32、t design”,“product quality”,“public relations”nShock!Questioning mental models can enable us to develop an innovative business modelSome companies,like Lan&Spar bank in Denmark,take this process to heart.They question:WHO their customer really is WHAT their value added really is HOW they sell/distri
33、bute/produce/organize,etcSuch questioning MAY lead a company to identify a new WHO/WHAT/HOW position(i.e.to strategically innovate)An extra step for radical strategy change:nWho develops strategy?nShould you keep a new strategy secret?Making Strategy DemocraticIdeas come from:AnybodyAnywhereAnytimeI
34、deas come from:AnybodyAnywhereAnytimeButOur strategy process involves:-Top 20 managers-In a retreat-For 2 daysMaking Strategy DemocraticMaking strategy democratic:nOnly idea generation phase innovation,not anarchynAnyone,anywhere,anytime should be able to contributenNeed to institutionalise the proc
35、ess of idea generation John Bachmann“I give my people the canvas,CEO,Edward Jones:the paints.What they paint is up to them”E.Leclerc“I tell my people that I want CEO,Leclerc them to be in city X Supermarkets,by Monday,9.00am.France:How they get there is up to them”but how do we ensure that all this
36、does not lead to chaos?How to give autonomy without chaosnProvide the parameters within which your people are free to operate.n These parameters are:nThe major strategic decisions that the organization has taken(Who/What/How)nThe values of the organizationWhy do companies resist the democratisation
37、process?nFearn“Their contribution might be better than mine”nArrogancen“Their contribution cannot be better than mine!”nSecrecy for competitive reasonsnDemocracy requires that contributors are knowledgeable about external conditions and internal strengths and weaknesses.This is information that a co
38、mpetitor would kill for.But Wal-Mart,IKEA,and the Open Law project at Harvard beg to differ.nCostnCollecting input involves a substantial logistical cost in terms of diverted employee attention,aggregating information,etc.Communication technologies can help in this regard.A traditional distinction:e
39、mergent vs.planned strategynImpulsive vs.rationalnExploration vs.exploitationnRadical vs.incrementalnCrafting vs.directingnIntuitive vs.calculatingDeveloping strategy-LessonsnIndividuals need a context to express their creativitynRecognise constraints&opportunities of a contextnAssume a role in a co
40、ntextnTo understand causes of behaviour you need to ask“why”to elicit the underlying beliefs that are held unquestioned by your colleagues in the company.nThese beliefs concern the basic questions about“Who,What,and How”.They may provide insight into a new business model and an additional source of
41、competitive advantage.nOrganizational processes such as the democratisation of the strategy-making process can help unleash this creative potential that resides within firms.nTo identify possible solutions to problems you need to ask“why not”to elicit alternatives to current strategynExplore a variety of metaphors to derive possible alternativesnUse different kinds of data n“Test”these alternatives using this data
