Corporate Strategy

Institute of Health Management Research

Dr. Kishore Murthy

 Introduction
Definition
Why Corporate Strategy
High profile initiatives launched recently
Beyond Restructuring
Beyond Reengineering
Regenerating Strategy
The quest for Competitiveness

The Quest for Competitiveness

Restructuring Reengineering Reinventing

the Portfolio and Processes and Industries and
Downsizing Continuous Regenerating
Headcount Improvement Strategies

Smaller Better Different

 Today 5 to 10 Years in the
Future
Which customers are you Which customers will you
serving today? be serving in the future?
Through what channels Through what channels will
do you reach you reach customers in
customers today? the future?
Who are your Who will be your
competitors today? competitors in the future?
What is the basis for What will be the basis for
your competitive your competitive
advantage today? advantage in the future?
Where do your margins Where will your margins
come from today? come from in the
future?
What skills or What skills or
capabilities make you capabilities will make
unique today? you unique in the
future?
In what end product In what end product
markets do you markets will you
participate today? participate in the
future?
Our promise that a company can control its
industry only if it understands how to
control the destiny of its industry.
Organizational transformation is a
secondary challenge. The primary challenge
is to become the author of industry
transformation.
No Company can escape the need to re-skill
its people, reshape its product portfolio,
redesign its process and redirect its
resources/
 Towards a new view of Strategy
Our starting premises are simple :
Competition for the future is competition to
create and dominate emerging opportunities
to take out new competitive space.
Creating the future is mo challenging than
playing catch up, in that you have to create
your own map. The goal is not simply to
benchmark a competitors products and
Processes and imitate its methods, but to
develop an independent point of view about
tomorrows opportunities and how to
exploit them. Path-breaking is a lot more
rewarding than benchmarking. One doesnt
get to the future first by letting someone
else blaze the trail.
At a broad level, Future requires four things :
1. An understanding of how competition for
the future is different;
2. A process for finding and gaining insight
into tomorrows opportunities;
3. An ability to energize the company top-to-
bottom for what may be a long and arduous
journey towards the future; and
4. The capacity to outrun competitors and get
to the future first, without taking undue
risks.
 The New Strategy paradigm
Not Only But Also
The Competitive Challenge
Reengineering processes Regenerating Strategies
Organizational Transformation Industry transformation
Competing for market share Competing for opportunity
share
Finding the Future
Strategy as learning Strategy as forgetting
Strategy as positioning Strategy as foresight
Strategic plans Strategic architecture
 Mobilizing for the Future
Strategy as fit Strategy as stretch
Strategy as resource allocation Strategy as resource
accumulation and leverage
Getting to the Future First
Competing within an existing Competing to shape future
Industry Industry structure
Competing for product Competing for core
leadership competence leadership
Competing as a single entity Competing as a coalition
Maximizing the ratio of new Maximizing the rate of new
Product hits market learning
Minimizing time-to-market Minimizing time to global
preemption
 Three phases of competition for the
future
Intellectual Management of Competitions for
Leadership Migration Paths Market Share
Gaining industry Preemptively Building a
Foresight by building core worldwide supplier
Proving deeply competencies, network
Into industry exploring alternate
Drivers. product concepts. Crafting an appropriate
and reconfiguring market positioning strategy
the customer
interface. Preempting competitors
in critical markets
Developing a creative Assembling and Maximizing
Point of view about the managing the efficiency and
Potential evolution of: necessary coalition productivity.
Functionality of industry
Core competencies participants.
Customer Interface

Summarizing this point Forcing competitors Managing

of view in a onto longer and competitive
strategic architecture. more expensive interaction.
migration paths.
 The need for Genetic Diversity
Is the industry reasonably concentrated,
with fairly stable market-share positions
among the incumbents? (that is, are the
incumbents spending most of their time
watching each other, and are they counting
on gentlemanly competition to keep their
margins up?)
 Alternately, is the industry highly
fragmented? (that is, has no one yet
discovered opportunities to capture
economies of scale?)
When you ask managers across the industry
whats the secret to making money in the
industry, do you get more or less the same
answer? (that is, is everyone following the
same profit recipe?)
Have most of the top management teams
spent their entire careers in the industry?
(that is, has in-breeding reduced genetic
variety?)
 Is the industrys take-up rate for new
technology slower than most? (that is, are
there opportunities to use technology to
change the rules of the game?)
Have the leaders tended to rely on high
barriers to entry, rather than product and
process innovation, to protect their
profitability? (That is, have the leaders been
able to rest on their laurels?)
 Has the basic concept of the product or
service remained unchanged for a
significant period of time? (That is, there an
orthodoxy about what customers want and
how to serve them?)
Do regulatory issues preoccupy top
managers across the industry? (That is, do
managers blame industry problems on
regulators rather than search for creative
solutions?)
 Decomposing the economic engine
What is our basic value proposition
How have we segmented the market?
Concept of
What kind of customers do we serve?
Served Market
Where are our customers?

Where in the business system do we take

profit?
Where do and
Revenue our margins come from?
Marginhas
What structure
determined the size of our margins?
What are the major cost and price drivers?
 What do we believe we know how to do well?
What physical infrastructure supports
our business?
Configuration of What kinds of skills predominate in our
Skills & Assets company?
What is the trejectory of our development
spending?

How alert are we new value delivery models?

Flexibility and How easily could investment programs be
Adaptiveness
reoriented?
How easily could the infrastructure be
reconfigured?
Which constituencies would most resist
change?
 Finding the limits of the Current
Economic Engine
Concept of Served What customers and needs
Market arent we serving?

Revenue and Could profits be extracted at a

Margin Structure different point in the value chain?

Configuration of Might customers needs be better served

Skills & Assets by an alternate configuration of skills
and assets?
Flexibility and What is our vulnerability to new rules
Adaptiveness
of the game?
 Strategy as Form Filling
Strategy Planning Crafting Strategic
Architecture
Planning Goal Incremental improvement Rewriting industry
in market share and rules and creating
position new competitive space
Planning Formulate and ritualistic Exploratory and
Process open-ended
Existing industry and An understanding of
market structure as the discontinuities and
base line competencies as the
base line
Industry structure analysis A search for new
(segmentation analysis) functionalities
value chain analysis, or new ways of
cost structure analysis delivering
competitor bench traditional
marking, etc.) functionalities

Tests for fit between Enlarging oppor-

resources and plans tunity horizons

Capital budgeting and Tests for signifi-

allocation of resources cance and timeli-
among competing ness of new
projects opportunities
 Individual businesses Development of
as the unit of analysis plans for competence
acquisition and
migration
Development of
opportunity approach
plans

The corporation as the

unit of analysis

Planning resources Business unit Many managers

Few experts The collective wisdom
of the company
Staff driven Line and staff driven
 Old Frame Strategy
Long term = Distant return
Ambition = Risk-taking
Commitment = Big Bucks

New Frame Strategy

Long term = A point of view about industry evolution
and how to shape it
Ambition = A stretching aspiration that is de-risked
through the tools of resource leverage
Commitment = An intellectual and emotional commitment
that ensures consistency and constancy
 Twenty questions about the future
1. Does senior management have a clear and
collective point of view how the future will be or
could be different?
2. Do senior managers see themselves as industry
revolutionaries or are they content with the status
quo?
3. Does the company have a clear and collective
agenda for core competencies, deploying new
functionalities and evolving the customer
interface?
4. Is top management allocating as much time and
intellectual energy to pre-market competition as to
market competition?
5. Is the company exercising an influence over industry
evolution that is disproportionately large, given the
companys resources?
6. Do all employees share an aspiration for the
enterprise and possess a clear sense of the legacy they
are working to build?
7. Is there a significant amount of stretch in that
aspiration that is, does it exceed current resources
by a substantial amount?
8. Has senior management operationalized that aspiration
into a clear set of corporate challenges?
9. Is ti clear to everyone in the company how their
individual contribution links into the companys overall
aspiration?
10. Have managers clearly identified current corporate and
industry conventions and subjected those conventions
to close scrutiny?
11. Are the conditions under which the firms existing
economic engine might run out of steam clear to all
managers?
12. Do employees at all levels possess a deep sense of
urgency about the challenge of sustaining success?
13. Does the firms opportunity horizon extend sufficiently
far beyond the boundaries of existing product markets?
14. Is there an explicit process for identifying and
exploiting opportunities that lie between or transcend
individual business units?
15. Does the management and allocation of core
competencies receive as explicit attention as the
management and allocation of more tangible
resources?
16. Are there a sufficient number of ongoing marketplace
experiments to ensure that the company learns faster
than rivals about the precise location of tomorrows
opportunities?
17. Does the firm have a capacity for global preemption
(either using its own infrastructure or piggy-backing
on partners)?
18. Have all senior potential opportunities for resource
leverage been fully exploited?
19. Are senior executives confident that they will leave a
legacy to future managers and employees that
exceeds the legacy they themselves inherited?
20. Are you having fun?
(The answers to the first 19 questions are irrelevant if you
are not enjoying the challenge of competing for the
future).
 Discussions
Findings..