Novo Marmo

STRATEGIC THINKING
Prepeard By : Faleh Zahrawi

STRATEGIC ISSUES
A Strategic Issue is any issue that significantly influences a persons, a work groups or an organizations ability to develop and maintain a competitive advantage.

STRATEGIC DOMAINS
Organizational Work Group or Function Individual

COMPETITIVE ADVANTAGE
Acompetitiveadvantagehas threekeycharacteristics: 1.itprovidessuperiorvaluetocustomers 2.itishardtoimitate 3.itenhancesonesabilitytorespondto changesintheenvironment.

SOURCES OF COMPETITIVE ADVANTAGE

Government subsidy or support Established or monopolistic markets Product innovation Process innovation, Cost efficiencies Superior Service Human Resource Management

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.
.

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.

Strategic Mindsets
STRATEGIC FIT MODEL STRATEGIC INTENT MODEL

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

Source, Hamel and Prahalad, Strategic Intent, HBR

Four Questions that Guide Strategic Choices

WHAT CAN WE DO? (strengths and weaknesses) WHAT MIGHT WE DO? (external opportunities and threats)

STRATEGY

WHAT DO WE WANT TO DO? (organizational and individual values)

WHAT DO OTHERS EXPECT US TO DO? (stakeholder expectancies)

ur Related Questions that Guide Strategic Choi

WHAT CAN WE DO? new What (strengths and capabilities do we weaknesses) want to develop? WHAT MIGHT WE DO? How do we (external opportunities create new and threat) possibilities?

STRATEGY

What do we WHAT DO WE need to WANT TO DO? learn to care (organizational and about? individual values)

How do we partner toWHATshared build DO OTHERS EXPECT US TO expectancies? DO? (stakeholder expectancies)

Porters Five Forces Model

NEW ENTRANTS

SUPPLIERS

INDUSTRY COMPETITORS

BUYERS

SUBSTITUTES

Porters Generic Value Chain

FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT TECHNOLOGY DEVELOPMENT
GI AR M N

PROCUREMENT Inbound Logistics Operations Outbound Logistics Marketing & Sales Service
IN M A RG

Adapted from Michael Porter, Competitive Advantage, Free Press, New York, 1985, p. 46

GENERAL VALUE CHAIN

Raw Materials Transport Processing Whats your value chain? What are the margins in each link? Where are your competitive strengths? Where is your strategic intent? Forming

Assembly Service Sales Distribution

Creating Core Capabilities

The building blocks of corporate strategy are not products and markets but businessprocesses. Competitive success depends upon transforming a companys keyprocessesintostrategiccapabilities thatconsistentlyprovidesuperiorvalueto customers Companies create these capabilities by making strategic investmentsin a support infrastructure that links together and transcends traditional functions. Capability-based strategies, because they cross functions, must be championedbyseniorleadership. Stalk, Evans, and Shulmand (1992)

Defining Growth Trajectories D

NEEDS
New

A
Existing

Existing
Charan and Tichy

New

CUSTOMERS

Defining Growth Trajectories D

New

Response

NEEDS

Existing

nt ua A Q

m u

p ea L

B
$XB Global

PushPast

Your Share

Existing
Charan and Tichy

New CUSTOMERS

Organization Charters
Mission Statement Vision Statement Values Statement Strategy Operating Goals Leadership

ORGANIZATION CHARTERS
LEADERSHIP Strategy Mission Goals Values Vision

1. Mission Statement 2. Vision Statement 3. Values Statement

4. Strategy 5. Operating Goals and Milestones 6. Leadership

PROBLEM LEADERSHIP

LEADERSHIP ACTIVITY Problem Solving Problem Finding ProblemCreating Old New

Questions Answers New Old New New

Adapted from Pathfinding by Harold Leavitt, 1995

Technological innovation Fast customer response Leading edge synergies Investing in core capabilities BUT reinventing the future?

Indirect Influence on Outcomes

Environment

Leadership

Design Decisions

Culture

Results

Competitive Advantage Through People

Employment Security Selectivity in Recruiting High Wages Incentive Pay Employee Ownership Information Sharing Participation and Empowerment

Self-Managed Teams Training and Skill Development Cross Utilization and Training Symbolic Egalitarianism Wage Compression Promotion from Within

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

Strategy as Revolution
Planning isnt strategic. 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.

Revolutionizing Strategy
Radically improving the value equation Separating form and function Achieving Joy of Use Pushing the bounds of universality Striving for individuality Increasing accessibility Re-scaling Industries Compressing the Supply Chain Driving Convergence

Strategy as Revolution, Gary Hamel, HBR July-August, 1996, 96405, p. 69

Strategy is revolution; everything else is tactics. In industry after industry the terrain is changing so fast that experience is 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

Who Should Be Involved in Democratic Strategy Making?

People geographically on the periphery Newcomers Young people

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.

CONCLUSION
Whats your charter? What competitive advantage will achieve your charter? Are you internally consistent? Nurture your revolutionaries. Create problems that build the future.

See U Next Week